Although the vast majority of U.S. home sales involve real estate agents, the notion in the industry that consumers would be fine buying or selling a home without one is not really a new one. After all, the for-sale-by-owner route has been an option forever, and other industries have shifted to a “buy-it-now” mentality that some suggest will fit real estate, too.
But with all due respect to consumers who try to go it alone—and those in the industry who encourage consumers to go it alone—it’s a terrible idea.
DIY real estate is on par with DIY surgery or DIY legal defense. When so much is at stake, it’s always best to have a professional on your side. Period. That certainly applies to the largest financial transaction of a person’s life.
The good news is that most buyers and sellers agree.
Most People Agree
The National Association of REALTORS®’ 2018 Profile of Home Buyers and Sellers report notes that 87 percent of the buyers in the survey used an agent or broker, while another 6 percent purchased directly from a builder or builder’s agent. That leaves only 7 percent who made their purchase without the guidance of a professional.
The figure on the selling side is similar: 91 percent of the surveyed sellers worked with an agent. For-sale-by-owner properties accounted for just 7 percent—the lowest share since the annual study began in 1981.
Gen Z Weighs In
It’s worth noting that the value of an agent crosses generational lines. A recent Homes.com survey of more than 1,000 adult Gen Zers (aged 18-24) showed that nine in 10 plan to use an agent when the time comes to house-hunt. It’s telling that this group—the most digitally inclined generation yet—understands that buying a house isn’t as simple as purchasing a commodity, arranging a ride or planning a trip. The risks are exponentially higher.
The fact is, there’s much more to a successful transaction than meets the eye. It can all seem so simple, especially with online home search being what it is today, but there’s a big difference between seeing a great home online and walking in the front door as its new owner. An expert real estate agent can provide guidance an app can’t touch—and, at the same time, provide all the value and data that can be found on the app.
In the Right Hands
Technology provides all sorts of advantages, but in the end, it’s a tool. Technology in the hands of an expert agent, though, becomes much more. That’s when data meets real-life instinct, insight and local knowledge. That’s when agents deliver their irreplaceable value by negotiating, working through contingencies, being a voice of reason and guiding clients through a long, complicated process.
The real estate industry is clearly targeted for disruption, and we should all celebrate innovation that elevates the customer experience and raises the standard. At the same time, make no mistake—nothing in practice or on the horizon matches the value delivered by a great agent who’s armed with great technology. That remains an unbeatable combo.
Adam Contos is CEO of RE/MAX, LLC. For more information, please visit www.remax.com.
Well said, Thank you!
This is an interesting study and a little encouraging however, would the 7% be growing? The fairly recent evolution of on line Realtor and Lender services seems a threatening disrupter to me. The targeted on line marketing sucks in people who may not have a clue about the huge difference of using good local professionals. It is just so easy to “click here” until they get to the badly botched closing.
Agree 100%.
Attorneys say that if you represent yourself in court, you have a fool for a client. Professionals use professionals.
I am sorry but you don’t really address the issue of how a licensed Real Estate professional can help a home buyer/seller. You offer a couple of vague concepts under the heading Technology, but nothing definitive about how using a licensed professional, will in the end, be more secure than trying to do it yourself.
Rather than go on with my criticism, I will write my own article saying why any buyer/seller in the real estate world should use a licensed professional.
As someone who has sold his own properties in the past I strongly disagree. As long as the sale is finalized by professional real estate attorneys their is no advantage to paying someone a 6% fee for basically listing your house and showing it. This is easily accomplished by anyone capable of using the internet. The way of traditional real estate buying and selling is quickly changing. For the better.
Internet is insecure and getting worse.
For example, the US Social Security Administration posted that in 2017, there were 3,200 scam attempts by villains who claim to be SSA attempting to capture private data. This year, the number is 34,000 and growing.
Only a fool would give confidential information to an ibuy company. Just watch, their reputation will crash.
Do business with someone you trust, a Realtor.
I recently sold a $299,999 property at my asking price without a real estate agent or attorney because the Title Company handled all the paperwork for the seller and buyer. I have other properties to sell in the future and would like to hear the specific things that could go wrong if I don’t use a real estate agent.
