Are home buyers still using real estate agents?
Are home buyers going to dispense with agents? I hear lots of people questioning whether buyer agents will disappear as a result of consumer-searchable information. With ever increasing tools and tech available to enable people to “do it themselves”, why is the most computer-savvy generation relying more than ever on agents? 90% of Gen Zers who were polled about whether they would use an agent when purchasing a home said that they would. When asked the reasons, the most common were marketplace knowledge and experience as well as the ability of the agent to understand what the they want. These buyers are relying on their agent to be able to find something that meets their needs while staying within their budget and other parameters.
How agents help buyers prioritize
Guidance in sorting through priorities: compromise is ALWAYS required. Agents can help illuminate which things really matter to the buyer. Things that were on the must-have list may move to the would like list. Agents may have a work around solution (whether it’s a nearby area or a den/finished basement instead of a 4th bedroom, the ability to fill in a pool if a pool is a non-starter, etc.) That “Understanding what I want” was the number one factor cited by Gen Zers in response to why they’d use an agent. A good agent listens to what her clients say but also tries to find compromises that they can tolerate in order to find them options that meet the most important of their needs and wants.
Information without experience is not very valuable
Why are agents still relevant with all the technology that exists? While most buyers do begin their own searches on line to do some of the initial legwork, the complexity of the offer, negotiation and closing process is at an all time high. These buyers rarely have expertise in those areas. So, arguably, the agent’s value is also higher than ever. To begin with, the negotiations surrounding both an offer and, then, later, the inspections, is not for the faint of heart. Experience in understanding as well as negotiating these specific contracts is vital. Inexperience may well lead to the buyer being taken advantage of with no recourse. Should you use an escalation clause? Modify the built-in appraisal contingency? In addition, consider the many lawsuits surrounding sellers disclosure issues, pre-settlement walk-through visits that uncover damage or problems, mortgage commitments that are not delivered on time, etc. Few home buyers are equipped to handle these kinds of situations.
The current marketplace supports the use of an agent
Take a look at some of the current market characteristics bolsters the case for using an agent. With historically low inventory, having an agent guide a buyer in a multiple offer situation is a must. Why? For a couple of reasons. One is that these multi-offer situations usually happen very quickly and buyers must sign offers the same day as they see the house in most cases. Having an experienced agent craft an offer in a competitive bid scenario greatly increases the buyer’s chance of winning the property.
Information needs interpretation
Similarly, with so much data available, buyers usually need someone to help them interpret what it all means. For example, as the tight market drives prices up, we’ve seen some low appraisals which are the result of sales in a softer market. How should the buyer react when the property he is under contract for appraises low? What should the number of days on market mean to him? How about finding out what the seller paid for the property seven years ago? Then there’s my favorite red herring: The Zestimate. In my opinion, a Zestimate in our area where the houses are unique is highly inaccurate. Perhaps in areas where there are large developments all built the same way at the same time, they might be useful, but not on Philadelphia’s Main Line. Only someone with exceptional familiarity with similar properties (a local, experienced agent) can effectively estimate value.
Expertise: how often do you buy a house?
Whether you’re a first time buyer or not, most people don’t buy more than a few homes in a lifetime and those are often years apart. People forget the nuances and laws and customary practices change. As a result, i-buyers (those who represent themselves and don’t use an agent) often put themselves at great risk. While they can ask the seller about the property and can call the township to ask about ordinances, what about the questions they don’t know to ask? In our area, these could include: what’s knob and tube wiring and why should I care? Is this property in a flood zone? Where are the school district boundaries? Is oil heat bad? Does a septic tank mean there’s sewage in the yard? What does taking care of all of these trees cost? I believe that this service (answering the questions they don’t know to ask) is the most valuable thing I offer my clients. I educate them about the questions they should be asking and explain the possible answers and their ramifications.
Buyers do not pay the agent’s commission
Finally, at least in Pennsylvania, using a buyer agent does not cost the buyer anything (except sometimes a settlement fee of around $300). The seller pays all of the real estate commission fees. So cost should not be a factor in choosing to work with a buyer agent.
There’s a lot at risk
Keep in mind, buying a house as a DIY project is riskier than others you might try. If you attempt to fix your fan belt yourself and it doesn’t work, you can still take your car to a mechanic and have it repaired. If you realize halfway through negotiating your home inspection that you’re in over your head, there’s not much you can do. A home is probably the largest purchase you’ll ever make–why do it without the benefit of (free) expert advice?
Now do you see why you need an agent?
Clearly, there are several compelling reasons to use and agent and lots of risk to representing yourself in a real estate purchase. Please understand, working with an agent in no way suggests that you should not avail yourself of the technology and information available to you. I absolutely encourage prospective buyers to begin their search online. Start looking at neighborhoods and note commuting distance, school districts, taxes and other pertinent factors. You may even want to start your search for a mortgage broker on line (though I’d recommend also asking your agent for referrals). Being armed with information can never be a bad thing.