Agent Services

As to the benefits of using realty agents, here's what career real estate investor and renovator Suzanne Brangham writes in her excellent book, Housewise (HarperCollins, 1987, p. 163):

Real estate agents are invaluable. You need them as much as they need you. After you have narrowed your choice to one or two neighborhoods or towns, enlist the aid of an expert. Your real estate agent will be your guide so you can sit back, take out your notebook, ask questions, and learn. . . . Good agents know what properties are selling for, which areas are strong, and which neighborhoods are getting hot. . . .

If you let your agent know that you plan to buy and sell several properties over the next few years, he (or she) will do everything short of breaking and entering to show you the properties that are available. . . . I'd been lusting after a beautiful two-unit building, but it had never been up for sale. My agent called me the minute it was listed and I bought it in less than an hour. In fact, I soon became notorious for signing offer forms on the roof of my agent's car. When there's a race to get in your bid on a particularly juicy piece of property, a faithful agent who knows exactly what you want can make all the difference.

In addition to showing you properties and neighborhoods, a good agent can assist with at least eight other tasks:

1. Suggest sources and techniques of financing and help you run through the numbers.

2. Research comp sales and rent levels so that you can better understand values.

3. Act as an intermediary in negotiations.

4. Recommend other professionals whose services you may need (lawyer, mortgage broker, contractor, designer, architect, property inspector).

5. Handle innumerable details and problems that always seem to pop up on the way from contract to closing.

6. Clue you in about what type of interest and market activity has developed around various properties.

7. Give you an insider's glimpse into an area to let you know who's doing what and where.

8. Disclose negatives about a property or neighborhood that might otherwise have escaped your attention.

Your agent can become your trusted partner. He or she will help you sort through your neighborhood and property trade-offs, suggest possibilities for value-creating improvements, and help persuade sellers to accept your price and terms. Overall, as Suzanne Brangham points out, "A good agent, one who really listens when you explain what you want, is likely to take you directly to the buried treasure you've been looking for."

Civil Rights Caveat. Real estate agents (like everyone else) must constantly guard what they say out of fear of lawsuits alleging discrimina tion. If you ask, "What's the quality of the schools in this neighborhood?" the agent may hedge an answer if, say, at one time forced school busing or racial turmoil has spurred an exodus to suburbia, and corresponding school achievement test scores have fallen.

Similarly, if a changing ethnic or racial composition of a neighborhood is affecting property values (either up or down), a sales agent would avoid discussions along those lines. The U.S. Department of Justice (DOJ) and the U.S. Department of Housing and Urban Development (HUD) have decreed that neither ethnic, religious, nor racial demographics affect property values. Hence any real estate agent (or appraiser) who disagrees with HUD or DOJ can be held civilly and criminally liable for damages.

In today's climate of victimhood, any statement that in any way might give offense to some "protected" group can land a real estate agent in court and out of a job. Don't expect candid answers to any questions that may transgress someone's politically correct idea of civil rights.

Property Condition Caveat. In addition to fair housing issues, most agents tread lightly in response to questions about the condition of a property. "How's the roof?" you ask. The agent answers, "As far as I know, it's eight years old and hasn't had any leaks." You buy the property, and three months later the roof begins to leak. On the basis of the agent's statement, you sue the brokerage firm for misrepresentation and fraud. Even though the agent was telling the truth as far as he or she knew it, many judges or juries would still find the agent liable.

Agents have been sued so many times for giving "to the best of my knowledge" answers concerning property condition that many avoid such questions and will refer you to appropriate specialists and inspectors. In one major precedent-setting case in California, an agent was held liable for not informing his buyers that a property was located in a mud slide area—even though the agent did not know that the area was risky. In response to this case, the California Association of Realtors convinced the California legislature to enact a seller disclosure law. Most other states have followed California's lead.

To confirm your belief that you're buying at a bargain price, you need full and accurate information about neighborhoods and specific properties. A top real estate agent will provide you with some of this knowledge. But not all of it. You must recognize the practical and legal limitations that even top agents confront.

Buyer Loyalty. For every real buyer they work with, most agents encounter a dozen pretenders—people who steal an agent's time and knowledge but feel no obligation to buy from that agent. Or if they do buy, the first thing they do to make a deal work is to try to cut the agent's commission.

This approach does not build a lasting and mutually beneficial relationship. For best results, once you find a top agent, demonstrate buyer loyalty.

When you're loyal to your agents, they will see you as a real buyer who will give them repeat business (as well as referrals). In return, they will give you preferred treatment and make sure that you're among the first to learn of those "juicy deals" as soon as they hit the market, and sometimes even before a listing goes into the MLS (Multiple Listing Service).

Agents: Summing Up. Most experienced real estate investors buy their properties through real estate agents. Although they might save money dealing directly with property owners, they would lose time and valuable help. So most investors delegate the legwork to someone who knows their requirements, knows how to find properties, and knows how to push a deal through to closing. Top real estate agents are out talking to buyers, sellers, investors, lenders, politicians, merchants, employers, and government agencies, every day, all day. Put one of these agents to work, and you may learn of more good deals than you could ever turn up on your own.

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