Recently, an article was posted over at Business Insider titled “9 things you should know but real estate agents won’t tell you.” Framed as a contentious relationship, the article’s focus was not on what a real agency relationship involves.
An agent represents you, and only wins if you do. If that isn’t the case, they aren’t doing it correctly. The only part that I really did agree with is that you should shop carefully for a Realtor because it impacts every other decision in the transaction and is a true trust relationship.
Let’s walk through 9 points that a good realtor WILL tell you, and maybe a different way of looking at hiring a Realtor to list your home.
You don’t need to hire a real estate agent to sell your house, but it really helps.
You’ve heard your local market is really high, so you’re going to stick a For Sale By Owner sign in the yard and save a fat commission. Pricing? “No problem. I’ll just go high and come down until I get an offer!” In a super robust market, you might even get away with this tactic, but incorrect pricing, amateur marketing, and a lack of insider knowledge will likely really hurt your bottom line.
A good Realtor will bring more money to your pocket than all of the commissions. Recent NAR studies show a wide range, depending on area, but a listing agent is worth an additional 6% – 10%, which again, depending on area, is usually less than their commission.
You can avoid a commission if you bring your own buyer, but don’t be surprised if you end up doing a ton of paperwork…
You definitely should disclose to your prospective Realtor that your cousin-in-law has decided that your house is his new forever home, and is out back measuring out the RV parking. If you guys decide to go ahead with the contract, and go around Realtors altogether, you’re probably stuck in paperwork land and spending a ton of time with your new bestie, Cousin Dave. If you don’t pay for service, you don’t get any, and time has a value.
Commission is almost always negotiable (True!)
A good Realtor will be totally clear with you about what is going on with the entire deal, and talking about commission is the only time when the Realtor is not negotiating on your behalf. Ask yourself – do you want to hire someone to advise you in negotiations that just gave up their pay super easily? Instead, look for a Realtor that convinces you that they are worth their commission. Don’t be afraid to discuss variable rate commissions. They should be happy to to cut their commission if you allow them to also represent potential buyers.
Small agencies can be just as good as big ones (True!)
More important than the size of the agency is the activity level of the agent. You want a full time Realtor. It’s not that your brother’s boss’ hairdresser doesn’t do a great job of selling real estate as her side hustle. It’s that any high dollar transaction deserves advice from a well-educated professional, dedicated to their craft. It’s good to look for designations specific to your purchase, and you can research agent’s history through your state’s real estate commission.
The public can access any Realtor’s conduct record (True!)
Here in Idaho, the website is https://irec.idaho.gov.
That open house – its for buyers
It’s basically fishing. Let’s be honest. Only eight percent of homes are sold immediately at the open house, and, yes, they are a good opportunity for the Realtor to push their own business. It’s also important to note that the 90% plus of people who find homes, do so online, and they are drawn by video and photos. The modern real estate company is leveraging images of your open house to bring more buyers in an online marketing package.
A Home Inspector is not the only professional you need
A great realtor will help you ensure that you are working with quality contractors throughout the entire process. The home inspector is one, as well as Heating/AC pros, roofers, handymen, painters, landscapers, professional stagers and photographers, lenders…you get it. A full time realtor has long lists of contacts, and even more when they reach out to their colleagues at their brokerage. These contacts alone can save you weeks of time, and save money in the long run. You can increase the sales price, shorten the time on market, and greatly reduce the stress involved throughout the transaction.
All the forms are available online, but…
You, likely, are not a lawyer. Neither is your realtor. In fact, they are specifically forbidden to practice law without a license. They work with boilerplate forms that if you have enough attention to detail, you too could manage. So, why are you paying them again? To start, there are 70+ possible forms and knowing which combination of 7 that you need can be daunting. Knowing which 15 other forms you might need can only be learned through experience. There are a multitude of invisible pitfalls that can be easily avoided with the right clause or form. They are transaction, property, and offer specific. Having a pro to help navigate the paperwork (not to mention the negotiations) will save you a ton in time, frustration, and straight cash money. 🤑
It seems like a good time for a story
Recently, I was approached for advice by a member of the public. The seller (lets call him Sam) did not want to employ the services of a realtor, but he did need some late stage contract advice on a pending offer. We didn’t sign a representation agreement, and he agreed that I could discuss his situation.
He had listed his home at what he knew to be a high market value, with the expectation of coming down if necessary to find a buyer. After a few months and a few reductions, Buyer Bob made an offer, substantially below listing price. This offer was fairly clean of contingencies, except waiting for the sale of Bob’s home. Sam came to me trying to find a way out of this contract, because a better offer had come along from another buyer, Betty. The second offer was closer to the listing price, and Sam was hoping that he was not legally bound to the first offer. Unfortunately, after listening to the details of the situation, he was bound to Bob’s offer and had to let the second offer pass, leaving a lot of money on the table.
I could have helped Sam avoid all of this in the following ways:
– Proper pricing. I developed a proper price opinion on this after we talked, and I would have listed at thousands higher than he originally did.
– Marketing. He put a For Sale By Owner sign in the yard and told his co-workers. These were his only marketing efforts. He reached less than a tenth of his potential buyers, and could have sold his home faster and for much more. This goes straight to the bottom line in something most sellers forget about – carrying costs. Sam held this mortgage three months longer than necessary, and that’s pretty easy math.
– Professional Knowledge. He could have used help from a pro to ensure that he was not locked in to that first offer. This could be done with a specific form or clause added to the terms and conditions of the contract, and a good realtor would have caught it. Specifically, the right to continue to market would have been extremely valuable in Sam’s case.
– Negotiations. The seller made his choice to not use a realtor because the market was so hot. He didn’t know how to leverage being a seller in a seller’s market, and without getting into too much detail, made concessions he shouldn’t have. It cost him at least 18% – 20%, trying to save a 5%- 6% commission.
So, I called to follow up with Sam and see how he was digging the new place. He and his wife were totally happy in their new home, and thanked me for the gift of free advice. In fact, he had learned so much during this whole disastrous transaction, that he was now educated. A Realtor still was not going to be for him, but I sure was a nice guy so he would be staying in touch. I agreed. Sam was a great guy, and I’ll still answer the phone when he calls.
Sometimes, people have to learn in their own way. ¯\_(ツ)_/¯