Why Realtors Are So Important

Colleen Wood:

We will also dive into how to navigate the ins and outs of being leaders in business and how to build a robust and dynamic team within that business and navigating the world as a career-driven professional all while raising a family.

Alicia Rutz:

Join us as we share our highs and lows in real estate, business ownership and motherhood.

Colleen Wood:

Hey, Alicia.

Alicia Rutz:

Hello, hello. How are you?

Colleen Wood:

I'm doing great. How about you?

Alicia Rutz:

Oh, I'm feeling very important today.

Colleen Wood:

I think you are very important. I think we should talk about why you're so important today.

Alicia Rutz:

Yeah. Why are realtor's important? I, obviously, am a realtor and going to be biased. Let's hear your quick-

Colleen Wood:

Well, I thought it was hilarious. I think this is what prompted this conversation. I saw a Facebook post. It was an ask Bozeman Facebook post.

Alicia Rutz:

I saw that too.

Colleen Wood:

Did you see that too? That was so crappy.

Alicia Rutz:

I couldn't believe it.

Colleen Wood:

The Facebook post was, is there a realtor out there that'll work for 5% commission or a flat fee? And I was like, "Well, I don't know where you're getting your numbers from to begin with. And nobody would ever work for a flat fee." And I thought, there were some realtors commenting back, "Hey, this is the service I provide. This is the commission that I charge. And this is typically what the buyer side is. What the seller side is. And this is what you get for that." And then some other people came back and said, "You should really try for sale by owner because realtors aren't going to be able to do that for you." And then there were some naughty recommendations of realtors recommending realtors that they didn't like.

Alicia Rutz:

I was also shocked at how many people did stand up for realtors too, though. I actually read through the whole thing. I'm so glad you saw it. And there were a lot of people saying, "Hey, you get what you pay for." And a lot of people who weren't realtors even said, "You will make that back on the sale of your home."

Colleen Wood:

Oh, for sure. I mean, we commonly see that, for buy sells that come in that are for sale by owners, we commonly see the appraisals come in high.

Alicia Rutz:

Yes, exactly. And you left a lot of money on the table. Also, I tell people all the time, there's two really big parts of the transaction. One is getting it under contract. That can be tough. Not as tough in this market, if it's priced right. But two is keeping the deal together. There are so many details and nuances to every single transaction that for people who aren't in the industry, they just don't understand how hard it is to keep things together. And we've talked about every single transaction is different. Something comes up on every single deal. It's not the same as the last. Keeping it together on time and making things happen is also really, really important.

Colleen Wood:

It is. It's really important. And so let's just talk about the listing side. So you're going to try to for sale by owner. You're going to list your property yourself. So you're going to try to take your own pictures with your iPhone. And then you're going to try to stick it on Zillow and hope that somebody will call you. And then when somebody does come, you put this homemade sign in the front yard, or one you get from ACE Hardware. And somebody does show up randomly, because they're going to call your phone number and they're going to want to look at your house. And then here's what I see happen is people will want to buy a property that's listed for sale by owner and they don't have the ability to be able to write a contract that is going to protect them.

Colleen Wood:

And so they'll try to put one together themselves without the help of a realtor. And there will be nothing in it that will protect them in the event that there's a title issue, or if it doesn't appraise, or if there's an inspection issue, or if they can't get financing. There's nothing. They have signed a legally binding agreement that is going to require them to buy the house no matter what. There could be all sorts of contractors' liens. There could be tax liens and everything that are stuck on this property. And guess what? The seller doesn't have to remove them. You're stuck with it, no matter what. It's a huge risk.

