Profile picture for SoCal Engr

Why do REAs insist on...

Telling new buyers, without any idea of what they are doing, to start by engaging a REA? Other than the obvious reason, doesn't the blatant conflict-of-interest bother the REAs?

I am reminded of the voir dire process, where the attorneys attempt to eliminate anyone whose opinion they cannot shape.

This is not to say that REAs don't provide value, especially if they are competent and can provide relevant input to the buyer's decision making process. However, it'd be much more "open kimono" if REAs simply pointed new buyers to non-NRA sources of information on the RE market/process, as well as mortgage products.

Of course, it may be hard to resist the temptation of taking a newbie and trying to shape their decisions for them.
  • July 03 2011 - Black Mountain Ranch
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Answers (17)

Gee, i thought i could be quit helpfull for a new buyer. It never occured to me i could take advantage of a person.
  • July 30 2011
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Profile picture for SoCal Engr
@ Glenda...

Really? The educational requirements, from what I have heard (granted, I've never taken the course/exam), are not earth shaking. I have, however, seen some of the "strict educational requirements" needed to get some of the designations...not impressed at all. Matter of fact, there have been several threads started by REAs advocating a tougher barrier-to-entry in order to weed out some of the less competent and/or serious REA wannabes.

As far as the internet, who is advocating blogs written by Joe Schmoe? Not me. I simply said there is plenty of good information, and Sunnyview was nice enough to provide some examples. I provided an example of a site for self-education on mortgage products - authored by someone who rises above "Joe Schmoe" status.

"Are you saying that they would be better off trying to decipher what is and is not a reliable source of information on the Internet than getting information from a licensed agent? Wow ... just wow."

If the consumer can't figure out reliable sources by reading and comparing information, how do you expect them to be able to select a reputable and knowledgable REA? With the Internet, they at least have a chance to read multiple sites and apply some "reasonable person" analysis.
  • July 05 2011
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Profile picture for SoCal Engr
@ Cory...

I use REAs, just on my terms - not theirs.

Maybe it's not apparent from my original post, but this was not about my personal experience. It was prompted by yet another round of "start by engaging a REA" answers to a "This is my first purchase and I don't know where to start" posts.

"You're going to get incompetence in any industry. In real estate, you'll see unethical people, or just lazy uninformed people. And then there are many helpful, ethical people. It's up to the consumer to do their homework, ask good questions, and take the process seriously."

My point, exactly. The consumer "needs to do their homework" and "take the process seriously". Unless they take the time to do some self education, how are they supposed to recognize the unethical or less-than-competent REA?

While some of the house facts or listing/sales may be inaccurate, that does not do anything to the value of the Zillow Guides, nor to the other sites that Sunnyview pointed out, or that others have pointed out on other posts. My point is that there are good places that a responsible consumer can go to and start their education process. Not that they should completely avoid a REA, just be prepared and not be a sheople - who then will blame the REA for every bad decision they (the consumer) makes.

As far as "swaying their thinking against all agents in general?", nope. There are many things I think need to be changed in the RE industry, and there are many tactics I've seen used/endorsed that I believe to be unethical, but I've never flat out said "never use a REA" or "REAs are all worthless". Matter of fact, I believe that the consumer is the #1 problem, not the REA. I've even taken the REA's side when I believe that the consumer is trying to foist their own lack of responsibility onto the REA.

Just saying....
  • July 05 2011
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@SoCal_Engr - you missed my point about education.  Since education is required in order to obtain and keep a real estate license and since the profession is regulated by the state, there is more accountability than JoeSchmoe who gets it into his head to write a blog about real estate.  There are, unfortunately, many poor souls who believe that everything on the Internet is true.  Are you saying that they would be better off trying to decipher what is and is not a reliable source of information on the Internet than getting information from a licensed agent?  Wow ... just wow.
  • July 05 2011
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Your question is vague, and usually the questions new buyers have are vague, because they don't know what they need to know yet. An agent can ask them those questions and point them in the right direction. By the right direction, I don't mean "my referrals," For example, here are some lenders to call for some preliminary information as far as loans go.

