Like just about any other industry, real estate is rapidly evolving through the advancement of technology and changing the way we go about the purchase or sale of a home. But some things remain unchanged. For buyers, a home is likely the most significant purchase you will make in your lifetime. For sellers, your home is probably your most valuable asset and its sale will likely factor into your level of financial security going forward. Hold this thought.
Much is being said about how we buy and sell homes these days and some of it goes so far as to say that our job as realtors is becoming obsolete. We, of course, beg to differ. In fact, we prefer to embrace the technology that allows us to better serve our clients. But we also know there is new competition out there for our business and we will acknowledge that as well.
So, what are we talking about here and what are the differences?
Public online real estate sites provide a service. And whether it’s Zillow, Realtor.com, or any of the others, they make it easy for you to do your initial research without feeling the pressure of a sales call. But because here in California, these public sites are not in the brokerage business, they use their platforms for visibility and make their money off the agents who are paying them for your information. So, if you are a serious buyer and have found a home of interest using one of their platforms, this is where you have to make the next decision in your process.
You may or may not already have a realtor. Regardless, if you want to know more about the property you are interested in or even want to see it, you are just a click away. But beware – once you click, you are now treading into a territory where the term “agency” becomes a factor. In short, the term “agency” in real estate is a realtor’s built-in legal protection to safeguard their investment in time and money when working with a client. If you want to be discerning about who would represent you in a potential transaction or if you already have an agent, it is critical that you understand what “agency” in real estate means. Here you will find a description.
Then come “discount brokers”. They offer sellers the option to save on selling costs by listing with them. This can be true but there will be some compromises in level, and possibly even quality of representation. Some online brokers simply sell you their listing service meaning no representation, just documentation, and visibility. While online discount brokers are becoming more common, most will still be more comfortable with traditional realtors because, as we said:
Even with a discount broker such as Redfin that does provide full brokerage services here in California, there are going to be compromises. First, and maybe most important, their agents are salaried employees meaning they have less personal incentive to ensure you the best possible representation. Putting a sign in the yard, creating brochures, and listing in the MLS is perhaps the easiest part of our job.
In short, there are good agents and bad agents, regardless of the broker. For most, this means it is essential that you decide on who will represent you in the transaction. With Redfin, you get assigned one of their agents who is an employee. Like Walmart, when prices are low it’s all about volume. Redfin agents are working on a lot more transactions at a time than most traditional agents. You will get one point person to work with who is handling many clients and have support staff managing the paperwork. And though the seller’s side is discounted, they still have to pay the full buyer’s side commission as in any transaction. Redfin does offer a more personalized concierge service at 2.5% plus the buyer’s agent’s commission, but now you are now in their system at “essentially” the same cost as any other broker.
Some buyers may be confident enough in their understanding of how a transaction works and their ability to negotiate pricing to go directly to the seller’s agent. They would normally do this to negotiate a price reduction or rebate by not costing the seller a buyer’s agent’s commission. Because a real estate transaction is a complicated and legal process, this isn’t likely going to happen. Sellers and their agents will generally have a contract in place that would divert the buyer’s agent’s potential commission to the seller’s agent. A buyer without representation means the seller’s agent now needs to hold the deal together for both sides throughout the escrow process, while at the same time minimizing the seller’s legal exposure. In this circumstance, the unrepresented buyer is now working with the seller’s agent who has an established relationship and a fiduciary responsibility to their seller.
In the meantime, we are still here. Do we wish that we had the budget to create the kind of visibility that Zillow has to get in front of you? Of course, we do. But after that, they can only make referrals to realtors who have paid them a premium to get your contact information. They have no more information on their website than we do on ours, and we are confident enough in what we do to welcome an opportunity to have a conversation with you and then not punish you with spam afterward if you choose someone else.
For sellers – we are not just an agent assignment you would get from a discount broker, and we welcome the opportunity to speak with you to determine if we are the right fit. We are confident that we can give you an accurate valuation of your property rather than a Zestimate that cannot factor in the uniqueness of coastal neighborhoods, current market conditions, or the distinctive nature of your home. We understand that we are our project managers when it comes to handling timelines, inspections, and negotiations. We know how critical it is to communicate with escrow, the buyer’s agent, and their mortgage lender throughout the escrow process. We’ll be present to assure the best possible appraisal and stand ready to negotiate any requested repairs. But mostly, we know how important it is to any seller that no money is left on the table, that everything will be handled according to the agreed-upon timeline, and that limiting legal exposure is critical.
For Buyers, we will fully investigate the value of the home you are interested in and meld that with the current market conditions and your budget. We will help you determine your best possible offer and then negotiate that offer with the seller’s agent. Because we are local, we are familiar with a wealth of well-respected lenders, inspectors, and appraisers, contractors, and even decorators if desired. But most importantly, just like for sellers, we are your project managers that will keep the escrow on track and maintain communication with all involved parties including your lender, escrow, inspectors, and appraisers throughout the process.
While technology continues to bring new innovations to every facet of our lives, we know that we provide a valuable service, and would love to speak with you about it. Online brokerages can make it possible to buy or sell a home using their discount services, but we know we’re not in the business of negotiating the sale of a sofa or even an automobile here. We grasp the significance that we are talking about the most valuable asset you can own, and as independent contractors, it’s personal to us. It’s personal to us because we know that our success depends upon your success and that though the purchase or sale of a home may begin with a click, it should always end with a smile and a handshake.