Alicia Rutz:

It's a huge, huge risk. And also selling a home yourself if you don't disclose things correctly, if something comes up that you weren't aware of, this does give you a buffer of protection and it's part of our job to help you discover that and figure it all out. And also the marketing of it really is... There's a lot of things that for sale by owner people can do. You can put it on Facebook Marketplace, Craigslist, Zillow, and such. But being able to reach other realtors. So other realtors would have to be so on top of their game to really be scouring every day. And I do look for for sale by owner for my clients. And we do put a lot of them together, but then I end up basically getting a listing on it as well. So I have to have the dual listing on it. And what you're really doing though, is you're just missing out on a lot of other buyers. Realtors are checking our MLS all the time, constantly scouring for their buyers. And there's just a really good chance that they're going to miss it as well.

Colleen Wood:

Something that I see a lot with for sale by owner transactions and sellers is that a buyer will come with a realtor and the owner of the property will say, "Well, I'm not paying your realtor's commission so either you pay your realtor's commission or you don't get to have a realtor." So then these buyers are dropping this realtor that they've been working with for months. And they've been driving them around in their car and helping them find the right property and doing all these things for them. And then they're just dropped like a hot potato. And I don't know about you, but I don't like to work for free. And then the buyer doesn't have any sort of protection, no third party. They literally have to just take what the seller tells them as gospel. You think that the seller is going to tell you what is in your best interest or in their best interest?

Alicia Rutz:

Exactly. Well, what we've been doing a lot with for sale by owners too, is we're just adding that on to the price. So if they're like, "We're absolutely not working with another realtor." We're like, "Well, you're under market or this is really what the value is. Let's add that on to the sale of the home. And then that's going to cover it." We're super honest with the buyer and the seller about it. And every buyer I've ever had is like, "Absolutely. You've been working your butt off for me." Especially with buyers right now in this market where we're running everywhere, 6:00 showings, working on weekends. And they're happy to add that onto the price of the home.

Colleen Wood:

Well, that's really classy. Because some people are not so classy.

Alicia Rutz:

That's so true.

Colleen Wood:

I've seen that happen a lot where they just drop their realtor and they're like, "Well, the seller of the home says, 'I can't use a realtor.'" And I'm like, it's so amazing to me how gullible some people are in the buying and selling of homes and how people just telling them something just suddenly is-

Alicia Rutz:

And HGTV's ruined it for us. All they do is show you showing the house. They see, oh, you get it under contract. They show you what the commission is and think that's all that happens. Really we spend most of our time at our computer trying to get the details dialed in, helping them with inspection stuff, title, like you said, appraisals, getting them lined up with the lender. There's so many little details that come with every single transaction that are tough.

Colleen Wood:

And we often as lenders have to work with the realtors in order to get the things that we need in order to get loan approval. And there are things that a buyer cannot get. And we really lean on you guys. In fact, I had a transaction recently that our realtor was nice enough to help them write a contract, but then should have been able to step away from the transaction. And we had changed the closing date because there was a bunch of things that needed to be removed from the property and the buyer did not want to close until all the things were removed from the property. And the seller, so adding the addendum on there to extend the closing date, the seller would not sign the addendum without adding a whole bunch of restrictions on how the buyer could use the property going forward.

Colleen Wood:

And then there was, everybody was a stale mate, and everybody's looking at everybody else. And there's nobody to explain anything. And so there's nobody to get the seller to sign anything. So we reached out to the seller, phone number given to us by the realtor, reached out to the seller to have them sign it to try to tighten everything up so we could close. And the seller lost their mind because he's like, "How dare you be reaching out to me, to be calling me." And wanted full details about the loan transaction for the buyer. I'm like, "We can't tell you that." And then that made him mad. And so I ended up actually going back to the realtor and saying, "Hey, I know that you just wrote this contract, but I need your help on this because I can't. He won't take my phone call. And so now I need this guy to sign this thing." And this is exactly why we need realtors.

Alicia Rutz:

Yes. Or I had a listing with one of my girlfriends and we've always talked about how Zillow could take over our market, which should be a whole nother podcast what's happening there. And that realtors could maybe disappear because of Zillow. And just we would, it's just been an ongoing conversation with us. And after the transaction, she was like, "There's no way we could have done this without you." And you just need that expertise that it just, again, the expertise is just so important. And finding out who, or knowing who to call, knowing how to get inspectors in, all of that stuff really does add up.

