Television programs about how to negotiate a real estate deal. How to renovate a residential property is on almost every channel these days. And what’s more, everyone proclaims to be a real estate expert as family, friends, and even your trusted doctor are quick to dispense advice. So as potential home buyers and sellers try to make the most of their money and save wherever they can. Does a real estate salesperson offer any value when online tools like StreetEasy, Zillow, and Trulia are rapidly available to provide comparable sales data, current listings, and access to market properties?
Fostering a Relationship with a Trusted Advisor
The answer is a profound Yes! The agent does add value to a buyer or seller in achieving their real estate aspirations. To derive the best outcome, it is important to select and grow a strong relationship with one real estate agent who can act as a trusted advisor. This will ensure that your best interests are paramount in this competitive market. A trusted agent advocates for your needs and is an empathetic listener guiding you throughout the emotional purchase or selling process.
Code of Ethics
There are many real estate agents that are simply licensed by the State which enables them to conduct business. However, A Real Estate Board of New York (REBNY) real estate salesperson and/or REALTOR®, a member of the National Association of Realtors are unique. The REBNY agent(s) and/or REALTOR® selects to be bound by a strict code of ethics. These agents representing a buyer, seller, landlord, tenant, or other client have a primary duty to protect and promote the interest of their client. This obligation is primary; however, it’s also their obligation to treat all parties honestly and fairly.
Real Estate Transaction Complexity
Real Estate transactions can be complex, and on average, people buy and/or sell a property every seven years, a span of time in which markets, laws, rules, regulations, and practices can change greatly; therefore, it is advantageous to have an experienced agent’s knowledge to support in the execution process. An agent in their daily profession stays abreast of market dynamics and changes in order to share this knowledge with their client at the appropriate time in the process. Whether an agent is previewing properties or evaluating an owner’s property, they will share their observations, and disclose pertinent information from public sources in aim of mitigating issues in pursuit of achieving the proper outcome for their client.
Client Meeting
At the initial meeting with a prospective client, the agent must explain the various types of agency relationships that exist and the obligations they create, as well as in what capacity they plan to work with you. New York State law requires that each agent of potential buyers and sellers provide a Disclosure Form to document that they have explained their agency relationships and how they intend to assist prospective buyers and sellers. It’s likely you will be provided more than one Disclosure Form throughout the buying and/or selling process describing the various roles and obligations of the many parties involved in a real estate transaction.
Hurdles and Roadblocks
Most buyers and sellers aren’t aware of the numerous roadblocks that they may encounter as they try to make a purchase or achieve a sale. Hurdles arise along the home buying/selling timeline due to factors such as: complications with a lender, negotiation process, legal due diligence of the property, a difficult finance package or interview process with a co-op or condo board. By working with an agent, however, prospective buyers and sellers have a guide and support system to help derive solutions to resolve issues that arise.
Top Ten Reasons an Agent is Crucial
The top 10 reasons an agent is crucial in your home buying or selling process with the aim of meeting your investment objectives are:
1. Emotional and Expensive Investment:
When something goes astray in the buying and selling process, it is best to have an experienced advisor and an objective third-party that can manage the situation and keep the transaction moving forward in a positive and productive manner. When we are emotionally invested, we can lose perspective of our priorities. The result is the loss of time, money, and unnecessary aggravation.
2. Markets and Processes are Evolving:
REBNY agents and/or REALTORs® are not only bound by a strict code of ethics, but they are also members of a large community of experts that share market, legal, and process information daily. A typical buyer or seller is involved in a few real estate transactions in their lifetime, and in turn, has a smaller network to rely on to answer questions, and is less familiar with the market, process, legal and regulations changes that are ever-evolving.
3. Investigating:
In preparation for purchase or sale, agents work with you to facilitate the due diligence process. Per Investopedia, “due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party with aims of preventing unnecessary harm to either party.” An agent will assist you in deriving important facts such as:
- Is there any litigation associated with the building or counterparty?
- Are there any upcoming assessments on the building?
- What type of renovations may be made without the undue influence of building management?
- Are all permits and inspections in place for renovations done in the past?
