Wednesday, October 28, 2015 / by Marion Franke
3 Common Perils of Hiring an Inexperienced Real Estate Agent
“Experience is the best teacher, but the tuition is high”. This is an old Norwegian proverb, but it certainly applies to the experience of buying and selling a home.
Too many people see the process of purchasing or selling a home to be simple. They see it as a matchmaking event. The process is simply to find a buyer and seller that want to make a deal, negotiate the terms, close and convey ownership. The truth – it is much, much more complex. Many perils will cost you time, money and aggravation if they are not handled properly.
Even an experienced homeowner is not equipped for handling the sale of their home. I know that sounds a bit bold in today’s internet-enabled environment. It is possible to find a buyer to purchase using internet tools (statistics say that less than 20% are successful), but most sellers don’t know how to adequately advocate for themselves.
Details Mean Dollars
An agent tells the story of her first transaction. She was so excited to have her first listing sell at full price, she did not carefully read the details. The buyer had included language that provided for the seller to pay up to 3% of the sales price toward buyer closing costs. This is actually a pretty common provision. The seller’s bottom line was $8,000 less than expected. Out of integrity, the agent conceded to cover that expense, but can you afford to take that risk with an agent that is not seasoned.
When it comes to new homes, there are many expenses not covered by the builder in the contract. For example, in our area, it is customary for the seller to pay for the title insurance policy. With a builder, their lawyers craft the language to make paying for the title policy a buyer concession. Your agent should watch out for you and make sure you understand your options.
Few agents fresh out of school have the level of negotiation savvy found in a seasoned agent. They will often approach negotiations from a combative position as if their job is to take advantage of the other party. In every single negotiation with an argumentative agent, the one with the negotiation experience will best represent their clients.
Residential real estate negotiations are about a meeting of the minds. There are many protections like option periods, appraisals, surveys and mortgage company conditions that buffer the risk of one party dominating the other. Sure, there are exceptions to this friendly and fair approach to residential real estate. Most of them occur directly between buyer and seller. That is one more reason to have representation from a licensed professional agent.
Contrary to common opinion, real estate is an expensive industry for the agent. Although the broker/owner of the company gets a large portion of every commission, the support in advertising, marketing, staging and other services is minimal.
New agents rarely invest great sums of their own money into their education and the marketing of listed properties. Without “feet on the street” experience, they only know what is taught outside the real estate schools. Getting a license does not prepare someone to represent real estate buyers and sellers.
An agent with more than 5 years experience is certain to be fully invested in serving their real estate client. Many agents get out of the business within 2 years because of this need to sink a portion of all commissions into client service. Those that survive are spending lots of money out of their portion of the commission to compete.