On the Verge of Extinction: Local Area Real Estate Agents

The world of real estate is a very interesting industry.  Unlike other industries where consumers look for the best product or the most qualified individual to help them with their needs, the real estate industry is built more upon relationships and consistency.  When it is time to sell their home, most homeowners lean towards the real estate agent that has left the most flyers on their door or their friend from the gym.  Many homeowners think that real estate agents are interchangeable, that one real estate agent is just as good as the next.  However, that could not be farther from the truth.  Not all real estate agents are created equally.  The amount of money involved in real estate transactions floods the real estate industry with all sorts dreaming of making it big.  Real estate is one of the only industries that a person can work in where the earning potential is limitless and the education requirements are minimal.  Whether you have a GED or a Law Degree all you have to do in California is pass the real estate exam, pass the background check and complete an application and you have a real estate license.

Choosing a real estate agent to help you buy or sell your home can be extremely stressful.  First of all, as soon as anyone gets wind that you are thinking of buying or  selling your home everyone that you have ever known in your life that now has a real estate license will approach you.  Friends you did not know that you have and family that you have not spoken to in years will be at your doorstep, ringing your bell hoping that you will pick them to help you.  This is to be expected because, as I mentioned, relationships play a big role in the real estate industry.  My suggestion is, do not work with friends and family.  I spoke about this very topic during one of my appearances on CW6’s San Diego Living.  While being interviewed by Heather Myers I stated that homeowners should avoid family and friends when buying or selling a home.  I told her that buying or selling a house is a business transaction and it is best to keep business and family/friendship separate.  After the interview (“off camera”) Heather Myers asked me, “Do you really believe that?  Are you telling me that you would not want to work with family or friends?”  I told her that I absolutely meant it.  I told her that in the past, whenever I worked for a family or friend, it was not a pleasant experience.  Family and friends hold grudges.  If you help them buy a house and a year later it decreases in value, it is your fault.  If you help them sell their house and 6 months later their neighbor sells their home for more money, it is your fault.  Everything is your fault.  No to mention, they typically want a huge “family/friend” discount when helping them.  So they typically want you to work harder, hold you on a higher accountability level and want you to worker cheaper than a real estate agent that is not their family/friend.  The moral of the story is that business transactions with family/friends can tax and jeopardize even the strongest of relationships.  Homeowners are wiser (and so are real estate agents) to keep business as business and friends/family as friends/family.

Extinction-of-Area-SpecialistOnce a homeowner has eliminated friends/family from the equation a typical homeowners natural reaction is to call the person that puts the most flyers on their door, the so-called “Local Area Expert.”  Prior to the advent of technology, local area experts were the go-to real estate agents for homeowners.  However, technology has severely equalized the playing fields.  Now all real estate agents have the ability to research the same information.  If you give me 4 hours I will know as much, if not more, about your neighborhood than any local area real estate agent.  The age of the Internet has made numerous databases and informational websites available to me including the Multiple Listing Service, Tax Records, School information (including rankings and average test scores),  Google Earth, etc.  My research skills acquired during my years in college and as an attorney make me a ferocious researcher.  I am a data driven individual focused on providing top notch representation.  I was selling a house in Chula Vista about a year ago. After a couple of days on the market a real estate agent called me and challenged the list price that I put on a house.  She said I was listing the house too high and it would never appraise for that amount.  I took her call as a challenge.  I asked her how SHE acquired her information.  She told me that she was a LOCAL AREA EXPERT.  I asked her if she was at her computer and she said yes.  I decided to teach her how to properly pull comps.  I asked her if when she pulled comps on this property is she used a radius (“circle”) around the home.  Of course she replied “yes.”  I explained that in this neighborhood a radius around the home of 1/2 mile or more would pull in housing information from south of Proctor Valley Road.  I told her that the community south of Proctor Valley Road was an inferior housing community and that those comps would pull down the values in the subject property’s community.  I explained that there were more than enough comps in the subject property community to derive a value.  I told her that instead of a radius she should draw a polygon around the community, cutting out the area south of Proctor Valley Road, just pulling information from the subject property’s community.  I then asked her what square footage differential factor she used.  I could immediately tell that she did not know what I was talking about.  I explained to her that the default square footage factor was 25% meaning that the computer would look for comps 25% larger and 25% smaller than the subject property.  I told her that the 25% square footage differential was too large for this property; that there were more than enough comps using a smaller square footage differential to properly determine the value of the subject property.  I told her that I used a 15% differential and suggested that she run her own comps using this figure.  While I was on the phone she independently ran comps as I suggested and her response was classic.  She told me, “I am a local area expert and you make me look bad.  You do not even live in Chula Vista and you know more about this area than I do.”

The truth is that “The Age of Information” has more than equalized the real estate industry.  Even though my office is in Carlsbad, I can just as easily sell a house in Irvine or Chula Vista.  The need for a “Local Area Expert” has been nullified and is now nothing more than a marketing tactic.

Homeowners should be interviewing real estate agents not just handing over a listing to the first real estate agent that knocks on the door.  Homeowners need to interview real estate agents in order to see which real estate agent is going to give them more from the beginning to the end of the transaction.  Real estate transactions typically involve marketing, negotiation, contract drafting, disclosure interpretation, dispute resolution, inspection reviews, etc.  Most people forget about everything else other than the marketing component of a transaction when marketing is just the first step in the overall process.

So when interviewing a real estate agent, homeowners need to look for the real estate agent that they believe will be represent them during the transaction from A-Z.  Factors that should be considered are educational background, experience, overall knowledge and ability to handle adversity.  Homeowners need to really contemplate who they feel the most comfortable with to help them with the largest transaction that they will probably make during their lifetime.

The age of the Local Area Expert is over.  Homeowners are no longer restricted to choosing from a small pool of real estate professionals.  Instead, homeowners can now choose from a large pool of very qualified real estate agents and are no longer restricted to choosing from the pool of local agents.  The technological advances of the last 20 years has ushered in a new breed of real estate professionals that are changing how homeowners choose real estate agents.

 

 

Buying or selling a home is the largest investment that most people make during the lifetime.

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