Or, maybe we can tell them to ask their cousin or uncle who just bought a house ... or maybe start with sites like Zillow, you know the ones that consumers write into every day, in this very forum, complaining to us agents of outdated and inaccurate information?

Where else are they going to start? You're going to get incompetence in any industry. In real estate, you'll see unethical people, or just lazy uninformed people. And then there are many helpful, ethical people. It's up to the consumer to do their homework, ask good questions, and take the process seriously.

After all this time positing real estate theories on this forum, and you still don't know any good agents? And, aren't you trying to sway their thinking against all agents in general?
  • July 05 2011
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Profile picture for SoCal Engr
@ Glenda...

As you can see, it's not too hard to find a lot of info online. I'll add this one, which provides an intersting combination of facts and opinions. I referenced this a lot when I was trying to catch up on mortgages. It also has some interesting perspectives on home ownership.

Zillow's guides also provide some interesting info grouped by their forum topics.

"Remember that all agents are required to be educated in order to get a license (and most are required to take continuing education to maintain their license)."

I really don't recommend flying this flag too high. The topic of REA training and testing, and having too low a barrier to entry, has been a discussion topic many times - by both consumers and REAs (especially those REAs fed up with overcoming the perceptions set by some of their fellow REAs).
  • July 04 2011
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Thanks, Sunnyview!  That's a good start!
  • July 04 2011
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Profile picture for sunnyview
You asked about resources for first time buyers that were solid. I like the the about homebuying site here. It covers a lot of different subjects related to home buying. The HUD.gov site also has a lot of good information on buying including everything from finding out how much you can afford to how to choose a house here.

I think the having new buyers look at their own financial goals and needs before they contact a professional can be helpful. This budget calculator is a good place to start so people can look at how much they can really afford as opposed to how much they can qualify for here. Then they can look at a broad mortgage calculator like one here to see what they might qualify for and for making a plan to save for a down payment if they don't already have one here.

A good real estate agent can also be helpful, but as a new buyer you simply don't know what you don't know. I think is it best to get a little information before shopping for an agent. That will help buyers recognize the good agents that are honest and well informed.
  • July 04 2011
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Since you insist that the consumer should educate themselves before talking to a real estate agent, perhaps you could provide some sources where they can find this information.  Totally unbiased, of course.

Remember that all agents are required to be educated in order to get a license (and most are required to take continuing education to maintain their license).  While I would agree that there are some self-serving and/or incompetent agents out there and on this board (as there are in every profession), most are ethical and honest.  Why do you insist on tarring every agent with the same brush? 
  • July 04 2011
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Profile picture for SoCal Engr
"I wholly agree, unless you are 100% sure you're going to get a real professional who takes their fiduciary task seriously, a little education will save us all."

And that would drive to my main point. Story after story indicates that the chances are good that a consumer will not get a consumate professsional. Through intent or lack-of-experience, REAs have been known to give bad advice. Some of that even happens in the open, on these boards.

Given that situation, and your comment, the knee-jerk response of "get a REA" is not the go-to-answer for "I'm a new home buyer and don't know what to do" questions.

The responsible consumer should educate themselves so they can separate the wheat from the chaff, both when selecting an REA and when sorting through advice. An REA saying the first step is to "find an REA you trust" is essentially saying "Trust in your local REA, we'll steer you right". There's too much evidence to the contrary to pretend that this is anything other than self-serving - with the interest of the REA above that of the consumer. Even sadder, is if the REA is not honest/aware enough to realize this.
  • July 03 2011
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Profile picture for Jonathan Shidler
Michael,
I wholly agree, unless you are 100% sure you're going to get a real professional who takes their fiduciary task seriously, a little education will save us all. 

I love and much prefer my clients to be educated. Either before I get to them, or after I meet them. Because an informed choice is more likely to be a happy choice.

Education comes best with learning to ask clear questions. With vague questions, It's hard to answer with any definitive- I am not going to be sued, advice that doesn't display bias without knowing the situation clearly.

