I am having a very difficult time training some agents who still want to believe that “a house is worth what a buyer is willing to pay for it.” That is just SO not true. That runs more along the lines of “A sucker is born every minute.”
On the other hand I once fired an agent for saying, “I won’t let you pay a dime more than the property is worth!” If you are pretending that you can value a property “to the dime” you are just blowing hot air.
I spend two to three hours a week, outside of my normal real estate activities, training agents on a variety of topics. Many who have had their licenses for 2-3 years have never had to fine tune their home valuation skills, and find themselves feeling like they are rookies again. It’s a difficult change to embrace, but necessary. When there were five offers, buyer agent skills involved “how to win the bid” more than what is this house “worth”. When garnering an offer for a seller client, how to handle multiple offers was more important than how to price the property in the first place. That is no longer the case, and agents must spend time learning how to value property, with a reasonable degree of accuracy.
One of my mantras is “Agents are not allowed to use the word like”, unless they are referring to what a majority of buyers may like. “I like” coming from an agent, is like a stock broker recommending that you buy Target stock because he enjoys his shopping experience at that store better than at Fred Meyers. I often tell agents that they are not allowed to personally like or dislike properties. Whether or not you personally like a property is often a sign that you have not yet honed your valuation skills to the level of a true professional. When an agent stops saying “I like”, that is the day they begin to cross over from apprentice to professional.
This changing market leaves much less margin for error. Every week we go out and look at six to eight properties (Broker’s Opens) and come back and value them. To many this seems like a foreign exercise. Some still say “but I think my buyer would like…” or “I didn’t like”.
I don’t expect everyone to buy into the concept that an agent really can know what a property is worth. But I do think it’s odd that they all seem to know what it’s worth when a seller won’t list it at “the right price”, but then play dumb when the buyer wants to know what it’s worth. The conversation all too often turns to what it will take to “get it” vs. what it’s worth, when there is a buyer client in the room vs. a seller client.
Maybe this is just part of the 15 year old problem of a double standard for buyer clients vs. seller clients. Maybe it’s the conflict of interest involved in the agent needing the price to be fairly accuate in order to sell it for a seller, but not wanting to value it properly for a buyer client, because then they might have to say DON’T buy it.
We’re definitely “back to basics” with regard to real estate agent training classes. Those who refuse to accept any valuation technique beyond “it’s worth whatever a buyer is willing to pay for it”, will be left in the dust . If agents continue to refuse to accept the fact that property valuation is one of their duties as an agent, I may have to switch to holding these classes for people who are buying property vs. those charged with guiding them well through the process.
Licensing criteria does not involve training agents in an ongoing way in the art of home valuation. All to often, Brokers want to say “go out and SELL!”. Maybe it’s time for the buyers themselves to be able to access classes on home valuation techniques that go well beyond “price per square foot” and “the comps”. For now, suffice it to say that “comps” are not relevant to your valuation, unless you have at least driven by that “comp” to see if it had obvious differences beyond the photos available in the mls. “comps” are not properties “for sale”. “Comps” are properties that have SOLD.
And in this changing market, if it sold before August of 2007…it ain’t a comp, unless you make appropriate adjustments for what happened in the latter part of 2007.