I’ve worked off and on as a New Jersey Realtor for 25 years this June. Now that’s no great accomplishment, especially since I only went into real estate in order to earn enough money to publish my novels until I became good enough or crafty enough to convince Oprah my books were worthy of her holier-than-thou book club, and then win a publishing contract. Alas, I managed to struggle along in real estate, earning only enough to get by.
As you can guess, I’m not one of those driven go-getter type ‘A’ personalities who has to be the best at everything I do. In fact, for much of my real estate career I was ashamed of being a Realtor, equating them as a step above used car salesmen. Sure it hasn’t been all bad. I have fond memories of Realtor Boot Camp.
“Cadet, why do you want to be a Realtor?” The training broker would bark.
“Sir! I want to sell houses, Sir!” I yelled.
“My grandmamma wants to sell houses,” the training broker responded.
Okay, so there is no boot camp for Realtors, and that was just my pathetic attempt to make you think I’d look as hot as Richard Gere in a uniform, but it would be great if there were a training camp for Realtors. As it is, there is a 90 hour licensing course required, and a state test that you have to pass with a minimum of 70 percent on the real estate portion and 30 percent on the ethics portion of the exam.
Once you pass the course, complete the state exam with what is essentially “C” or better, you can go to pretty much any broker and they will greedily jump you as you come in the door, anxious to hire you because even if you flop and only get one sale that’s an extra three to five thousand dollars in their pocket. As for training, this is real life not a hot Richard Gere in his skivvies’ movie fantasy. Okay, I’ve got a Richard Gere fixation tonight. I’ll get over it.
After being in real estate for 25 years I’ve learned a lot about life, and I want to pass on some of those important life lessons to you here today.
1: "The" real estate say.
There’s a saying in real estate. “Buyers are liars, sellers are worse, and brokers are whores.” There wouldn’t be a saying if there wasn’t a ring of truth to it. Buyers either outright lie to their Realtor, telling the Realtor they are the only Realtor they’ve seen, or are using, or have written a contract with. This is the equivalent of telling your girlfriend/boyfriend they are the only one and you don’t even look at other Realtors, um, girls/guys. On top of this, the second biggest lie buyers tell is how much they can afford. This is why we pre-qualify buyers through mortgage reps before wasting time showing them something they can’t afford.
At least we tell the sellers all our buyers are pre-qualified. Really, it’s to the Realtor’s benefit to pre-qualify all buyers, but that wasn’t always the case. Twenty-five years ago pre-qualifying consisted of finding out how much a buyer earned and doing the simple one and a half times income formula to figure out how much they could afford in mortgage payments. Times have changed. Sellers have become savvier.
Speaking of sellers, the sellers have learned a lot in the ways of being sneaky. At one time they could get away with a lot. “Let the buyer beware,” another saying, was the war cry of every home seller, but as time went on sellers had more lawsuits levied against them and more laws passed making hidden flaws harder to get around.
There is such a thing as a seller’s disclosure, which allows the seller to disclose any problems with the property in question before a buyer even sees the property. If they are honest, and that’s a big ‘if,’ they are supposedly covered when a buyer makes and offer and gets to the home inspection phase of the deal. Of course sellers still seem to think patching things with duct tape makes everything okay, and they don’t want to fix problems correctly with qualified contractors because if they were going to do that they would’ve stayed in the home to begin with instead of trying to unload it on unsuspecting buyers.
Brokers like the sellers to fill out a seller’s disclosure because this supposedly covers the broker from being sued when a lie comes up during a home inspection. Bear in mind the broker’s portion of the real estate saying, because brokers will say whatever is necessary to cover for them, especially if a seller slips them an extra thousand for their trouble. It’s the nature of the business. As Robbie Williams sings, “You can’t lie to a liar because of all the lies.”
2: The home inspection.
The most brilliant advice I ever got was from a man named Jay Tauber, a home inspector. This sage of inspections, with a blond highlighted buzz cut, and great sense of humor, had a saying. You’ll notice in real estate there are a lot of sayings. Jay’s saying was, “it is what it is.”
This little piece of advice is the most brilliant thing I’ve ever heard, and made more sense than you can imagine. When a buyer goes on the home inspection, and if a buyer chooses not to be present at a home inspection they are fools and get what they deserve, they will always pick up on some obvious problem the home inspector doesn’t seem too concerned over, like a broken window frame.
Jay would handle this situation with his catch all phrase, “it is what it is,” leaving the buyer with the perplexed look of confusion on his face. In essence what he was saying was, “it’s broke, so fix it.” Duh. I’ve heard buyers ask what to do about broken items like light fixtures, windows, doors, etc... It always amazes me that people don’t seem to have the common sense we all assume they were born with. Apparently common sense isn’t something with which we are born.
As a Realtor I am required by my broker to offer three of everything to buyers or sellers. Three names of mortgage reps, three home inspectors, three lawyers, this prevents it from looking like I might be getting a kick back from any of these services because I’m not pressuring anyone to use one particular service. Yet in the tradition of contradictions, many real estate services are offering ‘one stop shopping’ by offering in-house mortgage services, contracted home inspectors and group law firms. Of course many people have their own family lawyer, and in states such as New Jersey a lawyer isn’t required to buy or sell a house.
