- The Washington Times - Friday, April 18, 2003

Only in stabilized real estate markets do consumers and commentators on the market want to maintain common-sense buying and selling practices, such as getting a buyer agent to purchase a house, requesting home inspections and getting referrals from Realtors on the residual services needed to buy or sell a home.

When the market heats up, buyers are willing to forgo the protection they need to complete a purchase. Home inspections are the first victims, it seems, to the dismay of both buyers and sellers. Buyers usually find something glaringly dysfunctional in the house and sue the seller. So goes good advice thrown away.

One particular standard practice attacked in many markets during the past few years is the use of referrals from the Realtor for residual services. The Realtor, in essence, is the center of the transaction. He is the one who puts the seller’s house on the market and starts the selling/buying process by placing it in the multiple listing service.

Once a buyer places a contract on the house, the residual services kick in some of them even before a contract is presented. Buyers and sellers on average go through this process about once every seven to 10 years. So it would be in their best interest to ask the Realtor for a referral in the business to fulfill the necessary tasks that must be completed. These residual services include the mortgage provider, appraiser, home inspector, pest inspector, environmental inspector, title company (with homeowners insurance), contractors for repairs and others.

Some encourage buyers and sellers to take a real hard look at the list of referrals they receive from their Realtor, arguing that they may be in cahoots just to get the transaction through. They’re not so concerned about your needs, the argument goes, and they just want to get their money. Forget for a moment that most agents want your business for life and understand full well they are in heated competition with their colleagues. In the minds of many in the real estate media, that’s beside the point.

They encourage you to go find your own lender, inspector, appraiser and home inspector because then you know they’re not trying to pull the wool over your eyes. In a word, it’s poppycock.

Since the transaction begins with the Realtor, this is where your first referral should start. Ask around for a good Realtor. Talk with friends who just sold or bought a house. It’s really not that hard. If you decide on a Realtor the way you decide which fast-food restaurant to eat at for lunch, then you’re probably asking for nothing more than a quick fix, followed by a prolonged case of indigestion.

Ask around. Then trust the agent for the referrals. If they’re top notch, they’ve been through transactions scores of times and have developed professional relationships with the residual service providers who get the job done, when they say they’ll get it done, for the price for which they say they’ll get it done.

You’ll be faced with two types of referrals, usually one where the agent’s company owns the residual service company or another where it’s within an agent’s personal sphere of professional contacts.

Ask them up front if they’ve ever used the particular referral in a business transaction. How did it go for their past clients? How many times did a deal get messed up with that person? Trust me, there’s always a deal that gets messed up. It’s just part of the industry.

Very important is the fact that they’ve built their referral network through professionalism and not family, religious, political or other ties. You don’t want to use a referral solely because it’s the Realtor’s brother or fellow Moose Club member.

I’m not saying that all referrals guarantee a bump-free transaction, but successful Realtors don’t let a lot of people in their sphere unless they are professional and can get the job done.

M. Anthony Carr has written about real estate for more than 14 years. Reach him by e-mail ([email protected]).

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