Before entering into a business relationship, it’s helpful to know your real estate agent is nice, patient, available when needed…and honest. So while many of us assume we’re ‘safe’ in the hands of our doctor, attorney or pastor, what about your Realtor? Find out here, or use the audio player below for this edition of the Oregon Real Estate Podcast.
Sadly, as seen in this news report, not all real estate agents are trustworthy. However, some preliminary work has already been performed by the state of Oregon confirming a real estate agent is sufficiently trustworthy to work with the public. These include a state screening, which involves a criminal background check, fingerprinting and mug shot. This data is submitted for review by the Oregon Real Estate Agency (OREA), which also provides regular updates about investigations in their insightful publication Oregon Real Estate Agency News Journal.
Of special note is the OREA ‘Administrative Action’ section, which provides information about decisions regarding Oregon real estate violations. The resulting consequences to untrustworthy real estate agents could include a reprimand, license suspension, license revocation and/or a civil penalty. So while no screening process is foolproof (as witnessed by crimes committed by doctors, attorneys and other professionals), the state of Oregon does considerable due diligence to vet real estate agents.
As part of the application process to become an Oregon real estate agent, any felony and misdemeanor convictions and arrests must be disclosed. The disclosure requirement is fairly high, because in addition to any criminal activity, also requiring disclosure are any administrative proceedings, plus civil and even financial issues. For example, if a prospective Oregon real estate agent has an unsatisfied judgment or bankruptcy, each must be disclosed.
A Matter of Trust
Trust is an important factor when buying or selling real estate. Thankfully, trusting your Realtor is not super risky. That’s because consumer surveys consistently reflect a high level of satisfaction with Realtor performance. One study by Forbes magazine revealed 96% satisfaction for the real estate industry. So if many real estate agents were dishonest, we could expect that figure to be much lower.
This doesn’t mean blindly signing off on every suggestion one receives from their Realtor. But obsessively hand wringing over transaction minutiae is one sure way to make the process less enjoyable. A recommended approach is for Oregon homebuyers and homesellers to carefully read all documents, ask plenty of questions and work with a recommended professional with a solid track record.
Trust For Homesellers
Looking at trust from a seller’s perspective, for starters there’s significant trust needed to deal with buyers. For instance, trust is needed to allow strangers in your house. There’s also trust in taking your property off the market, in the hope a sale will go through. And trust in finding a replacement home.
Trust For Homebuyers
Trust is needed for homebuyers, too. Trust is necessary in working with a lender and that the discomfort of prequalifying will be worthwhile. Trust they’ll find a home they like and can afford. Trust their lender will come through.
Trust For Both Homebuyers & Homesellers
So what do homebuyers and homesellers share in common? Trust. And there is perhaps no greater trust that homebuyers and sellers have in common than in their Realtor.
After all, your Realtor is someone you expect to be there to help navigate your way through what is frequently the largest financial transaction of a lifetime. Similar to an attorney or priest, Realtors are expected to keep confidences.
But let’s first look at a few situations which underscore why it’s important to be able to trust your real estate agent.
- Trusting your Realtor means you don’t have to second guess suggestions you receive. Let’s take pricing your home, for example. If you can’t trust your agent to provide meaningful comparable home activity information, how can you possibly expect him or her to advise you once an offer comes in?
- Trusting your Realtor means you can breathe easier with less stress. Buying or selling a home is considered to be a particularly stressful activity. In addition, most homebuyers and homesellers don’t want to take on real estate as a second job, especially when making a house move. So expect that by having your bases well-covered by a professional you can believe, you’ll find the entire process far less taxing. If a Realtor is ‘pushy’ and won’t listen to your concerns, it’s likely a good time to find a new one.
- Trusting your Realtor means you can access his or her reliable resources.
Speaking of taxing, if you need recommendations for an experienced 1031 tax exchange professional, or real estate attorney, or home inspector, or mortgage lender, or home repair contractor, expect those recommendations to be even more valuable from a trustworthy agent.
- Trusting your Realtor means you can focus. There’s usually enough to deal with throughout the course of any real estate transaction. Dealing with lenders, appraisers, inspectors, contractors, title companies and the like can be overwhelming. As a result, you’re more likely to be far more effective if you can concentrate on what you’re best at, while having your real estate agent handle what he or she is best at.
- Trusting your Realtor means more time. Just like you can expect to have more time to go fishing if you hire a contractor to build your new deck, working with a trustworthy real estate agent allows you to do other, more enjoyable tasks than scheduling a home inspection, constantly dealing with escrow details, or meeting an appraiser.
Trust is easier when there is good ‘chemistry’ between a Realtor and their clients. When seeking an agent to refer for out of area homebuyers or homesellers, there are many things I can readily confirm. These include an agent’s years in business, designations earned, coverage area, plus areas of specialty like homes, farms or commercial property.
As a result, I’m frequently able to locate a very good Realtor to ‘match’ with an out of state homebuyer or seller and it’s not always difficult. That said, the one challenging element to know with certainty is the ‘chemistry’ that even a highly qualified, out-of-area Realtor will have with a new client.
People are different and that includes real estate agents. Most times relationships work out swimmingly with the referred agent. On rare occasions, it doesn’t work out. But going in and at least on paper, the homebuyer or homeseller who interviews a previously unknown, yet vetted Realtor, knows the agent is qualified and experienced, along with some important other facts about him or her. Plus, knowing these facts up front is typically less risky than taking a ‘shot in the dark’ with an unknown agent.
Does The Company Matter?
