Professional Spotlight – Real Estate Agents
This FSBO blog would be incomplete without an article specially dedicated to the many benefits of hiring a real estate agent:
Real estate agents are knowledgeable about the buying and selling process. I am as well, but real estate agents are often better trained at making appraisals on houses, and they compile lists of local sales. They use these skills and their data to prepare Comparative Market Analysis Reports (CMAs). I don’t write these reports — I’m generally no better at gauging a home’s sales price than looking at Zillow or Redfin.
I’ll also add that I have learned a great deal from real estate brokers about the buying and selling process.
The real estate sales process is largely standardized today in the forms used to document the purchase contract, disclosures, title, and escrow. High-level realtors and attorneys have worked together to create this standardization and it is relied on throughout the nation for efficiency and predictability. And this standardization also helps minimize errors, which further promotes confidence in the real estate industry. I use forms provided by the California Association of Realtors (CAR) because they provide that desirable confidence and efficiency.
Interestingly, having read a great deal of California real estate law in my career, I can assure you that not everything on the standard forms today is required by law. But I can also tell you from my experience working in this industry that the vast majority of clients have no interest in rocking the boat or learning what isn’t required – they want the forms because they want standardization.
Real estate agents are licensed by their State’s Department of Real Estate. By contrast, I am licensed by the California State Bar (a different entity). Maintaining a clean record and a positive reputation in the community is incredibly important to the professionalism of both a real estate agent and a real estate attorney.
As part of their licensure, real estate agents are required to obtain basic knowledge regarding legal and contract requirements in the real estate sales process. (A few years of experience goes a long way too!) Lawyers are trained differently – in some areas we are trained more specifically than agents (i.e., how to analyze and resolve title disputes – clouds on title) and others more generally (i.e., real estate sales contracts) – which is why it is customary that the only lawyers who document sales transactions are experienced ones with an established real estate practice. And of course some attorneys are also licensed real estate agents.
The real estate industry provides valuable check & balances on buyers and sellers who may have unreasonable expectations or are prone to making odd statements when interacting with other buyers/sellers. Real estate agents and attorneys are therefore quite useful to the system as a whole to counsel this segment of the population – as professionals we oversee the process and help to provide stability, predictability, and civility. It is difficult to put a price tag on that added value.
4. Personable Negotiators
Real estate agents are generally very personable people who are skilled at showing homes and courting interested parties in a sales transaction. By contrast, I personally lack the temperament for this sort of thing. I may be relatively personable but I have no desire to show properties or engage in some long discussion about comparable sales. Here is my goal as a closing attorney: I want to identify the agreed upon terms of a prospective home purchase, and then I want to document them, and then I want to assist in a limited role to oversee an efficient and orderly closing process. You will never find me baking cookies for an open house.
The National Association of Realtors (NAR) has provided an industry publication that infers that homeowners are more likely to receive a higher price for their home if they use a realtor. Source: 2011 National Association of REALTORS® Profile of Home Buyers and Sellers. The statistic makes sense to me because it’s a commentary about society as a whole. But in that society there will always be savvy individuals who know they can achieve their desirable price or home purchase without a realtor. It is for these individuals that my services make the most sense. For perhaps the large majority of the home selling population though, choosing a realtor rather than a closing attorney is more advantageous.
If real estate agents didn’t receive 3% commissions, I presume there would be much more house-flipping in America. So we can thank the industry for helping to bring stability to the real estate sector of the economy in this regard.
Notably, your average real estate agent does not receive the whole 3% of his commission: he has to pay a large portion to his brokerage house. Realtors also have a relatively high over-head cost for things like office expenses and professional liability insurance.
The commission structure is nice for homeowners because it helps relieve the stress and pressure from an already stressful buying/selling process.
In the big picture, real estate agents help ease the buying/selling process, and they add professionalism – I like that a lot.
Greg Glaser, Attorney at Law
San Francisco Bay Area – Northern California
Flat Fee Packages Available for Buyers and Sellers Without a Realtor