Why your Realtor may be the biggest threat to you….

When I first obtained my real estate license in 2007 the real estate market was a very interesting place. The real estate market was teetering on the verge of collapse after a decade of record year over year gains in almost every market in the country.  If you had asked someone on the street if they knew a Realtor chances are they were one or someone standing right next to them was. Once the market crashed one of the best things happened to the real estate business; lots of real estate brokers got out. Many of these brokers were part time and couldn’t put enough deals together to pay their license dues let alone make a living. They went back to whatever jobs (or hobbies for the part time folks) they held before real estate boomed. The days of sitting one open house and picking up 5 new buyers were over. Reality quickly sunk in.

In recent years we’ve seen a resurgence in the housing market throughout the country; some markets stronger than others. We’ve also seen a resurgence in new real estate brokers. Shows such as Million Dollar Listing not only make the business look easy and lucrative, but they make it look “cool.” It has never been so “cool” to call yourself a broker. Everyone wants to pull up to lunch in a new Range Rover to meet a client. Sit outside on a Wednesday afternoon, sip a martini, and discuss the real estate market with a potential client. Who wouldn’t want to do that? Not only do I want to do that, I actually do it. I’ll also be frank. This business is relatively easy and lucrative. It has it’s fair amount of stress but that is what two martini lunches and happy hours are for. But at the end of the day there is a threat to our industry, to the real estate market, and to you the homeowner; that threat is some of us. Real estate brokers. The only reason why some of us may call the business “easy” is because we know what we’re doing.

Too easy to get licensed…

The barrier to entry into the real estate business is quite minimal. You take a class, you take a test, you pay some fees, and you’re in. Actually being successful in the business takes much more work but being good not in terms of sales volume, but in terms of protecting and advising your clients, takes experience, knowledge, and the ability to understand market forces that most people don’t possess.

I’ve seen countless people on social media dive into the real estate business. They then spend money on on-line advertising, magazine ads, and even someone to manage their social media profiles. They’ll start posting articles such as “What Today’s Fed Actions Mean for the Mortgage Market” but if you asked them what it meant they’d stare at you like a deer in the headlights. When you ask them about the real estate market they’ll quote something our association has sent out as a talking point “Next year Chicago is projected to be up 3%” but when you ask them specifically about the two bedroom luxury condo market in the Gold Coast you might get that deer in the headlights look again. They’ll talk up the real estate market to you and tell you why now is a wonderful time to buy, despite the fact they may not know what area you’d even be interested in buying in. Every day they’ll post photos of a new property they visited on a brokers open talking about how wonderful it is and how it is “gorgeous, stunning, amazing location” even though it might be on a desolate street bordering an industrial complex. These people are a threat to you.

You might be thinking these agents can’t survive in this business. They won’t make enough to sustain themselves and they’ll die out and move on to other things. But let me ask you this, how many people do you know who have bought homes actually interviewed their buyers agent? Conversely, how many people who have listed their homes for sale interviewed multiple agents? Why do people insist on interviewing listing brokers when they’ve already acquired the asset and the sales price is essentially set by the market, yet when it comes time to acquire an asset (their home) they’ll let almost anyone help them? After all, as the old saying goes,  you don’t make money when you sell, you make it when you buy.

So why do I mention all this and take the time to write about it? Am I against new brokers? Absolutely not. We all have to start somewhere. As a matter of fact part of my day to day job is training new brokers and mentoring existing ones. What I am against is stupidity. I’m not going to sugar coat it. I’m against people who quite frankly do not have any business being in my business. I’m not saying this because I’m afraid they’ll take business away from me personally. I’m saying this because their stupidity and apathy hurts you, the consumer which in turn tarnishes the Realtor brand and what we stand for and believe in.

As a broker it is our responsibility to educate ourselves to the fullest to protect our clients. It is our responsibility to be honest with our clients and not repeat sound bites we’ve heard only to make ourselves appear much more educated than we really are. Some of the clients we deal with are wealthy and their home is a small asset to them. However, most we work with, their home is their largest asset. It will be the largest purchase they make in their lifetime. The money they make from their home (or lose) may determine what age they retire, what college they can afford for their children….or bigger yet, how much stress they’ll have in their lives. We cannot control market forces, but we can do our best to educate our clients to help them make the best decision with the information available. That is what we’re here to do. That is our obligation above all else.

