What Do Real Estate Agents Really Do?
What do Real Estate agents really do?
These days you can look up listings on lots of websites, including this one, get automated property valuations, and even sell your home on your own (FSBO). Lots of other industries have been “disrupted” and tech has in large part replaced stock brokers, travel agents, even cab drivers. So what’s up with Real Estate?
Some people think agents don’t do much and are grossly over paid while others appreciate the time, effort and institutional knowledge we bring to the job. Having personally sold hundreds of homes representing both buyers and sellers I can attest to the fact that there’s a lot more that goes into Real Estate practice - particularly in CA, than the public realizes. I’m also surprised on a weekly basis as how little some of the agents I have to deal with know about the business. But at the end of the day, you just can’t Google what I know about how Real Estate deals really go down.
In this post I am going to deal with what listing agents do when you are selling a home. I’ll have a follow up post to address buyers.
In A Seller’s Market Why Do I Need an Agent?
Great question and I’m really glad you asked.
In CA we’ve had historically low inventory, particularly in LA County, for quite a while and it’s not likely to change anytime soon. If houses are going to sell anyway, why do you need an agent?
Here’s a few reasons.
Preparing Your Home for Sale
Professional Presentation
Syndication | Market Exposure
Advertising Including Social Media
Negotiation Which Isn’t just about price
Liability & Disclosures
Contract to Close
Put another way, managing the process. It’s what I do for a living, not your area of expertise.
Preparing Your Home
Maybe you’ve been watching HGTV and think you know everything about staging or remodeling. Or you think that inventory is so low you don’t have to do anything other than putting up a “For Sale” sign. Wrong.
Beyond the almost too obvious to say “de-clutter”, experienced listing agents know:
When it makes sense to spend time and money on staging, painting or other improvements, and
What, if any, repairs to make before the home goes on the market.
Much as you might like the light purple with yellow accents you painted your family room, truthfully that is not going to help you get the highest price possible. Other than the obvious (and no disrespect to the mentioned colors), many buyers these days don’t want to have to do anything, including painting, once they get the keys.
Often, there are some simple low cost cosmetic fixes that can be done that will improve your selling price. Like updating lighting which can often be done for a lot less than you think and makes a big difference. Or replacing a garage door, or kitchen counters (okay now we’re spending more money).
Please note, a lot of agents these days have access to tradesmen or other programs that can get this work done for you without you having to spend money up front. (Contact me for details.)
Here’s some properties that I listed that were either professionally staged, virtually staged, or just decluttered and arranged really well.
The other service that a good listing agent will help you with is getting pre-listing inspections to determine what, if any, repairs need to be made before the house goes on the marker and the buyer makes a request for repair. In about 100% of the situations, the buyer will ask for a greater concession than it would cost you to get the work done on your own. And having reports to hand the buyer before they make an offer makes it more likely the deal goes through because there will be less to negotiate later.
While you could find home inspectors on your own, great listing agents know the best ones as well as what should be fixed and what is and isn’t required for the highest priced sale. And we have access to the workers to get the work done too.
Let me sum it up this way.
I’ve walked into thousands of homes with buyers over the years and can see listings through their eyes. I’ve also held hundreds of Open Houses over the years. Experienced agents know how buyers may respond to any property. You as a seller, with all due respect, do not. And in my humble opinion, that creates value.
Professional Presentation
Because most buyers are getting listing alerts from Zillow, Trulia, Realtor.com and other portals as well as their agents and viewing those listings on their phones, you have a few seconds at most to make a positive first impression. And if not, they are on to the next listing.
And if the buyer does stay on your listing for more than 20 seconds, you need content to keep them there.
That means 3D Virtual Walk Throughs, Videos, high quality photos and drone shots and well written property descriptions.
If you are not familiar with 3D Walkthroughs, here’s an example:
Advertising & Social Media
I’m not referring to ads in your local newspaper when I’m talking about advertising. And by social media I don’t mean just letting all your friends know about your listing or adding it to your story or using hashtags.
You may not know that there are ways for agents to further promote their listings using sophisticated internet strategies. And then there is social media which can be used for effective broadcasting in a specific area.
Now truthfully, most agents or even brokerages do not do these things. But for those of us who do, we have a reach that expands far beyond just standard syndication meaning that we can reach buyers who may not be specifically looking for your home just because it wasn’t in their initial search criteria. But they will buy it if they know about it. Call this “push” as opposed to “pull” marketing.
An example of this might be adjacent neighborhoods with comparable amenities. For example someone looking for a SFR in Redondo Beach might wind up buying in West or South Torrance. You want to proactively reach that buyer.
Or a house that has 3 bedrooms plus a bonus room or den might work for someone looking for a 4 bedroom who just needs the extra bedroom for space. But you have to proactively reach them and not wait for your listing to pop up in their search results because it just might not.
Market Exposure & Syndication
Did you ever wonder how listings get on all those websites all over the place? Probably not. Let me share with you how it works.
Once an agent places a property into the MLS, it is “syndicated” to all the major portals (Zillow, Realtor, Homes, Trulia etc) as well as every brokerage website (fill in the usual suspects) through a technology called “IDX”. That happens automatically unless the Broker opts out. But why would they? You really want every listing exposed to the broadest market possible.
