Before you say, “I’m going to sell my house” there are some things you should know other than agents just want to earn a commission.
It has long been perceived by the public at large that the average real estate agent is a millionaire. People see them driving around in a fancy Mercedes Benz or BMW and assume that they are doing well for themselves.
This creates the allure of becoming an agent oneself. I’ve heard it said by many people looking into becoming an agent that they know some guy or girl who’s a real knucklehead and if they can have all that success then surely it’s easily achieved by anyone. Thus they begin their journey of studying and test taking to get their not so difficult to get Real Estate Salesperson license.
The thing that no one told them about that fancy agent is that most of them are either in debt up to their eyeballs or they have a spouse who works at a high paying job and brings in enough money to cover the every day bills.
How do I know? While helping manage several real estate offices over the years, my heart was broken over and over again by the cries of agents (human people) who would come to me and share that if they don’t close a deal this month then …their car would get repossessed…they would get evicted…would go to jail for not paying child support… fill in the blank . I heard it all.
However, it wasn’t for lack of training or knowledge. The numbers just weren’t on their side.
Something these agents weren’t told BEFORE they got into this illustrious business was that they were set up to fail even before they began. Let me explain.
In Orange County California where I work there are three real estate boards (or associations). These are the boards agents belong to that give them their membership benefits and access to the Multiple Listing Service. It also allows them to use the trademarked Realtor® designation and adheres them to a strict code of conduct and ethics. You could almost compare it to a Union of sorts.
In my brief research, in total I was able to estimate that there are approximately 24,365 agents as active members. Note: These are only estimates I was able to extract from various resources or squeeze from an insider. The associations don’t appear to want to give these numbers out freely for some reason. Also, let me clarify my definition of an “active” member. In my opinion, it is anyone who’s membership dues are current and in good standing.
Some people would argue that just because they are paying dues doesn’t mean they are actively selling properties and I whole heatedly agree. However I contend that if any one of those 24,365 agents were contacted and asked to take one of my listings away from me, would they jump on it? In a heartbeat.
OK, back to the numbers. In January 2016, per the local MLS, only 1823 homes sold. Keep in mind that commissions on those homes are shared with a buyers agent so in essence, assuming not a single agent Orange County agent participated in sale with more than one buyer or seller then that would mean there were 3,646 (1823 homes x 2 agents) commissions paid out to agents.
Again, assuming that everything was equal and 3,646 agents earned a commission in January, that leaves the other 20,719 agents who didn’t get paid a penny in January.
The reality is that some of those transactions were listed AND sold by the listing agent and many agents represented more than one buyer or seller. I know I did.
The Possible Sell My House Solution
As a prospective home seller what are you supposed to do?
Do you hire someone who hasn’t sold a home in a while because they’re probably more hungry?
In my not so humble opinion…NO! Not because they don’t deserve the shot. I’ve trained some brand spankin new agents who were destined for success in this business. They had the right mindset and committed to learning their stuff.
Think about it like this. If you were suddenly arrested for some horrible crime you didn’t commit (of course) would you really want some young stud who just passed the bar to stand before the jury and plead your case? What if you got that awful beast “cancer”? Would you be OK with some elderly woman who retired from her aerospace job 6 months ago and had never even taken anyone’s temperature (professionally) would you want her to treat your illness? I hope not. Not at least without oversight by a highly experienced and well trained agent.
Let me tell you a story. A past client of mine decided they were going to sell their condo. This is a client I had done business with on a couple of occasions and we had a really good relationship. Of course I assumed I would get the listing but was surprised when she told me she was going to hire her neighbor. I knew her neighbor. We actually worked out of the same office. Imagine my surprise. As of that date her neighbor had never sold a single property. Not one. Why would my client do this?
My (ex-)client told me she was hiring her because she felt sorry for her. The agent was struggling and the client wanted to let her earn the commission.
Well, the agent finally sold the condo. I was horrified when I saw the results. She outright sold the condo for more than $40,000 less than the current comparable sales. Really? Then this agent went on to represent the client in the purchase of her move up purchase. Why was I not surprised when they offered full price right out of the gate?
Point is, feeling sorry for someone is an emotional decision and can cost you tens of thousands in commissions. The seller would have been better off hiring an experienced agent so they could realize the additional $40,000 in proceeds and then turned around and wrote a personal check for $10,000 to the person they were trying to help. They would have come out better in the end.
So then…do I hire the neighborhood expert? It just depends. If you do your research on someone and they prove to have the experience and technological skills to expose your property to the masses then yes perhaps they’ll be a good fit. A word of caution though. Make sure they understand the technology used in real estate sales today. Many if not most do not. As a result, they can’t possibly leverage the expanse of the internet beyond what the MLS offers to get you the exposure you deserve.
Here’s something else to consider when looking at the neighborhood expert. One reason many people hired me and not their neighborhood “expert” was quite simply that they didn’t want all their personal business ending up in the neighborhood rumor mill. The neighborhood expert thrives on developing friendships in the neighborhood to get the future business and there is a potential of both good and bad for you.
Aside from the rumor mill, here’s another example of why that might not work out and you have to consider. Let’s say the agent has become very good friends with a neighbor down the street who has a similar floor plan to yours. They both go to each others parties, watch each other’s kids and some times just get together for a glass of wine or barbecue.
Suddenly they decide to put their home on the market at the same time you hire that same agent. While that agent would never admit it or even realize it but they are emotionally attached to that family and don’t want to let them down. So you have to ask, do they work harder to get that other home sold? In the end, who really knows? It is something worthy of consideration though.
In the end of the day it comes down to two big no-no’s of hiring a listing agent.
- Don’t hire agents emotionally. Find the one who’s best suited for the job.
- Don’t be lazy about interviewing agents and doing your research. If you are, then it will cost you thousands.
I hope this has caused you to think before putting your home up for sale. Of course if you have any questions about real estate in general or about hiring the right agent in Orange County California, feel free to contact me directly.
In the mean time, feel free to check out some new listings on the link at the bottom of this page.
God Bless and take care,