Buyers feel more comfortable working with an agent they know versus hiring a complete stranger, so wanting to hire a friend is understandable. They feel that a friend or family member will tell them the truth and look out for their best interests, but that type of situation can also create conflicts, in more ways than one.
Hiring a Friend or Family Member as a Buyer's Agent
The main problem is an agent who is close to the buyer might decide to save a friendship over delivering hard, cold facts. It's difficult to draw the line between business and friendship.
For first-time home buyers, buying a home involves spending more money than most buyers have ever spent in their lives. When significant amounts of money are at risk, it makes more sense to hire an experienced real estate agent who has first-hand knowledge of your area.
Think about this: if you were being unjustly sued, would you hire Uncle Joe from one town over who just passed the bar exam, or would you hire an aggressive local lawyer who annually wins dozens of cases just like yours and goes to lunch with the judge?
- Buyers are also reluctant to tell a close friend if they are dissatisfied, and they won't issue demands, fearing they may make the friend unhappy.
- It's harder to fire a friend who is under performing than it is to fire an agent with whom you have had no prior relationship.
- Moreover, some buyers hesitate to disclose their full financial picture to friends and family.
- Sometimes part-time agents don't have enough experience to predict problems before they arise and solve them.
- Many agents who aren't in the trenches day in and day out don't receive legal updates or hear about changes in the law.
- Inexperienced agents, especially those who don't regularly sell real estate as a living, may find writing purchase offers difficult and leave out excruciatingly important details. One unchecked box and a buyer could lose a good faith deposit.
Hiring a Neighborhood Specialist
Sometimes buyers hire agents who work outside of an area. Working with an agent who doesn't have intimate knowledge of the neighborhood can hurt a buyer. For example, here are 12 pieces of crucial information that a neighborhood specialist will undoubtedly know, whereas an out-of-area real estate agent may not:
- History of neighborhood homes, who owned them and when
- Which homes were previously on the market outside of MLS data
- What makes some homes on a street worth more than others
- Which streets are considered desirable and which are not
- Neighborhood nuisances and their influence on value
- Special retrofits exclusive to the community
- How to accurately price homes and determine specific values
- Which agents take listings at market and who takes overpriced listings
- Listing agent's reputations and how to negotiate with certain agents
- Pending legislation or neighborhood enforcement of regulations
- How to get inside information from listing agents, because they know each other
- New inventory that is not yet on the market but coming
In Closing: An agent in my office moved to Sacramento from the Bay area and bought a home in Land Park. This agent was seasoned and had sold for many years, but she still paid $150,000 more for a home because she hired an agent who did not specialize in the area. When I asked if she knew her home had been listed as a FSBO for $150,000 less, her eyes bulged. I sort of wished I had kept my mouth shut since it was now water under the bridge.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.