The most important reasons to work with a realtor are for their relationships, negotiation skills and knowledge of the local market. Everything else is noise.
But most people don’t understand this.They think that they need to hire an agent for access to the MLS, or so that they can attend more open houses, or to gain access to some sort of secret list of homes.
Nope, most data is easily accessible. Hop on Redfin.com for free access to housing data, Zillow, Realtor.com, Homes.com etc for home prices…information is free!
But being able to combine the quantitative information you see and apply it to a hyper local qualitative/subjective situation is where the rubber meets the road.
It’s where most people fail. It’s where good realtors excel.
That is the value of a good realtor. Wisdom, knowledge and insights to be able to discern value and put you in the best position to be able to close.
The Real Value of A Real Estate Agent
Many agents can connect you with good contractors, home inspectors, mortgage lenders, title companies, movers etc…These are all very valuable and important things to most people so forgive us for brushing over it, but they’re not among the most important reasons good agents are valuable.
Buying a Home:
You can research an area all you want, but none of that matters when it comes down to an individual property. You make offers on individual properties, not zip codes, neighborhoods, or areas.
You won’t have any idea how much leverage you have in any negotiation without having some of the following information:
- How many offers does the home have? Is there a bidding war brewing or are there no offers?
- Is the owner looking for a quick sale or do they care more about time and flexibility for a potential closing date?
- Will they not entertain anything under a certain offer amount?
- Can I negotiate a seller’s credit or concession for an issue uncovered during the inspection? If so, for how much? Will the seller walk if I do so? Are there backup offers?
Good luck finding this data online. You obtain this information through dialogue – communication between humans. Not AI, not fancy algorithms, but through open and transparent communication.
As a buyer, having this additional insight and information could either make or save you a lot of freaking money! $5,000, $10,000, $100,000!
What if You’re Selling a Home:
Please don’t rely on some online estimate of your home. Algorithms don’t know your home’s condition.
Do you know how to run comps on your own? Ok, so price your home accordingly.
This is paramount and is where most people mess up. Usually, they’re too emotionally involved and think their house, their baby, is special and deserves to sell for more.
Let’s try pricing it at *insert dollar amount that’s too high* and see what happens. Sigh.
On rare occasions, they’re correct. It’s 2021. Interest rates were at 3% The housing market was on fire. It was up and stuck. Homes regularly sold for more than asking price.
But things have changed. Some homes in certain markets still do sell for above asking price. Many homes don’t.
Pricing your home correctly, negotiating correctly and choosing the right offer can make or save you ALOT OF MONEY. A difference of even 2% on a 500K home is $10,000.
Price it too high and it sits on the market. People then start to wonder. There has to be something wrong with it, right? They make a lower offer. You don’t accept. The house stays on the market even longer, the downward spiral continues.
Price it too low? Probably a better strategy because you will likely generate a bidding war. But how do you know which offer to accept? The highest offer may not always be the best one. Why not? Ask your agent.
Is It Worth it to Pay the Commission for a Realtor?
Is it worth it to pay a good doctor, dentist, lawyer, accountant etc…more? Notice we said good because let’s be honest, most agents suck. Seriously. Worthless, and they give the industry a bad rap.
Damn near anyone can pass the test to get licensed. Bad agents aren’t responsive to you or your lender, can’t negotiate, don’t know sh*t about a property and its inherent value etc…We’ve heard some horror stories!
We’re obviously biased but good agents, on the other hand, are worth their weight in gold.
Why? One important reason is because they’re part of a network. A network of trust and communication amongst realtors.
Relationships matter. People open up to people they trust. Trust is earned. Agents, particularly those who do business frequently with one another, are more likely to trust and open up to each other than an outsider.
Does your attorney have a good relationship with the judge? Does a recommendation from a particular colleague at work carry more weight than someone else? Do you trust one friend over another when it comes to certain things?
Same way in real estate. There are loan officers, realtors and attorneys who frequently do business with one another, and they could make the difference between you being able to close a deal or not.
This is not some sort of deep or amazing insight, but for some reason, many people dismiss this fairly obvious point.
Think about your job. Do you communicate openly with everyone or only to people you know and trust?
What about people you hire? Is that job really open to everyone or is it an open secret that there’s someone who is basically getting the position no matter what? What about vendors with whom you do business?
Communication is everything. And not all communication or information is public. It’s the way of the world unfortunately.
Hopefully, we’ve made our point by now.
You may buy or sell a home 3 or 4 times over the course of your life. Good agents transact 3 or 4 times per month.
You can absolutely go it alone. This may come off as a sermon for why agents are worth it. And if so, sorry not sorry.
But at the very least, think hard and as objectively as possible before making your decision.
You basically have 3 choices:
- Do it yourself.
- Hire a cheap agent.
- Pay for a good agent.
You get what you pay for in life. Oftentimes, we think we’re getting a deal, but it ends up costing us more in the long run. Doesn’t matter whether it’s for a service or a product.
There’s no need to break down each choice but we’ll leave you with one thought between choices 2 & 3.
Choice 2: Do you really expect someone who is getting paid less to advocate on your behalf at the same level of someone who is being fairly compensated? Would you?
If the agent won’t stick up for themself, do you really think they will best represent and stick up for you?
Choice 3: Let’s say you think you overpaid and felt the commission was too high. In a few years, when your home likely appreciates well beyond whatever you paid, was it worth to make sure everything went smoothly?
Maybe it wasn’t, who knows? We do know that people care more about protecting their downside risk over anything else.
There are no guarantees in real estate. It’s all about increasing your odds of success and putting yourself in the best position to get to the closing table.
Why? Because real estate is the biggest, safest and most valuable asset in the world in the long run.
Play the long game.