Many real estate brokers and agents describe their real estate sales experience by quoting the number of sides they have closed. The average buyer or seller needing to hire an agent may not know what a side is and how it reflects an agent’s experience and business practices. Let’s look at the meaning of sides and how it fits into how we evaluate agents we might hire to buy or sell property.
A side is simply a party to a real estate sales transaction. In most sales, there is a buyer and a seller and they add up to two sides. If buyer and seller are each represented by their own agent, the agents can add to their tally of experience one closed side when the sale is completed. Simple enough, right? If experience was measured only by the number of closed sales – sides – agents have under their belt, picking the right agent to represent us in a sale would be easy. We’d hire the one with the most sales, or sides. But there are two important reasons why the number of sides completed is not on its own a reliable indicator of an agent’s useful experience.
A key consideration when hiring an agent is relevant experience. Just as we would probably not hire a tax attorney to defend us in a murder trial, we want our agent to have training and experience with our property type and transaction type. Homes, land and commercial properties each require different purchase agreement forms, disclosure information and unique processes during the sale. An agent with thirty years experience who has never sold a parcel of land to a developer may not be the right person to help us with our land sale. The same might be true if we were an executor selling a home on behalf of an estate going through probate. Most legal issues relating to probate sales are handled by the estate’s attorney, but an agent with probate sale experience can often implement strategies that increase benefits to the estate when the sale closes. The same can be true with trust sales, short sales, foreclosure sales and other unique transaction types. Many agents obtain professional certifications and designations in areas of specialization that reflect their expertise in specific property and transaction types. That expertise may not result from a large number of sides closed, but it could reflect a depth of competency greater than knowledge obtained over many years of irrelevant experience.
The second reason I discount real estate sales experience represented by sides is because the total often includes dual agency transactions. The two most common dual agency situations occur when a buyer and seller both employ the same agent during a sale or when the agents representing buyer and seller both work for the same broker (see my article Dual Agency Pro’s, Con’s and Cautions). Although dual agency is legal in most states, it is prohibited in some states and debates over the ethics of dual agency frequently take place within the real estate industry. When large real estate franchises boast about their offices closing “X” number of sides in TV commercials, I wonder how many transactions they would report if agents involved in dual agency sales reported only one transaction closed instead of two sides. I’d prefer offices disclosed their number or percentage of dual agency sides when using the measurement to indicate experience.
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