Nine out of 10 homebuyers rely on a real estate agent
Video may have killed the radio star. But technology - despite making it easier to shop for and list homes online - hasn't ended our reliance on and trust in a flesh-and-blood real estate agent, who isn't going away anytime soon (at least until they invent a robot Realtor, perhaps).
According to the National Association of Realtors' 2016 Profile of Homebuyers and Sellers report, released last fall, 88 percent of buyers continue to use an agent or broker to purchase a home, and 88 percent of buyers would enlist their agent again or refer this person to others. Additionally, a mere 8 percent of recent home sales were FSBO (for sale by owner), an all-time low mark tallied by the annual report since it began in 1981.
Why do so many home purchasers continue to put their trust in agents/brokers? It's a high-reward, low-risk decision, say the experts.
"Agents provide objective guidance throughout the process - they're able to give consumers perspective and keep them from making emotional decisions that could ultimately not be in their own best interest," says Mark Jones, managing broker of RE/MAX Metro Atlanta. "They also provide expertise on navigating the myriad unexpected issues that can occur throughout a transaction, ranging from a pipe that bursts between contracting closing to the surprise lien that appears on the seller's title that they didn't know about."
Andrew Saltman, mortgage broker at Carbon Capitol in Ponte Vedra Beach, Florida, says that, despite the fact that consumers today use websites and apps that make it easier to find a desired property, "they still need to get into these homes and be shown around by a trusted representative. Steps like these can be daunting for anyone not familiar with real estate, especially first-time homebuyers."
But it's often an agent's deal-making abilities and negotiation skills that make him or her most wanted by a prospective buyer.
"As an expert negotiator, I'd say that 40 percent of my job is in the negotiations, 20 percent is life coaching and educating all the parties involved, 20 percent is project management, and 20 percent is paperwork," Bethany Londyn, agent with Keller Williams Santa Monica (California), says. "I've represented clients before on properties being sold as a FSBO; eventually they ended up hiring an agent to represent them in the last week before closing. So many of their concerns and stresses could have been avoided had they allowed someone to represent them from the beginning. When you are involved in a transaction that is one of the biggest investments of your life, going without representation simply isn't worth it."
Besides, adds Londyn, there is virtually no financial risk to the buyer in using a real estate professional: the buyer's agent usually splits a home sale commission (typically 5 to 8 percent of the sales price) with the seller's agent, resulting in no cost to the buyer.
"Plus, a real estate agent provides a legal buffer for when things go wrong," says Brett Maternowski, a Tampa, Florida-based Realtor. "And a seasoned agent can react quickly, call out contracts, and keep things from becoming litigious."
Of course, agents can provide poor value if they lack experience and good bargaining skills.
"Many agents don't know how to negotiate well. I've seen many customers get railroaded by their own Realtors because of their lack of knowledge and inability to be shrewd negotiators," Saltman says.
To avoid agent-related buyer's remorse, do your homework before you pick a professional. Ask friends and family for a referral to an agent they were satisfied with, look for someone who has ample experience in the industry and knows your local market well, and select someone who will be punctually responsive to your needs and requests.
Also, many recommend working with an actual Realtor, a licensed real estate salesperson who is a member of the National Association of Realtors.
"They are sworn to adhere to a code of ethics above and beyond their legal obligations to their clients," Jones says.