If you can’t pay, you can’t play. But just because you’ve got the dough doesn’t mean you’ll be a successful buyer. Before you begin the hunt, you have to be honest with yourself, recognize your weaknesses, and understand how to mitigate them by surrounding yourself with an all-star real estate team.
My weakness #1: I am a first-time home buyer, and don’t know what I don’t know.
Remedy: Read ambitiously
Ignorance is not a bliss when your life savings are on the line. I highly recommend the book Home Buying Kit for Dummies. Also, talk to people who have recently purchased a home, and ask them about their experiences and lessons learned, but don’t take just any advice or referral as gospel.
My weakness #2: I live 2,800 miles away from where I am purchasing my property. Beyond my twice-a-quarter business trips, my knowledge of the area and its real estate market is nonexistent.
Remedy: Build an kickass team that you can trust
Know your negotiables and non-negotiables, familiarize yourself with different neighborhoods, trust your team’s recommendations, and be ready to pull the trigger and put an offer on a house without having seen it in person. Trust me, I know how crazy the last part sounds.
Before I delve into my real estate team recruiting mania, I wanted to share with you some of the lessons I had learned in my professional line of work (enterprise software sales) that served me well as a first-time home buyer.
- Home buying is a team sport. You do not have to know everything yourself. What is important is having good people on your team who can help you avoid pitfalls and solve problems when they arise. Hire people who have mastered the skills you lack.
- Even people with good intentions can be misguided or misinformed. Always maintain a healthy degree of curiosity and skepticism. Be polite but assertive. Ask a lot of questions, and take legible notes.
- Find an agent who will stand by your side to coach and cajole you along the way. Your agent’s mission is to help you find your dream home, tell you what the home is worth, and negotiate for it on your behalf.
- Do not let any player on your team to manipulate you to act in their interests instead of yours. You hire these people, and you can fire them if they don’t satisfy your needs.* Your players are your trusted advisors, not decision makers. You are the boss, and the buck stops with you.
*You are free to work with as many agents as you want, especially during the early stages of your search. That said, playing the field is rarely worth the reward. You should not be working with more than one agent at any given time.
The truth of the matter is, home sales prices are directly related both to the agent’s knowledge of what comparable houses (“comps”) have sold for and to the agent’s negotiating skills. A good agent can help you find a home that meets your needs, negotiate for the home on your behalf, supervise property inspections, and coordinate the closing.
I found Tracy after having interviewed 11 other agents, all of whom were referred to me by friends or friends of friends. Some buyers ask each agent to share a list of every property she listed or sold during the past 12 months (“activity list”). Others ask for a list of client references. For me, it was mostly about compatibility and personality. Here is my process for evaluating agents:
- Email introduction
Reach out to the agent with some context around my buying profile, and ask for 30 minutes to speak over the phone. Pay attention to the writing style and grammar/spelling used.
- Online research
Check out the agent’s online profiles, and get a sense of the neighborhoods, types, and sales prices of the properties she has sold in the last 12 months. The agent should know the area where I’m looking to buy, specialize in the kind of property I’m looking to buy, and have experience handling properties in my price range.
- Phone screen
Does she talk more than she listens? Do I communicate well with the agent? If I can’t understand the agent, chances are she is a poor communicator. As a remote client who relies heavily on emails and phone calls, I need someone who is articulate, eloquent, and patient. Most importantly, she and I have to speak the same language.
- In-person meeting / house tours
Send the agent a list of 3-5 properties, and ask for her opinions. A good agent would make comments or suggestions and perhaps even challenge you to think differently (Tracy, for example, would often remind me of a property’s proximity to the highway and its relative noise level). When we meet, she presents me with a folder that contains a Multiple Listing Service (MLS) fact sheet describing each property we visit. During the house tour, she guides me through the house, and calls out certain areas where I should pay attention (i.e., the bones vs. aesthetics). We take notes and pictures/videos, and cross reference them with any additional information we find in the MLS database. After we finish for the day, she examines the disclosure documents, digs up a list of comps, helps me determine the value of the houses we saw, and flags any that she thinks are overpriced. We often engage in debates, and sometime even schedule a second viewing when we cannot come to a consensus or conclusion.
- Post-meeting evaluation
This is the part where I ask myself, is the agent a highly skilled, experienced professional? Would I enjoy working with her? Does she understand me? Do I respect and trust her? Would I be proud to have her represent me?
Tracy and I went on two sets of house tours in a week before I decided to go with her. Below are a few important characteristics I appreciate and admire about her:
- She screens several properties for each one she eventually shows me. She spends time playing phone tag with the listing agents, trying to get instructions about how to show properties, and scheduling showings.
- I know how much I can realistically afford, and it is my job to recognize if Tracy tries to pressure me into buying a more expensive home than I can afford. (Typically the seller pays the real estate commission, but since commission is part of the sales price, the effective cost of the commission comes out of both the buyer’s and seller’s pockets.) Luckily, I do not have any problem with Tracy. In fact, she has dissuaded me from pursuing several expensive listings because she thought they were overpriced.
- She educates me, and carefully explains each step so I always understand what’s happening. She is patient, and never uses my ignorance to manipulate me.
- She doesn’t make decisions for me. Her job is to present the relevant facts and empower me with the knowledge to make wise decisions regarding my best course of action.
- She doesn’t claim to know everything or try to give me gratuitous advice in a misguided attempt to save me money. Agents are not a CPAs or home inspectors or lawyers. Free advice from the wrong expert is worthless and may even cost me a great deal.
- She has working (but non-financial) relationships with local lenders, property inspectors, lawyers, title officers, insurance agents, government officials, and other real estate agents. She is also able to refer me to highly skilled service providers who offer competitive pricing. I always ask if she gets paid referral fees, and her answer is always no.
- She gives me all the time I need. I’ve called Tracy late at night (she’s three hours ahead of me), and she has answered my calls in the middle of social gatherings. I am not her wealthiest client, but she gives me all the resources and attention I need.
I realize how lucky I am to have found Tracy. But she is not the only important member of my real estate team. Over the past year, the Alvarados have become my adopted family in D.C. I first met Laurance on a Southwest flight from SFO to DCA. He invited me and my then-boyfriend (who was local) to dinner at his house in Chevy Chase, where I met his lovely wife Kathy and adorable son Davie.
Laurance and Kathy are experienced real estate investors, and have been instrumental in assisting me through the home buying process, often attending house tours with Tracy and sharing video clips and thoughts with me afterward. They are my eyes and ears on the ground, and I could not have done what I did without their support, encouragement, and guidance.