How Good is Your Real Estate Transaction? As Good as Your Agent!

Do consumers really think that the logo on any Realtor’s jacket has anything to do the the quality of a real estate transaction? Frankly, the logo has zilch to do with the buyer or seller’s forthcoming experience.

Branding may influence consumer choices when it comes time to selecting an agent to represent them in a residential home transaction. But as the quality of the consumer experience goes, it really boils down to the competency of the Realtor they have working for them. The agency has very little to do with the ability of the Realtor.

An agent may have a nationwide or regional brokerage behind him, but that doesn’t necessarily mean that the consumer gets a quality agent for the transaction. This is the principal reason Errors and Omissions Insurance was created for the real estate industry.

Consumers do better with single agent representation - better than swimming of the deep end!

Consumers do better with single agent representation – better than swimming of the deep end!

Consumers rarely know anything about the agent they hire, unless it’s on a personal level. Realtors are some of the most personable people you will meet. But what does that tell you about their experience, savvy, due diligence, organization, attentiveness, or other traits that set good agents apart from poor ones? What tells the consumer they are getting a good agent?

Nearly all potential home buyers or sellers are at a distinct disadvantage when dealing with any Realtor. You are on their turf because of the complexity of any real estate transaction. They are still clueless when it comes to asking the right questions to find out about the experience and ability of the Realtor they have working for them.

So what should consumers do to make sure the agent working for them is any good? Answer: Ask the right questions.

Questions for a listing agent:
How many homes have you sold in the last 12 months? Where did you sell them? How many listings are you servicing now? What is your average days-on-market? What is your average list to sales price? Ideally, it is great when consumers can get the listing agents statistical data. This info is generally not available to the public so you have to ask for it.

Questions for a buyer’s agent:
How many buyers do you represent at a time? How many buyer transactions have you closed? How often are you available to your buyers? Do you list properties and if so, how many? (Listings take time and servicing them can put constraints on the availability of the agent)

There are other good questions to ask, but the point is for consumers to ask questions!


Dual Agency, Compromised Representation and Special Interest Groups

Dual agency, also called limited agency, is where one agent represents both the seller and buyer during a property transaction.

There's not much room to negotiate when one agent represents both buyer and seller.

There’s not much room to negotiate when one agent represents both buyer and seller.

A real estate agent compromises his or her ability to fully represent either client, when representing both simultaneously. In most states this practice is legal. If explained properly, no buyer would ever do it, but because additional disclosures required by dual agency are often explained poorly, a buyer’s perspective and understanding of this compromising relationship is not fully understood. Little do buyers realize that their agent can no longer give either client a “contractual advantage”. This can be huge. For example, if a listing agent has been instructed by the seller to list a home for $100,000, and the agent knows it is only worth $90,000, he can only say to his new buying client that the property (by fiduciary obligation to the seller) is for sale for $100,000 – and not one penny less. Sadly, many unknowing buyers paid $100,000.
The carrot for Realtors is that the projected commission can double when both parties are represented. This is just as bad as a couple using the same attorney for a divorce. But the unethical practice will continue in most states due to the strong real estate lobbies at the state and national level. Special interest groups protect the groups that pay them, not the consumers who utilize the real estate industry’s services – food for thought for consumers who are buying or selling a house.

Choosing the right doctor, I mean, real estate agent?

A man went in to have some foot surgery. His doctor was trustworthy, honest and professional. Two years later the same man needed brain surgery and insisted that his podiatrist do it because he trusted him so much. Of course, most of you would tell that guy to have a brain surgeon do the operation. We all know why.

Which brings me to this great analogy in real estate. A man, Mr. Buyer, bought a home and was represented by Realtor Bob. Bob did a great job representing Mr. Buyer. In fact, some years later, Mr. Buyer needed to move. And his automatic reaction was to call Realtor Bob. But Mr. Buyer is making the same mistake the guy in the first paragraph made. How could this be?

clay Make sure you hire the right agent, or it might be a long walk home.

As many of us know, the training for a foot surgeon and brain surgeon is very different. They are specialists in medicine. In real estate, real estate agents have only two jobs – representing buyers and sellers. But the skill set necessary to do either job is about as different as being a podiatrist or a brain surgeon.

So when Mr. Buyer bought his home, Realtor Bob functioned as a buyers agent. And years later, Mr. Buyer calls Realtor Bob to sell his home to work in the capacity of a listing agent. Does Mr. Buyer know anything about the different skills needed from an agent when they are acting as a listing agent? Probably not. Should he be concerned using an agent who may or may not have the skills to effectively market a home for sale? Well, he doesn’t have a clue. How would he know?

Too often, consumers wanting to buy or sell a home will choose an agent, based on trust. Trust has nothing to competence yet consumers make choices without getting any factual information. You don’t have to be a brain surgeon to figure this out. Of course, most Realtors don’t want you to know whether they are competent in both areas. But there are ways to find out.