Should I Hire Both Selling and Buying Agents?



Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to askbrian@realtybiznews.com.

Q1. Richard from Lubbock TX: Brian, I happened to come across one of your investing Q&A recently and wanted some advice, I’m looking to sell my home here in Lubbock and move to Austin, I did some research on Zillow for agents and was wondering what’s your advice on hiring an agent to sell and assist in relocating to Austin, should I hire two different agents?

A1. Hi Richard. Thanks for reading our Q&A. I hope you find it helpful. Regarding your move from Lubbock to Austin, you should hire both a selling agent in Lubbock and a buying agent in Austin. Even if you were only moving across town, it’s still a good idea to strongly consider hiring both selling and buying agents. In your situation, the distance is about 375 miles. Although agents are licensed to do business anywhere in a state, location is still the number one consideration in real estate. But the full answer requires more depth than that.

Let’s take a step back. Using one agent for both transactions can be effective in very small markets (rural) where a single agent is thoroughly familiar with the entire market. In larger markets (even medium sized) agents tend to specialize. Not only in a few specific neighborhoods but also by honing the different skills required for listing and selling. For instance, a selling agent should be highly adept at comparative market analysis (CMA) for the neighborhood your home is located. This includes knowledge of historic and current price trends as well as the future forecast. Listing agents are also proficient in other areas such as effective marketing, home staging, and value added improvements.

On the other hand, a buyer’s agent focuses more on people skills rather than the characteristics of the home and neighborhood. These agents focus on being good listeners with problem solving skills. They figure out what the buyer wants and deliver it. You expect them to have an intimate knowledge of past and present inventory in the local market. Buyer’s agents are also detail orientated when it comes to closing the transaction. They have the best contacts regarding other professionals such as home inspectors and title company agents. Additionally, it doesn’t directly cost you anything to have a buyer’s agent.

Richard, for most people the logical first step is interviewing listing agents. Typically at least three agents. Beyond the interview, ask each to provide a CMA. Knowing what you home in Lubbock will sell for is important to understanding what you can afford to buy in Austin. Ask your listing agent for a referral to a buyer’s agent in Austin.

Q2. Alejandra from San Jose, CA writes: How do single-family real estate investments perform across different market cycles?

A2. Hi Alejandra. Thanks. That’s a short question that could have a very long answer. I’ll keep this short. I’m assuming you’re interested in the rental market rather than the rehab and flip market. For the most part, single-family rentals perform well in all cycles of the market. Today’s growing economy with very low unemployment, is probably the best cycle for family rental homes. Appreciated value has been rising along with monthly rents. You have the best of both worlds. In these up cycles, investment homes often gain value faster from appreciation than from cash flow. If you’ve been considering selling, now is probably the right time before the cycle inevitably turns down. However, the general economic consensus is that we are likely heading into higher inflationary times. This is indicated by the Federal Reserve increasing interest rates to keep inflation in check. Homes are becoming too expensive for many people to purchase.

This is a time when single-family homes add more value from cash flow than from appreciation. Rents have a long history of increasing during inflationary times. This makes then a good inflation hedge. Cash flow also remains the primary benefit when the economy softens because people tend to rent rather than buy during these times. Although historically few and far between, a major housing crash will diminish the value of your property, which will only affect you if you are looking to sell your property at that time.

Ultimately, unlike Wall Street stocks and bonds, single-family homes are brick and mortar assets that you control. The idea is to buy low, collect the cash flow, and sell high only when you are ready.

Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to askbrian@realtybiznews.com.

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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 12 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.

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