My number one training was in how to drive out the right questions from my clients or prospects so I can better serve them by knowing their individual needs and history.

Same thing with visiting a doctor vs checking webMD forums.
A better history makes for a better assistance to the client.

However, sticking with the medical analogy, I notice almost all the questions that I have that first thought of "talk to an agent" run into the analogous style of someone asking:
"I broke my leg, what do I do now?"
Can they check it and set it themselves? Yes, humans have been doing that for eons. But I will still have the gut first reaction of "Go see a physician"

Now, if the question was analogous to "I am thinking about having my leg broken and reset, what kind of splints would you suggest for a femur reset?" I would suggest a splint set up (assuming I know at all).

I suppose my main point is:
A little education, even before asking a question gets better answers.
Better answers make for more education.
A better educated seller/buyer/tenant/landlord makes for a smoother transaction.
  • July 03 2011
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Profile picture for Michael Helton
Jonathan, I think it is good that you think of yourself in such a positive light; if all of your peers felt and performed up to the highest standard there would not be the current general feeling of animus towards Realtors.

I think my answer to your question, "Why wouldn't we tell people to get a Realtor if the question is vague and undefined?" is that I think the first step is self-education.  Then, and only then, should someone goto a Realtor.

Do you know why the Dark Ages lasted so long?  If you understand why, then you will understand why it is never a good idea to send first time buyers to an agent without preparation.
  • July 03 2011
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Profile picture for Jonathan Shidler
The problem is a lot of questions are broad questions.

Example:
"What is the best deal in XYZ city/Neighborhood"

I don't know that person's purchase abilities, their motivation, their goal, or what they define as a good "deal". So just spouting "Oh, this area" enters either into self serving for my own region/listing which removes my credibility, or I tell them to go out and deal with something completely out of their own personal range.

Most of the agents that answer on Zillow are genuinely good agents and have their buyers and sellers best interests at heart and take our code of ethics and oath of "Do unto others as we would be done unto us" very seriously. and Assume others within our field to have the same opinion of their task and oath.

And as I tell my buyers "Listen, I am not going to push you into this home. If it was my listing and you just walked in, yes, because that would be my job, but my job, as your agent is to make sure your goal of getting the keys to the home that fits your desires best gets into your hands for the best price" - And almost every other buyers agent I meet maintains that same attitude. Mind control is counter productive to building our brands as trusted advocates of our buyers.

Plus we do most of it for no cost to the buyer.

Why wouldn't we tell people to get a Realtor if the question is vague and undefined? We genuinely believe in our trade and our guild. That should be a positive. 
  • July 03 2011
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Telling someone "you need an agent" may seem self-serving, but it is also often right. 
  • July 03 2011
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Profile picture for the_country_hick
If my car was broken down I would ask a mechanic what would most likely be the problem. They are supposed to be specialists who know things. I have done this many times in my past and had some very nice mechanics who were willing to help me out.

Realtors say call a realtor because they think they are specialists who can help people understand what is going on in the whole house buying process. They may even be right.

How many unbiased sources of information are there that most realtors know about? I bet not to many.
  • July 03 2011
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Profile picture for hpvanc
Socal,

You forgot another great idea for 1st time buyers, repeat buyers or sellers.  Send them to the library to read up on the psychology of sales tactics before contacting a lender and especially before contacting a Realtor®.
  • July 03 2011
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Well, given that most of the "non-NRA" (I assume you actually meant NAR) sources of information are those provided on real estate agent's web sites, I don't see how this helps the newbie.  We have no way of knowing how much they know, or don't know, about the process and the market.  A one-on-one conversation is likely to be much more helpful than simply telling them to go to a web site (sort of like throwing someone into the deep end of the pool and assuming they'll figure out how to swim).  

In most cases, it costs nothing for someone to sit down with a buyer's agent and there's no obligation to use that agent.  And, contrary to your belief, most of us are not into mind-control.  Everyone's situation is unique and dealing one-on-one with an agent - or several agents - is more likely to lead to a successful home-buying experience.
  • July 03 2011
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