Should I Let My Friend Or Family Member Represent Me As A Real Estate Agent? (With real numbers).
If you're here, it means you already have doubts. Well, you probably should.
Sure, you trust them, you have a long history with them, and you may even enjoy their company. But will they really get you the best deal when you buy or sell a home?
The answer is: it depends. And just like with any other business deal, you're going to want to do your own diligence to make sure that you're making the right decision when it comes to working with an agent.
Do they have the skills or experience that you are looking for? Agents come in all shapes, sizes, and experience. Some work with new home buyers, some exclusively work with sellers. And, when it comes to their knowledge of the neighborhood, you're definitely going to want the best.
So, before we determine whether or not it's a good decision, let's examine the benefits that a good agent brings to the table with real numbers (and the costs of not using one):
1. Benefits of working with a great agent (with real numbers):
In a study performed by MIT, it was found that homes sold by agents with more experience were 13% more likely to sell than those marketed by lesser experienced agents! With 4.3% of homes already failing to sell nationwide, as reported by Trulia, that would bring the chance of failure to sell with an inexperienced agent even higher.
Another study, performed by the Journal of Real Estate Research, Price, Place, People, and Local Experience, found that inexperienced buyers did not receive discounts, compared with experienced buyers obtaining 13% to 15% discounts! If you factor in the average price of a home in the US being $258K, that's up to a $38,700 difference in price when working with an experienced buyer.
When it comes to the time it takes to sell, the Journal of Housing Research found that homes sold by experienced agents sell 32% faster than those sold by lesser experienced agents. The average listing on Zillow in 2018 closed within 68 days, which means that a 32% faster sale means that the average home sells 3 weeks faster with an experienced agent!
2. What buyers and sellers look for from agents:
In a 2018 report from the National Association of Realtors:
The most important factors that buyers look for in an agent are:
Finding the right home to purchase
Negotiating the terms of the sale
Determine what comparable homes were selling for
Determining how much home buyer can afford
Find and arrange financing
Teaching about the neighborhood or area
The most important factors that sellers look for in an agent are:
Marketing the home to potential buyers
Sell the home within specific timeframe
Pricing the home competitively
Finding a buyer for home
Find ways to fix up home to sell it for more
Negotiation and dealing with buyers
Paperwork/inspections/preparing for settlement
See homes available to purchase
Create and post videos to provide a tour of the home
3. How to interview your friend/family member to be your agent:
While standard interview questions will help you get to the bottom of their experience, there's no substitute for in depth research. Luckily, Scout provides services that can help you do this research, at no cost.
If you think it may be awkward telling them that you're going to work with the local expert, it may feel a bit awkward, but it will likely be a whole lot less awkward than what happens if the purchase or sale ends up as a disaster months down the road.
4. Our recap:
In a best case scenrio, you get your dream home, or sell your house at the price you're looking for in a shorter amount of time and get to work with someone you know.
But, if things turn south it could increase the likelihood of a failed transaction by 13%, take 3 weeks longer to sell, and cost you over $38K. And last, but certainly not least, you may encounter some pretty awkward family dinners and social events (though this is not supported by empirical evidence).
Now, before you go off and make your own decision, think about what you're really looking for from your agent and whether your friend or relative is experinced enough to help you accomplish it.
If you have doubts, it might be time to start looking for the best representative to help you through what can be a pretty stressful time, though it doesn't always have to be.