Do You Need A Real Estate Pro?

Do You Need A Real Estate Pro?


I asked the question because it is absolutely critical for consumers to define our legitimacy and value for themselves. Hopefully, by offering our own ideas of how our service expedites and smoothes the process, the consumer comes away with sound reasons for using real estate agents.

Some people prefer to walk the new or used car lot alone with no help (read interference) from a sales person. Others want a full-blown tour of the lot as the sales person explains different makes, models, and options.

Much like home shopping, car shopping involves many of the same issues of home ownership. Big-ticket item, insurance, registration, taxes, paperwork and a myriad of other details attended to by the salesperson and dealership.

In essence, the car salesperson expedites the sale and transfer of a vehicle to the end consumer. For that service, he or she receives a commission. Those who know the auto sales business understand that good moral fiber, honesty, and sincere service are rewarded by repeat business from the family and friends of the buyer.

How different is this process from introducing folks to our listings or working as a buyer’s agent? We have a copious amount of proprietary information we can easily access for answers. The consumer can also access the same information, albeit more slowly and perhaps less accurately.

Buying and selling real estate is not rocket science. As real estate professionals, we should be careful to define what our functions are and how they serve to benefit our clients and customers.

A good agent wears many hats and is an expediter. Quite often we act as the middlemen/women between two views that need melding and agreement. Whether negotiating price, getting tax information, scheduling and conducting viewings, we certainly perform valuable services for those who understand how special knowledge lubricates the buying and selling process.

John Kavaller

Other People’s Money or Why You Need A Real Estate Pro

The Real Estate Industry is flush with jokers, red herrings, and fast talkers. As with most businesses, the opposite is also true. Professional and ethical sales people are legion as well.

The professional real estate sales person, especially those who earn a living based on commission alone, barter time, energy, and hopefully expertise, for a payday upon closing. The agent performs a valuable service in return for substantive remuneration.

Conceptually, what could be better than using other people’s money (OPM) to earn your own living? Typically, the seller pays a commission upon the successful completion of a sale. The listing broker and or agent leveraged the seller’s resources to gain specific financial gain without risking a dime.

Sounds like a super model to me. Much like the auctioneer who receives a seller’s premium, buyer’s premium, or both, the broker/agent gets a cut off the top thereby earning a healthy living for his/her trouble.

Buyer’s agents often represent clients for a stipulated commission that is akin to a professional consulting agreement. Much like an attorney receiving a specific award percentage for services rendered, the buyer’s agent gets paid by successfully completing a sale for his/her client.

Opening shop requires a license, perhaps a sponsoring broker, phone, computer and access to listings. Start-up costs can be minimal when compared to the expenses borne by other business models.

Is it any wonder why so many seem to be involved in real estate sales? Of course not. And—why the heck do you need one of these people to represent you? What can a real estate agent possibly do that you can’t?

Glad you asked. Let’s use the attorney example. You can represent yourself pro se in court if you choose to. If you believe you have the skill, experience, and determination to win a tort case, you may opt to argue your case as a layman.

Chances are, you won’t win, but you certainly are welcome to state your case without a professional at your side. Most personal injury lawyers don’t get paid unless they win your case. So, you aren’t paying for services unless there is an award in your favor.

Where is the downside? Oh yes—if you manage to win an award pro se, you get to keep the entire award. And, if you lose, you get zilch. Would you truly consider representing yourself after your auto accident?

This logic also holds true for representing yourself in personal real estate transactions. Of course, you have the right to carry out the mission. If you are a buyer, why would you try to navigate the real estate tide by yourself? The seller is paying out the commission, not you.

You may reason you can cut a better deal with the seller by cutting out an agent. Let’s say the seller must pay a 6 percent commission upon the successful completion of his home. Makes sense to ask the seller to reduce his price by a minimum of that amount because of the commission savings. Right?

Not a bad strategy, but you, the potential buyer are leaving a whole lot of money in the seller’s pocket if you haven’t correctly assessed the market. If you’re negotiating 6 percent below asking price, you’re probably paying too much—especially in today’s market.

So go ahead and lowball the price and negotiate up from your first offer? Sound right? Could be a good strategy, but maybe not. Maybe the owners will just tell you to get lost. Maybe you don’t care if the seller’s walk away; but I’ll bet if it’s a home you really want, it makes a very big difference.

Now what do you know about obtaining a mortgage? What do you know about points, application fees, FHA programs, Fannie Mae, Freddie Mac, home inspections, title companies, deed filing, transfer taxes?

Who writes up the sales contract and why? What happens if you don’t understand the contract or want revisions? What the heck is agency anyway and why does that affect you? Should you hire an attorney? Is it mandatory to hire a lawyer for your transaction?

There’s an oil tank in the ground. Should it be tested? Is it leaking? If it is, who is responsible to get the mess remediated. What the heck is a binder and what happens to it if the deal falls through? Leach field, your own well, colliform? Hm? “Ah-just dump some bleach down the well head”—“say what”?

Sure—there are a lot more situations and circumstances that arise in real estate transactions. And frankly, with a computer and some commons sense, you can probably find the answers for yourself. It may take you substantial time, but you certainly can go it alone if that makes sense for you.

For the Seller—Want to save on the commission paid out? May not be a great idea. You may wind up saving a few percentage points, and losing out on a much higher selling price because you don’t do this sort of thing for a living. You may wind up pricing incorrectly for the market place and sit twiddling your thumbs whistling Dixie.

Or you could get lucky—really lucky and have a buyer come along and give you exactly what you want. In today’s market, that is even more unlikely than it was several years ago.

For the Buyer: What is the downside of using a professional real estate agent? I can’t think of one. I could send you a link to the National Association of Realtors site listing all the benefits, but then I’d be accused of be a talking head for NAR and entirely unoriginal—perish the thought.

At any rate, share your ideas as to why or why not using a real estate pro is the way to go or not go. There will be those that consider the logic here entirely self-serving with no merit whatsoever. If you are among that tribe, craft a response that presents your side of the issue. I am sure the public will appreciate your perspective.