Theoretically we all have access to properties being sold thanks to the Internet. In addition there are real estate companies who for a small fee, offer to do all the paperwork and you therefore “save” on the commission that otherwise would go to a real estate agent. There is also a very famous real estate website which offers to rebate 40% or more of the commission back to you via a discount.
It seems as if it is just a matter of finding the property you like then buying it. It seems as if technology has made human assistance unnecessary. Why pay tens of thousands of dollars to an agent who does nothing or very little? This is more or less what these Realty Sites offer as arguments to employ their services.
So, if you are a Buyer and you have read or heard the above you may be thinking why do I need an agent?
If you are a Seller you may be tempted to employ these realty websites and discount services in order to sell your house, after all you know your house better than anyone else. Thanks to the Internet what could an agent do that you can’t do yourself? thereby saving yourself tens of thousands of dollars!
From my experience, only very few Sellers are able to sell their homes by themselves in a short period of time at the highest market value and only very few buyers are able to buy a home without professional assistance. Why?
It boils down to network, liability, speed & getting the most out of your dollars, let me explain:
Most Agents (or Brokers) in the realty business for over five years, have developed relationships with many other agents, brokers & realty companies. If you are a Seller, in my experience about 30% to 40% of the time your house is already sold via these contacts, whether or not it is shown on the MLS. This is specially true of Commercial Property, by the time you see the property listed on the MLS, it is probably too late. You save months of marketing thanks to these contacts.
Unless you have bought & sold a good many properties, at least over 10, at the beginning it is hard to understand the massive liabilities associated with the process of Buying & Selling a Real Estate Property.
- Lack of disclosure of what’s wrong with the property.
- Title issues which affect the value, marketability and ultimately your right to own the property AFTER you have paid!
- Promises or representations that are not kept or properly written down.
- Issues with the City, such as violations or Code Compliance.
- Properly Executing the Documents.
Like anything else in Life, experience and making all the mistakes you possibly can are your true Teacher. I have been lucky to have a great mentor for many years in this business, and also lucky that the mistakes I did make (which were many) were not bad enough that I could not fix them.
The above only covers some of the liabilities of Buying or Selling Real Property.
What about financing? what about the loan side of the transaction?
Today loans are very complicated financial products. They have many moving parts and once you sign on the dotted line you are bound to the terms. When doing a loan, you have to decided TODAY how your financial future will be affected tomorrow.
I started my career in Real Estate as a loan officer, I processed hundreds of loans, very difficult ones too, and I can categorically tell you that choosing a loan online is the worst mistake you could ever make. Use the Internet for what it’s good at, get the information, find out about all the possible loans out there, then sit down with your agent and figure out together what’s the best option for YOU.
A regular Buying or Selling of Real Property involves about 30 pages of legal documents. The loan, another 80 to sometimes 100 pages. You should and need to read them all. Most people don’t. Unless you are very familiar with these forms chances are you could make several mistakes. These forms are there for a reason. Years of litigation & problems between Buyers & Sellers have created the need for these forms. Early on on my career I didn’t think much of these forms, later I came to realize how vital they are.
But I stray a bit. If you sell a property you can receive many offers, how do you know which one to take? the answer is not as simple as picking the highest price! and most of the time it is not! what if the Buyer cannot get a loan? what if he cannot close? what if he changes his mind? What if (and this happened to me) he/she holds your property hostage! Yes, hostage, he/she will not release you from Escrow, nor is he in a position to buy it either, so while he goes around trying to put the deal together, you cannot market the property NOR sell it to another Buyer. Your only recourse is to sue him to get out of Escrow.
If you are the Buyer and you have decided on a property, how can you write your offer so it gets the highest chances of being accepted? Just writing the highest price won’t cut it if the Seller has an experienced agent, because he/she knows that that is not necessarily in the best interests of his/her client.
You may lose MONTHS, or more time by accepting the wrong offer and once in Escrow it can get as bad as the other party not wanting to release you from Escrow (Yes, you need both parties agreement to be released from Escrow) then going into a lawsuit.
By knowing what you are doing, you can buy/sell a real property in the least amount of time at the best/most efficient price point, without getting into a lawsuit.
Most of the Sellers and Buyers who are able to do all this by themselves are seasoned Real Estate Investors and even they prefer and do pay an agent to handle the transaction for them.
I personally know an owner who has struggled for 12+ years to sell his property. He couldn’t even sell it while on the last Real Estate Boom from 2001 to 2007.
A word of caution to potential Sellers:
Don’t seek an agent who promises you the most for your home, they are usually trying to sell you.
Seek an agent who can justify and prove to your satisfaction what is the actual value of your home. The actual value of your home and the value you may want for it are almost always at odds with each other. Agents know this, they know that if they tell you the truth, you won’t hire them.
Agents that come prepared with a value for your property on their first visit, only have an approximation. It is not possible to price a property correctly unless you physically see it.
Inevitably what happens is that the agent ends up listing your property at a price that makes you happy. But it sits for months and little by little you start lowering it until you reach the correct market value. The sad part is that your Agent already knew this from the start! but he had to go along with your expectations so he/she could pay her bills.
Honestly is quicker and more efficient, but what if your Agent was wrong and priced the home too low? then you are going to receive multiple offers and you will be able to push the price up.
It is better to be busy answering phone calls and writing counter offers than sitting idly wasting time & resources on an over-priced property.
In some properties you can increase the value and therefore match the Seller’s expectations but in most the simple reality is that you can’t.
The reason successful agents sell homes is because of their connections, of the people they know. They can expose your home to qualified buyers by other means besides using an Internet ad.
This is why, in my estimation, no matter the technological advances, good real estate agents are always going to be in high demand.
Selling or Buying a property is not a technology endeavor, it is a people’s undertaking. There is a lot of emotion, both good and bad. There is a lot to take into consideration.
Technology has allowed us to do the process in record time, has enabled buyers/sellers to reach thousands of potential sellers/buyers for almost no money and has made pricing more efficient.
Buyers & Sellers get very emotional, without a third party to keep everyone cool, many property deals would simply evaporate! and lawyers would be happy to have more lawsuits coming their way!
Buyers and Sellers need to be able to communicate with someone who knows about the neighborhood, who knows about the process of buying or selling a home and knows about lending. They also need someone to understand them and guide them into buying what they want. If selling, most sellers have a purpose in mind, they need someone to understand that and act accordingly.
When Sellers sell a property, they are not trading on the stock market – simply selling to get a higher value is seldom the reason. The sale has a reason behind, it is important to understand that reason (example: divorce, moving, cannot afford the payments, foreclosure is imminent, trading up, etc…)
Unless you are truly a real estate expert (with experience) don’t attempt to do it yourself, not that it cannot be done, it can, but the fun is getting what you want while not suffering during the process or getting short changed because of ignorance of the details of the process.
I could say a lot more about this subject however I wanted to share with you some of the observations I have made over the years.
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