Did you know that Michigan is one of the easiest places to become a Realtor? Literally the only requirement is to take a 40-hour class and pass a state exam. Crazy, considering agents are the people helping customers make some of the biggest purchases of their lives or sell one of their biggest investments. Despite the easy requirements to become an agent, there is WAY more to the profession and being able to give customers the right service and advice throughout the process. Especially in a market where agents are a dime a dozen, inventory is at a record low, and the demand is through the roof.
Let’s dive in deeper to help determine who you should choose to represent you in your real estate ventures.
BROKERAGES…yes, the brokerage that the agent is a part of matters. Some brokerages are large, nationwide names, while others are small and may be locally and family owned. Some brokerages are big on real estate teams, while others are all for solo agents. Either way-as a consumer it depends on the type of experience you are looking for. Teams may have dedicated people for different parts of the process—there may be someone that goes on the listing appointment, a different person that deals with the negotiation once an offer is secured, a processor, a lead generator, someone that runs the open houses, etc. vs. solo agents (like how we work at Team Hamilton) where you will be working and establishing a relationship with one of us from start to finish.
The other thing to consider is that bigger brokerages have larger overhead and costs so in turn, the agents are required to pay a portion of their commission to the brokerage itself. They may also have to pay monthly fees for things like access for office space, use of office supplies, etc. Why may these matter? Compliance fees. These are usually fees within listing or buyer contracts where the seller or buyer agrees to pay the brokerage an additional fee on top of the commission the agent earns for selling or buying a home. We’ve seen these fees range from $200-$800. Team Hamilton DOES NOT charge any compliance fees.
Now, along the same lines as compliance fees are buyer premiums. We recently came across this concept while searching for homes to look at for a home buyer we are working with. On the MLS, a listing stated “a 1% buyer premium was to be paid to XXXX brokerage” and it needed to be included in the offer. Right off that bat before seeing that clause, it was shocking to see this home still on the market because the home had been on the market for over 30 days and was completely updated and priced where it should be priced. This clause alone was almost a $4,000 additional fee that the Buyer was asked to pay that would go directly to the brokerage. This is an immediate deterrent and the explanation to why this home was still on the market. A market where any home if priced right and in good condition would typically have multiple offers and be gone in a few days. Buyers likely avoided even viewing this property because in a market where appraisal guarantees and going above asking are pretty much the norm, why should buyers have to throw money away when it is a fee they should not even be asked to pay in the first place. If a seller wants to use a listing agent that charges this, it should be on the seller to pay this premium fee.
Lastly, commission, which is not fixed in the state of Michigan is a big part of the real estate picture. As a seller, you are paying the commission to the listing agent that helps put your home up for sale as well as the commission of the agent that brings the buyer to purchase your home. (Which means as a buyer it is free for you to use an agent to help you purchase a home).
Yes, it is costly to sell a home when you take into consideration your selling costs. But that does not mean that agents do not earn every bit of it. There is so much more to representing you in the selling/buying process than just listing your home online with pictures or taking you to tour homes. Realtors have costs themselves like marketing, photography, etc. They are working behind the scenes to help negotiate for you at inspection time, order title work, review title work, help navigate things that may need to be dealt with like divorce decrees in situations of divorce, tax or contractors’ liens, preparing packets for appraisers, if it doesn’t appraise-preparing packages to rebut an appraisal, coordinating closing, etc.
With bigger brokerages, agents have to pay a portion of their commission on each sale until they reach a certain earning for the year. This sometimes limits their willingness to negotiate or discount commission. What we have seen that may be harming your marketability of your property for sale when it comes to commission is when you think your agent may be giving you a discount on their commission, but they are actually only discounting the amount of commission offered to the buyer’s agent that will be bringing the buyer for your home.
At the end of the day, if this is the case, we will show our clients any home they want to tour and will do anything we can to help them purchase that home if it happens to be the one, but if an agent is going to discount their commission, they should be taking it off their own earnings and not the agent that will be bringing the buyer to view your home. Not every agent is like us, and some agents or buyers even will steer clear of a home because they want their agent to earn what they deserve for the work they have put in.
As some people may know we own a radon testing business as well. Throughout dealing with agents on that side of the business it has been eye opening to see how some agents work and it has been interesting to see the demeaner and how certain agents conduct themselves. As Realtors, one of our duties is to help coordinate home inspectors and other contractors getting into homes as well as sometimes assisting our buyers in the scheduling of these inspections within our contract timeframes. Dealing with rude or pushy agents has been eye opening. We tend to wonder if clients were to see how agents were interacting with contractors or even the agent on the other side of the transaction if they would approve or agree with how business was being conducted. Agents have a duty to represent themselves professionally and on behalf of their clients. If you are not representing yourself in that way, it negatively effects your client whether you realize it or not. Make sure you are picking an agent that isn’t running on emotion and will be willing to represent you in the best way whether they are in front of you or not.
Ultimately, the real estate market in 2021 was one of the craziest we have seen and 2022 is starting off just the same. The inventory is LOW. The number of buyers for each house are HIGH. And the pool of agents available right now is higher than it has ever been. So, take some time to research who you are using to represent you and consider all factors and fees associated. There are so many moving parts to a real estate transaction and picking the right agent could be the key to helping you get your offer accepted or home sold smoothly in this wild market.
Give us a call or reach out today in order to get the conversation rolling. We can show you how we are different and the Realtors you want on your side in this competitive market!