What is the value add by a Real Estate Agent?

Question

Hi everyone,

I'm Mayank, a new home buyer from Bay Area.With this post, I have no intention of offending anyone - however I do seek genuine information.

In my past 3+ months of experience of working with an agent, they are available to show us homes as we requested. They are a great person & I wish them the best of luck for future work.

However, I'm somehow unable to justify the $25k+ I am expected to pay to them as commission on each $1M invested.

If I am researching the market myself, creating comps myself, reviewing each disclosure myself, working with the mortgage lender myself, finding problems in the homes myself - what is the value add that the agent is bringing to the table that I can't execute myself?

Do I need the agent just to create an offer?

What am I missing? What is the value add by a Real Estate Agent?

Thank you!

Bruce Lynn · Answer

Do you know the 45 ways to get out of a real estate contract?

What is the standard option and earnest money in your area?

Can you call a board certified real estate attorney for free to ask questions or resolve simple issues?

Which lenders consistently have the lowest fees and close on time?  What happens if the lender you choose misses the closing date?

if you miss your rate lock timing and it costs you to relock who should pay for that?

Should the buyer or seller pay for the survey?

Should the buyer or seller pay for title insurance?

What happens if you agree in the contract to close on a Saturday?  Will a title company do that?  Is the contract valid?   Should you close a day early with the seller still in the house?

What are the remedies if the seller has lied on the sellers disclosures?

What inspections are required vs recommended?

Who are the most respected and price effective structural engineers that work your target neighborhood?

What roofers can be at your home tomorrow to check out roof condition for free?

Are the days in the contract calendar days or business days,?

Is your target home in a special taxing district?

Do you know a surveyor who can perform tomorrow or resolve a survey problem?  Do you have a backup if #1 doesn't perform?

What are your remedies if seller refuses to close?

These and 1000 other questions or concerns or issues that to me are potentially of vital importance to your purchase, your investment, your resale and exit strategy for the future.

Real Estate is a team sport.  Build a fantastic team around you.  Great insurance agent, great realtor, great lender, great attorney, great title people great trades and others.

A great realtor can save you time, money, frustrations, headaches, and keep you out of a lot of trouble.  No need to go at it alone. For many people a real estate purchase is their largest investment.  Why make it a DIY project?

Peter Mckernan · Answer

I would not only question who you work with but what their worth is to you. Some key things that you need to know..

1. Sounds like you are a buyer, so you should know that the buyer's agent has to have you sign a buyer broker, the game changed last year but did it.. The offer is still typically (100% of my transactions since August 17th last year) asking for my buyer agent commission to be paid in the agreement.. And this market 100% of the sellers have paid it (my market). So 25K is really not coming out of your pocket unless your market is different.

2. The agent is the person who will have all the data, when you do comps are they on Zillow or Redfin? That has great data, but does it have sniper-style data like the MLS? Zillow and Redfin give a buyer the 10K-20K foot view of the comps, the granular view is the MLS. Does your agent know how to do that and pull the right comps to get their value to 25K commission? I would be asking them to that info in detail for you, and all of the properties you offer on.

3. Contracts: do you have 6 days a week access to attorneys on staff who can answer your questions from a legal standpoint? You can get the contract from any agent and write it yourself, but if the seller is trying to take that 3% EMD are you able to call a legal hotline to ask questions to attorneys that know the contract and do it for FREE.. Not pay your attorney $300-$600 an hour to review the contract they do not work with that much? A licensed agent with the California Association of Realtors does have access.. You would too if you work with one..

4. The big one... Negotiation, can you get huge price reduction from the seller on concessions or on the purchase price.. My team and I have gotten (just the other day) a house $1.6M reduced down to $1.4M 30 days on the market, a property 68 days on the market reduced to $100K, and then another $24K in closing costs. The list goes on with the negotiations, and saying that you'll work with the agent in a dual agency role to get them to throw their commission into play for the seller to reduce from 1M to $975,000 is not that great when you can work with an agent that can get you a house for $925K and $20K back at closing while you are paying them $25K (typically not though).

5. The last one that I would throw out is inspection, disclosures, and title challenges. There was a title issue with someone doing an FSBO with a lender of mine that I work with at lot. The seller was selling to the tenant living in the property. The tenant knows some property line issues, the seller did know a little bit about it, but not enough. They got into escrow, and then the tenant started to create a real challenge for the seller and ended up taking them to court for performance/lot line issues on the property. This tied up the property in a legal battle between the seller, buyer, and lender for a long time and cost the seller $200-$250K in damages. Know who you are working with Great points @Bruce Lynn

Jennifer Bourque · Answer

You're working with the wrong agent. You need a real estate advisor that's going to help you really evaluate your options. The right agent can save you a lot of time and money. I'm from the Bay and work with some amazing agents that I can connect you to. There are a lot of agents out there and sadly, not all of them are created equal.

Bruce Lynn · Answer

Peter has a great point about comps.  If you're using Zillow or the tax district or almost any public facing website, I always question how good the comps are.   I remember the story of the Zillow CEO when he sold his house in Seattle for about 40% less than the Zestimate.  So if you are using that site or something similar you could very well over pay for the home.

Wilson Lau · Answer

Hi @Mayank Jain, great question! Honestly, I wish more consumers asked this because there are far too many agents who believe their job is simply to show homes, write contracts, and collect a commission. I am not here to convince you to use a realtor, but I like to share some of my thoughts.

Hiring a licensed professional is many times optional - you don’t always need to see a doctor when you’re sick, and you can DIY a home remodel if you have the right tools and knowledge. When you hire a licensed professional, you’re looking for two things - expertise and legal protection.

You mentioned researching the market, finding comps, reviewing disclosures, etc...Each of these steps comes with nuances and, in my opinion, takes a ton of experience to master. Unfortunately, every transaction is different, and oftentimes some transactions are more tricky to deal with than others. If things go wrong, you have no protection.

At the end of the day, my question back to you is - what is it that you are looking for in a real estate agent? Because even the top agents have different areas of focuses and expertise. If you’re confident in handling the entire process from start to finish and know how to mitigate risks when things go wrong, then you probably don't need an agent.

Bradley Buxton · Answer

@Mayank Jain

An agent brings value and if you get no value you need a new agent. There are likely thousands in the bay area. Think of it like hiring any other contractor that will do work for you. If you are not getting the value from and you have clearly communicated your wants and needs then you fire them and interview more.

Ben Fernandez · Answer

Each agent has their own unique set of skills. You need to find the one that fits your needs best. Think of them more as a partner in assisting you meet your goals. That means that not only are they resourceful, their dialogue is effective, informative and useful in you making your decisions.

You evidently haven't found someone with the level of expertise you'd prefer.

Mayank Jain · Answer

Thanks everyone for some really good insights. I will go back and re-evaluate what type of agent I would like to work with next.

Is there a good checklist that I could use to find a good agent?

Thanks

What is the value add by a Real Estate Agent?

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