Is the Real Estate Bubble Going to Burst?

Be Careful When Choosing A Real Estate Agent — Advice From A Former Realtor

Author: Kimberle Balsmanbr
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Let me start by offering my credentials. After all, what good is advice from someone who lacks any credible knowledge or experience on the topics about which he or she purports to be an expert?
I was a licensed real estate agent in New England (I am deliberately vague for reasons that will later become obvious). I took the courses required to even sit for the real estate exam and subsequently passed the exam with one of the highest scores on record for that state. Even my broker was shocked to learn that I scored better on my exam than he had. Thereafter, I became a member of the National Association of Realtors, earning the right to the title of Realtor. I paid my required dues, and they were substantial, and attended all the required continuing education to maintain my license and Realtor title. I was recruited by and joined the ranks of Century 21, the #1 most recognized and trusted name in real estate, and endured several more weeks of the most intensive training in the industry. I completed an exhaustive course in marketing, wherein I learned all the many facets of competing for listings and representation of buyers. In my first few months as a licensed real estate agent, I grossed more than $2 million in sales. Shortly thereafter, I left New England and my real estate career behind. That, however, is another article in its own right.
Thus, I have first hand knowledge of the many tricks of the trade and marketing exploits employed to win the confidence and, ultimately, the business of homeowners and buyers. Some of these methods are legitimate marketing tools utilized by reputable real estate agents. Others are nothing more than cons designed to manipulate na?ve and, perhaps, desperate people into signing contracts that can, and usually do, result in financial hardship for the unwary homeowner or buyer.
Please do not misunderstand me. There are a number of extremely dedicated and trustworthy agents out there. I have had the privilege of working with some of them myself. Even so, I doubt I have to elaborate on the reasons why real estate agents are the subject of so much scrutiny and distrust. In recent years, real estate agents have been the target of numerous lawsuits alleging fraud, misrepresentation and negligence. Much like lawyers and used car salesmen, real estate agents have earned a nasty reputation as sleazy, money-hungry vultures in polyester suits. I, for one, never wore polyester! More importantly, my extremely heightened sense of justice precluded me from mastering the finer points of consumer deception. My opinions, therefore, on the tactics of some of the masters were not well received.
The most disreputable of all the agents I knew or had the misfortune of working with was, ironically, the hometown boy whom everyone knew and believed to be honest. Despite the fact that this man deviously plotted for months to open his own agency, while employed by a prominent and long-established agency, and subsequently stole agents and clients from his employer, the tiny, unaware community continued to offer him its support. What relevance does this have to my article? This same man, who boasted about his rather lax standards and admitted with glee to selling the wrong property to a buyer, now claims a significant portion of the real estate business in that area. He is charming, clean cut, and appears to be knowledgeable. Before long, unsuspecting potential clients begin to feel comfortable with him and actually buy into the cunning bill of goods he sells. He is not unique. Therein lies the danger.
I am sharing this information with you now to help the average homeowner or buyer gain a much deserved and overdue advantage in the treacherous world of real estate.
Real estate agents earn their living strictly by commission. They do not get paid unless they close a real estate transaction. In any given locale, there are literally hundreds (in some cases, thousands) of real estate agents all vying for a very limited number of real estate closings each year. Competition is more than fierce. Therefore, agents are forced to find ways to set themselves apart from their competition. Commission wars, like airline fare wars, are quite common. However, what use is a reduced commission if the agent you hire completely botches your transaction and causes you to lose your shirt anyway?
Real estate agents are shrewd salespeople. They are quite adept at picking up on the fears and naivet? of potential clients and will, unfortunately, not hesitate to tell you what they know you want to hear. They justify their actions with the argument that they, too, need to earn a living and must protect their income stream. Who, then, is protecting you, the consumer? Only you can protect yourself from the pitfalls of hiring the wrong real estate agent.
Here are some of the important things to consider when choosing a real estate agent:
Price - the single most critical factor in selling your home, especially now that home values are stagnating or receding. The market has definitely turned in favor of buyers. Therefore, you MUST know the comparable sales of homes in your neighborhood or town and price your home appropriately. A good real estate agent will provide you with a Comparative Market Analysis detailing all the sales of like homes in your area and will have a definitive opinion about the listing price for your home. In fact, the best agents will likely refuse to take your listing if you, the seller, have unreasonable expectations for listing price. Be wary of any agent who promises you that you can get more for your home than the comparable sales will allow. One of the favored bait-and-switch methods of unscrupulous agents is to convince you that your property is so much better than the comparable properties (this is a play on human nature and our natural yearning for compliments). They will often disparage more honest agents who may have quoted you a fair and reasonable listing price just to get you to list with them. If questioned, these agents will assure you that if all else fails, you can simply reduce your price. I have seen questionable agencies parade dozens of its agents through a home to bombard the homeowner with expert opinions about the value of the home to remove any doubt that the homeowner should not only list with that agency, but should also list at the suggested and over-inflated price. What do you suppose happens in nearly every one of these scenarios? The homeowner becomes frustrated when months pass without a contract and, out of desperation, reduces the price of the home. Such a drastic reduction in price signals many things to a potential buyer, none of which helps the seller. The buyer will think that the home has significant problems or that the seller is desperate to sell. In any event, the seller loses most, if not all, bargaining power and will either have to remove the home from the market or accept much less than they should to sell the property.
