For those of you who may not have noticed, the real estate market has changed recently. Prices are up, inventory is down, and buyers outnumber sellers. This makes it a seller’s market. Buyers are in the market because rates are still at historic lows (and have only one way to go in the future). Prices are still affordable, and the economy is looking stronger. If you are thinking of selling in the near future, you should consider starting right now.
Whether you’re thinking of buying or selling, the question is whether to employ a real estate agent to help you. Are they expensive? What do they do for you, exactly?
To answer those questions, I thought I’d define a real estate agent’s legal obligations, as well as the difference between a real estate agent and a realtor®. All realtors are real estate agents, but not all agents are realtors.
Licensed real estate agents have a fiduciary responsibility to deal honestly and in the best interest of the principal (you) — this is not just an ethical responsibility, but a legal one. Real estate agents must follow your instructions unless they are “patently frivolous.” But, as long as you are reasonable, your agent must represent you according to your wishes.
A realtor is a real estate agent who is a member of their local realtor association (which also affiliates them with their state and national associations). So, in addition to being well trained, realtors adhere to a strict code of ethics and standards of practice, higher than those mandated by law. Membership in the associations also makes it easier for realtors to stay up to date with the latest legal issues. The question remains, should I hire a realtor to help me buy or sell a house? I’d say yes, and here’s why.
First, it is in a realtor’s best interest to help you meet your goal. realtors only get paid if you get what you want – if you complete a buying or selling transaction.
Second, people in the real estate industry hire realtors – brokers and lenders with the knowledge to do the work themselves. They know the value of a good realtor. It’s kind of like when you find out your doctor goes to a specialist when he needs one. Don’t you want to do the same?
On the selling side, a realtor will assess your property to determine its market value and bring to light any issues that make it unusual (e.g., is it in a flood plain? Does it have historic value?). realtors advertise your property locally, online, and via the Multiple Listing Service (MLS), reaching thousands of potential buyers. realtors are also connected to other real estate professionals and can share information about your home via those relationships. And, the realtor doesn’t make a dime unless your house sells. As a mater of fact, they spend time and money marketing your property on the prospect of collecting a fee when it sells.
On the buying side, realtors can act as a buffer between you and a homeowner, so you don’t tip your hand. In negotiations, he who speaks first loses. However, if realtors communicate, they may act as independent parties, providing you with information without giving away your position. (This is true whether you’re a buyer or seller.)
If you’re a buyer, realtors can save you a ton of time. As long as you are clear and specific about your needs, a realtor can filter through all the properties for sale so you only see ones of interest to you. Also, realtors are likely to hear of properties coming on the market before the general public, putting you in a position to know sooner.
The idea of saving money with a For Sale By Owner (FSBO) isn’t really accurate. From a seller’s perspective, unless you’re a marketing genius, your property just won’t get the same exposure it would with a realtor. And, advertising can get expensive. If you are not well versed in real estate law, mistakes can also be very costly. Not surprisingly, most FSBO homes end up being listed with a realtor.
On the buyer’s side, you do all the work and receive none of the benefits of an agent. Without a realtor, you may not know what’s for sale or what legal rights you have, what sellers should provide and/or pay for, or other legal issues. And, real estate contracts have a lot of details. If you aren’t familiar with them, you may agree to things you shouldn’t.
Whether you are buying or selling a home, if you have a smart phone you can download a free app that will give you a lot of information about what’s for sale. Text “Selzer” to 87778 and you’ll be sent a link to an app that uses your location to identify all properties in the MLS (not just Realty World listings). It also offers recent sales so you can compare your property to others.