Given all the online data sources out there making a lot of previously hard to find information readily available to the public, it’s no wonder that a lot of people out there are wondering why they don’t sell their own home and/or have a buddy take the licensing exam. Even today, real estate agents have plenty to offer the average buyer/seller. Consider: the basic analysis of the market conditions, help with financing and what’s personally affordable, repair and staging recommendations, the creation of a marketing plan. Then, there’s the search/listing, choosing to make/accept an offer, the negotiations, due diligence, appraisal, and closing. And while you should use the experience as a learning opportunity, you should also let your real estate agent do their thing.
Location, Location, Location
More than just putting a professional face on the best available online information, realtors usually bring a little something extra to the table. It almost always starts with deep-dive knowledge of the local neighborhoods that are part of their “farming” strategy—realtor lingo for the areas they focus on. A realtor will know that a local neighborhood is hot because it’s become a landing spot for young professionals who are moving into that city. They may know what’s likely to happen with new funding for public schools, employers, sports stadiums, and other developments that can affect the value of a particular property or neighborhood. Computer models don’t always grab the best available comparables in generating initial appraisals. Real estate professionals will have insight into which computer model estimates to ignore after which a more accurate number can be recalibrated.
What realtors are legally required to tell buyers/sellers can differ from state to state. The best realtors work hard to leave no stone unturned in identifying any potential problems or undisclosed conditions about the property. Local zoning and land-use ordinances frequently define the parameters of what the owner is permitted to do with the property. Realtors can ensure that your vision for the home is a viable one.
As much data as is already available, local real estate experts will really scour their neighborhoods for additional information that’s not widely available to the public. We know about some real estate experts who are out there tracking residential dumpster rentals as a leading indicator of their neighborhood housing markets. Why does this information matter to the typical buyer or seller? Near-term adjustments to inventory, both in terms of quantity and character, can help a buyer decide whether or not to walk away from negotiations. It can also help investors and prospective sellers, who are not forced to sell on a timeline, decide whether to put a particular property on the market this month—or to wait another month or two.
One overlooked detail can easily cost tens of thousands of dollars, either in the offer and closing terms, or down the line with costly and unexpected repairs. Publicly available data too easily creates a false sense of confidence that buyers/sellers know everything they need to—and/or can easily find out the rest.
The Industry is Slowing Changing
We’re not claiming that Zillow and other online sources aren’t changing the real industry. They most certainly are. But instead of dramatically increasing the number of for-sale-by-owner homes or changing the calculus in working without a realtor, publicly available data is slowly but steadily carving out a middle ground of low-cost, full-service realtors. Some of these realtors offer reduced and negotiable commissions, while others are introducing an altogether new kind of real estate agency fee structure.
Rather than killing the profession of real estate agent, the realtor knowledge and skillset will become more specialized within agencies. This specialization will be implemented in such a way as to offer superior value to a new generation of buyers and sellers. The risk of working without a realtor altogether, however, is still very real and very likely to continue for the foreseeable future.