In an Ocean full of Real Estate agents, each one claiming to be the best, most experienced and successful, here are some tips, tricks and ideas that will bust the popular myths.
Truth is, just like not all Doctors, Attorney’s, CPA, or Registered Nurses deliver the same value, ethics, results and service, not all Real Estate Agents are the same either. Being a top agent for over 13 years in the beautiful San Fernando Valley CA, I feel it’s shameful, that the Real Estate industry is the least educated of all the industries mentioned above. Imagine how much education a Doctor, Attorney or a CPA goes through and continues to go through. An average Real Estate Agent just takes a state test and starts practicing.
Did you know only 45 hours of continued education is required for an average Real Estate Agent every 4 years? You as a consumer has to know, this is where things will get separated. Did you know that 20% of the top Real Estate Agents do 80% of the business? What this really means is that 80% of the remaining agents are competing for a meagerly 20% of the business. This is why the desperation and unethical practices are prevalent in our industry. The U.S. Bureau of Labor Statistics estimates that real estate agents made an average salary of $53,140 and an hourly wage of $25.55 in 2013. Earners in the 90th percentile made roughly $98,090 a year with an average hourly wage of $47.16, while the lowest 10% of earners made $21,240 a year with a $10.21 hourly wage.
So why would you trust a Real estate agent or even need them especially when… National Association of Realtors themselves say in the Danger Report, the following quote:
“Masses of marginal agents destroy reputation: The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents. This knowledge gap threatens the credibility of the industry”
Now before the Real Estate industry shoots me down, I must say that there are some fabulous, ethical, value delivering, caring and result oriented Agents. Most of them are full-time agents, who treat this as a career. The trick is to find them by doing the right research and asking the right questions. In the 90s and early 2000’s (before the Real Estate Industry went crazy with online advertising), most people recognized the agents who were working specific neighborhoods, not only because they were selling a ton, but because, the face to face interaction told you something about them. This is what is missing in today’s world. Real Estate is still a people business. Let’s talk about the common ways people find Real Estate help and how they overlook some simple things to fall into the trap of hiring weak representation.
According to Fortune Magazine, 2015:
” Most People aren’t hiring Real Estate Agents or Brokers more than once or twice in their lives, making them uniquely incapable of gauging the quality they are getting”.
So, in other words, Buyers and Sellers have no idea on how to distinguish between the service or results they are getting. It’s not like you are doing this yearly or monthly or even daily. That’s why this industry has so much lack of incompetence because the consumers simply don’t know what to look for.
Find an agent Online:
Almost all Real Estate Agents found on the big sites just pay their way to be seen first, so people just like you can contact them. It’s called lead generating. Most reviews that you see about agents are surely from satisfied clients, even though that’s a great start, wouldn’t you want to know the flip side of the coin, are they active, do they have any violations? The first thing to do is to go online and check the BRE (Bureau of Real estate Website) and find out if they are actively licensed or not, and if they have had any violations. Secondly, Check their online profiles and see what they write. Trust me, portals like Facebook, Linkedin and some other social media sites give a lot of clues about who they are. Read their blogs, watch any videos they have, check Facebook and or Instagram. These are all clues that will give away their personalities. I feel finding an agent online is the new way of life, as long as you know the limitations it presents. To me, it’s going to come down to a thorough research and asking the right questions in the interview. (see my article on The questions to ask before you hire a Real Estate Agent).
Truth is, that most consumers will mostly come across an inexperienced or a weak agent in their lifetimes. Did you know, per a survey done by the National Association of REALTORS (NAR), an average consumer buys or sells a home every 8-10 years in today’s age? In a sea of Real Estate agents, most consumers are unlikely to experience the best service, and the best result based on the huge gap of years, not just days or months between buying or selling a home. When you are referred that agent by your friend, family or acquaintance, the Key here is to find what your friend’s motivation was to hire this Agent. Your job is to ask your friend the right questions.
- Do you know of an agent that you have worked with, who sells in my neighborhood (How many homes has this person sold in your neighborhood is the key)?
- What was the one thing that this agent delivered to them that they couldn’t find in another agent (Agents get paid for their knowledge of contract and negotiation skills)?
- How did they find this agent they are recommending?
- Always ask if that agent cut your friends a great deal or was a co – worker of your friends (beware of this agent, click here to read Top 5 Mistakes a Seller makes that will cost them money).
- What are a few things that you honestly think this agent could have done better ( Don’t take NO for an answer. Probe them more until you get something out of them) This answer will more likely tell you a lot about the person you are about to hire.