4. Deriving Value:
The single most important factor to consider when buying or selling a property is determining value. Purchasing or selling real estate requires a detailed analysis to derive a current value. To create the proper value, it is crucial that data related to the subject property and comparable properties are accurate and details the property’s key characteristics. Additionally, the comparable properties must be of “like-kind” and have sold within a 3- to 6-month period (generally). The information on many public real estate websites utilizes Automated Valuation Models (AVMs) to derive a value and is not always accurate.
Automated Valuation Models
These AVMs, and market estimator algorithms are not always reliable. This is due to a number of factors such as:
i) not including private or abhorrent sales that skew the data. For example someone sold their home to a family member for $1.00 or someone was desperate to live next door to their parents so paid an above market price,
ii) delays in posting sales values,
iii) inaccurate data input into the MLS or from users,
iv) comparables used within the model might require further +/- adjustment or are not a true comparable,
v) little sales in a local market. So the model may inaccurately extrapolate changes in the local market to derive a value,
vi) AVM does not access the condition of the home or renovations that have occurred, and
vii) other local market pressures or forces may be causing these estimated values to falsely depict the “true” market value.
Comparative market analysis
An agent conducts a comparative market analysis (CMA) of the subject property in relation to currently active, in contract, recently sold, and expired listings. Comparable sales are those that closely resemble the property under evaluation in respect to size, shape, condition and location. Agents account for square footage, construction date, amenities, upgrades and current condition. They also evaluate how long any comparable sold properties were on the market; if any “off-market” sales occurred (sold, but never listed properties); and what is the current inventory of properties available for sale.
5. Negotiating:
As Frederick Warburg Peters states in his blog article entitled “Feelings and Facts” dated July 8, 2014, “Every agent knows that people do not always make the best economic decision for themselves, either in the stock market or in the purchase or sale of a home.” An agent, as an objective participant, is in the best position to negotiate on the buyers/sellers behalf due to their understanding of the quantitative and qualitative facts (price, financing terms, furniture, fixtures, date of closing and occupancy, etc.) and their ability to act rationally and positively during negotiations. It is often stated in the residential community that if both the buyer and seller are unhappy with the price you have negotiated a fair and equitable deal.
6. Resource to Information and Experts:
An agent and their firm work with a large community of professionals in various lines of businesses. An agent can suggest vetted experts to work with you along the transaction process. The agent can share resources such as:
- design firms,
- retail stores and
- websites that would be helpful to you in the home buying or selling process.
The agent introduces you to and familiarizes you with a neighborhood or even how to navigate the transit system.
7. Prescreening and Advising:
An agent begins by listening to your needs and desires and prepares you for the buying and selling process. The agent is ever present throughout the transaction. Always there to dispense information, make appointments, and reassess the plan depends on the feedback they are receiving from you.
8. Mortgage Approvals/Commitments:
Your agent is your best ally when you are having difficulty ascertaining a mortgage approval or commitment letter. They are in the optimal position to help you fulfill the needs of the lender. The lender will barrage you with documents to complete due to new and ever-changing regulations these institutions must adhere to.
9. Board Approval with Co-Ops and/or Condos (if applicable):
The New York City cooperative, and in some cases, condo board approval processes are onerous. Many buyers and sellers do not want to prepare to tackle the Board process alone. Boards devise meticulous approval processes to ensure a building’s financial security. This require experts to navigate the approval process. It’s advisable to enlist an agent to learn about the board and building. To prepare the presentation, which includes:
- detailed financial statements,
- cover letters, reference letters,
- background checks, and an interview, amongst other items that vary by building.
Boards have been known to even reject cash offers if a board package is incomplete.
10. Marketing:
An agent in consultation with you will devise a marketing plan. This plan is a framework that documents the strategy to promote the property to the right market participants. Some important marketing decisions include:
- deciding whether to professionally stage,
- how best to photograph the property,
- digital videos to include: 3D, aerial, slide show, neighborhood
- determining the appropriate channels to showcase the property (online and print publication platforms),
- deriving the personal, professional, and business channels to distribute the property details to, and
- determining whether to showcase the property through public or private viewings.
Conclusion
An agent is your advisor, project manager, researcher, or ally. The partner looking after your best interests in obtaining your real estate dreams. Therefore spend the extra time to wisely choose an agent to act as your trusted advisor. Connecting with an agent’s true value provides you with the necessary emotional support and guidance to make your real estate aspirations possible.
