As many observed in an earlier post, a good realtor is worth every penny (or close to it depending on the price of your house). So if you are new to an area, like we essentially were…..how do you go about finding a great realtor?
It’s not easy. Apparently our approach was highly unconventional (and unfortunately it didn’t yield any results).
By January of last year we had three Realtors in mind that we meet by various means: one via a mom’s group I had just joined, one via a recommendation from a recommendation, and another from an open house.
Because our buying experience in D.C. was so bad, we were determined not to make the same mistakes twice (we used a Realtor a friend had used to sell their house). So we decided to interview the agents, instead of wasting their time and ours going to several homes….only to figure out we didn’t really see eye to eye on things. We found out at the interviews that this was incredibly uncommon, and they hadn’t ever really been on an interview to be a buyer’s agent (only sellers). As a side note, we interviewed almost five agents till we found one we liked to sell our house in D.C.
I told all three of them (some brought in their partners) I like numbers and data. Show me samples of the data you can provide. I don’t remember any of them bringing analysis of the local market. They mostly provided local demographic info, most of which is easily found on the internet.
The Interviews:
I mentioned some neighborhoods to try and see how much local information they knew (like about the inadequate wind standards in Stonebriar etc).
We more or less asked the same questions in all three interviews…below are some samples:
---Will they double end a deal? (Mr. BT takes it as a sign that they don’t have the buyers interest truly at heart if they will double end a deal)
---What is their market outlook? (As if in harmony…..they replied, great time to buy …do it now before the market takes off again)
---What did they know of building, construction and architecture? (To find out if they could provide insight on a homes construction or potential problems down the road)
---Given our interests, what neighborhoods would be worth checking out? (To find out if they really listening to us and what we are looking for?)
All three had some local knowledge which was a plus in my book. But in the end, none of them really seemed to offer any insight or factual analysis would lead me to believe their market predictions, let alone want to pay them thousands of dollars to open doors of 10 or so homes. I highly doubt any of them read anything other than what the NAR fed them.
By the time it was all done, I was feeling increasingly uneasy about jumping into the Sacramento market, despite what all the pundits and RE professionals were saying (the rent/buy spread was just too big for comfort). I prayed about what to do. I searched the internet, and lucky for me, I stumbled across Lander and Max’s blogs (which made much more sense, in terms of fundamental economics, than what the “professionals” were saying).
Mr. BT wasn't excited about any of the agents, but he was interested in purchasing sooner than later. Thus we struck the deal that I would closely monitor the market (the weekly screen scrape) to determine if the market really was on its way up again. Eventually I decided to start sharing all the data I was collecting, and thus another bubble blogger was born.
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14 comments:
I almost can't imagine interviewing an agent right now because when I ask them their view on the market, their answer that it is a "great time to buy" will inevitably p--- me off. Especially because their opinion is not based on any real data, bit
just anecdote or the blanket and uncritical statement that "prices are lower than they've been in years." Sigh.
BT, assuming it isn't too involved, would you be willing to share how you put together the weekly screen scrape? Mainly, I'm curious what you use to get timely and reliable inventory and sales data. I've been watching trends overall for the two zip codes I'm looking at, but after months of watching, I'm starting to suspect that sales are even slower in my price range than they are for the overall market in my area. Thanks!
BT - That would be great if you could provide a writeup about how you do it!
When we first moved back to the area (Cameron Park/EDH/Folsom), 2005, I called on an old childhood friend that has been an agent for 20 years. She knows me well and I asked similar questions to BT, except she was not from this area and could not answer anything connected to local knowledge.
We worked together for a while, put some bids in that were accepted but the deals fell through (mold & no price reduction for a damaged roof) - thankfully. After those failed attempts she encouraged me to work with a local realtor. We interviewed a few but didn’t end up liking any of them. Since I grew up in the area, I felt like I knew the streets, homes and schools much better than the agents we were speaking to and I was not getting much ‘value’ out of the relationship, besides being the gate keeper to writing bids that other agents look at and viewing homes.
So after a cooling off period (over one year) I contacted my agent friend again and we made a ‘deal’. (a) If no agent work is needed (agent bid and opening doors) then I can go it alone. (b) If I need her two cents, but go it mostly alone, she will give me her opinion with out charge. (c) If I need here to write a bid and do some a little digging we will negotiate her percent. (d) If she, for some reason, locates a home that meets our criteria that I have not identified we go the ‘normal’ client/agent route. (e) Anything in between the above is also open for negotiation. Currently we are in the (b) and (c) mode.
From what I understand, this situation is highly unusual and is primarily due to my knowing the agent before she was an agent, many moons ago.
BT,
So have you selected and agent? What were the deciding factors?
I have determined the neighborhoods I want to buy in, and monitor the MLS for new listings. Given this, can anyone give me examples of how an agent is worth the expense? What value do I get from the agent?
I'm happy to share, but when I do, you will wish I didn't...its rather tedious work (will give details tomorrow when I do my scrape).
