Hiring a real estate agent when you buy a home: Avoid these mistakes
In this article:
- Realtor® vs real estate agent: What’s the difference?
- What does a buyer’s agent do?
- Hiring a real estate agent: who to avoid
If popular perceptions of real estate agents were accurate, nobody would use them and the whole profession would die out. A recent MSNMoney survey found that real estate agents are considered only slightly more trustworthy than members of Congress by the general public.
In reality, many do valuable work that provides significant benefits to their clients. The trouble is, others are lazy, greedy or uninterested. But how do you find the former and avoid the latter?Verify your new rate (Nov 17th, 2018)
What’s the point of a real estate agent?
Unless you work in property investment, you’re unlikely to buy and sell homes often enough to really understand the process. And today those processes are ridiculously complicated.
To start with, there’s a long list of players: from home appraisers and inspectors to loan officers, title insurers and attorneys. And they all insist on using their own jargon, impenetrable to anyone normal. Then there’s the bureaucracy: mountains of forms and documents and records.
That’s why many homebuyers prefer hiring a real estate agent. He or she can:
- Help you understand the neighborhood (“The property next door is a fraternity house, just so you know”)
- Assist in filtering out houses that won’t work for you, saving you time (“This HOA does not allow clotheslines”)
- Deal with bureaucracy and explaining title issues, easements, HOAs, liens, etc. (“The easement means people can cut through your outdoor kitchen to get to the beach.”)
- Help you negotiate the transaction, including earnest money, price, and who pays what closing costs (“This is the customary split, but we can negotiate that if your closing costs went to Vegas — and stayed in Vegas”)
- Keep you from being “out of contract,” which means missing deadlines, and which can cause you to lose a home you want (“It’s okay that your appraiser’s car didn’t start; your contract has an automatic extension for this.”)
Real estate agent vs. Realtor®
Realtors® are real estate agents who are members of an industry organization with a registered trademark. This group is called the National Association of Realtors® (NAR).
The NAR has a code of ethics that its members must follow. However, lawyers, lobbyists and auto dealers also have trade organizations, so… Still, membership may indicate a commitment to professionalism. And there is some oversight because the rest of the members don’t want a few bad apples contaminating the whole warehouse.
You probably needn’t make NAR membership a prerequisite when hiring a real estate agent. But, the organization does offer the opportunity for members to gain additional training and designations that might work for you. For example, ALC, (Accredited Land Consultants) complete a rigorous education program, develop a specific, high-volume experience level, and must adhere to an honorable Code of Conduct.
The buyer’s agent
The real estate agent from whom you buy a home works for the seller. Because the seller pays him. So, no matter how nice and caring he appears, you’re nothing but a paycheck to him. In some states, it’s actually illegal for one agent to represent both the buyer and seller.
Understand that if you are a buyer trying to pay as little as possible, and the seller wants to get as much as possible, one agent can’t possibly serve you both to the same extent. And guess where the listing agent’s interests lie?
Some buyers are uncomfortable being outgunned in this way. They choose to use a buyer’s agent. This evens up the fight because you too have a professional who’s committed to protecting your interests.
Some benefits of having a buyer’s agent
A good buyer’s agent should:
- Save you time by steering you toward homes that will meet your needs, not the ones she can “double end” for a bigger commission
- Get information about the sellers (hello, Facebook!) and the property while protecting your privacy
- Preview properties and know what’s available, including some that may not be formally listed
- Have local contacts that can get you early viewings
- Understand the dynamics of the local market so you don’t pay too much
- Negotiate a great deal for you
- Help you with the necessary paperwork from your initial offer through to closing
- Troubleshoot the entire process
Just make sure the agent is working for you exclusively. If you sign a “dual agency deal,” your agent might end up working for the seller, too. And that defeats the purpose of hiring a real estate agent of your own.
Real estate agents to avoid
Those are some of the key tasks a good agent will fulfill. Now you need to find a good agent. And that means one who has a real commitment to promoting and protecting your interests, not one of these clowns.
