What Do Real Estate Agents Really Do for Sellers?
Depending on who you ask, the answer to the age old question of what Real Estate Agents do can run the gamut from “nothing” to “everything”. Truthfully, the answer is somewhat in between and the value equation depends on whether you are Buying or Selling and your specific situation.
In this post I am going to deal with Listing Agents and selling a home. I’ll have a follow up post to address Buyers.*
IT IS A SELLER’S MARKET WHY DO I NEED AN AGENT?
For the last few years we’ve been in a historically low inventory environment and it’s not likely to change. So if houses are going to sell, why do you need an agent?
Great question. Here’s a few reasons.
Preparing Your Home for Sale
Professional Presentation
Syndication | Market Exposure
Advertising Including Social Media
Negotiation Which Isn’t Just About Price
Liability & Disclosures
Contract to Close
I guess you could say managing the process. Let’s take a deeper dive.
PREPARING YOUR HOME FOR SALE
I get it, really. You’ve been watching HGTV and think you know everything about staging. Or maybe remodeling. Or you think that inventory is so low you don’t have to do anything other than putting up a “For Sale” sign. Wrong, wrong and wrong again.
Beyond the almost too obvious to state “de-clutter”, experienced listing agents know:
When it makes sense to spend money on staging, painting or other improvements, and
What, if any, repairs to make before the home goes on the market.
Much as you might like the light violet with green accents you painted your family room, truthfully that is not going to help you sell for the highest price. Other than the obvious (and no disrespect to the mentioned colors), many buyers these days don’t want to have to do anything, including painting, even if the cost is low.
There’s often some simple low cost cosmetic fixes that can be done that will improve your selling price and you need to hear it from a professional. Please note, a lot of agents these days have access to tradesmen or other programs that can get this work done for you without you having to spend money up front. (Contact me for details.)
The other service that a good listing agent will help you with is getting pre-listing inspections to determine what, if any, repairs need to be made before the house goes on the marker and the buyer makes a request for repair. In about 100% of the situations, the buyer will ask for a greater concession than it would cost you to get the work done on your own. And having reports to hand the buyer before they make an offer makes it more likely the deal goes through because there will be less to negotiate later.
While you could find home inspectors on your own, great listing agents know the best ones as well as what should be fixed and what is and isn’t required for the highest priced sale. And we have access to the workers to get the work done too.
Let me sum it up this way.
I’ve walked into thousands of homes with buyers over the years and can see listings through their eyes. I’ve also held hundreds of Open Houses over the years. Experienced agents know how buyers may respond to any property. You as a seller, with all due respect, do not. And in my humble opinion, that creates value.
PROFESSIONAL PRESENTATION
Because most buyers these days are getting listing alerts from Zillow, Trulia, Realtor.com and other portals as well as their agents and viewing those listings on their phones, you have a few seconds at most to make a positive first impression. And if not, they are on to the next listing.
And if the buyer does stay on your listing for more than 20 seconds, you need content to keep them there.
That means 3D Virtual Walk Throughs, Videos, high quality photos and drone shots and well written property descriptions.
If you are not familiar with 3D Walkthroughs, here’s an example:
ADVERTISING AND SOCIAL MEDIA
By advertising I am not referring to ads in your local newspaper. And by social media I don’t mean just letting all your friends know about it.
You may not know that there are ways for agents to further promote their listings using sophisticated internet strategies. And then there is social media which can be used for effective broadcasting in a specific area.
Now truthfully, most agents or even brokerages do not do these things. But for those of us who do, including yours truly, we have a reach that expands far beyond just standard syndication meaning that we can reach buyers who may not be specifically looking for your home just because it wasn’t in their initial search criteria. But they will buy it if they know about it.
An example of this might be adjacent neighborhoods with comparable amenities. For example someone looking for a SFR in Redondo Beach might wind up buying in West or South Torrance. You want to reach that buyer.
Or a house that has 3 bedrooms plus a bonus room or den might work for someone looking for a 4 bedroom who just needs the extra bedroom for space. But you have to proactively reach them and not wait for your listing to pop up in their search results because it just might not.
SYNDICATION AND MARKET EXPOSURE
Did you ever wonder how listings get on all those websites? Probably not. Let me share with you how it works.
Once an agent places a property into the MLS, it is “syndicated” to all the major portals (Zillow, Realtor, Homes, Trulia etc) as well as every brokerage website (fill in the usual suspects) through a technology called “IDX”. That happens automatically unless the Broker opts out. But why would they? You really want every listing exposed to the broadest market possible.
You as the seller can not do this. Maybe you can put a listing on some FSBO sites or even Zillow but you can’t get it everywhere that I can as a Broker. And even if you could, will you as a private seller know how to create the marketing materials? Most likely not.
So another agent service is pushing your listing out to the most possible buyers - far more than you could reach on your own.
NEGOTIATION
It’s not just about price. As a seller you are probably saying, “what do you mean it is not about price?”. A great price with bad terms can be worse than a lower price. A great price on a deal that doesn’t close is meaningless.
So negotiation on both price and terms is key to a successfully sold listing.
Now many people consider themselves to be great negotiators. And some probably are. But they haven’t negotiated anywhere near as many real estate transactions as successful agents. Someone like can be involved in over 100 negotiations per year. That doesn’t always equal 100 sales bit let’s say you get 5 offers on a listing or make 5 offers for buyers. That usually results in at least 5 negotiations.
And real estate negotiations are unlike any other business negotiations.