As for an agent, like husmanen, after roaming the neighborhoods for about a year, I know the area and the price points rather well.
I have selected an agent, he offered his services at a discount, since I am doing most of the work. He comes out and opens doors, and usually tells me they are asking too much. He has an MBA (like me), so we tend to see eye to eye on the market and what to look for. He is a generalist, so he gives me perspective on what my $$ can buy elsewhere in Sac. For example, last time we looked at a short sale, he was surprised at how expensive Folsom is still (compared to areas like Roseville).
This is my first home purchase in CA, so for me it is worth having an agent because the process is rather different out here, so I want a bit more hand holding when it comes to escrow.
Forgot to mention that he understand data, and provides lots of it (I am an analyst, so I use data to make decisions on a daily basis).....just go to SacRealStats for a sample =)
dfc--Generally speaking, if you buy a listed home that's in MLS, the listing agreement specifies a total percentage the seller is paying in commission for the listing agent to complete the sale. Typically, it's 5 or 6 percent. And the commission being paid by the seller is the same, regardless if it's one or four agents involved in the transaction. Now, if you, as a buyer, do not have your own agent when you decide on a house, then the agent representing the seller will get the entire 5 or 6%. However, keep in mind that the listing agent's first obligation (fiduciary duty) is to the seller. This means the agent must get the seller as much money as possible for the house. So, you have to ask yourself, are you better off working with the listing agent who is gonna try and get his/her seller the most money for the house or another agent that will try and get you the house for the lowest amount of money? In my personal opinion, you'd be better off calling an agent out of the phone book to represent you than entering a dual agency relationship. As a real estate broker of 10 years, I'm quite opposed to dual agency agreements. I think they are unfair for the consumer.
In my not so humble opinion, I'd recommend that you find someone to split the commission with you like Average Buyer did. You probably won't have to look far :-)
Agentbubble,
Hypothetical. If I were to buy a house for 500K, the 5% commission is split between buyer and seller agent, each getting 12.5K. If I am going to low ball at 400K it seems that I would have a better chance of getting the sellers agent to push the deal if he can get the entire 5% commission (20K vs. 12.5K).
Your honest opinion, what is the best way to present the low ball offer?
Instead of presenting it as 20K vs. 12.5K present it as 12.5K verses 0k while it rots on the MLS looking for another buyer.
Its a buyers market, I would have my own agent get me the deal I want. Or I just wait, no biggie.
Do you want his free advice or the advice he sells?
dfc,
I'd find an agent to split the 12.5K with me and have him/her write the offer. In 10 years, I've never even thought of convincing a seller I'm representing to accept an offer. That's a lawsuit waiting to happen. I will present facts and data on what the offer means to the sellers, but I won't tell them to accept or reject the offer. Honestly, I think you have just as much chance getting the offer accepted with your own agent as you do working with the sellers' agent.
Now as for you sippin, I hope I'm misinterpreting your comments, because that sounds pretty lame. I've always disagreed with you in a respectful way and never in a condescending tone.
I looked for an agent as down on the market as I am. If I went with one of the those perky ones, I'd tempted to punch them in the face. Or slightly less actionable, force myself to puke in their car. >; )
Bubble - no harm intended.
He's asking your professional opinion. It is worth money and I was just trying to point that out to him.
Potential buyers often focus on "not paying too much commission" when they really need to focus on the entire transaction.
If they're buying an REO or short sale, I would sure want an agent who understands that the adendum that will be thrown back from the lender will usually disregard all the careful language that was written in the offer. . . that the escrow fees from the separate title escrow companies that the lender specifies might charge the buyer 4-8x what local companies charge.. . . and that if you close late, you are subject to late charges (read the fine print).
Let me suggest another tact:
Call back to a top local office - CB, Lyon, REMax, KW, etc. and ask for one of their top 3 producers. Interview 1. See how that person compares to the blokes you already talked to.
The way I see it, if they all get paid the same commission rate, why not use the best?
No harm sippin. But, I would caution that what defines a great agent isn't necessarily high sales. I have worked with these so called Top Producers, and I honestly have to question what it is they're producing. I've worked with agents that love to point out all those fancy 2 and 3 letter certifications they have. Some of the best agents I've worked with are your normal Joes and Janes that just like helping clients out, not focusing on certifications and recognition. I've made the Master's Club on more than one occasion, but I've never applied for the recognition? Why? It's not important to me. Sure, I may lose some business because I don't tell people I'm GRI or Master's Club, but that's not what it's all about. I'll stand by what I think is the most important aspect: find someone you're comfortable with. If you're good at weeding out the losers and posers, then you'll know when the agent you're interviewing is the one.
This doesn't mean all GRI and Master's agents are dorks. It means some people feel more comfortable when they see those initials and certs. For others, they would rather have someone they feel is looking after their best interest. And yes, I realize that both issues can coincide.
Just my 2 1/2 cents worth (inflationary pressure).
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