Because agents are independent contractors, the individual Realtor is who typically matters most. After all, you don’t expect a faceless corporation to answer your late night question, or go over the details of your settlement statement. For example, I don’t care that much about what hospital I go to, but I want to have a say in the surgeon who will do the operating. Similarly, it’s the individual agent who is in a position to make the most difference, whether from a small or large office. However, longevity of a real estate firm can be helpful in determining that they are probably doing something right. So if a company you’re considering has been in existence for half a century or more, they’re likely not a ‘fly by night’ outfit.
Alternative Agent Finding Methods
One of the ‘little secrets’ about real estate online is that they’re often paid ads. Realtors frequently buy what are known as ‘leads’ online. Examples include Zillow and even Realtor.com. Sometimes this is done by the agent buying incoming inquiries regarding a specific zip code. Sometimes, the agent pays for better placement on a real estate website page in order to stand out.
If you decide to use a magazine or the Internet to locate an agent, it may be best to consider that as a first step of information gathering. Promotional materials can be misleading and if carefully crafted, can leave out a lot of important information. For example, if an agent is brand new, he or she may focus on how many agents their company employs, personal community involvement like donations to charity, or sponsorships. While these could be nice facts, they may not have a lot to do with the agent’s proficiency, professionalism, or trustworthiness.
Referrals Are Built on Trust
One good way to find a trustworthy Realtor is to ask people you trust and get a referral. The ‘proof is in the pudding,’ so if your friend or family member is happy with a specific real estate agent, there’s a good chance for a similar repeat performance.
White Hat or Black Hat?
One area where certain real estate agents are sometimes revealed to be wearing either a ‘white hat’ or ‘black hat’ is in the area known as ‘dual agency’ or ‘disclosed limited agency.’ This is a situation when an agent with a listed property also works with the buyer. To be clear, most Realtors are aboveboard and honest, continually looking out for their client’s best interests.
That said, the challenge to some agents comes when the agent attempts to ‘elbow aside’ other buyers, their agents and/or offers, in order to push his or her offer through. Why on earth would a Realtor push hard to get their offer accepted, since it’s all about simply selling the house, isn’t it? Not exactly. That’s because if the listing Realtor also sells your home, they typically get paid more.
Dual agency is well known as a potential minefield among ethically challenged agents and as a result, the State of Oregon, the National Association of Realtors and the Oregon Association of Realtors all have rules in place to help prevent its abuse.
Dueling with Dual Agency
In Realtor circles, the topic of dual agency has proponents and detractors. As a result, don’t expect every real estate agent you run into to have the same opinion. In reality, dual agency can be a very good thing, as seen in our previous article titled “5 ‘Insider Oregon Real Estate Tips.’ There, the topic ‘Having A ‘Double Agent’ Can Be A Good Thing‘ ranks as item #1 out of the five items listed. The advantages to having an agent on both sides of a real estate transaction are clear.
The result, good or bad, can significantly depend on your agent’s trustworthiness.
For example, hurriedly accepting the first offer can work out. That’s because sometimes the first offer is the best offer. Alternatively, acting without as much available information as possible sometimes comes at significant expense to the seller, who may be urged to quickly accept the offer their listing (seller’s) agent has written. The problem is that the listing Realtor can be expected to reasonably know how much activity there is on the property for sale. Again, trust is key here.
Plus, given the amount of agent and buyer activity, along with the quality of inquiries (such as highly motivated, qualified buyers), the seller’s Realtor may have even heard comments from other agents about possible future offers. So by pushing his or her own offer, is the listing Realtor providing the seller with all known information in order to truly serve the seller’s best interest? Sometimes the only person to seemingly know the answer is the listing agent. This Harvard Business Review article notes why this can be a problem:
“Take cheating. Claremont McKenna psychologist Piercarlo Valdesolo and I have conducted many experiments on the topic, and one surprising (if disheartening) result we have found, time and again, is that 90% of people—most of whom identify themselves as morally upstanding—will act dishonestly to benefit themselves if they believe they won’t get caught. Why? Anonymity means no long-term cost will be exacted. Even more startling is the fact that most of those who cheat also refuse to characterize their actions as untrustworthy; they rationalize their behavior even while condemning the same in others…”
More than once, an honest real estate agent working with a highly qualified and motivated buyer has inquired about a property, even written up that buyer’s offer, only to have the listing agent hurriedly put together his or her own offer and submit it to the seller in order to ‘tie up’ the property (and presumably make more money), before other offers can be considered. It’s a fact of the real estate business and as a result, unethical agents develop a reputation and are often viewed warily by others in the business.
The ‘Commission Effect’
If all these elements don’t sufficiently complicate the task of finding a trustworthy Realtor, there is also a phenomenon you might call the ‘commission effect.’ This is outlined in a previous article titled ‘5 little Known Realtor Insider Tips:’ Realtors Can Calculate Their Paycheck by Viewing a Property Listing Sheet. This means that for agents truly focused on maximizing their payday, you might expect them to guide you toward homes that pay a higher commission structure. However, the listing sheet is typically only seen by multiple listing members. Thankfully, most Realtors simply don’t do business in this manner.
The Bottom Line
President Ronald Reagan sometimes used the term ‘Trust, but verify’ during his high level negotiations. This old Russian proverb could be a helpful approach to grant you peace of mind in finding a trustworthy agent for your next real estate transaction. Do your research and ask family and friends for Realtor references. Be open and honest, then make your best decision based on relevant, reliable information for your situation.
Do you have an Oregon real estate question? Contact Roy with Certified Realty today for a free consultation using the convenient form below, or call him at (800) 637-1950.