Friend / Relative:
There is no better feeling than knowing you have someone you trust on a personal level to represent you, but this has its own limitations as well. Years ago, I was asked to represent a family member on a Real Estate transaction in Reseda CA. There came a time when I had to spill the beans to them. I had to muster enough courage to tell them that their expectations were unrealistic and that I wasn’t going to lower my standards just because they are family. They ended up breaking their relationship with me. I made a business decision, not to represent family for the most part. I come across people using their friends or family as their agent quite regularly. There are some unique things I noticed, that stood out among these agents. Most of these agents were over protective of their family and friends (we call them deal killers), there was more verbalization of emotions that in a normal transaction. Some others were just an agent who became a vehicle through which the client does all the negotiations (we call them order takers in our industry). Every time I dealt with an agent that I knew was a family member of the opposite party, my eyes would light up. I knew the advantage I had as a Broker, they were attached to the outcome. I also knew going in that this agent will try to over negotiate and that to me has always been a great advantage. I also knew that regardless of the credentials of this agents, they were chosen simply because they were being given a favor so the decision is emotionally influenced than being a business decision. If you choose to hire a relative, the law of probability says that it is a very thin line you will be treading on, so make sure you keep the process very professional. A Client and Consultant relationship is what you need to focus on. The Truth is you will be a tad bit more biased to what your relative has to say than an unrelated Agent has to say which could influence your decision for the better or mostly for the worse. Also, understand that because of their relationship with you, your relative may be more hesitant to stand up and tell you the way it is. Talk about your expectations, talk about the results you want, and above all try to keep emotions out of this transaction. Bonus tip: If your friend/relative is a part time agent, you are doing yourself a dis-service. Would you have a part time doctor perform surgery on you? This is financial surgery, choose wisely. (Read my article on 10 seller mistakes that cost them money).
The discount Agent:
In today’s world, you will see many advertisements for discount Agents. Most of these agents will cut their fees down and entice you with what is called a “Teaser Commission”. They will advertise that they will sell your home for 1% fee. What they don’t tell you is that you still have to pay the buyer’s agent’s commission. They are making you focus and narrow down to what everyone desires…Discount. Per Roger Hance (considered to be Guru of Real Estate in San Fernando Valley, CA) most consumers think, that no matter which agent represents them, they will make the same amount of money. This is the biggest misconception which is yet to be overcome. Here is a great example, We recently had a couple of transactions in a Condo Complex in Reseda, CA where we sold the homes in less than 9 days on the market with an average gain of $17,501 over list price and producing a minimum of 6 offers in that time frame. A discount agent, during the same approximate time, sold a similar condo in the area and took them 61 days to sell in a HOT SELLERS MARKET, while selling $12,500 below the asking price. The sellers for sure saved 2 % on commission (which is approx. $7000) but made $10,000 less compared to our sale even if the seller would have paid the full commission. Don’t be fooled by discount brokers. If they can give their money away so quick, don’t you think that they will give away yours faster?
Agents with guarantees:
Sell your home in 10 days or less or I shall buy your home Guaranteed: You have probably come across many billboards, bus benches or even online advertisement on a daily basis in a hot sellers’ market. Now that is a heck of a guarantee, when in fact, no one can predict the market with so much certainty. Here is the catch, this is just a line to get in your door. This is a great line to entice you to interview with this agent. Most likely in scenarios like this, most sellers have never thought of interviewing other agents. This is what this agent is banking on. The advertisement line is powerful enough to have you as a consumer focus on wanting to hear what this Agent has to say, and most likely has you sold on them even before they walk in. I would focus on that agent who is not afraid to walk away, because their reputation supersedes their need to pay their bills.
That Agent you met at the Open House:
Here is the secret to an open house that most agents in our industry will not tell you! Open houses are a tool for agents to get more clients and leads, so much so that the Real Estate Companies promote it to their New agents as one of the most effective instant lead generators tools. Understand that the agent you will most likely meet at an open house is a newer agent or team member. There are some great agents who do Open houses as well but mostly successful agents usually shy away from it. As a successful Broker, I have never fancied some stranger walking through a home I have listed without being committed to buying a home. Today buyers can find a home in an instant with a click of a mouse. So what’s the benefit of an open house to you? It’s a great way to meet an agent, and trust me that’s why they are doing pen house as well. Here is a chance to meet an agent in action and see if this person is who you want to represent you in one of the most important decisions of your life. An important tip here is that if you are already working and committed to your agent, be upfront with that hard working agent who is looking to get some new business and don’t waste their time. Allow this agent to sell you on who they are. If you like what you see, take a note. Out of the few agents/ Brokers you meet, rate them when you get to your car. Don’t forget to test them, ask questions like what are contingencies, what happens to my deposit as a buyer if I want to back out? (click on my article Buying a home? What are contingencies? to know more)
How long have you been selling Real Estate? Are you the Listing agent on this property or are you an agent who is sitting an open house for them? How many homes did you sell in the last six months?
How about working directly with the listing agent:
In today’s HOT SELLERS MARKET, I come across so many buyers who beg me to represent them on my listing. They lost out on many homes before, and they feel that by going to the Listing Agent they have a better chance of getting the home than having their own representation. Fair enough…..
