Twenty five years ago when Ronald Reagan was finishing up his second term in office, I passed the real estate exam in Pennsylvania. I still remember the first house that I sold in Willow Grove PA for $85,000 and the rate for the borrower’s thirty-year mortgage was 10.75%. I think I showed Sharon and Jay about fifteen houses before they narrowed the search down to three houses and then it was time to bring in the “wrecking crew.”
Who is the wrecking crew, you might be asking yourself? That was the label real estate agents would use to describe the parents and other family members of young would-be homebuyers. The theory was that as real estate agents, we would spend so much time finding the buyer(s) the right house and then the wrecking crew, most of whom hadn’t purchased a house in more than fifteen or twenty years, would come in and sabotage the deal. The reasons they would give… The house needs too much work, the price is too high, the closing costs are outrageous, etc.
Now, twenty some years later in an industry that has a fee for everything, I have a new appreciation and understand why the wrecking crew is a valuable resource, especially to first time homebuyers. Buying or selling a house is a very emotional time and as I always say, financial decisions made out of emotion are often times bad decisions.
Lucky for you, your wrecking crew is only emotionally attached to you, not the house you’re interested in buying or selling. The real estate sales person that you’re working with won’t be able to make them laugh at one-liners until they’re confident that the agent has your best interest in mind. The additional “fluff fees” that can add hundreds sometimes thousands of dollars to your closing costs, a good wrecking crew will question those as well and advise you not to pay them if it doesn’t sound right.
The one stop shopping model where your real estate agent attempts to control your entire transaction, from selling you a house to persuading you to use their in-house mortgage and title insurance company, could certainly raise a red flag or two in the eyes of the wrecking crew. They wouldn’t be intimidated to ask the real estate sales person, “What’s in it for you? Do you or your broker benefit financially when our son or daughter uses your in-house companies?” Often times the answer is yes, but even if it’s no, the wrecking crew will probably suggest that you shop around to make sure you’re getting the best deal.
Understand that every generation has it a little easier than the previous generation. Chances are that your parents and grandparents (your wrecking crew) are a little more conservative and have a greater appreciation when it comes to the value of money. If they wouldn’t pay it, then they wouldn’t allow you to pay it either.
It’s important to remember that today’s real estate industry is made up of national and international marketing companies, who happen to offer real estate services as their product. A great deal of the sales training consists of how to get you to pay them more of your money. They understand that buying or selling a home can be very emotional and that there’s probably no better time to catch you with your guard down. You’re already spending a couple hundred thousand dollars, what’s another thousand dollars or so in junk fees.
So, if you don’t have a wrecking crew, educate yourself on the process. Get to know the role of all of the players involved as well as what you should be paying for their services. If you have a wrecking crew, consider yourself fortunate. They might make you feel a little uncomfortable at first with the questions they ask the real estate professional that you’ve chosen, but they love you and will use their life experiences to make sure that no one takes advantage of you.