From Real Estate Game Changers
by Faun G. Hauptman
Whether you are a first-time home buyer, first-time home seller, buying or selling in a new state, or just know that you don’t have the time or skillset to manage your buying or selling process yourself, it is vital that you find a real estate professional you can trust.
I always chuckle when unrepresented buyers call me directly from a sign or internet home search result from one of my listed properties. Recently, one did just that. She and her husband were looking for a home in that area, and when my listing came on the market, they immediately called me for a showing. I met them at that property so they could see it. I did this solely as a service to my seller, because my seller would want any and all potential buyers to be able to see the property. When the couple were ready to leave, I asked them if the property was a fit for them, and they became very evasive and told me they would call me. They didn’t. After several days went by, I called to follow up and spoke with Mrs. Buyer. She said they really loved the property, but realized (as a result of my own disclosure) that they needed their own agent to represent them. So they had gone out and hired one. She went on to tell me that her agent had phoned me earlier in the week, asking about the status of the property. Not knowing who her buyer was, I explained that we were receiving multiple offers and the price was bidding up. The bottom line is, they never even brought an offer on the house they loved, all because they made the rookie mistake of calling the listing agent to see a property they knew they had strong interest in due to location, characteristics, and their own timing. And, they hired a new agent to represent their interests, as a result of the disclosure and education given to them by a different agent. Obviously, they trusted me when I disclosed their options to them, so why go and hire another agent? Why not call me instead, and ask how I could help them buy the home they loved? I had already gone out of my way to establish a trust relationship with them, and they didn’t know enough about the process to accept the gift. By trusting me a little, but not enough, they lost out on a one-of-a-kind home they wanted to buy.
So how should they have known that they could trust me enough to let me help them? Simple. I took the time to explain and disclose these issues to them. In my state, disclosure is mandated by state law, at first contact with a prospective buyer. But most agents simply don’t do it. So when I do, often it is the first time a buyer is ever provided with this information. If an agent gives you a disclosure document, and explains your options to you, that is the first clue that you can trust him or her! S/he is actually following license law! I can’t tell you how many times I’ve made simple, proper disclosure to buyers who looked upon me poorly for doing so, exclaiming “no other agents have asked me to sign this, why are you asking me to?” My answer, always, is because I am doing my job correctly and I can’t help what other agents do or don’t do. If you encounter a situation like this, call the local Real Estate Commission or whatever the licensing body is called in your state, and ask if the disclosure is appropriate. In real estate, we professionals have a saying: disclose, disclose, disclose. That is because so many agents don’t disclose what they should, when they should, and sometimes, it gets them or their client into trouble. If you are lucky enough to find an agent who is disclosing, don’t let him or her out of your sight until you have signed your closing papers on your new home!
Short of making rookie mistakes like calling the listing agent to see a home in a state where you should, if you are serious about buying, already have your own agent, what are the best ways of finding an agent to assist you? Let’s start with a few basic suggestions.
First, once you realize that you are serious about buying or selling a home, the first thing you should do is ask your family members, friends, colleagues, and other acquaintances if they have ever worked with an outstandingagent. If they answer with, “well, the last time I bought or sold a home, this person was pretty good,” or something similar, say “thanks anyway, but I want to work with the best.” Get it in your own mind, that you want to work with a top broker, and tell everyone you are asking the same thing. Don’t settle for “pretty good, adequate, ok, got the job done,” or similar sentiments. Ask for a referral to an “outstanding” agent because you deserve outstanding service. Gather at least three referrals from different sources, contact those agents, and schedule times to meet with them for coffee to discuss your upcoming home purchase or sale. Your task is to determine if you feel comfortable with one or more of these individuals. Your meeting should be about your plans, and your expectations of working with a professional.
If you are a first-time home buyer, or first-time seller, you may not know what to ask or look for. So I’m going to outline it for you here. As a buyer, you want the following traits in your agent. Smart, tenacious, and patient are all good places to start. But in the information age, when many people think they can replace the expertise of an agent by using online sources, the number one trait you need in your agent? Good communication skills.
