However, he stressed that most of the realtors he worked with did not act in bad faith and took the trouble to explain to clients “what they’re about to get themselves into”.
He said: “Those situations come up every week, and we basically act as a financial advisor, because at the end of the day we’re licensed professionals and we’ve got to let them (the client) know that they could be overpaying for a property and never recover.”
Smith’s comments come after figures from Realtor.com show that housing stock in the US has shrunk 28% year over year (single-family starts, however, ended 2021 with a 13.4% increase, amounting to a total of more than 1.1 million starts, according to the National Association of Home Builders.)
In addition, prospective buyers are being squeezed by soaring home price appreciation (up by 18.1% year over year, according to analytics firm, Black Knight).
Smith said a new pattern was emerging, with buyers having to shoulder added costs beyond the sale price. Giving details of one case, he said: “On top of the appraisal, the client’s paying an extra $6,000 in closing costs, because the seller and the listing agent, which is the other realtor, put in a contract that the buyer is to pay all title insurance, pay the seller side and closing costs, as well as the seller’s transfer taxes and fees.”