“What could go wrong if I don’t use a real estate agent?” Allow me to enlighten you. Also, I have added my personal comments on what makes a good agent.
It is not a surprise that “good agents” know their market backwards and forwards. They know on any given day, if there are more Pending Sales in an Area than New Listings, because it is a good barometer of a healthy market, or one in decline. This info can be very beneficial to both buyers and sellers.
If one is working with an agent out of their area, whether a buyer or seller, I think they are doing themselves a disservice. Local agents know WHAT’S HOT and WHAT’S NOT. Also, you want a full time agent and not one needing their next sale just to stay in business! It is reported that 50% of new agents are out of the business within 12 months, which is a pretty good indicator real estate is not as easy as it appears.
Good agents know which communities are having financial problems and how to dig deep for problems that may not have surfaced. They know what to look for going in the front door, so one can get out in the event of an unplanned life change. They know which communities are really selling, and for how much a property should sell.
A good agent will never sell their seller’s short or allow their buyers to knowingly overpay. In new communities they can usually get a better buy from developers than the average buyer walking in off the street. They can negotiate better and hold a transaction together when everyone gets frustrated, and work for their clients best interests when hired to do so. They can hold the price up if they represent the seller, and beat the price down if representing the buyer. It takes hours of research, but agents can provide a competitive price analysis that is adjusted for the quality of the property. Dozens of things can affect the value of a property, and it is necessary information to make a good decision whether buying or selling.
Good agents know the best lenders, the best title companies, and which attorneys are really real estate attorney’s. They know who charges a fair price for services and which ones over-charge. They know which property inspectors will rat out every last issue a property has, and which ones inspect for convenience.
My friend negotiated with a For Sale by Owner, and ended up rebuilding the roof system, a $30K mistake. Another closed on a home purchased direct at a great price only to discover after closing all the copper wiring had been cut out of the attic, and he thought the electric had just been shut off for non-payment. Another found a fabulous “As Is” buy that turned out to be full of Chinese Dry Wall. Good agents know the five star vendors & contractors that do great work at fair prices.
I have a host of true stories where the buyer’s deposit was forfeited because they didn’t use a Realtor, a scammer that made off with a $75K deposit from an attorney, and there was the delayed closing because the correct disclosures were not completed, and offers that were not properly constructed and negotiated, causing the property to be lost. I know seller’s that couldn’t sell because a potential buyer tied them up trying to get qualified.
Sometimes, buyers and seller’s don’t know what they don’t know until it is too late, like how to solve the problem of a lender pulls a buyer’s financing the day before closing because there was no proper follow-up with processors. The buyer didn’t stay on top of it and the seller couldn’t talk to the lender, but an agent could have. Good agents know which on-line lenders… talk the talk but can’t walk the walk. They know which local lenders can do what they say every time.
Until you have experienced buying, selling and closing problems that crop up quickly like real estate professionals selling against you, the proper way to handle multiple offers, counter-offers that improve the chance of success, or handling associations that delay approvals, or pushing busy attorneys that don’t get around to your closing causing it to be delayed, or estoppel’s not ordered, or undiscovered last minute tax liens, or spouses not signed off at closing, and strange things like a missing land patent in the chain of title, or encroachments of structures purchased but are not really on the property, or dealing with the seller who removed personal property the day before closing like a fences, furniture, fans, or appliances, and even the 500 gallon propane tank.
You ask, what problems could an unsuspecting buyer or seller have? Ask an agent that has been in the trenches every day. This is only the tip of the iceberg. A good agent is worth their weight in gold! I love it when my customers call me, “The Easy Button of Real Estate,” because only then have I done my job.
Thank you for listening, and do yourself a favor and hire the best Realtor you can find!
P.S. I should have mentioned I have 46 years’ experience in the real estate trenches and currently reside in Bonita Springs, FL.
Many argue that you do not need an agent because all we do is post pictures to the internet. We go a lot further than that. Most of the FSBO’s that I find around my area are people completely detached from the reality of how a home should be sold. From trouble scheduling showing to telling me the seller picks the home inspector, it has always been a nightmare dealing with unrepresented sellers. Most first time home buyers today are very detached from how to actually buy a home or what to expect, thus I find it hard to believe they will be able to take the necessary steps to do anything with out a professionals.