PREMIER BUSINESS & FINANCE
REAL ESTATE NEWS
VIRTUAL REAL ESTATE SERVICES ARE “FLEXIBLE� FEES WORTH ALL THE SACRIFICES? - By: Kathryn Holt -
Recently, I was involved in a real estate transaction in which I represented the Sellers of the property. The Buyers hired a Virtual Real Estate Assistant (known as a “VA�) to represent them. These Buyers aren’t alone. An increasing number of people are opting to go on-line for their real estate needs including and, perhaps, especially Millennials.
F
or many Millennials, a recent home purchase will be their first and only purchase to date, which is part of the challenge. First time Buyers lack previous experience working with a Real Estate Agent (“RE Agent�), and are unaware of what they’re sacrificing by not having an experienced Agent at their side. Most VA’s are not licensed as RealtorsŽ, they specialize in data entry-related tasks: entering/updating/ researching information, scheduling appointments, and managing social-media. Consequently, there are important considerations and differences that prospective Buyers should keep in mind...
WHAT IS THE MAIN ENTICEMENT OF HIRING A VA? Perceived savings and money... Clients can negotiate the commission. For example, of the 3% (Buyer’s Agent) commission, a predetermined amount will go to the Buyer, with the remainder going to the VA. Or, alternatively, the VA receives a at fee; however, this fee could be non-refundable if the deal falls through. In our case, the VA received 30% of the 2.5% commission which was high given the work they performed and lack of real estate knowledge. Remember the adage, “You get what you pay for.â€?
VA’s can arrange for an Agent to take their place, however, RE Agents in this position typically know little about the property since they’re briefly standingin. This forces the Buyer to pick up the slack, as the Buyer in our case learned. RE Agents work hard for their commissions, so it’s in their best interest to ensure everything stays on track and escrow closes. VA’s receive only a portion of the commission, so they’re not as invested in the ďŹ nal outcome and successful close. Being a RealtorÂŽ involves guiding and educating your clients, and negotiating
ARE THERE ADVANTAGES TO HIRING A RE AGENT OVER A VA? If you’ve ever been involved in a real estate transaction, you know there are lots of moving parts and opportunities for things to go wrong. For this reason, it’s important to know the legal risks. It’s important to consider the following: During a real estate transaction, a VA maintains a remote relationship. Their contribution is handling assigned paperwork. It is up to the client to verify the accuracy of the paperwork/contracts, because it’s their neck on the line. Also, non-licensed VA’s lack the protection of, and access to, the California Association of RealtorsÂŽ (CAR) legal hotline and/or a Brokerage’s legal counsel. If something goes wrong, the Buyer may discover they’re on their own. Review the Virtual Real Estate Company’s policy regarding legality/liability before committing yourself. VA’s seldom meet their clients face-to-face. Instead, each client is one of multiple â€œďŹ lesâ€?. Likewise, the VA will likely never see the property, so they won’t be able to detect the faint smell of mold, or other potential “red agsâ€? a seasoned RE Agent will detect. It also means they have never seen exactly what’s on the line: your home!
on their behalf and best interest. RE Agents have professional connections and relationships (with Lenders, Inspectors, Escrow & Title); an expansive network of contacts and colleagues; and direct access to Legal/Risk Management advice. RealtorsÂŽ also have cutting-edge technology. The MLS/Multiple Listing Service, Docu-sign, industry software, and the internet have streamlined real estate, making contract signing easier than ever. This saves time and energy, without sacriďŹ cing personal service.
Technology is a benefit to the real estate industry; however, to have a smooth and successful transaction, and protect your investment, it’s wise to have an expert at your side, especially someone who performs well under pressure. In our case, the VA became so overwhelmed by the pressure she “shut down� and stopped communicating, sometimes for up to a week. We asked the Escrow company to step in on behalf of the Buyer to assure the time-sensitive contracts/deadlines were met, and to keep the deal on track.
Moments after we closed escrow, I received frantic messages from the VA requesting the property address, so the Buyer could pick up the keys. (Let that sink in for a moment and I think you’ll find the humor in it.) All things considered, do I think VA’s provide a useful service? Yes. I just think they are better suited to assist Real Estate Agents, rather than trying to replace them. Kathryn Holt is a Writer, RealtorŽ & Designer | www.KathrynHoltRealEstate.com
25
