Agent's True Value
Mandy, a junior sales executive with a large cosmetics company, was extremely happy with the way her life was going. After four fun-filled years at a prestigious university followed by a fantastic year abroad in Italy, she got offered an entry-level position with a company with which she'd interned during the summer after her sophomore year of college. Within two years of working there, she'd been promoted and she'd started dating Nick, a handsome analyst in the finance department who kite-sailed in his spare time. Mandy was living the life of her dreams, but she knew a bumpy road lay ahead. The time had come for Mandy to purchase her first home, and she expected the house hunt to be a long and painful process.
After checking her credit history and getting pre-approved for a mortgage, Mandy sat down and wrote a list of everything she wanted in a home (a tip she'd picked up from the 'Buying a Home' section of this website). She knew the next step was to contact a real estate agent. As most of Mandy's friends were either living with parents while paying off debts or renting apartments, Mandy had no one to turn to for a word-of-mouth reference. Instead, she phoned up an agent she'd seen advertised on bus bays in a suburban neighborhood she'd been thinking of purchasing in. The agent met with Mandy later that week. Mandy brought her list along, and used it to describe to the agent exactly what kind of home she was looking for. At the end of the session, the agent ushered Mandy into her car, drove her around the neighborhood, and showed her not one, not two, but three homes that met her criteria!
Mandy was stunned. She'd anticipated several weeks worth of Goldilocks-esque critiques of potential homes ranging from too small, to too big, to too expensive. Instead, within an hour of her first meeting with an agent, she'd seen three potential dream homes.
Mandy's agent was demonstrating what the real estate world considers the determining factor of an agent's true value: market knowledge.
Two Types
In all career fields, you have two types of people: those who merely do the basics of their jobs, and those who do their jobs well. Real estate is no exception. In real estate agent terms, Type One consists of the agents who sit by the phone, wait for a potential buyer to contact them, hear the details of what it is they're looking for in a home, then set out to hunt for homes that meet their criteria. Type Two consists of the agents who don't need to hunt, because they're already so up-to-date on different homes in the market that, upon hearing a home buyer's wish list, the agents can already think of a few homes that are worth checking out. Type One goes on a home hunt with the buyer's criteria in mind; Type Two listens to the criteria and pulls out potential homes from their already existing mental database of homes for sale.
Think of it this way: when you go to a doctor complaining of an unidentified ailment, what would you prefer the doctor do: jot down a list of your symptoms, then search through his or her medical encyclopedia for an ailment whose symptoms match the list? Or, draw on his or her already existing knowledge of ailments and symptoms, based on extensive reading and experience, and diagnose you right away?
If you're like an overwhelming majority of the population, you'll want Doctor Number Two. Why? Because he or she has the knowledge and experience necessary to help you on the spot. This doctor's prompt reaction inspires confidence in you. You'll feel even more confident once you feel the benefits of his or her diagnosis and proposed treatment. The same goes for real estate agents. You'll feel more comfortable with an agent who has a suggestion list of homes ready for you the second you've explained your criteria. You'll feel even better about this agent if, once you've actually seen his or her recommended homes, you find a prospective home you really like.
Do you have to limit yourself to Type Two real estate agents? Of course not. This is your home hunt; you get to call the shots. However, remember that a Type Two agent is truly on top of his or her industry. Type Two agents are constantly checking out new properties as they get listed on the market. In this way, Type Two agents are actually ahead of the game. They'll arrive at For-Sale properties much quicker than Type One agents. Why? Because Type Two agents think two steps ahead. They don't wait for a client to come to them with a request. They are constantly checking out newly listed properties or model homes, then categorizing them and adding them to their mental database (and probably their written or electronic database, too). This saves time for both the client and the agent. Think about it: the sooner the client gets out there, looking at home, the quicker he or she can find a home he or she likes. Even if the client rejects the agent's first several suggestions, both parties still benefit because the client is actively checking out what's on the market. He or she will have to look at homes critically, and take note of what he or she doesn't like about the suggested homes. By going through this process, the client is clarifying what he or she wants or doesn't want in a home, making it easier for the agent to suggest further homes for viewing.