Here is a great example. Recently I was selling a hot property in Reseda CA. This was a teardown, a very desirable property for many reasons. Zillow said it was worth $450,000, but in reality, being a tear down the real worth was about $350k to 370k. When I listed this property, our advertising generated a hoard of clients, there was literally a line of buyers looking to get in. As I managed the line of 40 odd people standing in line to get in, some wanted to take me aside and work a deal with me. Some offered as much as $10,000 to me in cash to represent them to get them this deal. Other buyers just begged me to represent them because they felt their offers will get beat out. My answer to them was simple……. I don’t represent buyers on my listings. This is a decision I have stuck with for most of my career unless it’s the seller bringing a buyer for me to represent. I have seen so many unethical Listing Agents push their buyers offer down the sellers throat or some Listing Agents who just simply take advantage of the buyers. These poor buyers have no clue of how much they lost in that transaction by going through the listing agent. Either way, it is not the best interest of the buyer or the seller. The motivation here is simple, to double end the deal and make more money, which benefits the Listing Agent. Beware! Mr Buyer or Seller, it is not much of an advantage to you. The agent is banking on the fact that the buyers are vulnerable and desperate to get the home while the seller just took on additional liability by having their agent represent the buyers as well. As a successful Broker I feel it is a conflict of interest and mostly it is the Agent who wins by double ending the deal. Even though, Dual Agency (Representing the buyer and seller on the same transaction is allowed in CA) I feel this allows manipulation and greed to take precedence. Even the BRE ( Bureau of Real Estate is very particular that brokers must disclose to the buyers and sellers that this is a Dual Representation, have you wondered the reason why the BRE is so strict on this? Bottom line never have the Listing agent of the home you are buying represent you in the same transaction. Would you ever let the opposition’s attorney represent you in the same deal?
Now that we have identified some of the common techniques that people use to find the agent and their probabilities, let me share with you the kind of agent I would hire for my own family:
There will always be that stand out Real Estate agent/ Broker who will shine among many that knock on your door. Being a Real Estate Broker who has dominated my area in Reseda Ca, I can say that I have a soft spot for Neighborhood dominant REALTORS. A Neighborhood specialist is an Agent who does tons of business in a particular area. These agents really take pride in the community they represent. As a successful Broker myself, I built my business by focusing on specific communities and whole heartedly working on their best interests and not only sell homes. In all these years of knocking on doors in beautiful Reseda CA, I chose to help have my communities well kept, did garage sales so they could make money, organized street cleanings, took their concerns to the police, knew the names of the children and in some cases, I even had access to the homes when they went on vacation trusting me to water their lawns or feed their pets as a courtesy to them. (Pictures of community work and amazing events organized by Pebble Singha)
If I were you, and thinking of selling my home, I would pick that one agent who consistently knocked on my door. The agent I consistently saw the effort from to benefit the society. Now, if this is the same agent who keeps showing up on sold signs in my neighborhood, there is a reason why your neighbors are trusting them. Any Real Estate Agent who puts in hard work for the community along with selling homes, I would certainly give them a chance, they are fully vested in doing the best for you, simply because it’s their reputation at stake. This to me is the most bang for your buck. My advice to my Mom will be to look for that agent.
A final word of advice:
Whether you are buying or selling a home, know that you need representation to protect your interests. Out of all the options discussed above, I would use a combination that suits your style, now that you know the pro and cons. Don’t forget to check these Brokers, by visiting the BRE site I have mentioned above.
BONUS TIP: According to Roger Hance (a well-respected consumer advocate and guru of Real estate in San Fernando Valley CA) as a buyer or seller in this market, it is absolutely imperative and important to have the right representation in today’s complex market. This is more truer today than ever, why? Simply because of the inexperience and unethical practices that are common among the agents today. As much as I understand, that you would rather do this alone, the fact is, there will be an Agent on the other side. The Real Estate contract is too complex and you must not leave things to chance. Would you represent yourself in a court case where you stand to loose your hard earned money?
- If you liked this article, please LIKE and SHARE it on social media so it can help other’s, just as it did for you.
- Hope this article has helped answer some of your questions. If you still have any remaining questions that are unique to a transaction please email me or call me.
- If you like what you read and want me to represent your interest in buying or selling a home please call me at 818-919-5656 or email me firstname.lastname@example.org
Pebble Singha is a proud member of BrokerInTrust Real Estate, an Elite All Broker Network and Consumer Advocacy group. My blogs are a way to educate the consumers on what actually goes on in the Real Estate world vs what they think they know. This is one passionate Real Estate Brokers opinion on how he sees the Real Estate World in Los Angeles.
Disclaimer: Pebble Singha is not an Attorney or a Financial advisor. These are independent views and opinions of Pebble Singha and how he sees life in Real Estate. This blog is not to discredit or devalue anyone or their name. Information deemed reliable but not guaranteed. Cal Bre Lic # 01458748