This came into the comments section of this post yesterday, from Joshua Ferris:
What type of services do you expect a buyer’s agent to offer in order to create a “real value”?
Thank you, Joshua, for the set up! Timing couldn’t be better; there seems to be a confluence of events. Redfin has apparently duped a new round of investors (“Honest! It’s the last time I’ll ever need funding!” is the fourth great lie); Redfin is capitalizing on what seems to be an emerging anti-realtor trend; and I had more conversations with local realtors yesterday who are getting “I’ll only deal with the listing agent!” sign calls.
I wondered if there was anything that was helping drive it, so I just Googled “How to buy a house” and found this site:
“Real Estate Agent” Is Just Another Name For “Salesperson”
Don’t ever lose sight of that fact. Their only mission is to sell, sell, sell to YOU. Don’t ever let on that you are in a desperate situation, or that you need to sell a house fast to pay for emergency bills, or that you are in a desperate crunch to buy this house now, because you are being transferred into town this week. It’s simply none of their business and as far as they are concerned, you are not in a rush to buy a house.
Excellent. What good could possibly come from telling your agent how quickly you need to buy or sell?
HouseBuyingTips.com Buyers Warning
One of the biggest mistakes many home buyers make is assuming that their “buyers agent” is working for them. They could not be more wrong. Also, never let a real estate agent choose your attorney. You must choose your own attorney, not one with a cushy relationship to the salesperson who is trying to sell you a home.
Punctuation is oversold, and non sequiturs simply don’t deserve that negative reputation…
If you are buying a house instead of selling a house, you really don’t need a real estate agent.
When the Carnival of Praetorian Cranks Posing as Something They’re Not is launched, this guy — Jeff Ostroff — will win every week. He’s apparently an engineer by training, is an affiliate marketer who owns eight other ‘how to’ sites, makes his money here by driving clients to homegain.com, couldn’t land a gig writing for a middle school yearbook, and certainly couldn’t effect a successful real estate transaction. A consummate fraud.
But he Googles number four.
So, Joshua, in answer to your question; for the benefit of Redfin idolaters, for anyone silly enough to buy into this, and in the off chance that this is helping drive buyers to assume buyers’ agents are worthless, let’s put some nonsense to rest.
- The free market rests on the capitalization of self-interest. Every business decision an agent makes takes into consideration his or her interest above all others.
That, of course, is the point at which superficial thinking stops. I do what’s best for me, ergo whatever brings immediate gratification. But:
- Good agents know their greatest long term interest, by far, is in serving the interests of their clients. Not just because fiduciary responsibility is codified in the rules of agency, code of ethics and statute — and certainly not because of any altruistic bent — but because taking excellent care of customers means more customers.
With that in mind, here’s what to expect from a good buyers’ agent:
- Knowledge. An agent is paid not just for what he does, but for what he knows. About the market, the neighborhood, potential local problems, financing, people, construction, the law.
And it’s not just in the knowing, it’s knowing how to apply it.
- Education. Good agents don’t sell, they inform. With every buyer — first time or tenth time or investor — I sit down and go over the entire process, from pre-approval to close, outlining our respective roles so he or she knows what to expect before it happens. I subscribe to a map-based listing service that will email specific neighborhood listings to buyers each day, or narrowed listings within an hour of their going into the MLS; they’ll have a good idea of the market before we ever get in the car. I’ll give them any and all information they want, including commission splits. Educated buyers make their own best decisions.
- Observation. Listening is nice, watching is better, both ideal. I get more information in ten minutes face to face than a year of emails and questionnaires. What people say they want and what they end up buying are often far apart. When we tour, instead of puffing the color of the carpet, I’ll follow, watch and listen. Usually by the end of the fifth house, always by the end of the tenth, I can be their eyes; like most agents, I often know it’s the right home before they do.
- Negotiation and the writing of an acceptable, binding contract. Redfin’s claim to the contrary, good agents know what will work, what won’t work, and how to make what won’t work, work. Contingencies are balanced against price, motivations are weighed, the contract is written, then the agent will present the offer to the seller in person. If necessary, there can be lengthy negotiations through counter-offers. The result is not only better contract terms for the buyer — or the fact that there’s a contract at all if there are competing buyers — but, done right, there’s a sense of cooperation and a smoother transaction to close.
- Hands on during escrow. Especially in this market, finessing to close is the biggest job an agent has. Setting up and interpreting the inspection, then negotiating terms; constant communication with the buyer, who can otherwise be an emotional wreck; constant communication with the mortgage broker, some of whose lenders don’t seem to understand the concept of “time is of the essence”. Problem solving, both small — I just spent a half hour on the phone trying to track down the account number of a line of credit my buyer had never used — and large — the lender who folds two days before closing. My bet is every agent here could write a book on the hurdles he or she has had to engage to get a buyer through a transaction intact.
Note: There is no financial quid pro quo in the hiring of a buyer’s agent. While the agent may save a buyer enough to pay his or her own commission, and while settling of home prices will be reflected once commissions are divorced, the buyer is still paying as for the purchase of any professional service: the saving of time, anxiety, and a de facto policy against future liability. Not everyone needs that service, but most do and the cost is well, well worth it.
Incidentally, with the sudden enormous increase in buyers demanding to work only with the listing agent, I’ve yet to hear of one who’s actually bought anything…Related posts: