Buyers Agent in DC

Big news these past couple of weeks. Plaintiffs won a class action suit against the National Association of Realtors plus several real estate brokerages. Sellers may not pay buyer agent commissions anymore and everyone is FREAKING OUT! What will happen to buyers? What will happen to the buyer’s agent?

First, let me say I grew up in Connecticut on the NY border. Connecticut, New York and New Jersey are some of the states where it was customary the buyer paid the commission and once the buyer found a house, an attorney stepped in to do the negotiation. It is not like that in DC, Maryland or Virginia. Real Estate Attorneys work in the background – they pull title, prepare the legal documents and conduct closing. They are not involved in negotiation and they do not represent the buyer or the seller. They represent the transaction.

So what is everyone saying out there? Let’s take a look!

Buyers Don’t Need to Pay Buyer’s Agents, They Can Just Hire Attorneys!

DC is an attorney-heavy town. There are people here who say “Find the house online and hire an attorney to handle the paperwork and closing.” I have great respect for attorneys. I was raised by one. But when it comes to expediting a process and getting it done, this may not be their forte. In New York, New Jersey and Connecticut, contracts can take 90 days to close. In the DC area we close in less than 30.

If you hired an attorney, you will pay hourly for them to write a contract. Realtors use form contracts that are written to be equally fair to both parties. If a listing agent received two offers – one on the standard contract documents they are used to seeing from buyer’s agents and one with newly written language from your attorney, what will the agent do? Advise their client to have an attorney review your contract. The seller won’t want to incur a cost just to have someone interpret your contract. You may have a better offer, but still lose the house.

The other day on the crazy mom message board, someone posted that they bought a condo instead of a townhome and they didn’t understand there was a difference. They actually bought a townhome-condo which do exist and are a different type of ownership than a fee-simple townhome where you own the land beneath you. There were two alleged attorneys on the thread commenting that there’s virtually no difference between a condo and a townhome. I don’t know where they got their degree, but they need to remove Legal Zoom from their bookmarks. This is horribly incorrect information to tell someone that a condo and a townhome are virtually the same. I can’t believe a real attorney is espousing this.

I Don’t Care, I’ll Hire an Attorney For the Contract Because Agents Aren’t Worth it.

Could an attorney do the contract and negotiation part? Yes, they are more than capable of it.

But will they hold your hand through inspection and financing? Do they know how lenders work? Or the right amount of days for each contingency? Maybe, but probably not. Realtors who live and breathe this every day know exactly how to navigate the process so you don’t lose time or worse – lose your deposit and lose the house.

Sales is not a one size fits all situation. When things don’t go as planned, and they never do, Realtors get creative in figuring out how to get you what you want while protecting you and protecting your deposit.

Attorneys typically work in an office. But that isn’t how real estate works. It’s a physical job that requires showing up. It’s time in the car, it’s late nights on the phone, it’s being available even when your kid is first learning to walk or ride a bike or swim and missing it because a client needed something. There’s no retainer being held or hours billed for any of this by the way.

It’s also an emotional job. Real Estate is very personal for many people. Even when they think it won’t be, buying a home is never an “all business” process. Attorneys are great at fighting to get their way and use a “just the facts ma’am” approach. Their goal is to win. This process needs someone to come at it from a collaborative place so everyone gets what they want.

I Found the House on my Own, What Do I Need an Agent For?

Thank you internet. It’s brought information right to the palm of everyone’s hand. Many people will find their house online. When clients think they found “the house,” they decide to buy with emotion but back it up with logic. They unconsciously block out the negatives if they even notice them at all.

This is why your agent must see the home with you. Full-Time, astute agents tour so many houses that they can spot fatal flaws during even the quickest tour. I can tell when a crooked floor is just an old house settling and when it’s a structural issue. Gremlin in the basement? We’ll point that out! A great agent will prevent you from wasting time and money writing an offer on a problem house and help you focus on the homes that won’t require costly repairs.

Finding the home is just the tip of the iceberg in the home buying process.

What Process? What Do You Actually Do?

I recently learned about homebuyers who felt the process wasn’t transparent. They purchased a “newly renovated” home that needed extensive costly repairs after they closed. While they were more upset at the listing agent, who they thought was not forthcoming about the condition of the home, they also revealed that their agent didn’t join them for the home inspection. Their agent also didn’t attend the final walk through. Their agent actually told them to walk through on their own and they would see them at closing. The buyers had no idea what to look for.

Had their agent told them to put the utilities in their name the day of closing, to check the appliances, to run water and make sure gas was getting to the stove and burners, or shown up and done this with them like they are supposed to, the buyers may not have closed on a home in mid-winter and lived for ten days without heat. They said they wished there was a one pager which they could have referred to and asked why this process isn’t streamlined.

I said, “We all run our own businesses. Some of us are good at it and some of us are not. If you take your car to 10 mechanics, you will have 10 different experiences and lists of repairs needed. It’s the same with agents. We don’t all do things the same way.”

I felt awful for those buyers. An agent cannot phone it in. This is not a virtual job. They cannot be too busy to show up when they are supposed to show up. Being at a home inspection is non-negotiable. In 14 years I’ve missed 2 home inspections and I always sent a trusted agent in my place. I am also at every walk through so I can ensure that everything is still in working order. If something broke or was damaged at any point in time during the contract period, it is the seller’s responsibility to fix. As a buyer’s agent, it’s my job to protect you on this. I have held up closing when these things have happened.

The agent’s job is to protect their buyer clients, to work for their best interests, to advocate for them at all points during the process. With this commission lawsuit happening now, the agents who aren’t worth it are going to be gone. There are predictions that the number of agents currently at 1.4 million will be less than 1 million by this time next year. Cian! Adios!

My Friend Bought Without an Agent and She Said She Could Walk Me Through It

Your friend would be practicing real estate without a license. That aside, have they bought or sold 10 houses in the last year in the same market where you want to buy? Most people don’t know what they don’t know. They may think it went okay, but then when I ask questions I find out they really got taken advantage of by the seller.

Give me Examples of What You, as a Buyer’s Agent, Do For Clients

Are we worth it? Depends who you hire. We can only speak for ourselves. So let’s talk about what we do for our clients

  • Explain the entire process so you know what to expect.
  • Review each part of the process in real time as you reach that milestone
  • Strategize how to get the house you want for the least amount of money and concessions while beating the competition.
  • Protect your interests from offer to closing
  • Provide research and opinions on pricing strategy to ensure you don’t overpay
  • Offer lender and inspector recommendations who are trustworthy, client-first professionals who are a mirror of our own business ethics.
  • Advise clients when to “shop around” with lenders before locking the interest rate and applying for their mortgage loan.
  • Attend home inspection and advise on the priority of repair requests to the seller.
  • Negotiate for repairs
  • Order moving package so clients can get started on packing.
  • Provide information on which utilities need to be set up and send email with links to start service.
  • Confirm appraisal report is on time and value is at or above contract price
  • Renegotiate with seller on appraisal and/or challenge appraisal with lender if necessary
  • Advise client how to “save contract” in the event of a low appraisal
  • Ensure deposit is never at risk by monitoring and following up with all contingency dates
  • Confirm any pending permits on the home are closed out
  • Review Condominium or Homeowner’s Association Documents for red flags

How Did Agents Get Such a Bad Name?

I find myself on the other side of transactions where I wonder how this person gets clients or how they haven’t been sued. I also sit on the review committee for cases brought to the local Realtor Association when there’s a Code of Ethics Violation. These hearings blow my mind.

You want an agent who is all – in, who is completely invested in their business, works at it full-time, or in most cases more than full-time. There are indeed sloppy businesses being run out there. There are agents who have other gigs and this is just one of them. There are agents who get their license solely to sell Aunt Mary’s house. There are agents who let their licenses expire and continue to sell and no one notices. There are agents who lie during negotiations or don’t negotiate in good faith. There’s no real bar to entry in real estate, but there should be.

Getting a real estate license is the easy part. Staying in the industry, being successful in real estate and having a good name and reputation is not.

Can We Fix This?

In 2015, the National Association of Realtors put out a “Danger” report, stating what was wrong with the industry. A couple quotes regarding the main findings:

The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents. This knowledge gap threatens the credibility of the industry.

Professional, hard-working agents across the country increasingly understand that the ‘not-so-good’ agents are bringing the entire industry down. Yet there are no meaningful educational initiatives on the table to raise the national bar.

They’ve known for 8 years that there is a problem but they haven’t done much to fix it. They can’t stop people from getting licensed because that’s up to the state licensing boards. But they can do more to protect the profession by raising requirements to gain board membership and carry the Realtor designation.

Are the part-time, untrained, incompetent agents bringing the real estate industry down? You tell me. I currently have five buyers under contract on homes. Two of the five listing agents have an expired license. One of them is part-time, brand new, trying their hand at flipping houses. This is literally the trifecta of a huge problem.

Raise our fees. Make it cost-prohibitive and education-heavy to be a Realtor. I believe that is how we can get this fixed. In the meantime, I’ll continue working my ass off for you.