Buying a home is a seriously complicated process these days, and it is fraught with potential road hazards. Hazards that can derail your transaction and prevent you from acquiring the home of your dreams. Good communication skills are not easy to identify. As a first-time buyer in particular, you need someone who is going to over-communicate with you because you won’t know what to expect, or how to anticipate problems, but a good agent should explain what to expect and help you anticipate problems. And, some agents are better at communicating when they are not slammed with 20 buyers and 20 listings in high selling season. Others can handle those demands without missing a beat. The ability to multi-task and juggle the needs of multiple clients and communicate well with all of them is the mark of good agent. And guess what? If you are moving from another city, state, or country, you should consider yourself a first-time buyer regardless of your past experience, because the differences in the process from your last purchase or sale could be extreme based on individual state law.
Second, you need an agent who is not going to relegate your home search to a public online source. If an agent tells you “just keep an eye on the new listings that come onto Zillow and call me if you see anything you want to look at,” run. This is not an agent who is working for you. Instead, when interviewing, ask each agent how they work with buyers, and then listen for at least one of them to explain that they use their local MLS to set up searches that return instant new listings, price reductions, and status changes. Listen for them to reveal that they look for these notifications and are constantly seeking new options for their current buyer roster. Listen to see if they say, “as soon as I see a property that meets your requirements, I will call you to arrange for us see it right away.” This is particularly important in a hot (seller’s) market. You don’t want to lose out on your dream home due to your agent neglecting you, because an hour can make a big difference in your outcome.
Ask them to describe how they show property. For a new buyer, they should be suggesting an initial home tour of between five and eight homes, more if you are flying in for a day or two specifically to look at property. When they show you a home, they should be willing to offer you the honest pros and cons of that property, assuming you want their professional input.
For sellers, your preferred skill set will be similar in some ways, but will have more requirements. First, as with buyers, good communication skills are the most important. Second, you want an agent who understands the market you are selling in, because that is crucial to getting your pricing right. If you interview several agents and choose the one who wants to price your home the highest, this may be an indication that you haven’t found an agent you trust, because you are resorting to price as the only factor in your sale, and it’s a surefire way to be disappointed with the outcome. Pricing is as much an art, as it is a science.
Let’s stop to notice what I haven’t said. I have not said to choose the agent with the most listings in a given neighborhood. I have not said that you should choose an agent who routinely works in only one part of the city. I have not said that your agent needs to sell $100 million worth of real estate every year. Now, I personally think that you are going to be better off with an agent who has at least five years’ of experience in the business, but every good, successful agent had to start sometime. So I don’t necessarily think you will be in bad hands with a newer agent, but make sure your agent works with a seasoned one, and with a reputable company, so they will have the help and resources they need to properly assist you with a variety of potential issues along the way.
Speaking of reputable companies, did you know that the only two qualifications to be “hired” by a typical real estate brokerage, is to be licensed and still breathing? I’ve worked for many of them. Some are good at training new agents, some are better at leaving experienced agents alone. Some have minimal production standards, some have none. Some allow part-time agents to “hang” their licenses for a small monthly fee. Study up on the reputable brokerages in your city. Find out which ones house the most successful, and experienced, agents. It may not be a “national” branded brokerage that has the very best agents. Sometimes, smaller, “boutique” firms have the highest quality standards. They aren’t looking to hire as many agents as possible, they are looking to hire as few as possible, with those few producing many times more sales than the average Realtor. This is where many quality brokers reside. And because these brokerages live or die by their local reputation, they tend to be more service-oriented. Local ownership ensures community engagement, which ensures that you are working with real humans, not just some mega-corporation. Trust still resides on Main Street.
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From Real Estate Game Changers
by Faun G. Hauptman
One of the questions I frequently receive as a real estate broker, from both foreign and domestic buyers, is “how does this work in the U.S.?” What many Americans and foreign buyers fail to recognize is that the history of this country and the immense power held by each individual state, has created a system of real estate law and practice that varies drastically from one state to another.
To illustrate, I’ll share this story. I have sold the house next door to my own, on three separate occasions. First, my husband and I owned it; we then purchased the house next door and sold it a few months later. That buyer, about 18 months later, was relocated with his company to another state, and naturally, he asked me to sell it for him. Those buyers kept the house for about a decade, and recently, I sold the house again, for them. And even though I only owned that house myself for about two years, you might say I’m an expert in that property.
