IF YOU ARE CHOOSING YOUR REAL ESTATE AGENT BECAUSE THEY ARE YOUR “FRIEND”

………….ARE YOU GETTING THE “FRIEND PRICE”

This article is intended to help consumers understand;

the types of services that real estate agents can provide;

questions to ask agents about their own skills;

and how to price the services.

While not all inclusive it is a good starting point for consumers to learn about how they are spending thousands of dollars. Would you write a check from your checking account in the amount that you are being charged?

When choosing a real estate agent, we have found that most consumers don’t really know; (1) Where to Start; (2) How to Shop or(3) the Questions To Ask. Unfortunately, we think that the real estate industry, either for lack of effort, or perhaps for more nefarious reasons, has not been forthright in explaining to consumers the types of services available and especially pointing out the services that have true value for which compensation is justifiably earned and deserves premium pay, while also explaining other services, that have some (but little) value and require very little skill and deserve little or no pay ( to be considered just as “value added”).

WE RECOMMEND QUESTIONS BE “ASKED VIA EMAIL” SO YOU HAVE A PAPER TRAIL AND THE FIRST QUESTION TO ASK AN AGENT FOR A SELLER IS: [WHAT AMOUNT, IF ANY, IS THE SELLER WILLING TO PAY FOR A BUYER’S AGENT COMMISSION].

This lets you know the amount by which you can “reduce the asking price” if you don’t want to hire an agent or want to hire an attorney for some things or  if you want to do it yourself! 

Or you may want to find an agent that will work for less and then KEEP THE REST for your closing costs or to lower the sale price. What a novel concept, shopping for equivalent services for less money….not really done in the real estate industry to date.

(1) Where to Start

THE LAW CHANGED IN 2024

Buyers do not NEED to hire a real estate agent to purchase a property that is listed for sale with a real estate company. The Seller is paying them! MOST AGENTS WON’T TELL YOU THIS! Most consumers are in a fog about what agents really do or, are capable of doing for buyers.

For example, we have spoken with consumers who believe that they need a real estate agent to point out conditions of the property that are problematic. Unless separately licensed as a contractor or home inspector (certified by a national association), real estate agents typically don’t possess special knowledge about construction. That information is best obtained by the contractors or inspectors.

A licensed real estate agent can:

1. Provide you with information about properties listed in the Multiple Listing Service (which you can find on your own with sites like Zillow, Home.com or Realtor.com or any one of hundreds of web sites of individual companies;
2. Be your “tour guide” and set up appointments to view the interior of homes;
3. Assist you in determining the price to pay for a property by providing you with information of recent ( within the last 12 months)  sales in the same market and homes currently on the market [in competition with the home you desire, which are some of your alternatives];
4. Fill out standard preprinted forms to help you make an offer to purchase a home( keep in mind that you should ask them to explain each and everyone for which you have questions);
5. Give you contact information for home inspectors and other contractors with whom they may or may not have a referral arrangement, all of which can probably be found with a quick internet search;
6. Attempt to influence you in your decision on the mortgage company and closing company to hire, with whom they may or may not have a referral arrangement ( meaning a financial interest). [ You are paying these costs, those are your decisions]
7. Shepard you through the sale process that is outlined in the agreement of sale so that you don’t miss important dates. (The contract is currently 14 pages long which you can and should read to get those dates, in advance).
8. Assist you in negotiating repairs on the property, found in the inspection process.
9. Attend closing in case any problems with the property are found during the final walk through to make sure the home is in the same condition as when the agreement was signed.

(2) How to Shop 

We encourage consumers to ask agents for details about what services exactly that they are paying for and to take a hard look at the amounts being charged. Does it really cost $5000 or more to have help in buying a home? Maybe. It depends on what services you desire, your willingness to pay, and your willingness to call a few different companies or agents to compare prices. We advocate, shop , shop, shop. You should obtain different pricing options. There is NO STANDARD COMMISSION ! That is part of what the landmark NAR(National Association of Realtors) settlement in 2024 was all about. Prices cannot be fixed, if an agent tells you this,….CALL ANOTHER AGENT. If you are choosing your “FRIEND” to represent you, consider their fee and compare that to the fee of other agents, and consider, are you getting the “FRIEND PRICE”?  Don’t feel obligated to overpay your friend when other agents will work for less and may have more experience. At least ask them to match prices.

Probe the details, get a written list of the services and ask why those are important in helping you., why do they have real value. See the next section.

