Just exactly how does one write objectively about members of an industry that have, for better and worse, have played a central role in the author’s life for the past ten years?  I don’t know either; so, I won’t try.  Instead, by embracing that time and the experience that comes with it, I hope to give you a purposefully subjective view, designed to help you get the most out any future relationships with real estate agents. 

Right out of the gate, I can say with the utmost confidence that real estate agents play an important and critical role in the real estate transaction process.  No doubt about it.  The value a competent real estate agent can bring to bear is a game changer for everyone involved:  buyers, sellers, other agents, lenders, appraisers, surveyors, contractors, movers, and, most importantly, settlement attorneys (okay, maybe not most importantly).  The key, like many other vendor/vendee and principal/agent relationships, is to know when you need a vendor/agent and how do go about picking the right one. 

I have been swimming in the same pool with real estate agents since 2001 and have picked up a few insights along the way.  As an accident of timing rather than by design, I rode the bubble up to its peak and then, to quote Wyclef Jean, “With what goes up, must come down, the laws of gravity.”  And, so, I rode it down as well and continue to ride. 

One positive thing about the crash insofar as the contraction of the real estate industry goes, is that most of the real estate agents in the game for the quick buck are long gone.  Whether they were good or bad, they likely made a killing and got out; for them, hopefully not too late.  Necessarily, those that remain are, by enlarge, the better agents who have seen bubbles before, know their trade and continue to provide value to their clients.  Still, it is an important relationship, not to be entered into lightly and there remain plenty of real estate agents to avoid.  [That was gentle and nice, right?] 

When do you need a real estate agent? 

For both buyers and sellers, the first question to answer is whether or not you even need a real estate agent.  While the answer is predominantly yes, you should have one; there are some instances where it may not be necessary and it depends heavily on the person asking the question.  In fact, if you catch one of my real estate agent friends in a sharing mood and after 10 cocktails or so, they would probably agree, no guarantees. 

The answer lies in the functions a real estate agent performs; a good agent, one worth engaging and paying for.  For you buyers that think the cost of an agent can be dismissed because the seller pays for both, think again.  No matter what side of the HUD1 the agent’s fee ends up on, it plays a role in the overall transaction. 

For the moment, hold this “do I need a real estate agent” question in the back of your mind while I share with you qualities that good real estate agents possess and the many important roles they play in the process of transferring real estate.  An understanding of these concepts, along with understanding what kind of client you are, is required to really answer the question correctly. 

What makes a great real estate agent? 

Whether working for buyers or sellers, a great real estate agent will know the market.  Specifically, they will be connected to the ebb and flow of the financial and real estate markets across a broad spectrum – from globally to locally.  No, your real estate agent does not need to know details about the financial condition of any particular foreign country or what the cost of a shack on the coast of Kuala Lumpur costs.  My point here is that a good real estate agent will “get it.”  They will understand the general nature of how money and property are related to and affected by events from around the world to those around the corner.  Clearly, the more local information counts more; but, both can matter. 

A second essential characteristic of a great real estate agent is the ability to also “get” people.  Not only does your real estate agent need to understand and work well with you; but, they also need to be able to connect with and productively flow with the other side and their agent.  Keep in mind that real estate agents have to accomplish this in an often emotionally charged, tense, life changing (good and bad) event for both parties.  Even the most well adjusted, happiest and best buyers and sellers can find themselves on edge at some point during the process.  Oh yeah, let’s not forget that this is typically the largest financial transaction of people’s lives.  Add all that up and what you get is a complicated personal, emotional, financial and business transaction out there.  A good real estate agent understands that and is able to work effectively with everyone. 

Beyond those two critical attributes, great real estate agents must also have a solid mix of: 

• the patience of Job;
• a sharp eye for details – details about the property, the people, everything;
• a quality network of service providers (more about that later);
• familiarity with the contracts, addendums and settlement documents used in the process;
• ability to negotiate firmly without damaging the overall relationships or, worst case, kill a deal;
• honesty & integrity
• follow through
• charisma
• natural tendancy to talk “to” people, rather than “at” them or “down” to them
• accessibility
• drive, desire, focus, unselfishness

As far as the exact role of a real estate agent, that can vary greatly depending on what the client (buyer or seller) is looking for and their particular needs.  In the responses to my survey on this question, there were many overlapping elements.  The overall gist was that real estate agents are professionals that guide their clients through the largest financial transaction of their lives.  That they take an otherwise challenging, complicated and stressful process and make it significantly more palatable for their client.  That they care about the client and successfully meeting the clients needs more than getting a check at the end of the day.  That they zealously advocate for what their client is looking for and remind the client of their original goals, needs, expectations, etc. when they get off course.   

