In a hot market like this, it certainly seems like many sellers wonder how much value a listing agent brings to the table. When you list a home, if it’s in good condition, and priced right, it’s easy to presume you can fetch top dollar no matter who you hire.
I think any savvy seller understands the power of the Multiple Listing Service (thus For Sale By Owner’s are still less than 2% of the sales in the county). So the biggest growth in the Real Estate sector is with discount brokerages, and more and more new agents.
Looking at the market stats in Whatcom County, there is literally hundreds of agents that are new in the last 3 years. And over 400 agents who have sold between 1 and 3 homes in the last 12 months. So our area (and most everywhere) is flooded with newer more inexperienced agents.
Everyone has to start new, so I’m not trying to begrudge new agents. But I’ve always been an advocate that Real Estate agents should be required to have 1 year of apprenticeship. Getting your Real Estate license actually requires no Real Estate pratice courses. Only just the state license law course. Understanding what an encroachment is…that’s great. But you should also understand contracts, and how the actual business works too!
I personally had my parents in Real Estate helping mentor and train me my first few years (and still today!). But most new agents, really frankly don’t know what they are doing out there half the time. I am surprised by how many people are willing to make decisions, based on advise from someone who just got their license a few months ago.
A study recently came out in the Wall Street Journal (see below), that outlines how veteran agents outperform newer agents. For me, after 15+ years, and selling hundreds of homes, you obviously learn a lot!
-I’ve learned to be more straight forward about my opinion of the home value, and what needs to be done to get top dollar (you also learn more over time what improvements will get a better return on value).
-I’ve learned to still do the full marketing promotion, even on a home that is priced right, and I know will get several offers. In a bidding war, you learn that 6 offers instead of 4, can turn into that extra $25,000 for the seller. Also what advertising really makes an impact.
-After hundreds of home inspections, I can now more easily help the seller be prepared for what might come up in inspection (and when to get the home pre-inspected). And I’ve built up relationships with all of the resources a seller would need (landscaping/handyman,etc).
-I’ve learned several ways to uniquely position a listing to get more eyes on the home.
-I’ve also become a more polished negotiator over the years.
I could go on and on! There is just SO many ways experience can make a really big difference in helping the client get top dollar, and have a smoother sale. See report below.
Sanette Tanaka reports in the Wall Street Journal:
Can you put a price on experience? In real estate, you can. It is about $25,000 for the average house
Veteran agents sell homes for an average of 12% more than their less experienced counterparts, says Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va. Veteran agents also tend to list more new properties, more townhouses and condominiums and larger properties.
Two-thirds of properties listed by veteran agents sold, while only half of properties listed by rookies did.
“The more experience you have, the more likely you are to sell the properties that you list, the more likely you are to sell it at a higher price and the less time it stays on the market,” Prof. Waller says.
Prof. Waller, along with Ali Jubran, a student at Longwood University at the time, examined 10,065 real-estate listings in a mid-Atlantic multiple-listing service from March 1999 to July 2009. They divided the listings into three groups—ones listed by agents who have been licensed for two years or less (called rookies), agents who have been licensed for two to 10 years and agents who have been licensed for 10 years or more (called veterans). They controlled for property characteristics such as size and location to isolate the “experience variable,” and then compared the results for rookies and veterans. The study was published in the Journal of Housing Research in May 2012.
Prof. Waller became interested in quantifying experience when he noticed an increasing number of agents who chose not to renew their licenses after two years. Real estate has “very, very, very low barriers to entry,” he says. But brokers then face a steep learning curve and many struggle to reach a level of expertise that is profitable, he adds.
Two-thirds of properties listed by veteran agents sold, while only half of properties listed by rookies did. That may be because rookie agents have to be more flexible in picking up listings, even if the chances of selling are low.
“If a house is priced ridiculously, they might say, ‘Fine, I’ll take the listing,’ ” Prof. Waller says.
Generally, experienced agents have greater knowledge of the neighborhoods and a larger network of buyers and sellers, as well as relationships with home inspectors, appraisers and mortgage brokers.
For some, confidence comes with time. James Stroupe, a real-estate agent at Realogics Sotheby’s International Realty in Seattle, says he used to take listings priced above-market, but now, with nearly 20 years of experience under his belt, he isn’t afraid to suggest an alternative price.
And then there are the lessons learned. Michael Rankin, principal and managing partner of TTR Sotheby’s International Realty in Washington, D.C., began selling real estate right out of college, so he faced the twin pitfalls of inexperience and youth.
“I would meet people and say I’m a real-estate agent. They would joke and say, ‘I’ve got children older than you. Are you sure you’re a real-estate agent?’ ” he says.
Mr. Rankin says he didn’t get referrals until his third year in the business. Referrals now make up about 70% of his sales. His listings stock also has changed dramatically. In his 20s, his average sale price was about $300,000 to $400,000. Now, it is more than $2 million.
Experience taught him how to deal with consumer behavior. “Residential real estate is really an emotional transaction. I don’t think I was prepared for any of it. It’s about understanding and knowing people. That, to me, is what an experienced broker brings to the table,” he says.
When Pamela J. Hagan first began practicing real estate about 30 years ago, she had a listing that just wouldn’t sell. After zero offers in eight months, she asked a more experienced agent to help. “We tweaked the price and staged it properly, removed clutter and everything. I just didn’t think of that when I was new,” says Ms. Hagan, of Century 21 Beggins Enterprises in Longboat Key, Fla. “After we got it all set up and dropped the price, we sold it within 30 days.”