(3) QUESTIONS (for buyers) To Ask - about the services that real estate agents are able to typically provide:

Services to ask about:

1. Setting up an automatic email notification of homes coming onto the market, leaving the market or changing status from ACTIVE, and available, to CONTINGENT (still accepting offers) to UNDER CONTRACT (not typically accepting offers). With search engines like Zillow, Realtor.Com and others, this information is very available but the automatic notifications of homes in your desired area can be time efficient. This typically takes 30-60 minutes to gather your criteria and to input the information into the multiple listing system.
2. Being a “tour guide”: arranging for you to see homes. You do not “need” to hire an agent to view the inside of a home listed for sale. The Seller is paying an agent to represent them and they should provide access without requiring you to have an agent or requiring you to hire them as your agent. The National Association of Realtors class action settlement that was approved by the Court prohibits many actions by agents. If you call the real estate agent for the Seller and they refuse access, we would suggest a call to the agent’s manager, followed (in very short temporal proximity) with a call to, or knock on the door or slip a note in the mailbox, of the Seller, to let them know that you want to view the home, you are in the market to purchase, and have been unable to make an appointment to see the inside of the home. And if that doesn’t prove successful, call a real estate litigation attorney.
3. When deciding on a Price to Offer: Providing information on other comparable homes in the area that have sold or are on the market. You may have some of this information from service 1 above.
4. Explaining the agreement of sale and the process if the agreement is accepted. This can have real value if the agent is competent and understands the agreement. All too often we are told of agents who give bad information either negligently or intentionally. There is a standard agreement of sale produced by the Pennsylvania Association of Realtors, that is not perfect, but usually cost effective to use. The association also has a pamphlet that helps to explain the provisions. Provisions of the agreement can be altered and crossed out, although some agents may resist ( especially those that absolve them of liability). If so, call an attorney.
5. Post-Sale/ Pre-closing assistance: There are a few tasks that must be addressed upon the acceptance by the seller of the agreement. Those are typically, the ordering of a home (and other inspections) and the application for a mortgage, if applicable. Agents are not necessary for either, they may make suggestions, but buyers should seek out their own sources. Home Inspectors are readily available with an internet search and consumers should look for those who are Nationally Certified, such as by ASHI [ American Society of Home Inspectors].  Banks and mortgage companies can offer options for financing and often have preferred closing companies with whom they feel comfortable to send hundreds of thousands of dollars to fund the mortgage at closing.
   NOTE: IF A REAL ESTATE AGENT STRONGLY URGES YOU TO CHOOSE A CERTAIN INSPECTION, MORTGAGE OR CLOSING COMPANY ( OR WORSE INSISTS ON ONE ), THEY MAY HAVE A FINANCIAL INTEREST,DIRECTLY OR INDIRECTLY, THAT IS LEGALLY REQUIRED TO BE DISCLOSED UP FRONT, BEFORE THE COMPANY IS CHOSEN. BUYERS ARE PAYING THE FEES, THOSE DECISIONS ARE ULTIMATELY THEIRS EXCLUSIVELY.
6. Attending Closing:  The last step in the process is when the buyers and often the sellers sign the final papers, the seller gets paid and the buyer gets the keys. With current laws, all paperwork should be completed prior to closing and buyers should have been given the papers that they will sign to review ahead of time. The type of problems that can come up, relate largely to problems with the condition of the property; items left that should be taken or items taken that should be left. A real estate agent can be helpful to address and correct those type of problems.

THE VALUE OF THE SERVICES ABOVE

Types of services that buyers should not look to their real estate agent to provide:

1. Referring you to a mortgage loan officer. Many real estate agents work for a company that has an “affiliate” and may provide mortgage information but the agent may directly or indirectly receive “referrals” or other compensation by using those companies or may have a “favorite” loan officer who helps them benefit in undisclosed ways, such as tickets to events, dinners or otherwise.
2. Referring you to a closing company and “warning you” that your transaction may not close on time and subject you to problems is, in our opinion, a violation of the current law. You should call an attorney;
3. If you think about it, you have the ability to purchase all of the services that you really need separately and pay far less, for example:
   1. You can value your property with an appraisal for about $600 dollars or less as of today
   2. You can market your property with most search engines for practically nothing and buy a yard sign from the hardware store ( this surprisingly is hugely effective, neighbors see it an tell others);
   3. You can hire a real estate attorney on an hourly basis to assist with what you need to do and at what time, for an hourly rate ( try to get an hourly rate from a real estate agent!)