Clark Howard (consumer blogger) pointed it out that “with all the technology out there for home buyers and sellers, do real estate agents really matter anymore?” he continued, “For buyers, the research you can do online and with your phone is amazing. Apps like Redfin and HomeSnap will let you drive down a street, pull out your smartphone, aim it at a house and snap a picture. Based on your GPS coordinates, the apps will tell you almost everything about the property. You don’t even need to know which street you’re on!” Makes it sound so simple, but the reality is that it’s not. Technology is amazing but it doesn’t make it accurate.
So let’s back up a little and first define the different kinds of real estate professionals:
Real Estate Agent: A real estate agent is an individual who is licensed to negotiate and arrange real estate sales. An agent is a person who can represent a buyer or a seller in a real estate transaction, in exchange for a commission. Their tasks include but are not limited to: showing property, listing property for sale, negotiating contracts and marketing properties. Agents are generally licensed but must operate under the supervision of a real estate broker.
Real Estate Broker: A licensed professional that is permitted to manage all legal intricacies of real estate transactions, both the buying and selling. Brokers also can hire agents to work for them while they manage the whole process. To be a broker, one has to pass a longer more intense exam and have either: several years of experience – depending on the states requirements or have a bachelor’s degree. In most states more course work is required as well. As a broker you are also required to complete continuing education courses to keep your license. There are benefits to being a broker, taking a leadership role, managing a team, being the exclusive recipient of commissions and earning commissions from the agents that work under you, just to name a few. A broker also has a higher level of exposure to liability.
Here are some of the benefits of using an Agent/Broker that most people might not consider:
- Having a relationship with home inspectors who can be trusted and can do a thorough job
- Knowing the area and issues related to that area
- Knowing how to negotiate for repairs after the inspection
- Getting the deal closed or “across the finish line”
- Knowing if the data that you are basing your decision on from say, HomeSnap app is accurate
- Negotiating contracts – technology can’t do that for you
- Having a professional marketing plan for selling a property
- Committing the time it takes to get a sale completed
- Protect you from lawsuits
- Reduce risk
Just to name a few. The two biggest things I get concerned about when the consumer feels they know it all is: first, how reliable is the data they are looking at? Reliability of data is important. When doing research, primary data is the most reliable. If it is a secondary source, how reliable is that source? Anyone can create a website – but what are the metrics used for the data on the site?
Second, is the data enough? Area knowledge is invaluable. Firsthand knowledge is really a primary source of data. This comes from the professional who has worked an area for years.
As investors, we too are professionals and will at times not use a broker/agent but we also need their expertise and knowledge on our side. An app does not replace a professional.