This brings into play the Title Company.
4: Title Companies.
Use a lawyer. No, I mean it. Forget hiring your own title company, because their lawyers are only there to protect the interests of the title company and not the interests of the buyer. Use a lawyer.
Now before I wrap up this little lesson in New Jersey real estate let me say, it hasn’t been all bad. Even though I’m really not a people person, one of the downsides has been watching relationships meltdown during the buying and selling process. I’ve been turned off of any thoughts of marriage or relationships of my own by watching those already in relationships rip each other apart like wolves when they are confronted with financial issues.
In spite of all the ugly downsides, like the guy who was too afraid to tell his wife he’d lost his job until the mortgage company discovered it a week before closing, or the couple who ended up divorcing just before close, or the house that burned down the day of closing, or the seller who flipped out and stabbed his Realtor to death and then tried to burn down his house to cover his crime only to be caught in his own trap, or, well, you can see there are a lot of downsides to real estate, but there are some upsides.
I’m an independent contractor, make my own hours, and as long as I can manage to get by until my big break as a writer comes along, real estate has its advantages.
Robert is the author of the novels Cool Mint Blue, Melba Ridge, and the recently released The Adventures of Homosexual Man and Lesbian Lad; and the creator of the on-line comix Impure Thoughts found at his web site Inside R.A. Melos, as well as having been an on-line staff writer for QBliss where he had a monthly humor column, Maybe A Yip, Maybe A Yap. In his non-writing time, when he's not studying the metaphysical or creating a tarot deck, he sells real estate in Middlesex County New Jersey, hangs out with his dog Zeus, and spends time at the Pride Center of New Jersey in Highland Park, NJ, where he is on the Board of Trustees.
ABOUT ROBERT A. MELOS
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3.12.07 @ 1:28p
We used a realtor to sell our last house, and bought our new house without one. And no offense, Robert, but I don't think we'll ever use another one. (Unless we're looking for something in NJ, then you're our guy.)
During the selling process it seemed like our realtor and the buyer's pushed us and the buyers at each other's throats. We were forbidden from talking directly to them. We had to negotiate all issues through letters passed through the agents. If we could have met over coffee I'm certain all of the problems could have been avoided.
3.12.07 @ 11:26p
In NJ, and probably everywhere else, lawyers and Realtors highly recommend buyers and sellers not speak to each other directly. In fact, in NJ, I'm not permitted to speak directly to the seller or buyer unless I am representing both parties. I'm only allowed to speak directly with the party I represent and their attorney.
I would probably use a Realtor to buy a house because I don't want to be bothered to do much of the work myself, but if I were selling a house I might not use one.
Personally I find most Realtors to be extremely annoying, flaky, flighty, and lacking knowledge in most things pertaining to actual home sales. I work with some agents out of my own office who barely know what they are doing, yet somehow they are successful. They are skating by, which I tried to do for years, until it became apparent I had to actually know what I was doing, and it still hasn't caught up with them.
However, having been doing this for 25 years, I've seen many flash in the pan Realtors who do very well for a short time, and then disappear. It may be beginner's luck. They made a lot of money and moved on before they had to struggle to survive. I wish I had done as well, but I always felt it imparative to be honest with my buyers and sellers. That in itself is almost unheard of real estate. Most Realtors are more concerned with covering their own asses to the point of using the law as their cover.
They have you as a buyer or seller sign all sorts of hold harmless agreements before they even talk to you about buying or selling a house.
Once I leave NJ I would have to get my real estate license in whatever state I moved to, I'm not sure I would get it again in another state. I get the feeling Realtors are pretty much the same all over, and I don't know if I could stand to enter that life again if and when I move.
3.16.07 @ 2:45p
So, um, are you a realtor in northern NJ, say, near NYC? And would you be able to hypothetically help someone find a condo in said location? So far the only thing I've seen that I can afford is right by the Holland Tunnel (in JC, on the Hoboken side) on the ground floor. There must be something else, there just must.
3.16.07 @ 4:17p
As it is, there is a 90 hour licensing course required, and a state test that you have to pass with a minimum of 70 percent on the real estate portion and 30 percent on the ethics portion of the exam.
The emphasis above is mine. Boy does that explain a lot!
3.16.07 @ 5:45p
Craige, I'm a Realtor in central NJ, working mostly in the Middlesex County area. Technically I'm licensed to work anywhere in the state, but the most I could do is possibly hook you up with a Realtor in that area.
It really helps to work with Realtors familiar with the areas in which you are looking, and the same goes for sellers. Many sellers look for "out of area" Realtors to list their properties in hopes of getting a higher sales price for their property.
I'm sorry I can't do more for you.
Lucy, that's something that has always amazed me. As a Realtor we do have to take a refresher course in ethics every two years, but all that involves is watching the same Ethics tapes or DVDs again. No test for reviewing.
3.17.07 @ 3:23a
I love ethics courses. Always taught by people who pretend to have solved, and are able to fully characterize, all the varoius dilemmas of existence.