That’s because it is very easy for one or even both parties to walk away at various points during the negotiations. This often isn’t the case in other non real estate situations.
Here’s what I’m referring to.
Let’s say you receive an offer. It’s good but kind of low and you counter both on price and terms. The other party doesn’t have to respond. Done. You’ve lost your buyer. Or you receive a request for repair, extension of time, or an appraisal shortfall. These are all negotiations points where a deal can fall apart. Experienced agents know how to manage these situations.
And unlike other business negotiations, often the principles:
Are emotionally involved
Think they know more than the agents
No one wants to hear opinions that differ from theirs about their home and just because you can look up comps on Zillow, that doesn’t make you a Realtor.
On top of that we are often dealing with multiple parties who may have entirely different points of view.
LIABILITY & DISCLOSURES
It’s not just the multi million dollar Malibu mansions that wind up in litigation, sellers in all price ranges can wind up in litigation after the close of escrow because of misrepresentations and mistakes in disclosures.
Whether you sell a house on your own without an agent (FSBO) or you have most known celebrity agent from Million Dollar Listing or some other TV show, this can happen to you.
So what do the best listing agents do to keep their clients out of trouble?
First is they don’t say and do dumb things. For example telling a buyer, “no problem you can add a second floor”, “the property line is (points) over there”, “the HOA won’t be raising the monthly dues”, etc.
This all falls into the bucket of agents just saying stuff to get a sale which unfortunately the seller may wind up being on the hook for also.
And then there’s the issue of disclosures. There’s two things you really need to know about disclosures":
Disclose, Disclose, Disclose
If you have to ask, Disclose
The seller really has to disclose everything they know about the property and that means everything. While there are a number of forms that are filled out to elicit this information (TDS, SPQ), a good listing agent will also question and prod the seller to uncover anything that might be an issue after the close of escrow and have it disclosed in the proper manner.
As a seller you have to state the facts that you are aware of. For example, if your roof leaks when it rains, disclose it. If the neighbors have wild parties and you have to call the police, disclose it. If you know about zoning changes, HOA assessments, or anything else, disclose, disclose, disclose.
You do not have to disclose things in a manner that will kill the deal, but you do have to state what you know.
And a great listing agent will make sure that you do so by reviewing the paperwork you fill out before the buyer sees it and advising you as to best practices.
Liability in the COVID Era
If you are reading this post in 2021 or later, hopefully the Coronavirus pandemic is behind us. And hopefully I’ll remember to update this section so you won’t be seeing it.
But for right now, Sellers have an additional liability due to the Coronavirus and I unfortunately see some Listing Agents acting in a way that might lead to problems (litigation) down the road.
Specifically, I am referring to managing the PEAD forms and access to homes. While I see some agents taking the proper precautions, others are just looking at the new protocols as an outright nuisance or another speed bump on the road to their commission check. By that I mean not scheduling showings with enough time to properly prepare the property for the next viewing. Or worse yet, how some are trying to avoid the Open House ban by offering “walk up appointments”. I’ll write more on this elsewhere but suffice it to say that politics aside, listing agents in a rush to get a commission check can be putting the public health and their seller client’s health at risk and opening themselves and their seller’s up to a lawsuit.
Enough of liability and doom and gloom, let’s look at….
FROM CONTRACT TO CLOSE
This is where agents really earn their money. From contract to close. Just because you have signed a purchase contract to sell your home, that doesn’t mean you can start to pack yet or cash your net proceeds check. Well you probably won’t be cashing it. it most likely will be wired to you account when escrow closes.
There is an art to getting deals to close. Stuff will come up. It always does. There are very few escrows that just close smoothly without issues to be worked out (sorry). There are a number of parties involved that can throw things off track. And given the chance they will.
So here’s some of what happens after you accept an offer to sell your house in California. And I’m not even going to include “buyer’s remorse” which is very real and can derail a deal for no reason other than the buyer changed their mind before any contingencies are removed.
Open Escrow: the purchase contract and all relevant information is sent to whoever is holding the escrow which these days is usually selected by the seller.
Define Timelines: what happens when according to the contract including when the seller can prepare to move.
Earnest Money: the listing agent will track the deposit of the buyer’e earnest money into escrow (typically 3% of the purchase price) which is due 3 business days after the offer is accepted. How promptly those funds are delivered is a good first tell on what to expect during escrow from your buyers.
Inspections: the listing agent will be attending some of the buyer inspections and of course coordinating dates and times with the sellers.
Appraisal: this is the big one, particularly in a market where prices are going up. The listing agent will meet the appraiser with information about the property, comparable sales, and anything else that is relevant. If the property doesn’t appraise at the sales price you are back to negotiating price or worse yet the deal falls out of escrow.
Loan: listing agents will communicate with the lender to make sure the loan is being processed through underwriting so that the loan contingency can be removed in a timely fashion.
Escrow: needs to coordinate with agents to pull all the documents together and resolve contract issues. Additionally now agents have to order home warranties and even NHD reports that escrow previously provided. So we are taking on some functions traditionally handled by escrow.
Final Walk Through and Transition: at the final walk through the listing agent has to make sure all repairs that were supposed to be completed are done. Additionally there is the actual transition during which the property has to be delivered to the buyer broom clean and vacant and all utilities transitioned.
So that’s just some, but not all, of what we do in addition to everything else pre sales contract.
And lest we not forget, these days in the time of COVID we are also managing PEAD forms and showings to a higher level of detail than ever before.