DO WE REALLY NEED REAL ESTATE AGENTS?

WELCOME

Happy pumpkin spice and football season! Okay, yes, it’s going to be in the 90s here in Atlanta all week and it will be a good while before I can break out boots and sweaters, but it’s coming, y’all. As much as I love summer, I can feel fall in every fiber of my being. (Even if I’m currently sweating in my car.)

Anyway, surprise, surprise, the New York Times has managed to make me mad again, so today we’re going to cover their recent article on whether people really need real estate agents. (Spoiler alert: I may have a bias here.) So let’s dig in!

THE REALITY OF REAL ESTATE

The Rate Cuts Are Coming! The Rate Cuts Are Coming!

If y’all have been following the story, you have seen that stocks rallied at the end of last week when Fed Chair Jerome Powell indicated that interest rates would likely be lowered at next month’s policy meeting. 

Specifically, he said:

“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks… My confidence has grown that inflation is on a sustainable path back to 2%… It seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon. We do not seek or welcome further cooling in labor market conditions.”

Per Mike Fratantoni, we’re heading in the right direction:

“The immediate reaction to the speech resulted in some reductions in longer-term Treasuries and secondary mortgage market yields, so mortgage rates may be somewhat lower in the near term. Our forecast continues to look for mortgage rates to drift down closer to 6% over the next 12 months or so.”

I’d love to see this shift start to bring the reluctant buyers back out, especially the first-timers. I don’t like that idea that these first-timers could choose to sit around and wait for the potential promise of $25K incentive that is, to this point, theoretical and yet to be defined. Always remember, great buyers’ agents are the ones who can get everyone to the table on the right house, regardless of the news cycle or politics.

Still, a pending interest rate cut is very positive news and it’s an excellent reason to revisit conversation with those buyers who’ve been hesitant to dip their toes in the buying pool.

STORY TIME WITH GLENNDA

Is That So, Joanne Y. Cleaver?

Y’all, it’s rare that I pick a fight, but I feel like I’m spoiling for one after reading last week’s NYT article called Do I Really Need a Real Estate Agent? (You may require a subscription to read it, so I’ll summarize, just in case.)

In the piece, Joanne Y. Cleaver (whom I suspect calls herself Joanne Y. Clever in her own head) boasts about how she sold her $750,000 home in Charlotte on Facebook Market Place on her own, allowing her to pocket the $25,000 agent’s commission. She didn’t hire a seller’s agent—and she also refused to pay the buyer’s agent a commission. Instead, she opted to conduct the transaction with the help of a real estate attorney. And almost everyone in the comments section is cheering her on, which is more than a little disheartening.

Per the article’s author: “But real estate professionals warn that the list of things that can go wrong in a property transaction is long, and the downside if they do go wrong is steep and financially painful, from discovering mold to finding a faulty foundation or a termite infestation—all things that should be flagged on an inspection report, but sometimes aren’t detected.”

Collectively, I imagine every one of y’all reading this thinking, Well, no sh*t.

Let me say this first—there are a lot of bad agents out there and we’re all getting painted with their wonky brush. I know agents here in Atlanta who are just terrible and some of them are quite successful. I could tell you about a transaction where my counterpart did everything wrong, from not knowing anything about the house (or any other home in the neighborhood) to providing no input or education for her clients to arriving late to the showing to not bothering to show up for the inspection. And guess what? We both got paid the same amount when that deal closed! What’s funny is my client said to me, “Wow, that was particularly easy.” I replied, “The reason it was easy is because you guys listened to every single thing I said for you to do and you allowed me to price it where I knew I could sell it.”

The new rules are going to flush out the bad agents who are fearful about all the changes, either because they know they lack value or they can’t articulate their value. Honestly, I can’t be mad about that. Good riddance to those sullying our reputations.

But for the good agents, we more than cover our commissions. For example, I have some clients who thought about selling their home on their own, having bought into the media’s narrative. They saw on Zillow that their home was worth $X, so that’s what they planned to list it for. Well, I sat down with them and gave them a full education and got their home under contract for an all-cash $X plus $50K because I knew the market better than an algorithm that changes the more people pull it up! If I hadn’t been there, my sellers would have left that $50K on the table, and that’s not even to mention the pain and suffering they may have endured trying to first-time what’s taken me 30 years to perfect.

