Hourly real estate consultants: Still hard to find
Originally appeared in Bay Area News Group publications on June 24, 2011
In some situations, buyers and sellers are much better off working with a real estate professional on an hourly, consulting basis rather than with a commission agreement. As an East Bay buyer or seller, however, finding a licensee prepared to work per hour, with the experience and knowledge you need, might not be easy.
Change comes slowly
A current, five-part series on a popular, real estate-oriented web site regarding the changing nature of business models confirmed that, nationwide, hourly real estate remains an extremely small niche in the marketplace. Although the need is greater than ever, it seems that the number of individuals doing real estate by-the-hour has not significantly increased, if at all, since my 1997 article on this topic, “Consultant or Agent?”
The dearth of hourly real estate consultants is related to the fact that many practitioners view the industry mainly from a sales and commission (percentage of the sale) perspective. Providing expert advice for a fee that is substantially less than a commission is not appealing to these folks.
Consultant vs. agent
Most importantly, in spite of articles that I and others write to inform buyers and sellers, there is a lack of understanding on the part of both agents and the public about the nature of hourly consulting and the difference between being a consultant and an agent.
In a nutshell, an hourly real estate consultant’s function is to assist buyers and sellers of properties that are not listed. Consultants do not interact with third parties; they guide and give advice directly to the buyer or seller. Consultants get paid only for actual time worked, as authorized by the client.
Due to the fact that a consultant does not have the same obligations and duties as an agent, the potential liabilities that attach to any transaction may be less. This depends on the experience and qualifications of the consultant and the quality of his or her company.
Legitimate licensees who work by-the-hour will provide you with a written contract that details their fees and the service they will provide. Do not do business with anyone who wants to work with you on a “verbal” basis and downplays the importance of a written agreement.
Warning: The word “consultant” on a business card, flyer or web site may not signify that the practitioner works on a fee-for-service structure. Many use the word simply because they believe it makes them sound more competent.
A buyer calls
Not long ago, I received a call from a man who wanted me to help him as a buyer. He was in the process of negotiating with a seller for a local property which was not on the market. We discussed the differences between my representing him as an agent and assisting him as a consultant. He chose the latter.
Over a period of several weeks, my consulting client and I had a number of conversations about the home he had identified. He explained details of his talks with the seller and I gave him information and advice.
In the end, the seller took a hard, take-it-or-leave-it stance and my client ended the negotiations. He was pleased with my service and will likely call me again when another unlisted property that meets his needs becomes available.
A seller emails
Recently, an email came to me from a seller who found me online. This consulting client is in the process of selling her home as a FSBO (For Sale By Owner). She is attempting to sell herself because she has not owned it for long and wishes to save on commission costs.
If she finds a buyer, she will want my help with negotiations, paperwork and escrow management. She recognizes that attempting these functions herself will probably cost her much more than hiring a professional to guide her on doing them.
If the property does not sell, the client will have had the opportunity to evaluate how well I advised and communicated with her and functioned in her best interests. In this case, if she chooses to hire me as her listing agent for the property, I will credit any monies owed from my hourly consulting toward the listing portion of the commission when the sale closes.
Final Thoughts
Despite amazing changes in technology and the impact they have had on the real estate industry in this country, the adoption and acceptance of a fee system similar to those we see with attorneys, doctors, etc. has been incredibly slow. The interesting thing is that most Realtors, if they were paid hourly for all their work, would earn much more than they do today.
Although not easy to locate, there are local agents, mainly from small firms, who will work with you on an hourly basis in a situation where that is appropriate. It may be worth your trouble to find one.
Related Articles:
Consulting Saves Buyer’s Bacon
Consulting Helps Couple Avoid “Money Pit”
Hourly consulting: Great idea whose time has yet to come
Hourly real estate consultants: Still hard to find
Berkeley seller applauds hourly real estate consulting