Getting back to the varying laws from one state to another. The buyers who kept the house for a decade are both attorneys from New York. After they bought it, we became next door neighbors and began a long friendship. Shortly after they moved in, we were talking one day and Mr. Neighbor made this comment to me: “wow, here in Colorado, you guys (real estate licensees) have a lot of responsibility. It’s like you’re attorneys. You write contracts, you close the deal. In New York, the licensees only show the property, and when the buyer says “buy,” the deal gets turned over to the attorneys who draft the contract and negotiate the entire deal. The real estate agents don’t handle any of that.”
As an extreme example, this illustrates my point. Real estate law and practice varies dramatically from one U.S. state to another. Some states only license salespersons; others, like mine, license every person as a Broker, but have different levels of Broker that carry different responsibilities, and capabilities.
About 25 years ago, a small number of states, Colorado included, began experimenting with the concept of buyers having an Agent fiduciary. Prior to this, all licensees involved in a transaction were considered to be agents, or subagents, for the seller. This meant that buyers had no true representation in the most important and expensive purchase they will likely make in their lifetime! Consumerist sentiment and legal theory led lawmakers to begin to change state laws, to allow buyers to engage an expert to represent their interests. About half of all states have legalized fiduciary level service to home buyers now, which is a huge step forward for buyers who know it exists, and use it to their advantage. But buying a home in a state that doesn’t, or failing to engage an agent fiduciary in a state that does, will make establishing a trust relationship more difficult. And, just as when selecting an attorney or other fiduciary for your legal, financial, or other important matters, who you select is extremely important because you are going to be in a longer-term relationship with that individual.
Without an understanding of fiduciary versus non-fiduciary service, a buyer coming to my market from the East Coast, might be remiss to trust their Broker. If I’m showing a property and a buyer says “I would like to buy it,” and then I whip out a contract and start drafting it (said for visual reasons, we actually now use electronic contracts here), she might think, “this is NOT how real estate is done in this country, and this woman is acting like a lawyer and that’s not legal!” She might even fire a perfectly competent agent, all for doing exactly what Colorado license law not only allows a licensee to do, but requires!
This is why it is important to research and understand local law and practice. Consumers need to understand what is “usual and customary” in the place where they are currently buying or selling, because it looks different in all 50 states, and even from one market to another within each state. There are a handful of Federal laws and regulations, mostly relating to lead paint, equal housing opportunity, and mortgage loans, that impact every transaction in the U.S. But the process of hiring a real estate agent and buying or selling a home will be done very differently from one state to another. Having this awareness up front, and looking for an agent who will explain in detail how real estate brokerage is done in their jurisdiction, will be your first notion that he or she is competent and trustworthy.
Once you know whether your state allows an agent to act as your fiduciary, the next step is to understand what that means. If you engage a fiduciary, that means that the person must act in your best interests at all times, they must be your advocate, seek a price and terms that are favorable to you, and be loyal to you. And that kind of relationship requires that you trust they will perform those duties. Mutual trust and loyalty work both ways. So it is in your best interests to not only find an agent you can trust, but one who trusts you too. Establish mutual trust and loyalty early in the process so that you can have open and honest communication throughout the home buying or selling journey.
Photo by Joey Csunyo (@joey_csunyo) on Unsplash
From Real Estate Game Changers
by Faun G. Hauptman
Trust, in the context of a real estate transaction, looks much like it does in any other context of importance. A few of the markers of trust I’ve observed over my years in the business include mutual respect, mutual honesty, mutual problem-solving, and loyalty. My most trusting, and trustworthy, clients have always come to the table with a sincere desire to learn from the experience, to let go of preconceived notions that later prove to be false, and to replace those with newly acquired notions based on facts and an honest evaluation of the present circumstances.
So what does that mean? Present circumstances can and do fluctuate wildly in the world of real estate. Real estate prices, and the process of buying or selling itself, will be largely determined by one very simple, but powerful, economic force: the supply/demand curve. Most successful real estate professionals know this down to their core, but how this plays out in their daily efforts to assist clients who are buying or selling, is less consistent. Probably, that’s because there is little long-term consistency to the supply/demand curve itself.
