Away with Tears in My Eyes
VCRs, Pay Phones, Real Estate Agents?
Do Due Diligence
Go Local
I Hope the Friendship Was Worth Half a Million Dollars
Buying a Listing
A Punch List: Questions to Ask a Prospective Agent
Chapter 9
Buying and Selling Homes: What the Future Looks Like
Money Talks
Artificial Intelligence
The Millennial Mindset
The Traditional Brokerage—Calling a Taxi to Take You to Blockbuster
The Brokerage of the Future
About the Author
If you’ve ever bought or sold a home, you likely left money on the table. And I don’t mean that the escrow company left you with the FedEx bill for the closing papers. In almost every real estate sale, buyers and sellers leave behind thousands or hundreds of thousands of dollars in the process, depending on the home values in your market. Given that the typical American homeowner has 40 percent of their wealth tied up in their home,1 the financial consequences can impact you for decades to come.
The good news? You will never know how much money you left on the table. If ignorance is bliss, American home buyers and sellers should be in a state of rapture. Every day, I watch buyers and sellers make well-intentioned but ill-informed decisions that undermine the monetization of their asset. Their decision-making processes are guided by a vague understanding of the real estate business, gut instinct, and, to varying degrees, the advice of their representatives. They have little awareness that their seemingly innocuous choices ripple out into all aspects of the sales process with extraordinary costs to them.
Residential real estate commands a great deal of attention in our culture, yet there has been no clear road map for buyers and sellers to maximize the value of the sale and purchase of homes—until now. This book will change your understanding of how to buy and sell a home. I’m going to show you, step by step, a strategic and comprehensive approach to buying and selling homes that guarantees you will NOT leave money on the table.
I’ve been the number-one producer in residential sales in Marin County, California, every year since 2005. After growing a boutique brokerage in Marin, I purchased Pacific Union residential brokerage in 2009, which was branded and grown to the fifth largest residential brokerage in the country. In 2018, Compass bought the company for a record price. Out of two million actively licensed real estate agents in the United States, I’m currently ranked fifty-first in sales by the Wall Street Journal.2 For the past ten years, I’ve been consistently ranked among the top seventy-five performers in the country. I thoroughly understand my craft. I love what I do. Yet every day I’m pleading with clients about the essential steps they need to take get the most value out of the purchase or sale of their home. Why?
Trust.
Buyers and sellers don’t trust real estate agents. They hire someone to effectively manage what is likely their biggest asset, but they are reluctant to place their faith in what he or she says. An agent is the public face of real estate and exerts the biggest influence on the sale of a home, but it’s not a face the public trusts. Buyers and sellers enter with a well-founded degree of skepticism.
Real estate agents don’t command the same respect as other professionals because the educational, regulatory, and qualitative standards are abysmal. If you are having a midlife crisis and want to switch careers, go get your real estate license. If your husband traded you in for a younger model and you have to generate income, become a real estate agent. If you’re a bored socialite and want to dabble, hang your shingle. Community college didn’t work out? There’s always real estate.
Residential real estate comprises roughly 30 percent of our nation’s wealth.3 The market collapsed in 2008–09 and the real estate industry has gone through extensive regulatory reform, yet the real estate sales community and their performance standards have remained relatively untouched.
The requirements to get a real estate license are less than rigorous. The time commitment sits somewhere between traffic school and getting an online minister’s license; you must be eighteen years of age, complete 135 hours of education, get a background check, and pass an exam. No minimum hours of working experience or any sort of apprenticeship are required. All you need is a heartbeat, the right birth date, and less than four weeks of education, and you can get a license to represent buyers and sellers making what could be their biggest financial decision ever.
Real estate sales are essentially an investment advisory business, but it’s not held to the same level of standards as, for example, the industry that sells and manages people’s other primary asset class: securities. Most brokerage firms require that securities traders have a college education. Brokers must pass the Series 7 and Series 64 exams to buy and sell stocks, bonds, and mutual funds—and they must be sponsored by a legitimate brokerage firm to take the exams. On-the-job training prepares a broker to work with clients before taking on the responsibility of representing clients. If the real estate industry had more rigorous requirements for agents, buyers and sellers would likely be more inclined to accept the feedback they are given about their homes.
Real estate’s low standards open the door for opportunistic agents who prey upon naïve, uninformed, or trusting clients. They don’t last in the real estate business, but their behaviors undermine the public’s trust. They say whatever serves their self-interest and are rarely held accountable. Their misrepresentations don’t necessarily come in the form of bald-faced lies, but they just as effectively manipulate the truth—and their clients.
Unethical agents tell clients what they want to hear, rather than what they should hear, to get their business. “Your house is an invaluable work of art and should be priced higher than any comp in the market.”
They pressure buyers into making offers by exaggerating competition. “I hear two parties are going to be writing offers” (though the house hasn’t had any showings in six months).
They speak without knowing. “I doubt that wall is load-bearing.”
They withhold essential information. “It’s a quiet family neighborhood” (without mentioning that the street is a popular Waze detour during rush hour).
Though unscrupulous agents are in the minority, they cast a long shadow. They are why 67.5 percent of Americans polled in an online Google Consumer Survey do not trust real estate agents.4
The Gatekeeper Is Gone
Technology is transforming the real estate business, and buyers and sellers are now awash