Like any of us even knows what ethics are as we're about to stumble down whatever path seems to be the most fruitful.
All I can say about ethics is this:
Never sell yourself short. Never gain from another's misfortune. Never do anything that Bill Clinton wouldn't do.
That pretty much covers it.
3.17.07 @ 11:57p
The ethics in real estate seem to be to CYA. Every ethical question that comes up can be answered by the thought, how do I cover my own ass? The answer is to place the onus on anyone else. Think Bush Administration. If a problem comes up, first blame the owner. If that doesn't work, blame the buyer. When all else fails, blame the lawyers. In fact, I've found, as first, last and best resort, always blame the lawyers.
3.20.07 @ 1:06a
As first-time homebuyers, we got totally ripped. The seller's agent totally snowed us with the "oh, don't worry, your agent and I will take care of everything" - which translated to "I'm the one taking care of everything", resulting in our agent getting kicked to the curb, and the seller's agent getting both commissions.
All because we didn't call our agent and have her meet us at the house with the seller's agent.
We felt bad. We had taken a first-time buyers' course with our agent, but she neglected to tell us that important point. Bet she never made that mistake again.
We gave her a plant and an apology. She didn't take it well. Then again, none of the houses she showed us up until that point were what we were looking for, and she also would slide us into showings that already had two, three offers on the table. We told her that if she did that again, we'd drop her.
I found our house by walking through the neighborhood. Made a phone call, had a meeting, made an offer and whammo - that night, it was ours. This was after 6 weeks of looking with our realtor.
3.20.07 @ 4:03a
Tracey, six weeks is a dream time. My best sale was in 1991. A couple called my office and I got the call. They were calling on a specific house, not listed with my office, they didn't want to deal with the listing office. I showed them the house, made the offer and it was accepted and closed in 60 days. Since then I've had customers who've looked for two and a half years before finding the right house, I've shown some people as many as 137 houses before they bought, through me, and had some people I've shown houses to for months end up buying for sale by owners (FSBO, pronounced fizz-bos in case you ever hear the term). Convincing people to be loyal to a realtor is almost impossible.
Many people believe they can get a better deal if they buy through the agent who listed the house. That isn't necessarily true. Buyers also believe the realtor can just cut the commission to make a sale, as do the sellers also. What they don't realize is, they wouldn't work their jobs if a client or customer came in to their office and said they would only work with them if they cut their fee in half. Negotiation of commission is the one thing that totally ticks me off.
Working in real estate can quickly burn people out.
3.21.07 @ 3:21p
I would never buy a house from the listing agent; there's no incentive for the agent to give me anything. Not to be greedy about it, but it's in the agent's best interest to try and get top dollar for his clients.
I'd rather have a buyer's agent try and work the sellers to cover some if not all of the buyer agent's cut, to say nothing of representing me for things like inspections, etc. The buyer, especially the stupid buyer, needs an advocate.
(Of course, my second house I bought as a FSBO, and didn't have an agent. Just we two couples, a kitchen table and a lot of pens. It was effortless.)
3.21.07 @ 10:40p
Things may work differently in your area, Russ. In NJ the commission comes from the sell. The buyer never should be concerned with commission, as it is negotiated between the listing agent and the seller prior to the listing agreement being signed.
Now I stated earlier that you don't necessarily get any breaks from purchasing through the listing agent, and that's true. The reality of real estate in my area is, there are no real breaks.
In many cases the buyer's agent doesn't present the contract in person, but faxes it over to the seller's agent who then presents it to the sellers. My preference is to fax all contracts to the seller's attorney and let the seller choose without pressure from either agent.
Some agents present a contract trying to play on the emotions of the seller by painting a verbal picture of their buyers. It usually goes along the lines of, "my buyers are a young family oriented couple with (number of children) looking for a lovely home like yours."
What the seller and buyer need to remember is, it doesn't matter if you love the home, it's a commodity. Your house translates into a dollars. It doesn't matter that you've upgraded the kitchen with blue granite, or just put in the highest quality sea foam green wall to wall carpeting. Those are cosmetics and some people don't like granite no matter how deep the blue, and even more don't like sea foam green and many don't even like carpeting right now.
We have buyer's agent's in NJ, but it is considered bad form for the non-listing agent to bring up commissions to a seller. And in NJ a seller can still be held to a contract for 5 or 6% to their agent even if the buyer's agent did pay their agent a fee. Buyer's agent's don't go over big in NJ. There is nothing fair about real estate.
Now did the lawyers on your FSBO charge roughly 2.5% to 3% of the final sale price for their services? Most of the lawyers in my area, when not working with a Realtor, charge the same as a Realtor. When working with a Realtor they generally charge between $600 and $1400 total.
I can't really speak much for other states as I don't know their real estate regulations. There are basics throughout the country, such as the right to hire a disinterested third party certified home inspector. However, you usually have a limited amount of time to have your inspections, such as within 10 days of contract signing. The inspector charges a flat fee whether or not they find problems. However, it depends on your lawyer and the contract as to what repairs or reparations are to be made and who pays.