I was a typical first-time homebuyer. I looked at everything in town — all price ranges, all styles and sizes, all neighborhoods. Usually I used the same agent for all this, but sometimes I would call the listing agent directly or call on FSBOs (For Sale by Owner). I actually looked for about two years and had contracts on five different properties before I made my final commitment. In the end, I got mad and fired that agent who had showed me no fewer than two hundred homes, and closed without her.
Boy, have I got bad real estate agent karma.
Fast forward about ten years. I’ve left the corporate world and gotten my real estate agent’s and broker’s licenses. I now know how things work, and payback truly is a bear. People think nothing of wasting my time, my knowledge, my money. And that’s karma. I earned it. But the fact is, if I let it continue, that’s also my own darn fault. It’s my fault every time I let someone misuse and abuse me because, like any relationship, I let them. I am teaching them how to treat me. And we as a profession have not taught you as a public what we do, why, and how — and most importantly — what’s in it for you. So here you go…
Top 5 Ways to Avoid Really Bad Real Estate Karma
- Hire the best local talent you can find. As much as you might love your rich Uncle Morty in Keokuk, and as often as he may have told you he knows everything about real estate all over Planet Earth, the fact remains that real estate is a local business driven by local conditions, and if you want the best representation, you will hire local talent. And that goes for inspectors, appraisers, title companies, and insurance agents, as well as realtors. Agents who work in vacation destinations, for instance, are worn out dealing with out-of-town agents who don’t know the local market, out-of-town inspectors who don’t know the codes, out-of-town appraisers who don’t know the comps, out-of-town title companies who don’t know the neighborhood histories, out-of-town insurance agents who don’t know how to write for specific conditions… And the reason they’re worn out is not because they don’t play well with others — it’s because they wind up doing all these people’s work for them. Which brings me to…
- Pay what they charge. Look, commissions are negotiable. That’s the law. Some people charge less than others, and that’s perfectly fine. But if your agent of choice says they charge X, then pay X. Don’t ask them to take less. When you do, you are asking them to do less work, put you second, treat you as an inferior client. You are also showing disrespect for their professionalism. You don’t ask your doctor or lawyer to take less than they charge, or your accountant or your insurance agent or your fireman or your dog groomer or your dry cleaner. So why ask that of the person you are trusting to represent you in arguably the largest investment of your life? Boggles the mind, that one…
- Do what they tell you. Agents are the very best sources of factual data about their particular markets. They are the experts. Listen to them and do what they tell you to do.
- Trust the numbers. They don’t lie. Whether you’re buying or selling, your agent can show you actual comparable sales that will tell you what the house should sell for, and what it will appraise for. Sellers: Hope is not a strategy. Setting the price higher “just in case” is a bad strategy. Buyers: There is no “national real estate market.” Offering a much lower price and quoting the “national sales statistics” is a bad strategy.
- Negotiate. Remember: It’s not a marriage; it’s a business transaction. You are a buyer until the day you buy, at which time you become a seller, and vice versa. Both sides want to feel like they did well. Sellers: Don’t take a low-ball offer personally. Consult the numbers, then counter-offer. Buyers: Don’t take a counter-offer personally. Consult the numbers, then counter-offer. No matter who you are, if you’re pulling a number out of the ether, please revisit your strategy.
Finally, if I could give just one tip each to buyers, sellers, and agents — tips that would make their real estate experiences as positive and expeditious and predictable as possible, given all the moving parts, it would be these:
Buyers: Sign a Buyer’s Representation Agreement. This document is promulgated by State Real Estate Commissions to protect both buyers and agents, and to establish a fiduciary relationship between them. By law, every licensed agent represents every listing client (sub-agency) de facto unless this document is signed. Once it is signed, the agent represents the buyer, period. You see, if the agent is sending you listings, giving you information, or showing you houses, that agent is WORKING for you — giving of their time, knowledge, and money. It doesn’t have to be a long relationship, just a loyal one. Show good faith and sign. (Note to agents: If a buyer won’t sign, even for the day, they are wasting your time. Move on to a serious client.) Once an agent is working for you, it is your responsibility to tell other agents that you are working with someone. Write down their name at open houses, and let them call on FSBOs for you. Don’t sign call sellers’ agents directly. Don’t talk to other agents or sellers about your buying situation. All these things have the potential to undermine your negotiating position.
Sellers: Give your agent a chance. If you haven’t applied items 3 and 4 above, changing agents will not help you sell your house more quickly. It won’t disguise the fact that it’s been on the market too long, that it’s priced too high, that it needs work or staging. What’s worse, changing agents and THEN doing what your former agent told you to do (i.e., make those repairs, move that stuff to storage, or God forbid lower the price) isn’t kosher either. Your original agent has invested in you. Let them finish the job.
Agents: Teach your clients all of the above, then practice what you teach. And refer, refer, refer. Work where you live. Become a local expert. 20% of something will always beat 100% of nothing!
Or we could charge a retainer and an hourly, like attorneys. Would that be better?