Dissatisfied couple with realtor in midst of a difficult real estate transaction

Why Real Estate Transactions are Easy… Until They’re Not

Over the past few months, I’ve spent many of my after real-estate hours working on building a tiny home. Being in the business of selling homes, the project seemed like a great personal and professional opportunity. I hoped it would give me a much more intimate perspective on what actually goes into putting together a home–and what can go wrong when a home isn’t properly put together.

At one point a few weekends ago, I’d come to the stage of hanging drywall. Kip–our Principal Broker and former owner of a construction company–had given me some pointers, and things were rolling along pretty well.  So well, in fact, that I started to fancy myself a bit of a carpenter.

It eventually became apparent, though, that I’d made a seemingly-innocuous but critical mistake at an earlier stage of the project. The problem was, I’d left screws sticking too far out of the reflective foam insulation I’d added over the usual fiberglass batting for extra energy efficiency. At first, I didn’t want to admit it. “It’ll be alright,” I told myself.

But the drywall I’d painstakingly measured and hung was getting more and more off-kilter. Finally, I had to throw in the towel: the drywall had to come down, and I had to fix the screws that were sticking out of my insulation.

It was all pretty easy–until it wasn’t.

The sense of ease I’d felt had been a false one. It turned out I actually wasn’t paying enough attention to the details involved.

Bringing it Back to Real Estate

It’s not a perfect metaphor, but I think real estate transactions are similar. It can seem on the surface like there’s really not much to it, that anyone could do a bit of research and be ready to manage their own purchase or sale.

Now that websites like Zillow, Trulia, and Redfin have proliferated, anybody can search online for their dream home. It’s a far cry from the days when the Sunday paper was your main source for new listings, and only Realtors had access to more detailed information about properties.

Of course, online property search engines aren’t the end of the supposed online real estate revolution. In the past year or so, a new wave of online services have emerged that promise to completely cut the traditional real estate agent out of the transaction. Just make an offer, sign on the dotted line, and for a flat fee, an online team will keep the paperwork moving along.

Most Realtors’ default reaction to these kinds of services tends to fall somewhere between exasperated skepticism and scorn. I feel like a more nuanced response is in order though.

I’m personally willing to entertain that there could some place in the market for these kinds of services and some situations where working with a discount, online-only brokerage could make perfect sense.

Real estate should only continue to survive as a profession so long as agents can offer a service that’s worth the amount that they charge for it. If you don’t feel that service is worth your money, then you should certainly look at alternatives. But, as with any other kind of marketplace, consumers should be able to make an informed decision.

The thing is, going back to our home improvement metaphor, when things start off just a little off-kilter, it may not be long before they get really off-kilter. Everything is going smoothly until all of sudden, it’s not.

Kip has told me plenty of stories about all the transactions throughout his years in the business that nearly went off the rails, requiring all of his knowledge, negotiation skills, and finesse to try and keep them together.

Horror stories are a dime a dozen in this business, but it’s true that the vast majority of transactions do go smoothly. Part of the reason they do go smoothly though is that they’re being guided by agents who can properly recognize and handle the little issues so they don’t become big issues further down the road.

What Can Real Estate Agents Do For You, and What Can’t They Do?

As with any kind of business, real estate agents have to market themselves. Some Realtors, unfortunately, sell themselves by projecting an aura of high-flying mystique. They’ll make you more money, supposedly, because they make X million dollars of sales per year, and set sales records in such-and-such neighborhoods.

The truth of the matter is though that no agent can perform a miracle for your financial bottom-line. Market forces will be the main determinant of the range of value you can get for your home. A skilled agent will be able to leverage the different elements at play, but it’s a matter of knowledge, people skills, intuition, and hard work more than anything else.

Now matter how impressive the portfolio of your agent, there are a few important questions that you need to ask going straight out the gate.

How involved will your agent actually be on the day-to-day minutia of the purchase or sale of your home? How familiar are they with the various issues that can pop up on an inspection report in different parts of town? How much direct contact will they have with the other professionals involved in the transaction, the lenders, inspectors, appraisers, and escrow agents?

To give an example, we’ve been working with clients in Eugene who recently put in an offer on a lovely home in the Cal Young neighborhood. We knew the home would be a hot ticket and that multiple offers were a virtual certainty, so we encouraged them to go in above list price.

Another party, however, came in with an offer much higher than list price. Our clients’ offer was rejected, but knowing that offers that seem too good to be true often are, we got the sellers to place ours in a back-up position.

Lo and behold, the original buyers’ offer fell through because they weren’t able to obtain financing. Even though their agent had assured the sellers that there wouldn’t be any issues, the appraisal came in lower than the first buyers’ offer, and their lender wasn’t able to finance enough for them to afford the necessary down payment. Much to their joy, our clients were now in the chute to own their dream home.

As Realtors–and the same applies to lenders–part of our job is to ask you questions and crunch the right numbers so that you don’t get the impression that the impossible should be possible.

Of course, it’s one thing to start your home search with an overly-optimistic idea of what you’ll be able to find. But making it to the home stretch of a transaction, as in our example, is quite another.

There can be real, irreversible consequences on both sides of the transaction: leases that have been canceled too soon, earnest money that might not be returned, and contingent sales of other properties that end up falling through, not to mention the stress involved.

One reason we think that traditional real estate agents aren’t about to go extinct just yet is that there are just so many interconnected pieces that have to go together seamlessly to make a home sale happen. Taken individually, each of those items might look simple enough, but when one domino starts to wobble, the other ones start to wobble too, and a chain reaction might not be far off.

Why “Trusted Professional” Should Mean Just That

Throughout my tiny home project, it’s been neat to learn a few things and gain some first-hand knowledge. But I’m not a professional  builder and never will be, unlike Kip, who made a pretty good go at it before the real estate market started calling to him again.

My tiny house is mostly all built now. I’m happy with the results of my efforts–pretty good for a first try!–but there are things I wish I could do over again with the benefit of hindsight.

The thing is, you learn a lot of things the first time you do something, and you also learn a lot of things the second, third and fourth time you do something. When you’ve done hundreds of real estate transactions, as someone like Kip has, you still encounter details that you haven’t before, but most of the landscape is pretty familiar.

Put simply, there’s a level of trustworthiness there that can’t be manufactured. I’m sure it’s the same with building homes.

A true real estate professional is someone who not only knows what is supposed to happen in the course of a transaction but also knows what can happen and just how to deal with it. That takes both experience and attention to detail, a willingness to stay involved with the details of a transaction that successful agents don’t always maintain once they’ve “made it.”

Wherever you stand in relation to the real estate market, whether it’s just starting to think about buying or selling or being ready to pull the trigger, we’re here to inform you and help you make the choices that might prevent much tougher choices from having to be made later on. Thanks for reading!

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