The fact of the matter is, Joanne Y. Cleaver isn’t entirely wrong. You technically do not need a real estate agent to sell your house. You also don’t need a hairdresser to cut your hair, or a dermatologist to remove a mole. (For the DIYers in each case, good luck dealing with the aftermath.)

The bottom line is, you do need an agent to negotiate the best deal, to negotiate the best terms, and to mitigate your risk as a sellers. You need an agent who can help you understand the value of 123 Banana Street over 127 Banana Street. You need an agent who’ll hold your hand through the intricacies of rate buy-downs. The largest financial transaction of most people’s lives is just not a DIY situation.

Let’s look at the example of someone buying a $500,000 home. With an agent, the buyer’s commission is $15,000. Now, let’s say the roof on the home is 17 years old and per the manufacturer, these are 30-year shingles, so the buyer thinks, “That’s great, I’m golden for 13 more years.” What that buyer may not know is that the insurance company is going to exclude that roof from coverage because it’s more than 15 years old. And in Atlanta, GA, you’re likely to have hail damage every three or four years and you could probably get your roof replaced free from the insurance company—if it were covered. Which it isn’t. By the way, that new roof is going to cost $25,000, which is $10,000 more than that commission. And I guarantee you a good buyer’s agent would have been on top of this, making sure there’s an allowance for that roof which is over 15 years old.

Now, back to Joanne Y. Cleaver. Cleaver says she had the advantage because she is a retired real estate editor for a newspaper in Wisconsin which, last time I checked, is an entirely different market in an entirely different state with entirely different rules and nuances at an entirely different period of time. What she failed to understand is that by listing her home on FBMP, her exposure to buyers was limited. She couldn’t reach Bobby and Susie who are relocating from Sacramento (with all their Monopoly money from selling a home in California) and are more likely to spend more on a home in Charlotte. I will bet y’all $5 that she could have gotten more like $800K if the home were marketed the right way, which would have more than covered the cost of commissions.

So do you have to have a real estate agent? Again, technically, no. But the keyword for 2024 is “frictionless” and a good agent is there to remove all that friction when buying and selling. They make it convenient. And that’s not to mention handling all the little (actually, huge) details like vetting and the pre-approval letter. Just because some stranger you allow into your home has what looks like a valid pre-approval letter doesn’t mean they aren’t capable of scamming or harming you. I bet the Menendez brothers had great credit, looked fantastic on paper, maybe could have even been cash buyers, but that didn’t prevent them from being murders.

Now, Joanne Y. Cleaver has actually published a book on selling real estate without an agent, plus she has another one about selling real estate on FBMP coming out soon. Both are self-published, so I think Joanne Y. Cleaver is of the mindset that she can do everything her damn self without the help of an expert. (I hope her hair doesn’t need a trim or that she has a pesky mole to be removed.)

Yet I can’t help but find it ironic that in trying to cut professionals out of the business, it’s Joanne Y. Cleaver who stands to profit here.

GLENNDA’S GURU

Welcome, Andy Florance!

I am pleased as a pig in a puddle to introduce Mr. Andrew C. Florance! Andy is the Founder and CEO of CoStar Group, which is a member of the NASDAQ 100. It’s hard to sum up his career in a couple of sentences, but I’ll try. This brilliant man has led the charge to digitize the world of real estate and we all do business differently today because of him. I could not be more impressed by what a visionary he is, especially considering he started it all from his dorm room. Now, CoStar is responsible for some of the biggest household name brands such as Apartments.com, Land.com, and Homes.com. So, welcome, Andy, we’re so glad you’re here!

Thank you so much, Andy!

GLENNDAISM

Remember

GO HOMES.COM WITH GLENNDA

Blink and You’ll Miss It

Oh, my stars and stripes, do I have a fantastic new listing!

This big brick beauty is one hot property, located in a neighborhood with a country club and a community lake! There’s a fully appointed terrace level, plus a patio and a deck and a screened porch, so this place is all about gracious outdoor living! The primary suite is essentially a luxury hotel room, with a separate sitting area (with a fireplace) and a whirlpool tub, so it’s a spa experience without ever leaving home. Every time I post a home like this and I show how far your dollars stretch down here, I have to wonder why everyone doesn’t live in the Atlanta area.