Picture this: You’ve budgeted diligently, saved for years, and are officially ready to buy your house. Maybe this is your first house, or it could be your next home. Excited about your journey ahead, you start searching for a real estate broker to help you in your home search.
Now look, it’s no secret that everyone has a friend or family member who’s licensed and ready to help you, and they probably find creative ways to remind you of that early and often. Then there’s thousands of other agents open for business that you haven’t met yet, and each one of them would love to grab time with you to discuss your real estate goals and forge a partnership.
Understanding that representation is not free, you make the sound decision to pick a few brokers to interview. And now once again, like so many other parts of your life, you’re in a position where someone is going to do their best to convince you of the value that their services will deliver, the value of their knowledge and experience and [insert a compelling and similar-to-your-situation customer story here] to make you comfortable with picking them over any of the other real estate brokers currently practicing in Portland.
Value gets talked about A LOT in our society. Value this, savings that, act now and you’ll get $$$ back in your pocket! WE SAVE OUR CUSTOMERS [THIS MUCH MONEY] COMPARED TO OUR COMPETITION. Feeling fatigued yet? Yeah me too.. Feel the trust in the room? Yeah me neither.
It’s no wonder that when it comes time to make one of the largest purchases of your life, you feel the need to approach it from a guarded, low trust state of mind.
Lovely.
So you may be asking yourself, truly, what value can a real estate broker give me, and what separates the good from the great from the.. well, everyone else? Let’s unpack that together.
When I think of ways to quantify value in a real estate transaction, I like to look at it from the perspective of quantifiable return on investment (you can point your finger at the exact amount of money that was saved), and qualitative return on investment (it’s still there, but harder to pin down an exact number). For the quantitative, we’ll unpack the stages of the home buying journey and address opportunities to negotiate savings along the way. For qualitative, we’ll think through things like time savings and mental/emotional health savings gained through proactive coaching and expectation setting that happens along your buying journey.
First, for the sake of clarity, the Investment that I’m referring to in this blog is the fee you agree to pay your real estate broker. Whether that is a fixed amount, percentage of sale price, or something else entirely that has been mutually agreed upon.
Let’s zoom in.
Quantifiable ROI (return on investment)
Offer submission and negotiation:
- When drafting your offer, your broker can help you save money by talking with the listing agent about what the Seller’s priorities are other than their bottom line. Maybe they are looking for a shorter/longer escrow period than usual. Possibly offering to allow the Sellers to stay in the home for a few days or a few weeks after close is valuable and important to them. Maybe they really love their refrigerator and are hoping to take that with them, or they’re downsizing and are dreading the idea of having to get rid of the upright piano in the dining room that they can’t take with them. Notice how none of these things are related to the sale price of the home? Knowing these priorities prior to writing your offer can help you submit a strong offer while also keeping money in your pocket by being able to offer a lower purchase price in exchange for these other items.
- Everything is negotiable in a real estate deal. This includes Seller contributions toward your closing costs and prepaids (ask your lender about these), and even Seller contributions toward your buyer agent commissions. Your broker can help you negotiate these items into your offer, and doing this successfully has the potential to save you tens of thousands of dollars.
Inspection period
- After your offer gets accepted, you will typically have the opportunity to hire a professional inspector to assess your soon to be home and provide you with insights on things that may need to be repaired/replaced/addressed. With this new information in hand, your broker can help you go back to the negotiation table with the Sellers. There are several levers that can be pulled to find a path forward when unknown issues are uncovered, including a reduced sale price, additional Seller contributions toward your closing costs, and even repairs to be completed by the Seller prior to closing on your home purchase. All of these negotiable items must be mutually agreed upon by both the Buyer and the Seller, and having a skilled broker representing you can help you build and communicate a compelling case to get the Seller to agree to some/all of these negotiable items. Once again potentially saving you tens of thousands of dollars.
Appraisal contingency
- Assuming that you will be taking out a mortgage loan for your home purchase, your lender will, in most cases, require that a third party licenced appraiser prepares an official report validating that the market value of the home you are buying is at least as much as the purchase price you’ve agreed to buy the home for. In some cases, the appraiser determines that the likely market value of your soon to be home is actually less than the current purchase price, leaving you with another negotiation ahead of you. When this happens, there is an opportunity for your broker to help you negotiate a lower purchase price if the Sellers agree to it. A strong broker will once again help you build and communicate a compelling case for why the Sellers should agree, and once again has the opportunity to potentially save you tens of thousands of dollars.
- On the flip side of this, if you and your broker were able to negotiate a strong, below market purchase price, you can find yourself in a position where the appraised value is actually higher than your purchase price. This puts you in the position of closing on your home with immediate home equity and can also be considered an added value that your broker helped you secure.
Dang, that’s a lot of opportunities to save tens of thousands of dollars.
Let’s move on to the squishier, less quantifiable value of hiring a high quality broker to guide you through your home buying journey.
Qualitative ROI
Home shopping
- Tailored, automated searches. As much as you may love spending time on Zillow or Redfin or whichever home listing site you choose to doom scroll on, your broker can actually set up an automatic search customized to your specific wants and needs and free up a bunch of your time for other things.
- On the subject of time savings, who likes scheduling and coordinating showings? Not you. Your broker will handle this as well.
- During showings, your broker can help point out smaller details about the home that may have been missed otherwise. Houses have A TON of things to look at and private showings are commonly described as overwhelming. Finding things during the showing will help you make a more informed and confident decision about how you would like to proceed. Whether for pointing out good or concerning things, having an expert in the room with you will help you know when you’ve found the one, and also know when you haven’t. Some call this peace of mind and that’s worth different amounts to different people.
Escrow
- After you have found your house and have an accepted offer, your broker will help you coordinate inspections and keep track of important deadlines agreed to in your accepted offer. These deadlines are a super important part of your escrow period and can mean the difference between a successful purchase of your dream home or a sale fail where you lose your earnest money deposit – kind of a big swing here of potential outcomes. A high quality broker will have your back every step of the way while also coaching you on what happens next and what to expect.
Post-purchase
- Guess what? A high quality real estate broker does not disappear the second you close on your home purchase. They’re always one text/call/smoke signal away, ready to help direct you to resources when questions come up.
Alright, we’re now at the part of the show where we need to wrap things up! Hopefully this was more informative than it was a ramble. Thanks for spending some time with me either way. If you found this helpful, please let me know! My name is Kyle Gordon, I’m an Oregon Real Estate Broker at Living Room Realty, and my purpose within real estate is to give my clients more value than whatever fee they pay me – so much so that they choose to partner with me again and again, and also feel delighted to recommend me to their friends and family. I recognize that this level of trust and partnership has to be earned rather than given and I’m here for it.
Not sure where to go from here? I offer free buyer consults at a Portland coffee shop near you, or at any of our lovely Living Room Realty offices. We can discuss your real estate goals and map out your journey ahead when you’re ready. In the meantime, check out my blog post that highlights things you should consider when shopping for your home.
