Written by: Joshua Cooley, Forbes Councils Member
If you’re looking to buy or sell a house in today’s market, the idea of working with a real estate agent or broker may feel outdated. You might wonder, while scrolling through Zillow or Redfin, “Why would I pay a 6% commission to someone when I could just do it myself for free?”
The instant gratification of real estate apps is appealing, and the sticker shock of that 6% on your single biggest asset is very real. But focusing only on that number doesn’t give you the full picture. When you partner with a broker who is an expert in your market and is committed to helping you reach your goal, you end up saving money, time and hassle.
In our current market, the new school is actually old school. Brokers no longer get a book delivered every couple weeks with all the new local listings like we did 30 years ago. We use technology, but we rely on tried and true techniques to create our own books — generating leads, building relationships and figuring out how to get the right houses in front of the right people.
Here are three ways realtors continue to provide value in the modern real estate market:
Defusing Emotional Decisions
I believe the single biggest value of a realtor is taking the emotion out of a transaction. That doesn’t mean I’m indifferent. If I’m not emotionally invested in your outcome, I wouldn't work with you. But a broker is able to keep a cool head and stay focused on the end game in a way that is difficult for buyers and sellers. I’d estimate that around 50% of the real estate transactions I’ve seen without realtors involved have failed, and approximately 10% have even ended in avoidable litigation. It’s invaluable to have a neutral third party to lead the negotiation process and de-escalate emotional decision-making.
Leveraging Local Knowledge
High-level realtors have deep roots in their local community. They know the area inside and out, and they’ve developed close relationships with a large network of vendors and lenders. Real estate apps may provide a user-friendly platform, but they simply can’t compete on this front. They can’t offer that level of personal interaction or community knowledge, and they can’t tell you accurately what your home is worth.
I have long-standing professional relationships that I rely on to protect my clients’ interests. If I’m concerned about a buyer’s financing, I will call the lender directly and ask questions — and I know that there’s no lender in town who would lie to me. If a sale depends on getting a home repair done on a tight budget and timeline, I can call in a favor with a contractor who will make it happen under their usual price because I send them a lot of business.
Getting You What You Want
When working with a seller, a realtor’s job is to help them define a realistic goal and negotiate terms to support that outcome all the way to closing. This process can be broken down into three main steps:
1. Marketing the best home possible, to as many people as possible.
A great realtor is a great marketer. With technology changing rapidly, realtors have to develop marketing strategies that reach a wide audience. Before you work with a realtor, learn about their approach to marketing. Are they only targeting local buyers? Do they have a plan for pursuing buyers moving to your area from other cities and states?
Our agency is based in Eugene, Oregon, and a large percentage of our buyers come from out of state — a trend that is accelerating as more people are able to work remotely. If we didn’t market listings in these locations, it would cost our clients an estimated 5% to 10% on every sale. Because of this, we’re constantly looking for new ways of expanding exposure for our sellers, like investing in a 3D camera that creates walk-through tours of homes and using geo-targeted Facebook ads to get listings in front of out-of-state buyers in hotspots like the Bay Area.
2. Get into contract with the best terms.
When defining terms for a sale, most people only think about price. But other terms can make a huge difference for a seller — for instance, getting the buyer to take your home as is, asking for non-refundable earnest money from serious buyers or negotiating a few months where you can rent your home back while you manage your move.
The main reason sellers give for not wanting to list their homes is that they haven’t yet found another one they want to buy. They’re afraid of being forced to move before they’re ready, but a broker has the solution to this problem. Our agency often manages chain sales, where we find the next home for a seller while selling their current home, with everyone going into contract at the same time. Brokers are a single source of real estate information, so you don’t have to worry about getting stuck without a place to live, like you might selling through an app.
3. Defending outlined terms until closing.
A realtor has to stay focused on a seller’s goal throughout the transaction, negotiating the best terms upfront and fighting for them until closing. This involves developing specialized knowledge about their market and advising their client about ways to get their desired outcome.
In my experience, home inspections and financing are the two biggest reasons that a home doesn't make it to closing. At times, I’ll advise a client to get a home inspection ahead of time to eliminate buyer concerns, or I’ll call the lender to verify information about the buyer and see if there are any red flags. All of these pre-negotiation steps help protect the seller and close with their ideal terms.