Broker: A person who acts as an intermediary…Webster’s New Collegiate Dictionary.
The Above Definition Is Woefully Inadequate. The main problem is that it does little to help the reader understand the value to be expected from a broker in a transaction. Occasionally, articles appear in the financial press that question the value of many types of brokers, including real estate brokers. Most of these articles reveal that the writer has little understanding of what a broker brings to the process. Although there are many kinds of brokers, including those in real estate, insurance, securities, and mortgage transactions, this discussion will be confined to the role of real estate agents
Agents Have Knowledge Of The Marketplace. Unless you are a very experienced, full-time investor, chances are this knowledge is much more extensive than yours. A typical investor may only participate in one or two transactions per year while the agent is out there every day seeking to help their clients accomplish their goals.
Contacts. Agents have relationships with allied professionals including title examiners, lenders, property inspectors, and attorneys. These relationships help agents get things done because these professionals see the agent as a continuing source of business. As a result, the agent has much more influence than a buyer or seller who only brings in a limited amount of business.
Familiarity With Standards and Practices In The Industry. A real estate transaction can be incredibly complex. Unforeseen problems can arise such as title defects, boundary encroachments, and ownership disputes can and do occur. An agent brings problem solving skills that can resolve these problems and allow the transaction to proceed.
Negotiating Skills. Nothing gives you a negotiating edge like information. The more you know about a property, it’s location, the supply and demand of similar properties, and the market value, the more likely you are to be able to structure a transaction that meets your needs. In addition to information the agent already has, the agent should know what additional information might be helpful, and where to find it. The agent may also be in a position to find out about the motivation of the other party and what kinds of offer would be most appealing to that party.
What’s Going On In The Denver Market? Perhaps the most encouraging sign in the Denver housing market is the drastic reduction in the number of building permits being issued. Just about the only builders still producing now homes are those with land inventory who have to build new homes in order to sell the land reduce costs required to hold it. The number of building permits being issued has reduced significantly over the past 4 years and it is difficult to believe they could still be going down but, during the second quarter of this year, total permits fell from a very low level of 2871 in 2008 to 1194 in 2009. That represents a drop of 58%. I expect this low building activity will continue until the foreclosure rate drops. Does this mean that it’s a good time to invest? I believe it is; however, only for those with adequate liquidity to hold out if the recovery takes awhile to materialize. The last time this happened was in the early 90’s. At that time, it took awhile for new building to begin since developed land inventory was low and the lead time to get new projects through the approval process was extensive. This long lead time is likely to continue to exist for some time.
Back To Denver. I’ll be back in town late next week. Those who wish to arrange a meeting should call Susan at 720-449-0200.
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