Marketing - more and more buyers are turning to the Internet to help them search for their next home. Very few buyers turn to newspapers or other periodicals anymore. Thus, as long as your real estate agent is a member of their regional, online multiple listing service (MLS), then your home will have the same exposure as the other homes similarly listed. MLS services are great equalizers. They generally have rules and regulations prohibiting any one agency from developing advantages over another. Nevertheless, this doesnt stop agencies from attempting to create a perceived marketing advantage over their competitors. Some will claim that multiple ads in magazines, newspapers and other publications will give your listing more exposure and, thus, sell your home faster. Although such claims are not impossible, they are extremely improbable given the overwhelming propensity of buyers to rely on the ease and convenience of the Internet. So, be cautious if an agent claims to offer significant marketing advantages.
Brand Name Recognition - indeed, some agencies will claim that its very name will provide you some advantage in selling your home. This rarely happens. The fact is that sellers just want to sell their home for as much as they reasonably can, and buyers want to buy their home for as little as they reasonably can. Thats it. Neither could care less what name appears on the listing. Some people may claim some allegiance to a particular agency because that agency helped them in the past or someone they know works there. However, I worked for the #1 ranked agency in the world, and I can tell you with unabashed honestly that it seldom helped me to compete for listings. I lost listings to smaller, nearly unknown firms for a variety of reasons.
Experience and Reputation - this is, by far, the most important element in choosing a real estate agent, in my opinion. Other than the listing price, the only other factor that can make or break your plans to sell your home or buy a home is in selecting an agent whose reputation and experience will work to your advantage. Longevity in the business, while important, is not the only consideration. I know several agents who have more than ten years experience, yet cannot decipher the simplest contract terms. Scary, huh? You, the consumer, place your trust in these individuals. Dont do so lightly. Whenever possible, choose a Realtor, as they are bound to abide by a stringent code of ethics. Interview agents. Ask them penetrating questions. Put them on the spot. Ask for references, and actually call them. You want results. You want an agent who has sold enough homes, successfully, that they have a large clientele and repeat business. Such an agent, after taking your listing and pricing your home correctly, will likely already have an idea of a suitable bank of potential buyers for your home. Now, I caution you to steer clear of marketing scams used by even the most well-known and successful names in real estate purporting to have buyers waiting to buy your home. Incredibly, I received such a postcard from an agent, employed by a prominent agency, claiming that I should list my home with her because she had buyers interested in my home. Instinctively, I picked up the phone to question her about her claims. Of course, it was a scam. She was embarrassed when she found out that I was a fellow agent, though she angrily tried to explain away her actions. Learn as much as you can about a real estate agent before you hire them. Found out if the agent is respected and involved in his/her community. Ask local lenders, home inspectors and appraisers which agents in your area are reputable. These individuals work with real estate agents every day. I guarantee you they will have opinions and stories to share with you that may help you to choose the right agent for you.
Be Informed and Decisive - finally, know what your goals are in selling or buying a home. Decide, in advance, what results you can and cannot live with. Do your own homework. Research the home sales and buying process. Know key terms. Unscrupulous people, regardless of the industry, most fear an informed consumer. Choose NOT to be a victim of fraud and questionable business practices.
Seek Legal Assistance - above all, remember that YOU are in charge of your own real estate transaction. Real estate agents work for YOU. Ask questions. Demand answers. If something sounds fishy or too good to be true, then it probably is. When in doubt, seek the advice and representation of a qualified attorney. Dont allow things to escalate to the point of disaster. I base this advice on personal experience. Before I became licensed, my husband and I had a terrible experience with an agent who claimed to have more than 15 years experience. We thought we were in good hands. Nothing could have been further from the truth. Thankfully, we were sharp enough to realize that our transaction was in serious jeopardy and sought legal assistance.
Buying or selling a home is a complicated and difficult endeavor under the best of circumstances. Consequently, you need a genuine professional, a truly dedicated and experienced advocate, to guide you through the process. Be diligent in your efforts to find the right agent for you. Dont yield to sales pressure. Take your time. Your efforts will pay off in the long run.
Kim Balsman, a former licensed Century 21 agent and Realtor, grossed more than $2 million in sales in her first few months as a Realtor. Upon moving to Colorado, Kim gave up her successful, albeit brief, real estate career to pursue her true passion, photography. Kims diverse background includes real estate, law, interior design, photography and writing. Kim now devotes all of her time to writing and photography. She owns Balsman Photography, LLC, a small, professional studio in Colorados Front Range. Kim and her husband, Bob, have two teenage children and enjoy all the many aspects of living in Colorado.br
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