Neighbor dodges bullet buying her first house…
A few weeks ago my wife and I were hanging out with our neighbor Kelsey. Somehow we start talking about how she ended up buying the house next door.
She said she knew renting was stupid and she wanted to buy a house. Kelsey is a recent college grad and an accountant by trade so none of this was really surprising.
Apparently she would call up a local real estate agent if she saw an interesting house. The agent would meet her at the house, show it to her and if she didn’t like it, that would be it.
After seeing and passing on a few houses though, some savvy agent pitches her on the idea of working with him exclusively. The really crazy part is after convincing her to commit to working with him and him alone, Kelsey willingly hands over a retainer of $500 to make it official. I was like “What the hell?” until I thought about it.
Here’s she is…a 24 year old first time buyer. She just needs someone to guide her through the process.
Obviously she isn’t dumb—she’s just never bought a house before.
Like any smart professional, she decided to pay for the advice she needed to try to keep from making a huge mistake.
So now I’m really intrigued because I remember that our old neighbors sold their house by owner—not your typical real estate agent scene. I couldn’t actually believe that a local real estate agent recommended that she look at a FSBO.
Not that it never happens, but it’s just very unusual. Real estate agents will typically “guide” you away from FSBO houses because its much harder for them to control the situation plus their fee almost always becomes an issue.
Yeah…that’s not what happened. Actually Kelsey goes on to tell us that not only did her agent not find this house, he never found a single house for her.
Here’s how it would work—she would drive around or search houses online until she found something and then call the agent to set up a showing. Are you freakin’ kidding me?? I guess you don’t know what you don’t know.
Since she had no experience buying a house, she had no idea how useless her agent really was. She paid this agent a hefty retainer to do what she was actually doing herself. Crazy! How do I get that job??
Fortunately—before it mattered, Kelsey called her agent and told him that she found a FSBO house and wanted her retainer back. She must have sounded pretty confident on the phone because miraculously the agent coughed up the retainer without a fuss. Maybe he felt guilty.
She seriously dodged a bullet because now she was going solo on her first home purchase. But a couple of things saved her: 1) Kelsey is no dummy so pulling any BS on her would be difficult.
2) Our old neighbors are super people so things worked out well for everyone—without an agent.
This is probably why so many people have such a horrible opinion of real estate agents. So many agents bring so little value to the process, but at the same time people feel like you can’t do it without one.
Don’t get me wrong—not all agents are bad, it’s just that they are usually so horribly under trained and under experienced. They mean well, but so does a first day law student—it doesn’t mean I’d hire them to represent me in court.
The road to become a really good buyer agent isn’t impossible, but you must have the right teacher and so many brokers have no interest in training new agents.
So how are they supposed to learn? It’s sort of like survival of the fittest. If the agent works really hard, reads all the right stuff, uses total honesty and ignores most of the traditional teaching, they might make it to the top. Again, these are long shots.
So, the million dollar question—how will you know which agent is right for you? Here are a few things I would find out before deciding on an agent.
- Are they players or wannabe’s?
- Are they full-time agents or do they work another job? I’ll put it bluntly: would you trust any other “professional” that had to work another job to support themselves?
- Real estate deals happen fast and they happen at all hours and as they say, “time is of the essence.” It’s bad enough that you have to work a full-time job–Imagine if you also had to work around your agent’s job. Also, agents have to be pretty good to survive with real estate as their only job–if they can do that then odds are better that they are going to be more experienced at handling some of the crazy shit that can happen when a deal is coming together. I don’t want an agent that is learning on my dime.
Bottom line: you need an agent that is both good enough to make it in this business AND available when you need them.
- Do they bat for both teams?
- In other words are they only into buyers or do they work with buyers and sellers?
Why is this important? Think generalist vs. specialist. If you need open heart surgery are you calling your family doctor or the heart surgeon? You get the point.
Most real estate agents would rather keep all options open because in their minds it means more clients, but in reality they are trying to chase too many people. In the end they become mediocre at everything.
Buying a home is much different from selling a home so get yourself an agent that specializes in what you are trying to do and not some generalist who knows his way around the industry.
If they have a seller, they have a listing contract in which they are legally obligated to work for that seller. If they have too many things to do, they are required to prioritize the seller.
If you are actually negotiating on a house they have listed, at best they will remain neutral. At worst, they will side with the seller. Either way, no good for you.
You need a pit bull who is ONLY working for you and your interests. No compromising here. Would you go into court with the other guy’s attorney? Nah…
When you first called, did they offer to run out and show you a house?
Think about some amazing attorney you’d like to hire. I promise if a potential new client called today, they wouldn’t get an appointment for several days or maybe weeks down the road. Agents who are answering the phone and running out on sign calls should be avoided because they are probably desperate and not very experienced or successful.
There are a handful of legal things agents are required to discuss with you and although they vary from state to state, suffice it to say they need to cover them before the first showing. If they opt to cover them at the doorstep, it’s unprofessional. If they opt to skip that step, it’s illegal. If they will violate license law on the first meeting, what makes you think they won’t cut other corners when the stakes are even higher?
Last, if you called the number on the sign, that agent is probably working for the seller. Again, no good for you. In that case, you could accidentally give away your negotiating position from something as simple as a gasp when you walk in the front door or a look to your partner that the agent passes on to the other side..
The point is you must have someone who is really good and who is clearly on your side in a legally binding way. Once you find the right one, they will be able to help you get the most house for the least money with the least headache possible. This takes time, experience and training.
Kelsey got lucky. (Not just because she got us for neighbors…) She’s smart but she’d never bought a house before and chose to go it alone. It was very risky but it worked out for her.
It won’t always go that way. Either get a great buyer’s agent or get yourself seriously educated on the process before you attempt to try this at home. Luck won’t always work in your favor.
So now that you know a little more about how this works, tell me–as you are thinking about buying a house, what are some things that scare you or keep you from moving forward?
Send me a message here
and let me know. I read every message personally and will respond.
Good luck and happy hunting,
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