Buying and Selling: How To Trust Your Realtor

I realize that I come down awfully hard on realtors in this blog, and not without just cause. Every time David Lereah runs his mouth, it just makes me want to scrub with a steel wire brush to remove any trace of his "sophistication."

The problem with real estate is the same problem with any sales-based business. Everything's based on commission, and there's no base you can cushion yourself with when times get hard. Realtors are strongly incentivized to do whatever it takes to close the sale, because all their money comes from that. And when financial services firms and banks stand to make mad moolah on churning mortgages, that's how you end up with Ameriquest's folly, among other things.

So what can you do?

* Do your homework, first of all. Teach yourself the fundamentals of buying and selling. Talk to your friends, family, neighbors, and coworkers about who they may have used to sell or buy a home. Use resources like Bankrate to learn the terminology of real estate. Do NOT go into any deal without knowing what kind of loan you want, what the payments are, what the difference between a home equity loan and a HELOC is, etc.

* Vet your realtor. Do they have a Quality Service Certification? Do they have any reports on them from the Better Business Bureau? (Yeah, yeah, I know these may just be rubber stamps, but it's better than trusting Joe's Chicken Shack Realtor!) Check the news, public records, anything and everything you can find to get proof your realtor is legitimate and honest.

* Stay involved in the process. Too many people pull the equivalent of handing the keys to the valet and let the broker and realtor do everything without paying attention. Even if it means being a backseat driver instead, this is your economic future at stake. You can't afford NOT to pay too much attention.

The key to any deal is trust and honesty. Know your realtor like you know yourself, and don't be afraid to ask questions, find out data, and play the skeptic. Take it from the fine folks at Zero One Realty: It takes more than a 5% commission to bring happiness.

(Image courtesy of what may indeed be the greatest real estate movie ever.)

Posted at April 5, 2006 04:26 PM

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I realize that I come down awfully hard on realtors in this blog, and not without just cause. Every time David Lereah runs his mouth, it just makes me want to scrub with a steel wire brush to remove any trace of his "sophistication." The problem with real estate is the same problem with any sales-based business. Everything's based on commission, and there's no base you can cushion yourself with when times get hard. Realtors are strongly incentivized to do whatever it takes to close the sale, because all their money comes from that. And when financial services firms and banks stand to make mad moolah on churning mortgages, that's how you end up with Ameriquest's folly, among other things. So what can you do? * Do your homework, first of all. Teach yourself the fundamentals of buying and selling. Talk to your friends, family, neighbors, and coworkers about who they may have used to sell or buy a home. Use resources like Bankrate to learn the terminology of real estate. Do NOT go into any deal without knowing what kind of loan you want, what the payments are, what the difference between a home equity loan and a HELOC is, etc. * Vet your realtor. Do they have a Quality Service Certification? Do they have any reports on them from the Better Business Bureau? (Yeah, yeah, I know these may just be rubber stamps, but it's better than trusting Joe's Chicken Shack Realtor!) Check the news, public records, anything and everything you can find to get proof your realtor is legitimate and honest. * Stay involved in the process. Too many people pull the equivalent of handing the keys to the valet and let the broker and realtor do everything without paying attention. Even if it means being a backseat driver instead, this is your economic future at stake. You can't afford NOT to pay too much attention. The key to any deal is trust and honesty. Know your realtor like you know yourself, and don't be afraid to ask questions, find out data, and play the skeptic. Take it from the fine folks at Zero One Realty: It takes more than a 5% commission to bring happiness. (Image courtesy of what may indeed be the greatest real estate movie ever.)