Desperate house lies
In the classic movie “Glengarry Glen Ross,” Jack Lemmon plays Shelley Levene, a real estate agent who used to be the top salesperson. More recently, he entered a spiral of decline, largely because his clients and colleagues can smell his desperation.
An agent who sells one place a year and whose Mercedes will be repossessed if he can’t get you to BUY SOMETHING RIGHT NOW is not going to be acting in your best interest. Desperate people do not make good decisions, and you need a real pro on your side.
There are plenty of real-life Shelleys in agencies across the country. Avoid anyone who applies inappropriate pressure, glosses over important information or makes you feel uncomfortable.
In the same movie, Shelley’s boss is Blake (Alec Baldwin). Blake’s the opposite of Shelley: successful, hard-nosed, and someone who thinks that empathy is for losers.
Blake may be a winner, but the only reason he doesn’t stab you in the back is that he’s worried about getting your blood on his $5,000 suit. If he saw an opportunity to add 10 cents to his net worth, he’d take it — even if that cost you $10,000.
A noteworthy study in the book Freakonomics found that on average, real estate agents are primarily interested in closing quickly and getting paid fast. This may not be in your best interest if you’re not ready to move, require a long escrow or need to sell another home first. And the “get ‘er done” mortgage guy they refer you to may cost you plenty, but they don’t care because it’s not their money.
You don’t want that. You want a real estate agent you can trust to put your interests first. Most will, including many great closers.
In the brilliantly funny but somewhat gory “Santa Clarita Diet,” real estate agent Sheila (Drew Barrymore) is a zombie. Luckily, she’s a high-functioning one, which means she can sell homes. She has a freezer full of body parts from neo-Nazis she’s viciously slaughtered. If you’re not a neo-Nazi, you’re safe to purchase a home with her.
However, you’re less safe with another type of zombie that infests the world of real estate agencies. These share the mental sharpness and travel speed of the drunken, dead-eyed wanderers you see at downtown zombie crawls. In other words, they move in slow motion and are deeply stupid.
Under no circumstances should you pierce such an agent’s brain with a bullet or sharp object, no matter how great the temptation is. Instead, choose a real estate agent with intelligence, knowledge, expertise and motivation.
Dilettantes take the hobby approach to real estate. They might be pasty post-grads living with their parents, pretending to have gainful employment — while actually spending their day’s training for video game tournaments.
Or ladies who want “jobs” that require them to buy nice clothes and go out to lunch a lot. Or folks who have so many “side” gigs that you can’t tell which is the “real” gig: bartending, dog walking, Uber or real estate.
The point is that none of these people care enough about the job to do it full time and make the commitment to be professionals. So why commit your trust to them?
What to look for in your real estate agent
You’ll probably want to choose someone who’s:
- Been personally recommended — Ask colleagues, friends and neighbors if they’ve used a great agent
- Local — Knowing the local market and having an established network of local contacts is essential
- Experienced — Sometimes the enthusiasm of youth is valuable, but normally solid professional experience pays dividends. Look for someone who sells real estate full-time and has had a license for several years
- Committed — A full-time agent is good, and one who has not worked for 15 agencies in three years is better
- Qualified — In some states, you barely need to mist a mirror to get a real estate license. However, experience, work ethic, continuing education and special additional training indicate someone worth considering
- Reputable — Check with your state’s licensing board for complaints against every agent you consider. And consult Yelp, Google and other online resources
- Supported — Nobody’s available 24 hours a day, 365 days a year. Make sure someone will fill your agent’s shoes during vacation periods and family emergencies
- Successful (where it counts) — Not only must your agent be good at selling homes generally; he or she must work your territory. A heavy-hitter who sells multimillion-dollar mansions might not remember your name if you’re looking at $100,000 condos, and a “fixer-upper” specialist may be out of his league in the luxury market.
The good news is there are likely to be plenty of agents near you who tick all those boxes.Verify your new rate (Nov 17th, 2018)