So, how does one become a Type Two agent? It's not that hard at all, really. All it means is checking out new properties that are on the Multiple Listing Service, that appear in home-sale magazines, that have newly erected For-Sale signs flapping in the front lawn; there are many ways to discover new homes for sale. It just takes a bit of research. Once the agent discovers where a new home is, he or she should get information on it and, hopefully, has a look at it. He or she is constantly keeping track of open houses, and attending them. Basically, a Type Two real estate agent is like a high school student constantly doing extra reading, or extra-credit projects. As you probably remember, these students always fared the best in classes. Similarly, these agents fare the best in terms of customer satisfaction.
Knowledge Is True Value
Basically, then, the key factor determining an agent's true value is knowledge. And that's the real reason you're hiring a real estate agent in the first place. If it weren't for the knowledge, a real estate agent would be doing little that you couldn't do yourself.
Which brings us to another point. You think to yourself, why do you need to sit down with an agent, even if he or she is a Type Two, and have them tell you where the three-bathroom homes are located? Can't you find that out all by yourself, just by combing through ads in a Home-Buyer's magazine? Well, yes, but it'll be a slow process. Imagine how much easier it would be if you had a little voice whispering in your ear, telling you, 'Flip ahead to page 23. There's a home you'll like there,' or'Skip pages 9-16' those homes are all way out of your price range. A real estate agent is supposed to act like that little voice. A Type One agent is flipping through this magazine at the same time you are, skimming ahead and calling out home names as he or she gets to it. A Type Two agent, however, has memorized the magazine before you've even picked it up.
Of course, all we've been talking about so far is inventory knowledge. For-Sale homes are to the real estate agent what inventory is to a store. By inventory knowledge, we mean that the agent will be able to tell you all kinds of features about the homes he or she has seen: for example, number of bathrooms, bedrooms, size of the kitchen, condition of a basement. He or she will also be able to tell you about the price range, the type of neighborhood, and hopefully some other facts you want to know. What he or she doesn't know off the top of his head, he or she should be willing to find out for you.
Advantages Of An Agent
However, a real estate agent's true value lies beyond just inventory knowledge. Here are some other advantages a really good real estate agent can bring to you:
Length of time on the market. This ties in to inventory knowledge. An agent who is keeping track of properties for sale will be able to tell you how long something has been for sale. This is important because the time on the market can affect the asking price of the home. Sellers who've only just listed a property will likely want to wait for the best offer they can. Sellers whose property has been on the market for a while, however, may be more willing to negotiate the sale price in the hopes of finally getting a sale. Your buyer's agent can give you leads on these kinds of homes, as well as tips for negotiating an offer reasonable to both you and the seller.
Connections to other agents. Networking is an important aspect of real estate. Your agent should be able to tell you which homes for sale are being sold by agents that will be easy to work with: that is, agents that are open to negotiation, if necessary. You can greatly benefit from an agent who is well-connected. Before you go forming some mental image of sleazy real estate agents functioning on a "You scratch my back, I'll scratch your" mentality, think logically: if your agent is friendly with other agents, he or she will be able to negotiate better deals for you and maybe even sway the other agent to get his or her client to accept your offer over someone else's.
Knowledge of the buying and selling process. Okay, so your agent has found you the home of your dreams. Now what? A good real estate agent will guide you through every step of the buying process. This means not only finding you a home, but helping you come up with a reasonable offer. The agent's job doesn't end there, either. He or she should walk you through everything that comes next, from home inspection to closing the deal. After all, that's what you're paying for, right?
When you were reading Mandy's story earlier on, chances are, you got pretty envious of her good fortune. However, the good news for you is, many real estate agents out there are knowledgeable. You just need to devote time and energy to finding them. Be sure to interview a few agents first to check their market knowledge. Don't be afraid to ask them if they know of any homes that might suit your needs. Test them to see if they really know their industry; test them to see if they're a Type One or a Type Two. After all, your home is quite possibly the biggest purchase you will ever make. Why entrust the task to second best?