To illustrate, I’ll pull a rather extreme example from the 2008 market crash. Just prior to the crash of 2008, I was an up-and-coming luxury home broker. I had just joined one of the most prestigious luxury home companies in the U.S., and was in process of listing and selling several multi-million dollar homes. I remember the market crash well, because when it happened, I realized that all of my inventory (supply) was now drastically overpriced, because supply began flooding the market, and demand was drying up quickly.
When commodities are overpriced relative to demand, they don’t sell. It’s as simple as that. And when your clients are trying to extricate themselves from an asset, having it sit on the market month after month is not ideal. It was time to have the talk. The assets had quickly become devalued, and that reality was completely out of my hands.
Some clients handled the news well, realizing that there was little I could do to “fix” the market. No amount of glossy photo ads, open houses, catered events, or other efforts were going to sell an overpriced property. The only control we shared was to re-evaluate the changing circumstances, re-price accordingly, and sell the asset. In some cases, clients chose not to re-price, and not to sell. Many of those assets would ultimately be lost to foreclosure because the client wasn’t ready to face the facts, facts that they were repeatedly being confronted with, by a variety of sources. Those were costly decisions.
Other clients had the ability to hold the assets until 2013 when the market in my area finally began a decisive recovery. For them, the market crash became a five-year inconvenience, a break in life’s momentum, and a waiting game. They were the lucky ones.
So what does that illustration have to do with trust? Well, when market values rapidly declined, some clients knew they could trust their real estate professional to advise on the changing conditions, and respond accordingly. Others began not to trust their real estate professional, even going as far as to blame their real estate professional, and made decisions counter to the information, data, and advice they were receiving. In some cases, there were millions of dollars, businesses, credit ratings, future financial security, foreclosures, bankruptcies, divorces, and even suicides that ensued. Real estate ownership doesn’t happen in a vacuum; it impacts and is impacted by all the challenges and changes life throws at us. No doubt, those individuals felt they had no one to turn to, to determine what to do next, and for help making informed, rational decisions to mitigate the impending damage. In some cases, they were receiving conflicting information or advice, and they simply didn’t know who to trust.
Others did know who to trust and they listened. And those clients, by and large, made it through the worst of the financial crisis and resultant real estate market crash, relatively unscathed. Being willing to hear the truth, or at least the facts that are reasonably available at any given time, and act on it, leads to more successful, or the least damaging, outcomes.
Now I admit, it may be hard for readers to believe they can ever trust someone like a real estate professional, who works on commission. So let me ask you a few questions: do you trust the waiter or waitress who brings you your food, in exchange for a future tip? Do you trust the bellman, who stores and later delivers your luggage, for a tip to be given later? How often have you driven your $50,000 or $100,000 car to a valet stand, handed over the keys, received nothing more than a little paper ticket, and trusted that your car would be returned to you in the same condition it was when you last saw it? Do you drop your child(ren), your most precious “asset(s),” at daycare before driving to work, and trust they will be well-cared for? The truth is, in the world of personal services, we are required to give people a great deal of trust. And while it’s true that sometimes that trust is violated, either intentionally or unintentionally, in the vast majority of cases, when intentions are good, the results are good.
But when it doesn’t work out, we become cynical. We doubt our ability to trust others we meet in the future, because we misjudged someone in the past. We have all had that experience, and the worst part about it is, we sour future relationships, in an effort to resolve the pain and other negative consequences from the past ones. That’s human nature I suppose, but it’s ultimately self-destructive because humans were not meant to live, or function, alone. We must trust those with specialized knowledge or we become destined to make costly mistakes that could have easily been avoided.
In anthropological terms, humans have evolved as a herd species. There is safety in numbers, and over the millenia, we have survived only because we learned to cooperate and specialize. We are now hard-wired to trust each other, to support each other, and to benefit from each others’ contributions. And when it comes to buying and selling real estate, most people can and should benefit from the experience and expertise of a real estate professional. But in order to benefit, it requires understanding a little bit about license law in the state where you are going to buy or sell property, and hiring someone you can trust.
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