Everyone has their own method to their madness on how they chose professionals they chose to do business with. The madness ranges from someone you’ve known since you were in diapers that has worked for your family for ages, to someone your best friend just used and raves about or someone who shares the same alma mater as you… and the list could go on forever as these are just three examples. Regardless of your method here are Five Common Mistakes to ponder before searching for someone to help facilitate your next purchase or sale.
Selecting a House BEFORE Selecting your Representation
We find this very common with first time homebuyers. It is nothing against first time homebuyers, but they tend to be eager in the home buying department. We associate this with the fact first time homebuyers are initially buying on emotion rather than logic. Think back to when you purchased your first home. You were probably so stinkin’ excited you peeked only a handful likely on one day and said, “SOLD,” when you found the one you could live with. What the consumer only sees and hears about the REALTOR® is they unlock the door and they collect a commission. Clients who have experienced a chaotic real estate transaction will agree having an educated professional on their helps navigate turbulent issues with ease making the realtor worth their weight in gold. You have to remember, most consumers have only purchased one or two homes in their lifetime. But a competent, educated and seasoned REALTOR® oversee anywhere between 10 to 25 transactions per year which allows the realtor to first hand encounter tricky situations that a first time homeowner wouldn’t immediately know how to navigate. So with all that said, find an educated and competent REALTOR® first, then find a home.
Forgoing Representation to Save Money
We often see two instances of this but they both generally have the same outcome.
The first is a buyer is out for a leisure Sunday drive and discovers a new home community with banners that say, “Come In – We Home Homes for Sale,” which lures the potential buyer to the model home. The person sitting in the model home is either a REALTOR® trying to pick up buyers or was hired by the builder to market the home. Or the person sitting in the model home is a paid sales professional who works for the builder and is compensated based on the number of homes they sell for the builder In a nutshell, both are typically working for the builder and are not looking out for the best interest of the potential. Sad, but true!
The second is a buyer is leaving Sunday brunch and they stumble upon a directional sign that says, “Open House” with an arrow pointing to the right. Likely the person inside is the listing agent, hired by the seller to bring a buyer in the shortest amount of time at the highest possible price. You see where I’m going right? The seller’s agent may say… “I can save you money if you aren’t represented.” But what they fail to disclose is they’ve already signed a listing agreement which states the amount of commission the seller will be paying to the listing agents firm. Of course that could be amended at the sellers discretion, however that is not the eye opener. The eye opener is that because the seller’s agent already has a legal and binding agreement with the seller which included confidentiality, they will not (or should not disclose) any information about the seller or his position. They cannot represent you as they are already representing the seller and subagency in Texas is illegal. What generally ends up happening is the buyer is put in a position to fend for themselves. They have to determine the best offer price, determine what repairs to negotiate, understand the entire real estate process, etc. So in a nutshell a buyer who purchases a home and is using the seller’s agent doesn’t offer any real advantages.
Hiring the First REALTOR® you Meet
We see this happen different with different generations. The Baby Boomers (born between 1946 and 1964) and the Silent Generation (born between 1925 and 1945), almost always interview a few REALTORS® and make a decision. Their decisions are based on different key elements about the individual. It could be they trust that person, that person is with a brand name company or they have been in the business for a lengthy period of time but regardless they generally always interview more than one person for the job. It comes with their upbringing and having parents who didn’t trust until they had verified. However, Generation X & Y’ers often interview one person only and move forward. Often times, they don’t even “interview” the person. The person has been highly recommended by a friend, family member or they’ve been following them on social media for a while. As you can tell every person, at every age, will have a different approach to interviewing someone to represent them for their real estate transaction. Since we (REALTORS®) know that we are not all created alike, do not all offer the same level of service it is important to take the time to interview more than one person for the job at hand. It also pays to ask for realtors references from close friends, co-workers and family members but make sure the referring party has used or worked with the realtor in the last three to six months. If it has been a while since your friend or family member has worked with their preferred realtor, ask the realtor for recent reviews or testimonials.
Committing based on Price
This is a key component for sellers who are searching for representation to sell their home. This is where we as REALTORS® see the most upset. A REALTOR® walks into a seller’s home, compliments it excessively, and promises to deliver the moon (stating they can net an outlandish price for the seller) is where many sellers find themselves upset down the road. What happens is a REALTOR® will promise a price to get the listing, then later demand the seller to reduce to the more realistic price – a price that should have been determined and settled on prior to signing the agreement. The National Association of REALTORS® Code of Ethics states that all REALTORS® must be ethical, honest and NEVER mislead a member of the public. Article 1, Section 1-3 of the NAR Code of Ethics states that a REALTOR® should never in an attempt to secure a listing mislead a member of the public. You have to wonder, if they mislead you with the price, what else are they not being truthful about.