Consumer complaints about goods and services almost always rise as demand peaks in the related market.
Enron. Worldcom. Dot com. Unsafe At Any Speed. Silent Spring. Hurricane season. Mold. Vioxx. Identification theft. Predatory lending. Ad nauseam. Pick a major market peak and you’ll find public uproar.
That’s often because the less qualified and the less principled slip in behind the blur of market frenzy to work their slight of hand, cash in on the rush to beat the clock to buy goods and services and then slip away looking for new rubes.
If it all sounds deviously insidious, well, often it is.
Regulatory enforcement weakens, watchdogs have their paws full and misunderstandings between both parties arise, but when consumer complaints grow, it’s almost always because of human error.
When it comes to the most valuable transaction you may ever complete, it shouldn’t matter what the market is doing, what’s coming out of the woodwork or how many rookies are at your feet.
Diligently scrutinizing professionals you hire is your job as president, CEO and CFO of your household.
If that hasn’t been how you run your “company,” market conditions should be a wake up call. California’s Department of Real Estate said it received more than 10,000 complaints in the fiscal year ended June 30, up 29 percent from the previous year and up one-third from three years ago. The backlog of 3,663 cases is double what it was four years ago.
The increased level of complaints and backlog coincides with a 44 percent increase in the number of real estate agents in last five years, pushing the total to about 400,000. In some areas, including Los Angeles and Silicon Valley, the number of real estate agents outnumber the number of properties for sale.
But it’s not just California. Local real estate markets are booming across the country.
Nationwide, the number of licensed real estate agents has swollen to 2.5 million, according to the Association of Real Estate Law Officials and the National Association of Realtors® (NAR) says membership has risen 25 percent over the last five years to more than 1 million.
So how do you sift through them all?
First get to know their area of expertise. Become knowledgeable about the home-buying process from credit scores and mortgages to close of escrow. The wealth of free information today, both on- and off-line and in classes, seminars, and counseling workshops, makes that a cinch. It’s up to you to take the time to let it all soak in so you don’t get soaked.
The knowledge you’ll need includes knowing the kind of neighborhood you want, the size and configuration of the home you need, financing, legal rights, how to evaluate comparable home prices and much more — including how to hire a professional real estate agent.
As you learn about the home buying and selling process, you’ll also learn what you personally need to know for your specific transaction.
- For starters, don’t hire an agent you meet by chance at an open house, find in the Yellow Pages, or discover on the Internet without thoroughly checking their credentials, experience and practice.
- It’s a better idea to get several recommendations from friends, family members, co-workers, and others you trust who also have recently used that agent to buy or sell a home and had a satisfactory experience.
- Any referral should be a full-time, licensed real estate professional in business of selling real estate in the area where you are seeking a home.
- Ask each referral to recommend one or two people (other than themselves) they consider top-notch agents who can fulfill your needs. It’s a question the agent likely won’t expect, but if he or she balks or refuses to answer, there are plenty of agents who will. Not only can the question provide you with others to interview, it also tests the agents’ honesty and integrity.
- All states regulate and license real estate agents and brokers. Agents need only meet minimum levels of state-mandated education, training and testing. Brokers, who generally oversee agents, have more training, education and experience. Ask for proof. The license offers you a layer of consumer protection should something go wrong.
- Real estate professionals obtain more credentials from their state and national trade associations, which require a state license before the individual can join. Trade group membership is not legally required, but most residential real estate sales are conducted by trade group members. Trade groups offer another layer of consumer protection and mandate that members adhere to standards of practice and codes of ethics. Trade group members are also privy to listings, market information and other data non-members are hard fought to obtain.
- Trade group sanctioned credentials and designations indicate a member has taken the time to achieve higher levels of professional skill identified by certain initials, much like post-graduate degree. Many real estate companies also offer their own special in-house training programs resulting in achievements that match NAR’s designations.
- Credentials alone don’t always guarantee a professionals’ expertise but they do indicate a certain level of professional commitment and achievement that can translate into a worry-less transaction.
- As you are aware from your own experience, there is nothing quite like time-honored in-the-field, on-the-job experience. It’s your job to learn what your prospective agent has learned.
- Once you’ve selected several real estate agents, let each know you want to interview him or her for 45 minutes to an hour. Ask for a resume or portfolio, just as any good employer would do. Later, you can talk in person or on the telephone. Arranging the interview is a test of the agent’s willingness to spend time with you and his or her punctuality. Ask the broker to sit in if you interview an agent. That will help you learn how not just the agent works, but his or her office as well.
- During the interview, explain your needs, how you like to work and what you expect. Ask the agent to speak in English, not industry jargon and acronyms. Let the agent know you are still learning.
- Ask the agent about mortgages, including special loan programs, new loan programs, creative financing, mortgage brokers and lenders and other financial details specific to your needs. Also ask about insurance and taxes.
- The real estate transaction is an esoteric entanglement of details, tasks and duties. Get the agent to explain how he or she gets the job done. Ask about any computer-based systems used to keep the home buying search, sales marketing and transaction negotiations operating smoothly. Ask to see logs, checklists, worksheets and other tools or documents the agent uses to keep track of the details.
- Ask how often the agent will report to you on sales activity or buying leads. You’ll have to determine how much is enough for you, but once a week is a minimum in a stable market. Daily check-ins could be necessary in a hot market.
- Ask about representation. Will the agent act as a dual agent representing both you and sellers with homes you may want to buy? Legal in many states, dual agency comes with inherent conflict of interest as the agent attempts to exercise fiduciary duty, fairly represent two opposing clients and collect the full commission.
- If he or she is a buyer’s agent, ask if a contract with fees is required. Also ask buyer’s agents about the duration of any contracts, fees in lieu of commissions and other details. A true buyer’s agent, an “exclusive buyer’s agent” works only with buyers in a company, office or operation that does not sell homes and is more experienced in working with a buyer’s best interests at heart.
- As you ask questions and discuss your needs, consider how well the agent listens to your anxieties, fears and concerns. You want to feel that the agent cares more about your needs than collecting the commission or making a quota.
- Ask for numbers of homes the agents found for buyers and sold for sellers over comparative periods. Don’t accept a dollar amount answer. Ask for the addresses of recent transactions. Scan the list for homes similar in price to what you can afford. Determine if the homes are in the general neighborhood or community where you are buying. If so, get the agent to talk about what you can expect for your money and the pros and cons of the neighborhood or community.
- Ask about listings that have languished unsold. Ask why, but don’t blame the agent for homes that were overpriced and sellers who’ve refused to reduce the price to a fair market value.
- Ask to talk to past clients, both buyers and sellers.
- Once you select an agent, don’t double dip. Loyalty and time commitment is a two-way street. If your agent doesn’t have your full attention, he or she may reciprocate. You’ll also get a disconcerting array of advice and opinions at a time when, more than ever, you need straight talk.
Written by Broderick Perkins