Editor’s note: The following is excerpted from Chapter 17 of Spencer Rascoff and Stan Humphries’ new book, “Zillow Talk: The New Rules of Real Estate,” on sale today.
Once you start looking for them, they’re hard to miss. The signs pop up in front yards and on park benches, on billboards and bulletin boards. In Battle Creek, Michigan: “Everything we touch turns to SOLD!” In Jamison, Pennsylvania: “Scott Geller, the Home Seller.” In Hutchinson, Kansas: “The Spouses who Sell Houses.”
When it comes to real estate agents, we’re all looking for the same thing: We want an agent with local knowledge that rivals a longtime neighbor, and the negotiating skills to match the secretary of state.
But how do you find that person? Because, clearly, it’s not enough to go by the advertisements. And you sure can’t just pick a name out of the phone book (because you probably don’t have one).
If you’re searching for a real estate agent, you can always ask friends and neighbors for a recommendation. You can read online reviews. You can even ask for references. But after analyzing more than 1 million sales by agents in our database, we have a few other tips for cutting through the slogans and the smiling headshots. We can tell you how to appraise real estate agents — and how to tell when you’ve found the best one in town.
Why real estate agents are more important than ever
Before we get to that, though, we realize this might sound needlessly complicated to you. Maybe you’re wondering whether we still need real estate agents at all. You might be wondering if they’re heading the way of the travel agent, the stockbroker, and, well, the dodo bird.
We get this question all the time. And our answer is simple: No. Not by a long shot. Real estate agents are still incredibly important, and they’re not going anywhere. In fact, real estate professionals are working more than ever today. According to a recent survey, almost 90 percent of homebuyers used an agent to help buy their home. In 2001, that number was only 70 percent.
In part, real estate agents have stayed relevant because they have embraced technology more than almost any other service-based industry. Almost every real estate professional has a website, and most of them have had these sites for years. They get in touch using text messages and smartphones, and are active on social media.
But that’s not the only reason that real estate agents are still thriving. They’re more important than ever in part because we’ve all seen how complicated the housing market can be. We’ve seen how consequential these decisions are — and how devastating it is when homebuying goes wrong. Given how life altering a home purchase can be, it’s not really a surprise that more people than ever want a trained professional in their corner during the process.
This isn’t just an anecdotal assumption. There’s actually an entire field of economics called “transaction cost economics” that helps us understand why real estate professionals are likely to remain a part of the transactional process. (Please give us a moment to adjust our propeller hats.)
Among other things, transaction cost economics asks why professions such as real estate agents, stockbrokers or travel agents exist in the first place. In theory, the market would be much more efficient without these “intermediating” firms in the middle. But as transaction cost economics explains, when a purchase is relatively infrequent and expensive, people are more likely to want a professional minding and managing the transaction. The more frequent and the less expensive a purchase is, the less necessary a middleman becomes.
This is why travel agents and stockbrokers are becoming extinct, while real estate professionals are still prospering. After all, when booking a trip to Pittsburgh, we’re comfortable clicking “purchase” on our own. When finding and financing a home, however, the emotionally charged, life-changing, bank account-draining gravity of the situation leads us to crave — and, indeed, to require — an expert’s guidance.
In our eyes, a helpful analogy here is WebMD, the large and popular online health resource. We’ve all searched online to research our ailments — “what are the symptoms of strep throat?” — but then we go to a doctor for a proper diagnosis. We need professionals to help us interpret and treat what anyone with an Internet connection can find in 12 seconds on Google. The doctor’s role, then, is a little different, but it’s definitely not diminished.
The same is true of the real estate agent. Home purchases are infrequent, emotional, and expensive.
High stakes command high expertise. But that doesn’t mean people shouldn’t be armed with the best possible information to help them navigate the process.
That also doesn’t mean the real estate industry won’t ever change. In fact, the job of a real estate professional is already evolving. Agents have evolved from the days when a large part of their job was being an information gatekeeper; today, theirs is more of a service industry, where they bring their minds and muscles to negotiating and pricing. People may be more and more comfortable searching for a home on their own — but they still want, and need, an agent there to help broker the final transaction and bargain for a fair price.
If you’re one of those people who still wants a real estate agent by your side, you’re clearly not alone. But remember, it’s important to find the right agent.
It’s no surprise that the agents who are willing to go the extra mile tend to be the most successful. But you don’t have to guess who those agents are. With just a few clicks of the mouse, you can now see who really cares, and who’s going to give your sale the attention it deserves. These are the factors that distinguish a great real estate agent. And once you find one, you’ll know that you’ve found the right agent for you.