Over the past couple years, technology has brought a revolution in the availability of information about real estate. Commercial services provide a wealth of information, often for free. And popular TV shows depict all sorts of real estate-related activities as pretty simple. If you can just knock down walls at will, change your cabinets, learn about the homes listed for sale on your block, and negotiate against the pros, why would you need anybody to help you? If you’re a bit industrious and willing to work hard, you could do it all on your own. But should you?
Let’s tackle this question from two sides: the buy-side, and the sell-side. This blog post will talk about the buy-side issues; sell-side issues will be discussed in a subsequent post.
As a buyer, data has become readily available. A lot of data. So much data it’s almost like drinking from the legendary firehose. But the data is not always distilled into helpful information, and so you’re left with the task of interpretation: What does all this mean? Is all the data of equal quality? And that’s the least of your issues.
Yes, you can search for available homes. And frankly, you should. You should do everything you can to make yourself an informed consumer. It will help you and your representative if you are able to talk from an informed position. But a good agent adds a great deal of value beyond finding a home for sale (even beyond driving you between different homes for sale – yes, I know the joke about real estate agents basically being glorified car-pool drivers).
Beyond searching, a good agent can help with the negotiation process, the inspection process, the contracting process, the financing process, and the closing process, and can even help with after-close issues that may arise. And a good agent will be able to help if anything goes wrong during the process. A really good agent can foresee the issues that may arise and help avoid them. How often do things not go perfectly: the overwhelming majority of the time (you can research the data on that – it’s a little harder to find than houses for sale, but it’s out there).
Keep in mind – if everything goes perfectly, you might come out approximately as well without a professional representing you. But what if everything doesn’t go perfectly? That’s when a good agent can be invaluable. Your agent has experience and training that can be put to the task of dealing with problems, contingencies, conditions, fraud, mistakes, and other issues that may (and often) arise.
So, if the general answer is ‘Yes, you should use an agent,” what about the specific answer as it relates to you and to some particular agent? Not all agents are created equal, and of course, neither are all buyers. You might be amazing, and you may worry your agent sucks.
So I ask you this direct question: Do you think you can interview two, or three, or four agents, and then pick the one who is most capable of working successfully with you to maximize your success?
If you answer Yes, then pick that agent and get all the benefits. If you answer No, you do not think you can do that successfully, then what about the buying process (finding, selecting, negotiating, contracting, financing, closing) do you think you can do better than an agent. I’ve got news for you – if you don’t think you’re able to source a great agent, you’re not going to be all that great at the other activities either.
If you can source a great agent, then you might as well gain the benefits of using that agent. And if you cannot source a great agent, then get some help finding an agent because that’s the easiest part of the real estate process.
This means your agent’s knowledge, training, and experience are important. All agents must be licensed by the state, ensuring a minimum level of knowledge. And the license requirements include ongoing ‘continuing education,’ meaning your agent must stay up-to-speed on current issues arising in the law and in the marketplace. Some agents have a lot of experience, and so they’ve seen a lot. Some agents have a lot of formal education.
At the Chong Miller Group, we are licensed, we have experience, and we have a lot of relevant formal education. I have my Ph.D. (have been a business school professor for a decade) and JD (I used to practice law in California, specializing in part in construction defect litigation, representing homeowners’ associations). I teach people how to negotiate, how to think in business-terms, and I’ve spent countless hours doing in-depth research (mostly into regulations and finance). Jason holds two masters’ degrees and has worked in consulting for fifteen years, helping search for optimal solutions to client’s needs and helping negotiate multimillion-dollar contracts.
We think we’re well positioned to help you be successful in your real estate endeavors. But if you don’t hire us, hire someone else. The truth is, you do need a real estate professional in your corner. Can you do it on your own, yes sure. Should you? No!
But what’s your cost for this representation – to have a skilled, knowledgeable representative in your corner, someone who owes you a legal duty of loyalty and will work on your behalf? Well, you don’t have to pay for this. No, it’s not free. Real estate agents work on commission (and therefore only get paid if there’s a completed transaction). But the fee is paid by the seller. The home seller is paying an agent to represent them. They pay that agent some commission based on the final sales price. That agent then pays your agent to represent you, the buyer. If you show up without an agent – the sales agent keeps the full commission. If you do not have your own agent, the seller doesn’t get a rebate, the seller/agent contract doesn’t get modified. The seller’s agent collects the full commission and keeps it. And by law, the seller’s agent cannot give you what they would have paid your agent (if you had one) – not even part of it.
Not having an agent in your corner literally means 1) you saved nothing, and 2) you helped the seller’s agent earn a larger commission. Of course, it may also mean the seller (represented by a professional agent) got the better end-of-the-bargain than you did negotiating on your own against the seller’s professional representative. Unless you truly believe you have superior negotiating skills to all real estate professionals (and I’ve got news for you, you don’t), you’re going to come out less well. That sounds like a less-than-optimal result for you – paying the seller more, paying the seller’s agent more, getting a contract with terms that are more favorable to the seller, and saving no money, with you getting only the benefit of playing DIY (doing it yourself) – on one of the most expensive purchases you’ll ever make.
If you do not have professional representation, you’re committing malpractice – against yourself.Justin Miller