What Real Estate Agents Wish You Knew About Their Job, Part 2: Most of Them Suck
One of the things that good real estate agents would like you to know is that most of their peers flat-out suck at their job.
If you speak to some of the top-producing, most-respected agents in the business (and I do), what they'll frequently complain about is how little the other agents they have to work with know about actually doing a real estate transaction.
Consider, for example, the idea of "bulletproofing" a transaction. Just because the buyer and the seller have tentatively agreed on a deal doesn't mean that it can't fall apart before the actual closing. The better real estate agents all talk about the importance of "bulletproofing" that deal, whether that is ensuring that all relevant paperwork is filed in a timely fashion with all relevant federal, state, and local authorities, or making sure that home inspections don't yield any surprises, or ensuring that both parties' expectations are properly set and managed. Of course, the better real estate agents then also talk about how little their peers know how to do this "bulletproofing".
For that matter, consider the task of marketing a property for sale. Consumers complain that all a real estate agent seems to do is stick a listing into the MLS and put up a yard sign, then wait for the phone to ring. Well, the better real estate agents complain far more often and far more loudly about the incompetents in their business than you ever do. You, the consumer, only deal with incompetent real estate agents once every several years; they deal with them every single day.
Get into the issue of fiduciary responsibility to the client, and the topic can go on and on for hours. In fact, there's a weekly Internet radio show called "Raise the Bar" that draws quite a bit of attention within the industry. If you're so inclined, you might find it an interesting listen.
They Can't Actually Tell You This
Now, they won't ever tell you, the consumer, any of this in person. That's because most real estate agents are members of the National Association of Realtors ("NAR"), and must adhere to a Code of Ethics. Article 15 of the Code of Ethics states:
REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices.
The obligation to refrain from making false or misleading statements about competitors' businesses and competitors' business practices includes the duty to not knowingly or recklessly repeat, retransmit, or republish false or misleading statements made by others. This duty applies whether false or misleading statements are repeated in person, in writing, by technological means (e.g., the Internet), or by any other means.
So What Can You Do?
There's no easy way for you, the consumer, who doesn't live and breathe this stuff every day to find out whether the agent you're considering is any good. There are some agent-ratings websites out there (the latest of which is from the Houston Association of Realtors, called RealtorMatch), but they're not likely to be of much use for a variety of reasons. (That's a separate post in itself.) But here are some things I would look at the next time I need a real estate agent.
Keeping in mind that stats alone rarely tell the full story, I'd still start with stats because they're not meaningless, and because they provide some quantitative basis for comparison. Specifically, I'd look for these stats:
- Years of experience & full-time status: This is a weak indicator of quality, but again, it's not nothing. Chances are, someone who's been in the business full-time for 10 years likely knows more about doing real estate than someone who just got her real estate license two months ago and is working part-time.
- Number of transactions, by side, by proximity and by price: How many deals has the agent actually done in the past 12 months? How many on the buy-side, and how many on the sell-side? How many within the relevant geographic area? (It may matter more that someone sold two homes on the street you're looking at instead of 20 homes two towns over.) How many deals within the price range?
- Price-to-list: I'd want to know the average price-to-list (the actual price the home sold for versus what it listed for) as well as transaction-by-transaction price-to-list. If I'm the buyer, I'd like to see if the agent I'm considering has a track record of achieving lower price-to-list when representing buyers; the other way around if I'm the seller. This is also a weak stat because so many factors go into actual sale vs. listed price, not the least of which may be the seller's unrealistic expectations. But again, it's not meaningless.
- Average days on market (for seller): I'd like to see what the average days on market (DOM) is for a particular agent, if I'm looking to sell my property. I'd also want to know how that compares to all the other agents within the market area (town, neighborhood, etc.). Most MLS' keep these statistics and make them available to the brokers and agents who are members of the MLS. So ask the agent for them. If he or she cannot or is unwilling to produce the stats, well, that also tells me something.
The Google Test
Basically, I'd ask the agent in question, "What can you tell me that I can't find out through Google about this house or about this neighborhood/town/whatever?" Someone who is a professional ought to know things that the general public does not. For example, because my house sits at the lower end of a slight hill, when it rains my house has a tendency to flood. I couldn't have found that out via Google, but a real expert who knows my town may have been able to tell me.
What I'm looking for here is "insider knowledge" -- some sign that the agent in question is a real expert on the town, the neighborhood, the development, market conditions and trends. If it's some pre-packaged report on housing prices, I can find that by Googling. But insights like this one from Jim Duncan, a Realtor in Virginia, requires knowledge of the local area. Chances are, someone who is that knowledgeable -- that involved about their market -- is a serious professional who's going to know a thing or two about getting a deal done.
Of course you'll ask for references, won't you? Well, I'd assume that whoever the agent gives me as a reference is a formerly happy client who will sing praises of that agent. So I'd ask two other questions.
First, "If I were not to hire you to be my real estate agent, who would you suggest I hire?" If the agent refuses to provide me any names, then that to me is a sign of a real lack of confidence and professionalism. If they gave me a couple of names, I'd ask those agents the same question, to see if they'd name the agent I'm thinking about using.
Second, "Can you give me the information on your last five transactions?" Such information would include the broker and agent on the other side, the buyer and seller, the closing price, and other information besides. I would then call the agent on the other side, as well as the clients. Asking for transaction information means that the agent in question isn't handpicking only those former clients who are going to say happy happy joy joy things about her. Again, failure to provide me this info is a red flag. What are you so afraid of, if you're a good, professional agent?
Finally, I would reach out to my social network to see if anyone on it or connected to it has worked with the agent in question, then ask them for their experience. If Facebook is useful for anything at all, it's for something like this.
[EDITED: Found a better suggestion on references, so modified one paragraph.]
Professionals Deserve Real Clients
If you've gone through all this hassle to find the right real estate agent, keep something in mind: They deserve a real client. If you're just kicking the tires, well, don't bother finding the "right" agent -- who cares, since you're not serious? If you just want someone to do a bunch of free work for you on spec, does it really matter whether you use a good agent or a crappy one? If you're going to go through the trouble of finding a knowledgeable, professional real estate agent, then ignore everything she tells you about proper pricing, marketing, staging, and market conditions. Why bother?
But if you're serious, if you're ready to be in the market, then the good real estate agents would like you to know that many of their peers don't know what they're doing, and that it will pay you in the long run to find the right professional to assist you in the biggest financial decision of your life.
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