When to hire a friend as your Realtor
When to hire a friend as your Realtor? Do you trust your real estate friend to sell your home or to help you buy one – at the best price? In other words. Are you trying to do your friend a favor or do you want to sell your home for top dollar in the shortest time? Before you answer. Keep in mind, this person will be in charge of a real estate transaction involving dozens of serious legal issues and hundreds of thousands of dollars. According to one source, ” it takes 10000 hours (or approximately 10 years) of deliberate practice” to become an expert.
In 2023 more people than ever have taken the few week course to sell real estate. Making the question of when or “IF” to hire your friend as your Realtor critical. Consider this. How experienced are your real estate friends? So many people have real estate licenses these days but not all have experience, knowledge or a proven track record. For example. The friendly girl at the Starbucks where I get my morning coffee has a real estate license. My friend’s Bob’s wife is part-time Scottsdale Realtor. My trainer just got his license. It seems half my Uber drivers have a license to sell Real Estate. I also just met a nice guy at my open house who got his license five days ago. He is now advising buyers about comparable sales, home inspections and contract items… as if he knows.
Realtor Professional VS. Real Estate License Holder
Here’s an important fact: When to hire a friend as your Realtor. Real Estate is a learned profession. Experience and talent is of the utmost importance to be a great Paradise Valley or Scottsdale Realtor. As much as we love our friends and appreciate their value in our life, would hire a friend to do a life threatening surgery? As opposed to an experienced doctor? Probably not. But for some odd reason, that kind of concern is not applied to buying or selling a home. What it takes to be an expert Realtor can not be learned in real estate school. Imagine a 16 year old – who has never driven a car , however has learned, “a traffic lane is 10 feet wide” driving your entire family to go look at homes. Below is an example of a what is learned in Real Estate School.
Choose Respected, Experienced and Talented Realtor
I can only think of one instance when it’s a great idea to hire your real estate friend to advise, counsel and guide your through a real estate transaction. That’s when your friend is “respected, experienced, talented and absolutely the most qualified Realtor for the job.“ There’s absolutely no other time that a “friend” should be considered for a very serious job that involves one of the most legally intensive, data rich, experience driven jobs in business.
Without exception, IF the real estate agent or real estate agent friend you select is NOT the MOST qualified real estate agent for the job, at the very minimum you are.
#1 Risking the loss of thousands of dollars on the purchase or sale of your home.
#2 Have the potential loss of the friendship. This happens in half the cases I have heard.
#3 Increasing the possibility of future lawsuits.
Regardless of what I just mentioned. IF you still decide to hire a licensed real estate friend but can’t decide which one. Here are a few tips.
Best Friend – Realtor
#1 Pick your very best friend, the one you would literally give $10,000 to $200,000 to on any given day of the week. Because that’s what you’re risking anytime you hire less than the VERY BEST REALTOR for your real estate transaction.
#2 You’ll be able to forgive your real estate friend if a conflict comes up during the transaction. After the fun of home shopping is over. Legal and monetary issues come up during the transaction. Your friend may be at odds with you or you may be at odds with them. For example, they may not be successful selling your home for the amount you want. Or purchasing the home you want at the price you feel is fair. There may be a conflict with one of hundreds of other issues that come up during preliminary contract negotiations or during the transaction period.
#3. Select the fun-loving friend who has earned your respect by demonstrating expertise, talent and integrity in previous transactions and situations you’ve seen them negotiate. Like a TRUE friend, a Realtor’s #1 MOST important fiduciary priority is to put the client first. Let me reiterate. The Realtors Fiduciary goal obligation above all else is to work towards the client’s highest good. I emphasize this because home sellers and buyers rely on the wise and experienced counsel of their Realtor during these incredibly high stakes transactions. The commissions involved are high. So the Realtor must be beyond allowing any amount of money affect his / her wise counsel.
#4 When to hire a friend as your Realtor. Pick the Real Estate friend you would want to go into business with. Because your friend will be your professional guide and counselor to acquire or sell a very expensive investment.
Real Estate Commission for Friends
How much should my Real Estate Agent friend be paid?
Now that you have decided to do your friend a favor by hiring him/her over a potentially more qualified professional. What amount of a discount is fair, if any? I think any discount request is a personal decision. Assuming you are hiring a friend or family member out of a sense of love and kindness …and not because they are the most qualified, experienced agent for the job. I would have the compensation question addressed upfront. Since you are trying to be a good loyal friend. I would assume the friend would return the favor and charge you a small flat fee.
One of my clients hired his niece to be his real estate agent (she worked in the business part-time). Based on relevant sales, he overpaid for the home he purchased with her guidance by nearly $50,000. This was also demonstrated when some other factors did not work out and he had to sell the home a few months later, at a total loss of almost $75,000. The niece received a full 3% commission for representing the buyer (her cousin). Additionally, because she needed the money, my former client did not ask for any of the funds towards closing cost or purchase price. So in this case; the family member lost $75,000 on the purchase. What amount would have been fair for the niece to credit of her commission or return, if any ??? Again, it’s a personal decision.
Realtor Friend – Managing Losses
When to hire a friend as your Realtor. In the case above. It would have been far cheaper for my former client just to write the niece a check for $60,000, rather than hire her. Typically a buyer’s agent will receive a 3% commission of gross sale price. A portion of that almost always goes to the broker (Real Estate Co.) unless it is a discount broker. Discount brokers only charges their agents a relatively small flat fee per transaction. Many newer and part-time agents work under these discount brokers. If your Real Estate friend works with a discount broker they should have more flexibility in offering closing cost credits and funds. Funds which can be used should there be an impasse between buyer and seller during negotiations.
In either case, since you are hiring a friend, depending on the closeness of the friend. The friend might offer a commission of 1.5% rather than 3% to a minimum of 1% of the 3%. That would be reasonable if they are working with a discount brokerage house.If your real estate friend is working with a NON-discount brokerage, a discount of between 1.5% of the 3% to 2.0% of the 3% might be considered reasonable. Of course you may not want to ask your friend to share the love. Additionally, your friend may not offer. Either way, have this discussion upfront. This is just the beginning of items to come up. So might as well get this out and cleared up first.
Summary – Realtor
When to hire a friend as your Realtor. I have heard dozens of stories of home sellers hiring their friends with the same results. Losses of thousands and thousands of dollars below obtainable net proceeds. The very best Realtor, most talented Realtors know how to earn you TOP dollar for your home. Buy you’re friend dinner. Buy them a car, send them on a Caribbean cruise because all those options are very likely less costly than having a lessor experienced agent represent you in the sale or purchase of your most valuable investment.
I write the article above because behind the scenes. I have seen and heard of so many nice people trying to do the “right thing” by hiring friends or family members. Often times, dear friends are lost or the relationship severely strained. Or I hear sad stories of overpaying for a home or underselling or getting short-changed on one or more of dozens of other issues involved in buying or selling an expensive home. Most of the time, the buyer or seller does not realize the mistake and may think everything is perfect.
Bottom line, the only time I would hire a friend for ANY job is because they are the most qualified for the particular job. Any true friend will want you to have the best talent behind you . Any licensed Realtor will respect and appreciate your carefully considered decision. You can sever a relationship with a Real Estate agent who is under-performing but not a dear friend. I hope this helps. Good Luck!!!
Please feel free to call anytime, Michael Chaisson I am at 480-450-4632 – Specializing in luxury and architecturally significant homes in Scottsdale, Paradise Valley and Arcadia Arizona.