By Chad Taylor Originally published November 5, 2020 in the Shawnee Mission Post
This shifting market is making plain the difference between full-time Realtors and Realtor hobbyists.
You might ask, “What is a Realtor hobbyist?” and my answer would be a Realtor who assists clients on a very part-time basis. Certainly, a Realtor who assists six or fewer clients a year would fall into this category.
Before I go any further, please know that I am a firm believer that the vast majority of people are doing the best they can with the skill and information that they have at the time. I believe that this is the case both personally and professionally. The challenge is that in our business, you are dealing with hundreds of thousands of dollars. In many cases, you are also impacting the largest financial investment that most families will make.
Since 2013 and through the last seven years, the strong seller’s market has presented some opportunity for Realtor hobbyist. Hot neighborhoods, low housing inventory, and strong buyer demand has allowed the Realtor hobbyist to sell listings without much market knowledge when it comes to pricing. Home buyers have been very forgiving when it comes to pricing accuracy over the last few years because honestly, beggars could not be choosers nor could they critique the price of a home if they actually wanted to buy one. If they took the time to criticize the price, someone else would probably swoop in and buy the home while they were complaining.
Today, however, the market is changing and we are seeing evidence daily that uncles, moms and sisters that sell homes a couple of times a year are struggling with pricing accuracy. And, due to the drop in overall housing demand, hobbyist are being forced to drop their list price “like it’s hot.” Lack of pricing accuracy leads to longer days on market which also takes leverage from the seller and hands it to the buyer. Time (days on market) is the seller’s enemy and the buyer’s friend. Statistically the longer a home is on the market without receiving a contract, the lower the list price/sales price percentage will be.
In more cases than not, a future home seller does give weight to the volume of business that a Realtor has sold when interviewing candidates. Undoubtedly, the higher the number of families that a Realtor has assisted in a given year, the better. I often compare it to the number of hours that your pilot flies. The more hours in the air, the better right? You feel much safer with an experienced pilot than you would if you found out that your pilot was just starting his career. The same should apply to your Realtor.
I must admit that it is shocking to me how many home buyers work with a family member or friend who only sells a couple of homes a year. In our market, the listing commission that a seller pays is, in most cases, split between the listing agent and the buyer’s agent, thus the buyer is not responsible for compensating their agent. Perhaps this is why it is more common that a friend or family member is hired for a home purchase. I would suggest that if a home buyer had to pay their agent’s commission as the seller does, they would most likely interview more than one agent and take them all through a more formal interview process.
Whether you are selling a home or purchasing a home in a shifting market, please keep in mind that our market is now a moving target and unless your Realtor is out there every day watching how the market is changing, you are accepting quite a bit of risk by hiring a hobbyist. I am not questioning anyone’s intentions. Again, I believe that most people are doing the best they can with the skills and information that they have at the time. You just have to ask yourself if “the best they can” will ensure that your goals are accomplished.