What makes a bad real estate agent?

Now that you know what makes up a great real estate agent, it is much easier to understand what makes a bad agent.  Quite simply, bad real estae agents lack the qualities set out above in sufficient supply to get the job done.  A great real estate agent will have a mix of the characteristics set out above; there is no being great without such a mix. 

For example, take a real estate agent that knows everything there is to know about finance and the real estate markets on a global, national, state, local, city, town, street and block level; yet, cannot read people or remember which contract addendums are required.  They might make a great addition to a team of real estate agents; but, that is not the person you want to work with one on one.  The mix is critical and, to be truly great, an agent must score high marks across the spectrum. 

An important note about vendors and inappropriate steering.    Good real estate agents know reputable title attorneys, lenders, home inspectors, builders, plumbers, landscapers, electricians, movers, designers, and so on.  The key is that a quality real estate agent will refer you to the right professional in their network of trusted service providers when appropriate and necessary . . . for you.  Just like a bad mechanic will always find something wrong with your car to fix for a fee, a bad real estate agent will always find a reason to send you to one of their buddies to get something done.  Not only might the work or service itself be unnecessary; but, the referred professional may not be the right person for the job to begin with. 

Despite federal law to the contrary, the real estate industry is fraught with “scratch my back” interrelationships, with real estate agents at the top of the proverbial food chain.  In fact, I am sorry to say, the kickbacks, steering and other prohibited and inappropriate behavior is more akin to an infection that the industry cannot get rid of.  With little to no actual enforcement of the law; however, there is little incentive for all of the money making circles out there to play by the rules.  But; I digress, a post (maybe a whole book) for another day. 

The point here is that as a client, you need to know that this type of unfair play exists and what to watch out for.  Just like you get a sense from your slimy mechanic that something isn’t right, so too will you (if you are paying attention) get a sense that something is off if you find yourself lining the pockets of your real estate agent’s referral partners. 

Don’t get me wrong.  There are plenty of good real estate agents that make outstanding referrals to friends and colleagues of theirs, that they have known for years; maybe even a family member.  That is what you want, right (hint:  the answer is yes)?  Getting connected to someone that is a known provider of excellent service is part of what your real estate agent should be doing for you.  The line gets crossed when you do not actually need the service referred or if the provider is not the best one for the job. 

I can tell you that as far as the referral to the title attorney, whether or not the real estate agent is getting something inappropriate out of it, the consumer is generally protected.  Title company fees are all pretty much the same and the insurance rates are regulated; so, they are the same.  You may just not get as high a level of service from the real estate agent’s “buddy” title company; but, in the end, you will still get what you came for – a closing where you buy or sell a home.  Business for a title company is a volume thing; so, there is no reason to expect they will not do their job.  Any inappropriate behavior is simply to drive the work to the front door.  Once inside, it is all the same. 

Are all real estate agents really the same? 

Yes, this is a rhetorical question and, no, real estate agents are definitely not all the same.   

First of all, just like in any profession, some real estate agents are just not good at their job.  For whatever reason, they are not competent nor qualified to do what is necessary and required of them.  They may be great people; but, they are just not good real estate agents.  Review the information above and avoid them as best you can.  If you get stuck with one, see below on how to know it and how to get out. 

Beyond the unqualified and incompetent, beyond the agents that are just okay, there are plenty of very good real estate agents out there.  Now that you know the characteristics that good agents bring to the table, you need to figure out how to pick one and that can be tough since there are so many good ones if you know how and where to look. 

The real differentiator here is you.  Within the subset of good agents, some are better at:  short sales & foreclosures; distressed assets; new construction; fix-er-upers; co-ops; condos; thriving singles areas; family neighborhoods; urban walkable; and so on.  Once you sift through the plethora of agents you should not be considering to begin with, knowing what you need and want will bring you the rest of the way to your final decision.

My next post will dig into a topic you know much better than I.  We are going to talk about you.  In order to find the right real estate agent, you have to know what kind of client you are likely going to be; so, do not miss:  Picking the Right Residential Real Estate Agent:  Know Thyself First to Succeed.