First, you’ll want to step back…like WAY back …..because the worms are going to come squirming out of that particular can when you open it.
Because state and national real estate pre-licensing courses agents take are geared toward teaching what’s legal, ethical, and necessary to understand the “components” of a real estate transaction (obviously critical), and because those 3 topics represent such a massive amount of information, the topics related to actually marketing, selling, and negotiating, are left untouched. What this means to the consumer is that the average agent is “allowed” to practice real estate, but not necessarily “competent”.
Nationally, the typical agent will sell fewer than 4 homes a year with an average (at the time of this writing) around 9 homes per year. Due to the complexity and ever changing nature of real estate best practice, coupled with continuously shifting market dynamics, this is not nearly enough practice to ever get very good. On might argue that simply marking time with respect to skill level would be a challenge with volume that low. In fact, given that these 4 to 9 sales are likely not evenly spread over time, there are likely many months were no sales at all take place. In this situation, skill could very well atrophy to the point that the agent actually gets worse over time.
Of course the opposite is often true with the top producing agents. For someone who brings sales and marketing skills to the table from another industry, or perhaps has a great mentor, the level of skill increases radically as volume increases. A good agent might sell 25 homes in a year. That’s 6 times what the typical agent does, and almost 3 times the national average. A great agent will sell 50 homes in a year. A truly exceptional agent will sell 75 to 100. A top producing team of agents, each specializing in a particular facet of the business (such as ours) will sell in excess of 100 homes a year. At this level you’re working with someone in the top 1% of the country…and usually at the same, or similar expense. The difference in ability from the top to the bottom of this range is roughly the equivalent difference between a toddler and a navy seal. Yes really…..it’s that big a difference.
So perhaps the question should be “How can I tell the difference, and what should one expect at the different levels?”
Telling the agents apart shouldn’t really be that tough. In fact, you can figure it out by asking 3 questions. First….”What year did you get your real estate license?” Second….”how many homes have you sold in the last 12 months?” And Third…”Can you prove it?” A long time holding a license doesn’t necessarily mean anything. It’s possible to be licensed for 20 years having never sold a home. What you’re really looking for is recent deal count.
And what does this deal count get you? Well….at a minimum it gets you someone who should have great vendor contacts. This part alone is worth its weight in gold. Although there can be exceptions, great agents tend to work with great lenders, and great home inspectors, and great attorneys. This makes them a one stop shop for exceptional home buying support from “A to Keys”. This is a BIG DEAL. Most of the horror stories you hear about buying and selling a home usually can be pinpointed back to a moment where a less than capable vendor was introduced into the mix. There are so many moving parts that it doesn’t take much to throw things out of whack.
But what about service “beyond the minimum”? This is where it gets interesting. You see, exceptional agents tend to be well fed. Meaning their bills are paid. Meaning that it’s not imperative for them to sell you “this particular house” in order to pay their mortgage for example. And when their financial future isn’t on the line they can give more objective advice. Does this mean every agent always does? Of course not. There are creeps everywhere just looking to add another dollar to their pile at your expense. But it does create an environment that’s more conducive to a candid, honest, and productive relationship. And only when you combine knowledge and skill in the absence of the pressure to close, can you have an agent that operates as a fiduciary putting your needs before their own.
In this situation you can expect to be lead to properties that better suite your needs. You can expect exceptional market intelligence which is critical to creating a strong negotiating position. You can expect systems and well worn routines that will more effectively get you to settlement without all the bumps and bruises. And in most cases, you can expect a better over-all deal because the agent is more concerned about reputation than compensation. A 1 or 2 % improvement in your over-all terms can quite literally save you thousands.
Oh yeah…and the cost? While it varies from agent to agent, more often than not it’s about the same. In fact, I think it’s fair to say that in most markets, it’s relatively easy to find an agent with exceptional skills that (thanks to economy of scale) may even be charging LESS than the unskilled agent.
Kinda makes you wonder, doesn’t it? 🙂