Colleen Wood:

Absolutely. It does. And on the buyer side, trying to navigate it on your own... We have a lot of buyers that think they're going to save money by not using a realtor. So it's a complete misconception. So the seller is the one who pays the realtor commission on both sides.

Alicia Rutz:

In Montana. Yes. Some states are a little different.

Colleen Wood:

Okay. So I've only ever, hanging out in Montana. So you, as a buyer, getting a realtor is making sure that you are having someone who is going to represent your best interests, remembering that the sellers are paying the real estate, realtor commissions. So when you have a seller and a seller's agent, guess who the seller's agent could commonly lean towards the best interest stuff? It's the guy that's paying their paycheck. And so it's really, we do see it occasionally. I know a lot of realtors who don't want to be a dual agent, being both the buyer's agent and the seller's agent. It can just be a little wonky. It's like having attorneys. It's you want your own attorney to defend you. You want somebody that's in your corner, that's fighting for you.

Alicia Rutz:

Dual agency can be hard.

Colleen Wood:

It can be really hard because it comes to question, if you say something for the buyer that is going to help the buyer and it is not so great for the seller, you can have a seller come back and be like, "I don't want you to be my listing agent anymore because you're just campaigning for the buyer." I mean, you can just go round and around and around.

Alicia Rutz:

We have some agents in our office that will not do dual agency. They'll refer one out or the other, depending on the situation. But yeah. They will not do it.

Colleen Wood:

That's smart.

Alicia Rutz:

Yeah. And then you can get in a lot more legal trouble doing dual agency as well. So things can get a little tricky, like you said. And you almost forget who you're representing sometimes. So it really depends on the situation whether that's a good situation or not.

Colleen Wood:

And you have two people with differing interests. And you're trying to make both of them happy at the same time. It's super hard. So, you're not going to save any money by not having your own realtor.

Alicia Rutz:

No, you really don't.

Colleen Wood:

And a lot of times people will go and look at a property and say it's a listed by Alicia. It's a good idea for them to bring their own realtor, and for them to have their own representation, because if Alicia has a listing or a realtor has a listing of some sort, of course, they're going to encourage you to want to use them as well. I mean, they're business people trying to make money.

Alicia Rutz:

Exactly. And the fiduciary duty is to the listing agent or to the listing people because that's who you signed your first contract with. So really you're supposed to be helping representing the seller most and again makes it tough. And on the buy side, it's really interesting because buyers can do so much research on their own with finding the home. With Zillow and realtor.com, oftentimes, they'll send, even though I have them on drips, they will contact me with the home they found or want to see it. And oh, well, I'm doing all the work on it. But then once you get into the transaction and educating them on the area, the pros, the benefits, the covenants, all of that situation-

Colleen Wood:

Boundary lines.

Alicia Rutz:

Yes, exactly. And that can, again, that can be complicated. And it takes a long time to understand whatever market you're in. Big cities are tough where, because when I was in Portland, you have to know every single neighborhood and literally one street over is a completely different world than on the other side.

Colleen Wood:

And two, as a buyer, you don't have any right to step on the property of somebody who's selling their home. It's trespassing. And so having a realtor there with you who's going to make the proper connections that are going to make sure that the folks are ready for you to show up and that you've asked permission. You can get in deep trouble by trespassing on somebody. I know, we've seen that tons of times where people just go on to people's property. They just march up to their door and want to look at their property that day and they're not ready. They're not, you're just standing on their doorstep. You're trespassing. You weren't invited.

Alicia Rutz:

What's really funny about that, so many people here don't lock the doors to their house or don't even have a key. And so we have to convince people when we list, you've got to start locking your door. They're like, "Well, I don't even have a key." And they find the one key that we can put in the lockbox. It's pretty funny. We live in a pretty great little bubble.

