A Discussion on Real Estate Agents: Part 1

Are Real Estate Agents Qualified to Sell Real Estate?

Did you know that just by writing an offer for someone else and telling them when to show up to closing, you could earn giant commission checks? If you represented a buyer on a 1 million dollar property, your commission check would be anywhere between $23,000 and $30,000. All you have to do is take a 2 week course for an hour per night and then pass a super simple test. Once you have your license, you just need a few friends who can afford expensive houses and you can make more in a month than most people make in a year. 

What exactly is involved in obtaining a Real Estate Sales License?

If you want to become a real estate agent, you need to sign up for a pre-license exam prep course. The course will prepare you to take a licensing exam. You could also just buy an exam prep book and study that, but the classes are more beneficial. The course will teach you absolutely nothing about selling real estate or anything about houses in general. You will learn nothing of value when it comes to product knowledge, marketing, economics, costs, construction, lending or architecture.  You WILL learn about government organizations, ethics and timelines of laws and regulations. From my personal experience, the course even gives you most of the questions and answers directly. Every test is organized and worded differently, but the questions are basically the same for each test. We completed several “practice tests” in the course I completed. I would estimate that 50% of the questions from the practice tests were in the actual test. 

The courses typically take about 2 weeks to complete. After you complete the course, you can take the test as many times as needed until you pass.  When I took my exam prep course, I was able to attend a class for about 1 hour each evening for 2 weeks. At the end of the two weeks, I registered for a test and went to take the test. I passed the test on my first try, I think I got a 96% or 98% on the exam. I was a C range student in High School and College. So anyone can pass the test if they attend the 2 week course. 

So that’s it. Once you have your license, you just need to find a sponsoring broker, and you are ready to make massive commission checks. You don’t really need to know anything else according to the local licensing boards. As long as you follow ethical guidelines you are ready to go out and list someone’s multi million dollar property. Don’t worry that it may be their largest valued asset, all you have to do is get them to list the property with you and you’re ready to collect a massive check. Don’t worry about learning anything about online marketing, real estate valuation models, economic principles, negotiation tactics, remodel costs, repair costs, or how to write a proper contract. Nothing. Just pass an exam and you can list that multi million dollar property your new friend from your kid’s school has been telling you about. 

Aren’t the Best Known Agents More Knowledgeable?

Plain and simple, No! It’s not likely. The largest and most well known agents are not more knowledgeable about anything real estate related with 1 exception. They are very skilled marketers and networkers. The largest and most successful agents are very skilled at marketing and buildinging a personal brand. The largest agents often have real estate “teams.” When you hire a large well known real estate agent, they will often refer you to one of their team members. Often these team members are agents who just passed their license exam and are well qualified to help you sell or purchase your home (according to the local licensing agency). 

These larger agent groups will brag about their sales numbers. They will tell you they have sold 50 million in real estate, or have completed 50 transactions in your market over the past year. When you look a little deeper, you will find that they have 20 agents working under them and they all put their sales under the main agent’s name. I have never really understood this model. If you sell 20 million in real estate, but you have a team of 10-20 people, why not just sell 1-5 million in real estate and do the deals yourself? When you have a team you have to split the commission and you are liable for the actions of the other agents. In addition you are selling yourself as the agent being hired, and then passing the client on to another agent. In my opinion, this should be an ethics violation. 

In my personal experience, the largest and most well known agents in my market are some of the worst agents in the business. They don’t know anything about pricing a home, they don’t know anything about economic conditions or negotiating. I vividly remember one agent bragging in a sales meeting about the fact that they didn’t know how to properly operate email, they just “fell into deals because of who they know.” In my personal experience these agents NEVER answer the phone and they never answer questions. As an appraiser I often have to call the listing agents on previous sales to get additional information. The larger agents in my market have never once answered my call or responded to my emails or questions. In the rare instance that one of their team members responds to me, the information I receive from them is not helpful in any way. 

Are All Real Estate Agents Bad?

Not all real estate agents are bad. I am not arguing that ALL the best known agents are bad. There are some very good and knowledgeable agents in every market. The best agents are not always the best marketers. The best agents get most of their business from referrals and they are often unknown to the general public. These agents spend their time working with clients and performing well. The best agents do not really have a need to market themselves. They do not build large teams and they hold themselves to a higher level of standards. When you hire an agent you are paying a large amount of money, make sure you do your homework and hire a truly qualified professional. 

When you are interviewing agents, make sure the agent you are hiring is the agent you are getting. Do not accept being passed on to a team member. If your prospective agent doesn’t answer your phone call or respond in a timely manner, this is a major red flag. You are paying a large sum of money to a real estate agent because they are supposed to be the professional in their line of work. Do not settle for a recently licensed agent with no experience or knowledge of their market or product. 

Get an appraisal of your home before you list it. An appraiser will give you an unbiased opinion of value on your home. They are not paid a commission on the final sale price of your home. Appraisers are paid for their opinion of value. Plain and simple. They do not get paid more if your home sells for more or if they appraise it for a higher value. The fee for the appraisal is negotiated in advance of the delivery of the report. Appraisers do not use your home for marketing purposes, they cannot pass you on to a team member with low qualifications and experience and they will not inflate the estimated value of your home in an attempt to win a listing agreement. 

Do your homework when selecting your agent or sell your home yourself. You could save tens of thousands of dollars selling your home for sale by owner with minimal guidance from a true professional.  I offer consultant packages and can help you sell your home for sale by owner. I can do pre listing appraisals and help you set a realistic listing price for your home. I can help you market your home properly and offer advice on minor improvements or staging ideas that make your home more visually appealing. 

Reach out and schedule an appraisal today!

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