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24 Jun 2016
Real estate referrals can be a blessing, but did you know a referral can also be a curse? It’s true. Let me “make the point as delicately as I can,” as the Russian Ambassador said in the movie Red October. Everyone has a friend, right? Every accountant, every lawyer, every doctor, and every real estate agent has friends. Friends will freely give real estate referrals, right? But where is the filter protecting you from getting referrals to someone less than qualified? People hand out the name of a friend or an acquaintance they don’t really know professionally to other people all the time. But accepting a referral without your own careful research could turn into a well intentioned curse.
A gentleman hired a real estate agent just because he/she was in his circle. Circle in this context can be any group, association, club, union, political affiliation, gym, company, non-profit, or even a church. It turned out his agent didn’t have the experience to deal with what turned out to be a difficult client, a negotiation that required advanced skills, and complex due diligence issues that had to be addressed diplomatically. The transaction was on the ropes several times. Had it not been for an experienced professional agent on the buying end of the transaction, the transaction would never have closed. The seller simply hired an agent referred to him, and the only filter was that he and the real estate agent were in the same “circle.” He did no other due diligence on his agent.
Now let’s pause for just a second, because there’s a lot of money at stake here–yours. If you only have one filter, one qualification for selecting a real estate agent, and that one filter is he/she belongs to your club or association or gym or church or whatever, that’s no filter at all.
If the only filter is a referral from someone you know who knows a real estate agent, then where is the filter protecting you? Where is the filter for important things like real estate education, real estate negotiating experience, experience in marketing and sales, experience in legal issues, knowledge and experience of due diligence items, experience in handling difficult and numerous real estate issues, honesty and integrity, availability, and other relevant qualifications. Granted, if the person giving you the referral already did all this due diligence to protect you, that would be great, but in 95% of the real estate referrals I’ve seen in several decades, this is not happening.
A couple hired an agent to list their property, but after a year of nothingness, no activity, almost no communications, and virtually no marketing of their listing, they let the listing expire, very disappointed. Their real estate agent was a referral from an acquaintance. I cannot tell you how many times I have heard stories of nightmares, and they were the result of real estate referrals that turned into curses.
Next time someone gives you the name of a real estate agent as a referral, write the name down, but do your own due diligence back home at the computer. Please, for your own sake, do not blindly accept real estate referrals without doing your own research to protect yourself. In an earlier article about real estate referrals, I wrote this:
Consider this. You spend $300 at a doctor’s office, and you expect that doctor to have University degrees and advanced medical degrees and a long internship, plus you also want a senior doctor with many years of experience. When you see a dentist, you also expect him to have 18+ years of education and a lot of experience, and you expect all that even if you are only spending a couple of hundred dollars. We expect and demand that our kindergarten teachers have four year degrees and state certification before we even let our children into that classroom. So when you invest your life savings or several hundred thousand dollars in your retirement home, shouldn’t you demand that your real estate agent have a relevant education and the experience that will protect you and help you meet your goals? Finding and hiring a good real estate agent ought to be high on your due diligence checklist. There’ s a lot at stake and you are the one who stands to lose if anything goes wrong.
If you would like to read more about what a qualified agent looks like, read What Defines a Good Real Estate Agent and Buyers Want Qualified Real Estate Brokers. Here’s a rhetorical question for you. Why wouldn’t you hold your Realtor to the same high standards you hold other professionals you hire?
This is probably one of the most consumer oriented real estate sites in the state of Washington. We share freely, offer insider information that helps consumers, and educate consumers on the major pitfalls when buying and selling real estate. Many clients have saved tens of thousands of dollars with our advise, not to mention avoiding litigation, reducing stress, and getting transactions closed. This article about referrals was long over due for consumers. Next time you need a real estate agent, beware that real estate referrals can be a blessing or a curse.
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