If you can find your home on an App, Do You Really NEED an Agent?
The public’s access to real estate listings has opened the door for Buyers to find their home pretty much on their own. The information that used to be controlled by real estate agents is now accessible to Buyers nearly real time on their phones, computer, or other devices – giving the power of information where it belongs – with the Buyer. But finding the perfect home is just the beginning of an extremely competitive and complicated process. That’s where an experienced, knowledgeable agent is worth their weight in gold.
Access to Property Listings – The Evolution
This graph shows the resources Buyers used to identify the home they purchased. (Source: National Association of Realtors 2020 Profile of Buyers and Sellers publication)
The smallest segments at the top are print. By far the most expensive and least effective advertising source to listing agents. Print has been the least used resource for over 20 years, disappearing entirely within the last five years.
Interestingly, the dark blue at the bottom shows the growth in the internet. Growing from 44% to 53% in the last 5 years.
The medium blue segments show the shrinking influence real estate agents have in providing listing information to Buyers. More often than not, Buyers actually find the property they are interested in seeing and send the listing to the agent. A complete paradigm shift giving ultimate control and power to the Buyer.
And while access to real estate listings are at Buyers’ fingertips, finding the home you want isn’t the end. In fact, it can be the very beginning. The process of bringing the transaction to close more times than not still comes together with the help of a Realtor. 88% of homes purchased in 2020 were purchased through a real estate agent or broker.*
Role of a Buyer’s Agent
As we well know, most buyers have an app on their phone from a national real estate site. In the old days, the agent used to be the provider of such information. They used to lug around a thick book with all that week’s listings. The agent was the primary source of real estate listings and could control the listings that buyers may see.
With the changes in technology that gives buyer’s more control of the information they get, there are still critical functions that agents add to the buying experience.
Even if you found the home you want on your own, your Agent still provides 3 essential functions that help deliver the home to you at close:
- Property Access
- Information Access
- Process Management
Real estate agents in Idaho go through an extensive national background check before being issued a license. Agents are also provided a unique access code to the MLS Lockboxes most commonly used. There are significant fines and other penalties for sharing their unique access codes.
Nobody actually buys a home without seeing it in person, do they? You may rethink this philosophy. Now, with the competitive market being what it is, Buyers are making “sight unseen” offers. But while they may be willing to enter into a purchase agreement to buy a home they haven’t seen in person, they don’t typically close on the property without seeing the property in person. So at some point, they need access.
There are essentially 5 ways that a Buyer and/or their agent can access listed properties:
- Call/text the listing agent to schedule a showing
- Call/text the Seller directly to schedule a showing
- Use a service called Showing Time to schedule a showing
- Simply access the property without scheduling if allowed
- Attend an open house
Getting a buyer into a home or on to property is one of the more elemental functions of a Buyer’s Agent.
While most agents are not trained home inspectors, they may be able to point out conditions that may need further investigation. Things like curled roof shingles, a crawl space with visible water or a musty smell can alert unsuspecting Buyers of expensive repairs down the road.
Agents have access to information that could be daunting for Buyers to get. Information about comparable sales in a neighborhood, easements and restrictions that may affect the way a buyer can use the property, and information about the house or seller that can be helpful in when writing offers.
Comparable Sales -Appraisal
Knowing what is selling and for how much is helpful in a normal market. But it could be critical in a hot or declining market. If you are financing your purchase, you have to be aware of how an appraiser is going to value the property. Falling in love with a property only to potentially loose it with a low appraisal can be devastating.
If the appraisal is low, you may be faced with bringing additional cash to closing to pay the difference between your offer and the appraised value. You could also potentially renegotiate the purchase price with the seller, or you can seek other finance terms with your lender to help with the spread.
A low appraisal doesn’t have to be the kiss of death to a sale. Working with an agent that has been through multiple markets can save you a ton of heartache and headaches. Having been a full-time Realtor since 2004, we have the experience to help you through the most challenging purchase.
Easements and Restrictions
If you are planning on parking your 30’ travel trailer in the space next to your potential new home, knowing the community rules allow it (or don’t) may help rule the house in or out of contention. If this option is a deal killer for you, your agent should identify that option prior to taking your time to show you the property. We have access to the community covenants and restrictions, referred to as the CCRs, to help identify that option.