You as the seller can not do this. Maybe you can put a listing on some FSBO sites or even Zillow but you can’t get it everywhere that I can as a Broker. And even if you could, will you as a private seller know how to create the marketing materials? Most likely not.
So another agent service is pushing your listing out to the most possible buyers - far more than you could reach on your own.
Negotiation
It’s not just about price. As a seller you are probably saying, “what do you mean it is not about price?”. A great price with bad terms can be worse than a lower price. A great price on a deal that doesn’t close is meaningless.
So negotiation on both price and terms is key to a successfully sold listing.
Now many people consider themselves to be great negotiators. And some probably are. But they haven’t negotiated anywhere near as many real estate transactions as successful agents. Someone like can be involved in over 100 negotiations per year. That doesn’t always equal 100 sales bit let’s say you get 5 offers on a listing or make 5 offers for buyers. That usually results in at least 5 negotiations.
And real estate negotiations are unlike any other business negotiations.
That’s because it is very easy for one or even both parties to walk away at various points during the negotiations. This often isn’t the case in other non real estate situations.
Here’s what I’m referring to.
Let’s say you receive an offer. It’s good but kind of low and you counter both on price and terms. The other party doesn’t have to respond. Done. You’ve lost your buyer. Or you receive a request for repair, extension of time, or an appraisal shortfall. These are all negotiations points where a deal can fall apart. Experienced agents know how to manage these situations.
And unlike other business negotiations, often the principles:
Are emotionally involved
Think they know more than the agents
No one wants to hear opinions that differ from theirs about their home and just because you can look up comps on Zillow, that doesn’t make you a Realtor.
On top of that we are often dealing with multiple parties who may have entirely different points of view.
Disclosures & Liability
It’s not just the multi million dollar Malibu mansions that wind up in litigation, sellers in all price ranges can wind up in litigation after the close of escrow because of misrepresentations and mistakes in disclosures.
Whether you sell a house on your own without an agent (FSBO) or you have most known celebrity agent from Million Dollar Listing or some other TV show, this can happen to you.
So what do the best listing agents do to keep their clients out of trouble?
First is they don’t say and do dumb things. For example telling a buyer, “no problem you can add a second floor”, “the property line is (points) over there”, “the HOA won’t be raising the monthly dues”, etc.
This all falls into the bucket of agents just saying stuff to get a sale which unfortunately the seller may wind up being on the hook for also.
And then there’s the issue of disclosures. There’s two things you really need to know about disclosures":
Disclose, Disclose, Disclose
If you have to ask, Disclose
The seller really has to disclose everything they know about the property and that means everything. While there are a number of forms that are filled out to elicit this information (TDS, SPQ), a good listing agent will also question and prod the seller to uncover anything that might be an issue after the close of escrow and have it disclosed in the proper manner.
As a seller you have to state the facts that you are aware of. For example, if your roof leaks when it rains, disclose it. If the neighbors have wild parties and you have to call the police, disclose it. If you know about zoning changes, HOA assessments, or anything else, disclose, disclose, disclose.
You do not have to disclose things in a manner that will kill the deal, but you do have to state what you know.
And a great listing agent will make sure that you do so by reviewing the paperwork you fill out before the buyer sees it and advising you as to best practices.
From Contract to Close
This is where agents really earn their money. From contract to close. Just because you have signed a purchase contract to sell your home, that doesn’t mean you can start to pack yet or cash your net proceeds check. Well you probably won’t be cashing it. it most likely will be wired to you account when escrow closes.
There is an art to getting deals to close. Stuff will come up. It always does. There are very few escrows that just close smoothly without issues to be worked out (sorry). There are a number of parties involved that can throw things off track. And given the chance they will.
So here’s some of what happens after you accept an offer to sell your house in California. And I’m not even going to include “buyer’s remorse” which is very real and can derail a deal for no reason other than the buyer changed their mind before any contingencies are removed.
Open Escrow: the purchase contract and all relevant information is sent to whoever is holding the escrow which these days is usually selected by the seller.
Define Timelines: what happens when according to the contract including when the seller can prepare to move.
Earnest Money: the listing agent will track the deposit of the buyer’e earnest money into escrow (typically 3% of the purchase price) which is due 3 business days after the offer is accepted. How promptly those funds are delivered is a good first tell on what to expect during escrow from your buyers.
Inspections: the listing agent will be attending some of the buyer inspections and of course coordinating dates and times with the sellers.
Appraisal: this is the big one, particularly in a market where prices are going up. The listing agent will meet the appraiser with information about the property, comparable sales, and anything else that is relevant. If the property doesn’t appraise at the sales price you are back to negotiating price or worse yet the deal falls out of escrow.
Loan: listing agents will communicate with the lender to make sure the loan is being processed through underwriting so that the loan contingency can be removed in a timely fashion.
Escrow: needs to coordinate with agents to pull all the documents together and resolve contract issues. Additionally now agents have to order home warranties and even NHD reports that escrow previously provided. So we are taking on some functions traditionally handled by escrow.
Final Walk Through and Transition: at the final walk through the listing agent has to make sure all repairs that were supposed to be completed are done. Additionally there is the actual transition during which the property has to be delivered to the buyer broom clean and vacant and all utilities transitioned.
So that’s just some, but not all, of what we do in addition to everything else pre sales contract.
