{"id":2167,"date":"2021-05-03T21:49:08","date_gmt":"2021-05-03T21:49:08","guid":{"rendered":"https:\/\/frankbuysphilly.com\/does-it-matter-who-my-real-estate-agent-is-yes-heres-why\/"},"modified":"2021-05-03T21:49:08","modified_gmt":"2021-05-03T21:49:08","slug":"does-it-matter-who-my-real-estate-agent-is-yes-heres-why","status":"publish","type":"post","link":"https:\/\/frankbuysphilly.com\/does-it-matter-who-my-real-estate-agent-is-yes-heres-why\/","title":{"rendered":"Does It Matter Who My Real Estate Agent Is? Yes\u2014Here’s Why"},"content":{"rendered":"


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For as long as people have been having to work through agents to buy properties, there have been people looking to change that workflow. Trust me. As someone who buys properties and had to go through agents to do so, I get it. Most people know I\u2019m a real estate broker in California. Not everyone knows the whole reason I got my license is because I was sick of the agents I used knowing less about real estate than me. At a certain point, I just decided to go for it, get my own license, and work with my friends and family.<\/p>\n

That was about five years ago. Today, my team is doing great. We are helping people sell their homes for ridiculously good prices. More than my competitors get for their clients. We are also helping buyers get properties under contract\u2014often when there are 10-15 other buyers going after the same properties. In addition to that, we\u2019re doing everything I wanted agents to do for me when I was buying. That includes analyzing deals, running numbers, helping with rehabs, explaining the loans, and more.<\/p>\n

I\u2019m also still buying properties. That means I\u2019m relying on agents to do a lot of these same tasks, and I\u2019m often disappointed. I\u2019m one of the few people I know who experiences this frustrating situation from both sides. I\u2019m an investor who wants an agent to help me, and also an agent who sees how often we are dismissed, discredited, and disregarded. There\u2019s clearly a problem in understanding each side\u2019s position, and this blog post is written to hopefully help address that.<\/p>\n

But first, let\u2019s lay out where most of the problems arise when working with real estate agents.<\/p>\n

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Poor expectations<\/h2>\n

One of my favorite quotes is \u201cBlessed is he who expects nothing, for he shall never be disappointed,\u201d by Alexander Pope.<\/p>\n

My oh my, isn\u2019t this true? Just about every form of conflict we experience in this life comes down to unmet expectations. Consider you buy a ticket for a flight to Hawaii. You are warned there may be massive turbulence. You\u2019ll likely be nauseous. There will be screaming babies on the flight, no food served, and no alcohol available. Your legs will be cramped and it will be a constant stream of getting up and sitting down to let others use the lavatory. In spite of all this, you buy the ticket anyway. Why? Because it\u2019s Hawaii. It\u2019s worth it.<\/p>\n

Now consider you buy the same ticket, but you are oversold. The airline does not tell you there will be no food or drink. You assume there will be because there was the last time you took the flight. The airline shows you marketing photos of relaxed people, lying back and sleeping soundly with plenty of foot room. Basically, you\u2019re sold that the flight itself will feel like Hawaii. This is what you have in mind when you buy your ticket.<\/p>\n

Now, assuming both scenarios end up with the exact same flight, in which circumstance do you enjoy yourself with a more positive attitude. Only the first. Why? You had appropriate expectations going in.<\/p>\n

It\u2019s important to be given realistic expectations up front\u2014especially if those expectations are lower than we would have previously thought. This works for a simple reason. When we know what we are getting into and we decide to move forward anyway, we are willingly buying into the process.<\/em> In essence, we are becoming a partner in the experience. A willing one.<\/p>\n

Consider one more example to clarify. Imagine going into a restaurant. You ask about the wait time. They tell you one hour. You decide that is worth it, and put your name in. Fifty minutes later they call your name. You\u2019re thrilled it was 10 minutes early. You love this place.<\/p>\n

Now imagine they tell you ten minutes to wait. You agree. Fifty minutes later they call your name. Same exact outcome, but you\u2019re furious. You hate this restaurant. You\u2019re fantasizing about negative Yelp reviews the entire time. You chose to wait, but during the waiting, you ruined your experience. It probably doesn\u2019t matter how great the waiter was. It\u2019s never going to be enough. They\u2019ve got an impossible hurdle to climb. What\u2019s the difference between the two scenarios?<\/p>\n

In the first, you willingly agreed to wait for the hour. You maintained a sense of control in your outcome. In the second, you never agreed to wait for an hour. Because of that, you had no control over the outcome. (You felt powerless to make an open table appear faster.) When we don\u2019t feel we willingly agreed to partner in an experience, we\u2019ll be resentful when something different is imposed on us.<\/p>\n

Put simply, most agents are absolutely terrible at setting proper expectations. This happens for so many reasons. A few of the most notable:<\/p>\n

Why agents struggle<\/h2>\n

The best agents are high \u201cI\u201d on the DISC profile<\/a>\u2014which stands for the \u201cinfluence\u201d sector of their personality. This makes them personable, but concerned with not being liked or disappointing people. They don\u2019t like to share information that may upset you. A recipe for unmet expectations.<\/p>\n