Colleen Wood:

We do. And we're not the only place that has that happen. But yeah, it's true. And then people just find an open door and they just start wandering through the house and they're like, "Hello." And you're in the shower and they just come on in and that can be very uncomfortable and awkward. So anyways, real estate agents are here because we need them. They really do put the cherry on top when it comes to doing a real estate transaction. I know that I love working with realtors, especially great ones that communicate and want to get things done that are forward-thinking and want to make sure that their clients are taken care of and that we just get to the closing table on time. So I don't know. I see your value.

Alicia Rutz:

And we spend a lot of money. So even though our commissions look large, there's a lot of money that's involved with taking on a listing. A good higher end listing, I'm working on this really cool new build. We're going to have it professionally staged, obviously, professional pictures, drone pictures. We're going to do the whole virtual tour, all crazy advertising. Postcards-

Colleen Wood:

Multiple websites.

Alicia Rutz:

Multiple websites. It goes on and on. So just to take on this one listing I'm risking probably $2,500 or more on our penthouse that we just got under contract, $5 million one.

Colleen Wood:

Congratulations.

Alicia Rutz:

Going to be the most expensive condo in Montana to ever sell.

Colleen Wood:

Holy shit, lady.

Alicia Rutz:

I know.

Colleen Wood:

She's such a bad ass.

Alicia Rutz:

I'm excited about it. Closing in two weeks. I'm going to keep holding my breath until then. But that one, we put it on TV. We held multiple open homes. We invited all the top people in Bozeman to it. We probably have $20 grand in and we put it in The Wall Street Journal, on and on. Yeah, probably $20 grand in expenses to get that out there. And we found somebody.

Colleen Wood:

Yeah, you found somebody. You did your job. And it costs money to do business-

Alicia Rutz:

And it was not easy.

Colleen Wood:

And the counter of spending money to do business is that you generally get paid to do it.

Alicia Rutz:

And we take on that risk. So some agents will, and this is probably where I should get better, but some agents, they will charge a fee if you terminate or if it doesn't go under contract during that time. I take on that risk 100%. I'm not going to charge my clients what I put into it, unless it's some crazy circumstance. And most of the time, they actually offer to pay my, whatever my fees were, or whatever my costs were on it. But so yeah, that's a risk we're taking on for every single listing that it might not sell. And yeah, we're out a lot of money if it doesn't.

Colleen Wood:

Yeah. Right. No, I get it. Well, I see your value. And like I say, I love working with realtors. And they're just the other part of the transaction. It's just like missing a leg off your chair.

Alicia Rutz:

And one major thing too, is the negotiations where it's not personal to us. It really is business. We do take it semi-personal where we end up caring about our clients on either side and we really want the best for them. But we can negotiate without there being the emotions involved. And I think that's one of the biggest things where the buffer between the buyer and seller, where we really have their best interest at heart, and it's not going to get emotional.

Colleen Wood:

And part of that in not being emotional is that you guys are really great at coaching people and doing counseling sessions, almost. You guys should almost be therapists, because there is a lot of emotion and there's things that you're attached to, or there's a dollar amount that you're attached to. And maybe that's not really the value of your home and hearing that your home isn't worth as much as you thought it was from your husband versus hearing it from your realtor is a completely different reaction. I mean, your realtors are professional. Your husband's just a know-it-all. So, I mean-

Alicia Rutz:

And there's a lot of homes where there aren't good comps. You're just coming up with a number out of, or they're coming up with a number out of thin air. We can usually make a comp work if we use the right amount of land and find similar properties and do our own little mini appraisals. But oftentimes yeah, if you just come up, "Oh, I need this number. I need a million dollars because I want it to sell for a million." But you get 975-

Colleen Wood:

You're going to be okay.

Alicia Rutz:

Yeah, exactly.

Colleen Wood:

But that's the conversation, right? You got 975 and you sold it. You could have had it on the market for another six months trying to get that $25,000. And you would, think of all the payments that you would've made since then.

Alicia Rutz:

Where's the market going to go from there?

Colleen Wood:

Where's the market going to go? Just having those rational conversations with professionals is why