So if you’re in the market to buy or sell, or even to rent, be sure to work with someone who knows what they’re doing. A new agent may be a completely fine person to work with, but make sure they have the backing of a team or a partner with experience. Make sure they’re committed to their job, to understanding the market, and understanding economic forces in general. If you’re looking to buy a new home, interview multiple brokers just as if you were interviewing someone to sell your home. Because at the end of the day how you buy your home today will determine how good of an investment it really is.

HOW TO CHOOSE A REALTOR IN CHICAGO

How do you choose a Realtor (Real Estate Broker) in Chicago whether you are looking to buy or sell? What should you look for?

Real estate brokerages would love you to believe that it is difficult to become a Realtor. I’ve been in the business for 7 years and I can easily tell you, based on the experiences I have had with other agents, that almost anyone can enter this business. Whenever the barrier to entry is low, no matter what the field is, you are bound to attract…..idiots. The fact remains that many people in the real estate business, should NOT be in the real estate business. A Real estate broker is helping you with the purchase or the sale of one of your largest assets, if not THE largest asset you will own. So what should you look for when choosing an agent? How do you pick out the idiots from the heard so you know to avoid them?

An agent that Shuts Up:

An agent should not try to talk your ear off right away. Instead, they should shut up and listen to you. They should listen to your needs and your wants. They should ask you questions and just as important; they should know what questions to ask you. Your agent should not be there to SELL you, instead, they should be there to advise you (and sell your home if that is what you hired them to do).

An agent that is all-knowing:

Surely, an agent can’t know everything and any agent that says they do is a load of crap. What I mean by “all-knowing” is that your agent should UNDERSTAND all aspects of the business. They need to understand how mortgages work, from application through the underwriting process. They should understand the basics of real estate law and contract law. They should understand basic accounting so they can help you evaluate the financials of a condominium association. They do not need to be experts in these fields, but they need basic knowledge in all these fields.

In each transaction it is my job to act as a facilitator. I am here to make sure the attorney is doing things properly, to make sure the mortgage broker is doing things properly, to make sure the condo association is turning over the proper paperwork to my client, and to make sure the agent on the other side of the transaction is doing things properly. Your agent is likely not an attorney nor a mortgage broker, but they should strive to learn as much as they can about these topics. They need to be your advocate throughout the entire transaction.

Knowledge of the market

Real estate is extremely localized and in Chicago there are neighborhoods, within neighborhoods which influence everything from pricing to schools to the overall “feel” of the neighborhood. Your agent needs to know these neighborhoods like the back of their hand. If they don’t, then they should not be working in that neighborhood. They should be able to give you at least rough pricing off the top of their head. While specific pricing may require your agent to look up comparable sales; your agent should be able to at least give you a price range for sale or if you’re a buyer tell you if something is over priced off the top of their head. If they cannot, then they do not know the market well enough.

Not a side job

Your agent cannot be part time. I am sorry, but these agents just piss me off. Helping someone with such a large purchase or sale is NOT a part time gig. If you had $100,000 to invest would you go to a “part time” financial adviser? If you were sick would you go to a “part time” medical doctor? No you wouldn’t, so don’t go to a part time agent.

Your agent needs to be on time

Your agent needs to be on time. If your agent is constantly late, they don’t respect your time. But more importantly, if they can’t manage their time how can they manage anything else? Precision and details are important in this business. If you are buying a home for $500,000 do you want your agent to do things with precision?

An agent that discounts themselves

There was a trend a while back, which is thankfully going away, where agents would greatly discount commissions and kickback large amounts of their commissions to buyers. I will not name the services in this blog, but instead, all I will say is you get what you pay for. The most successful and knowledgeable agents in Chicago do not need to discount their services. Would you trust a doctor that advertised a $25 physical exam? I’m thinking not so much. Same is true with the real estate profession. By the same token, however, hold your agent to high standards. Understand that they are getting paid to represent you and you should expect nothing but the absolute best from your agent.