Agents are also given notoriously poor training. There is no \u201cright way\u201d to represent a client. Almost no agents give formal presentations or consultations with clients to set purposeful expectations. If you\u2019re one of the few who do, kudos to you. (My latest book, \u201cSOLD: Every Real Estate Agent\u2019s Guide to Building a Profitable Business<\/a>,\u201d covers this topic.) Even so, you\u2019ve got to admit it\u2019s the exception, not the rule.<\/p>\n

Agents know if they tell you what you don\u2019t want to hear, you may go find a different agent who tells you what you want. This disincentivizes them to be more direct. The listing agent who shoots straight on list price may lose to the agent who\u2019s much more liberal with it. The buyer\u2019s agent who highlights how stressed you may feel loses to the agent who paints the prettier picture. It\u2019s a foolish way to construct a fiduciary system, but still. It is what it is.<\/p>\n

This may come as a surprise, but according to the numbers, there are too many real estate agents out there. The barrier to entry is low, and lots of agents get into the industry who never should. Because of this, most agents don\u2019t sell many houses. This makes them somewhat desperate to land clients. This desperation temps many of them to close the deal at the expense of their clients. A big no-no, but still, it happens.<\/p>\n

This same overabundance of agents causes many of them to try their best, but just lack the experience to know what to do. This isn\u2019t meant as a brag, but I routinely<\/em> out-negotiate or outmaneuver the other agents in the escrow. My team does the same. It\u2019s not because I\u2019m smarter than everyone else. It\u2019s because I have more experience. I\u2019ve seen more deals play out, understand more of the nuance of the situation, and have more resources at my disposal. I\u2019ve just seen more hands of poker than my competition.<\/p>\n

For context, if you sell six houses a year at my brokerage, you\u2019re one of the upper tier agents in our roster of 100. For context, I\u2019m averaging about 30\u201340 a month. I see five times the amount of deals a good agent does in one year in one month<\/em>. For other top-producing agents, they can put you in a position to win so much easier than those trying to break into the business. As with any industry, more experience equals better results.<\/p>\n

When you consider the cutthroat nature of the business, it\u2019s easier to understand why realtors fail to correctly set expectations with their clients. Please understand that I\u2019m not justifying this. We work hard to be intentional with the clients on my team about what to expect.<\/p>\n

The commission structure<\/h2>\n

Now, let\u2019s talk about why <\/em>agents may set unrealistic expectations. The primary answer comes down to the way agents are compensated\u2014commissions.<\/p>\n

Commissions are one of the most unpopular components of the way real estate sales work. Most clients don\u2019t like them, brokers want more of them, agents need them, and people don\u2019t understand how many ways they are split up. I\u2019m not here to defend the commission structure system (that would probably enrage over half the community), but I would like to present what it would look like if we didn\u2019t operate by commissions. Hopefully I can help shine some light on why agent\u2019s behave the way they do, so you can be in a position to maneuver through these relationships more deftly.<\/p>\n

In real estate sales, commissions are typically paid by the seller to both agents. The listing agent negotiates the commissions for both parties. While buyers agents are legally allowed to charge their clients a pre-agreed on commission, it rarely happens. This means buyers agents are at the mercy of whatever the listing agent negotiated for them. Yes, the same listing agent they will be going head to head with, on your behalf, decides how much they get paid. (Unless you want to pay them more\u2014how many times have you offered that?)<\/p>\n

It used to be common for each agent to make 3% of the commission. This 3% was split up among the brokers, office fees, errors and omission insurance, transaction coordination fees, desk fees, MLS fees, supra key fees, marketing expenses, gas, and any employees the agents employ to make your experience better. Agents don\u2019t keep the full 3%.<\/p>\n

Now, that 3% has become a bit of an anomaly. In my market, I see a 3% commission being paid to the buyers agent maybe one time out of 100 deals. When we see it, we call it the \u201cunicorn.\u201d (Side note: if you\u2019re listing your house, consider offering this. Every buyers agent in town will be pushing your property over the competition.) To sum up, agents\u2019 commissions are compressing.<\/p>\n

This all happens while more and more agents are getting licensed\u2014 creating more and more competition. See how that could create problems for getting the straight and direct feedback you need right from the beginning?<\/p>\n

The \u201cdiscount\u201d model<\/h2>\n

Many brokerages are trying to win new business and break into the market by offering back parts of the commission to the buyers themselves if they buy with that company. This always sounds great to the person receiving the credit, but let me ask you this question: If you were a good agent\u2014who knew what you could do to save your clients money\u2014would you ever work with that company?<\/em> It\u2019s not popular to say this, but it\u2019s common industry knowledge that the worst agents tend to be drawn to the \u201cdiscount\u201d model.<\/p>\n

Many bad experiences come from the buyer who chose the Walmart agent but expected the Hilton experience. So if commissions are causing this much drama, can\u2019t we just erase them? We can! Let\u2019s talk about what that would look like.<\/p>\n

A world without commissions<\/h2>\n

First off, many agents would be thrilled with this. Investors are often irritated with agents. But trust me, agents are warned just as frequently about investors, or, buyer clients in general. We don\u2019t always think about it, but try to imagine how much time agents spend:<\/p>\n