From professional training, to legal issues, to how to protect yourself, there is a lot of information most people don’t know about the real estate industry. Here are just a few of the facts you should understand.
Obtaining a real estate license does not prepare you to be a real estate agent.
To acquire a real estate license in CT, a person must take 60 hours of approved course work. In NY and NJ the requirement is 75 hours of approved course work. This course work is primarily comprised of real estate law and the bare essential knowledge needed to complete a real estate transaction.
However, just like any profession, there is much more to becoming a good agent than just course work. Many skills, such as writing, marketing, data analysis, project management, business development and relationship management, are learned on-the-job through completing transactions and managing marketing and administrative responsibilities. Therefore, competence as an agent can take several years of full-time effort, managing dozens of real estate transactions.
Measuring demand can help you reduce risk.
Many people think real estate values are primarily influenced by the overall ups and downs of the economy. While the economy is a big factor, the potential appreciation of a home is influenced just as much by the particular qualities of a home and its supply in any local market.
The demand for your home over time determines its appreciation potential. Demand is an indicator of how the neighborhood or a specific property is perceived and desired. This is important data to understand before purchasing a home. All neighborhoods and styles of homes are not equal. While most agents should not and will not influence your home style or neighborhood preferences, you can use historical data to determine which properties and neighborhoods have had higher demand and demand over time.
When analyzing historical data you must exclude overpriced and unusual listings, stay within a given price point, and examine factors such as market times, zoning, new developments and buyer trends. Utilizing historical data and recent consumer trends to predict demand is the same logic that financial investors use to evaluate stocks and companies. This type of analysis can protect you from risk by identifying properties that will be more resistant to market downturns.
The law against Steering is not adequate to protect you from risk.
Fair housing laws prevent real estate agents from steering people away from or toward a certain neighborhood based on race, color, or other protected categories. However, it does not cover all of the bases. For instance, it does not mandate that agents expose you to neighborhoods that you have not considered because of your own lack of knowledge. Also, this law does not prevent agents from directing certain groups of people to certain styles of homes that might be less desirable in your area due to location or design. Human issues such as social, race, class, cultural and political issues will always influence your real estate investment. Make sure you are aware of the social climate that exists in your city before you buy. Most of these factors are revealed through interactions with a wide range of sectors in a community, and the impact of these factors will vary from place to place.
You can get access to all the data.
You have a right to request to see MLS search tools and understand how your agent runs reports from their MLS system. MLS systems house all of the current and past property listings in a given region and access is granted to agents who pay fees to use these systems. As your representative, agents have a responsibility to disclose material facts, and that includes reasonable access to detailed information on relevant properties currently for sale and those sold in the past. Additionally, sales information on properties that are not on the MLS can be found at your local town hall, and a good agent will help you find it. This data is helpful if there are not enough similar properties sold through the MLS to analyze the market value of a particular home.
Referrals are Unequal.
Make sure to use all of the best practices in selecting a real estate agent, regardless of the source of your referral. Personal referrals are a common source for real estate professionals, but they are only effective if the person referring truly understands what a quality real estate agent is. Seasoned property buyers that have used more than one agent can compare the quality and scope of work that different agents provide. They will be better able to judge if an agent is effective. See my post “10 Questions to Ask Real Estate Agent before you hire him or her.”
Are your surprised by these facts? Do you have questions? Let me know.