Does Your Real Estate Agent Really Have Your Best Interest In Mind?
By Scott Gaertner, Associate Broker
Recently I noticed that there was a new movie on Netflix based on one of my favorite books and I decided to watch it. If you haven’t read “Freakonomics: A Rogue Economist Explores the Hidden Side of Everything,” then I suggest you at least watch the movie. The book is authored by Steven Levitt, a brilliant economist who uses economic concepts to investigate human behavior. What I like about it is how it questions our assumptions and, as the title says, investigates the dark side of things. Believe me when I say that this is not a boring economics story. One reviewer called it, “A fascinating look at examples of cheating teachers, bizarre baby names, crack-selling mama’s boys and self-dealing realtors.”
I’m writing about “Freakonomics” here because of the section regarding Levitt’s theory on “self-dealing realtors.” In a normal client-agent interaction, according to Levitt, the agents’ and clients’ incentives are not appropriately aligned. He discusses a clever statistical study he conducted to demonstrate that agents have no financial motivation to obtain you the best price for your home. Obtaining an additional $10,000 from a seller, for example, will normally only net the agent $150 more. He believes that there is insufficient justification for their readiness to wait for better offers so they advise you to accept the first offer you receive. And, unfortunately, he’s probably correct in a lot of cases. However, I do not believe this is the case with a local area specialist agent—meaning an agent who decides to concentrate his business and become an expert in a specific geographic area rather than working all over the place. The area-specializing agent understands their business model has their incentives aligned perfectly with their clientele. Using a local agent specialist has a slew of other benefits in addition to making clients more money. But if they are truly meaningful shouldn’t all those advantages translate into better sales prices for the local agent’s clients?
NOBODY KNOWS IT BETTER
A local specialist will be familiar with the local businesses, schools, and all the attractive features in the region. They should be able to sell the lifestyle as well as the house. They’ll know where to pinpoint the greatest dog parks, wine bars, unique restaurants, and hangout spots for the locals. Not only will a local realtor be able to detail the best cycling and hiking trails in the area, but they will also know the people in the area and have a powerful awareness of the nuances that you won’t find out about online. They have an intimate knowledge of comparable sales, area seasonality, and which characteristics impact home values most. They can confidently answer any question a buyer can throw at them.
A local expert is familiar with the best methods for marketing your home to the right kind of buyer. Scottsdale North has a unique demographic from the rest of the Valley. If the agent has been specializing in the area for a long time, they should have a steady stream of buyers as well as a strong network of local experts, providers, and vendors.
If the local agent does these things properly, these advantages should translate into more money and better transactions for the folks who choose to list their homes with them. If that’s the case, the local agent will easily be able to demonstrate the value that their local expertise provides, both statistically and through positive ratings. The local real estate expert should feel that every dollar their client’s homes sell above the area average comes back to them tenfold. That is the best metric they can track to assess their business’s progress. Our team has a sign in our office that reads, “$126,000 More!” because that is how much more our clients’ properties sold for in 2021 than the Scottsdale North average.
SELF-DEALING THE EXPERT WAY
I can agree with the “Freakonomics” theory that some “self-dealing” agents’ goals are not properly aligned with their clients. However, when it comes to a good local agent expert, I respectfully disagree. The local agent “self-deals” by ensuring that all their client’s real estate objectives are met or exceeded. That kind of self-dealing ensures the word-of-mouth and statistical proof required for a long and fruitful career promoting his local community.
If you’re looking to sell in our area of expertise, we’d be happy to show you everything we do to ensure that we continue to sell three times as many listings for much more money than anybody else. Please give me a call at 480-634-5000 to learn more.