Easements can play a big part in how you use the property. For example, if you are planning to build a shop in the back yard, it would be good to know there is a utility easement there that completely kills that option. Sometimes, issues with easements can be easy to find and other times not as much. Sometimes they are called out in the CCRs and other times, they are discovered in a preliminary title commitment. Whenever possible, we try and have the title commitment received before the end of the inspection contingency period. But even if we can’t, there is standard language in the contract that gives you and the seller options to hold the deal together or help you get out of the Agreement.
The key here is to be clear about what you want in your new home, how you want to use it, etc. Especially, be clear about deal killers so you can avoid spending a ton of time looking at properties that simply won’t work.
Found It! THE ONE
The big day has arrived. You’ve virtually toured over 100 homes online and now you have found THE ONE. So you pick up your phone, text me and share the great news. Let’s Go! Here’s how the showing experience may go…
When we show up at the house, we stop on the curb and I share what you should know about the community, details about the house (which you may already know), and get some feedback about what you see and are experiencing before we go inside.
Once we enter the house, I ask you questions about what you like and don’t like. Sometimes, saying these things out loud helps you look at the house in a more practical way rather than entirely emotional. We end up in the kitchen and I get your impressions of the house and if you can see yourself living here. Once confirmed, we start talking about the process of making an offer on the home. That’s when I provide you an overview of the activity in the area. Similar homes that have sold, what’s pending, and other homes on the market that influence the price. We talk about the offer and hash out the details of where to start with negotiations. We wrap up the showing and I go to work on writing up the offer.
The post offer acceptance process is as critical as negotiating the best agreement possible. Some elements include:
- Distributing the completed contract elements to you, your lender, and title
- Property Disclosure deadlines
- Review of Preliminary Title Commitment
- Scheduling the Inspection well within deadline
- Meeting with the Inspectors after complete
- Negotiating the correction items with the Seller
- Monitoring lender underwriting process
- Potential negotiations due to low appraisals
- Scheduling signing with title
- Ensuring documents are to title in time for signing
- Review closing statements
- Attend closing (in person or on phone) in case questions come up at signing
- Transfer of Keys/Remotes/Mail box keys
- Celebrate the experience
There is always a potential for hiccups along the way but by managing the process closely and communicating regularly with everyone involved can help prevent the potential for more catastrophic issues that can derail the transaction.
Going Direct vs Having Your Own Agent
As you are driving through your dream neighborhood, you spot “the one.” The house of your dreams. You grab your phone, key in the address, and BOOM! Its available and in your budget. You see the listing agent’s information and you think, should I call? Before you make that call, there are a few things you should consider.
- Have you been working with an agent you like? You should probably call them first. They’ve been working hard for you and they have probably earned the chance to make this happen for you.
- Typically, the commission offered to the Buyer’s agent is offered to whomever “procures” the Buyer in the transaction. If you contact the Listing Agent direct and the Listing Agent writes and presents your offer, the Listing Agent just procured the Buyer. As a result, they are entitled to the commission offered to the Buyers Agent. The Listing Agent made more money on their listing.
- As far as representation goes, the Listing Agent has a Seller Representation Agreement with the Seller (typical). That means they are required to put the Seller’s interest above all others. It also requires them get the Seller the price and terms agreed to in the Rep Agreement. There are a lot of potential pitfalls by negotiating with that same agent on your deal. Ask yourself, “If I was involved in a lawsuit, would I want my attorney representing or providing guidance to the person you are suing?” Just because its legal, doesn’t mean its the best way for you.
- Hiring a Buyer’s Agent to represent you and only you in your purchase avoids any potential conflicts between your interests and that of the Seller.
Finding your dream home is only one part of an ever-changing and complicated process. The help of an experienced, full-time agent, who listens to your needs, puts your needs first, is organized, truthful, and dependable can make the process of buying that dream home a whole lot easier and predictable.
When you are ready for your new home, give us a call. We have 17 years experience delivering great outcomes for Buyers.