Why Architects are the Best Agents
The purchase of real estate can be an incredibly complex process without some assistance from a sales professional who is well- trained in the art of the transaction. As liaisons of the contract process, real estate agents and Realtors bring an incredibly valuable service to the vast majority of buyers who are unversed in the complexities and opportunities that may surface in a given transaction. While most of the market is well aware of these benefits, there is some collective confusion as to the limitations of this professional designation; some of the most essential skills in securing an incredible and incredibly quick deal are absent from the training process for real estate professionals. Many of these shortcomings stem from a lack of building-specific knowledge that fall squarely within the realm of architecture, making dually-licensed architect-agents an incredible value to any real estate transaction.
First, what does a sales professional do?
Real Estate Agent: This is the general term for someone who is licensed by their state to represent others in real estate transaction throughout that state. For a typical home sale, both the buyers and sellers are represented by real estate agents to facilitate the transaction and all of the tangential requirements leading up to the sale. These professionals are trained exclusively in the transaction proceedings and documentation. Though it is common for real estate agents to posit an opinion on building design, integrity, and construction, the formal educational process does not require any knowledge of these topics.
REALTOR®: These are real estate agents who belong to the REALTOR® professional association. They adhere to an additional code of ethics (http://www.realtor.org/sites/default/files/policies/2015/2015-Code-of-Ethics.pdf) and pay additional national and state dues. At the time of this writing, the national cost of Realtor affiliation requires a $ 120 annual fee and the state dues here in San Antonio, Texas come in at $127 payable to the Texas Association of Realtors subchapter. While the registered trademark “Realtor” has become synonymous with the industry, this is strictly a professional affiliation and denotes no additional skills beyond those required of a traditional real estate agent. This is very similar to the architectural community’s American Institute of Architects designation, AIA.
Broker: Leading real estate professionals who are upheld to experience and educational requirements above those required for real estate agents. Every real estate agent and REALTOR® works below a broker, who assumes responsibility and some degree of liability for the real estate agents within their office. Each collects a portion of their agents’ commissions which can range from a flat per-transaction fee all the way up to a 50/50 commission split. Some brokers also charge additional fees for various services but this varies widely by brokerage. At the end of a typical transaction, it is very unusual for an agent to receive an undivided 3% commission unless they also hold their own broker’s license.
Other Key Roles in the Transaction:
Although these positions are widely known by the general population, there are many other accompanying professional players in the game of real estate that must be coordinated in cooperation between the client and the real estate agent:
• Special Inspectors (insect, mold, radon, asbestos)
• Service Providers (contractors, tradesman)
• Insurance agent
• Mortgage broker
• Mortgage lender
• Mortgage underwriter
• Title Company
• Closing Agent
• County Recorder and Auditor
With all of these professionals involved in a transaction how could anything possibly be missed? While real estate agents are great at studying and understanding the market, this understanding is largely focused on averages rather than the particular unique attributes of your individualized investment. Yes, a real estate agent will absolutely tailor his or her efforts around the property that you are considering but they are not trained in the fine-grained evaluation of construction, systems, longevity, and potential issues that are exclusive to each piece of property. About 25% of real estate insurance policy holders in 1996 were being sued annually according to REALTOR magazine. Three of the most common disputes can be largely attributed to construction type and execution: Structural issues , Water infiltration, and moisture/mold buildup. This is where the architect-agent becomes invaluable.
Isn’t there someone else watching over these construction issues? Also yes, it is commonplace to make a sale contingent on a home inspection. But this role is relatively insignificant considering the gravity of the decision at hand. To put this into perspective, the average home sale price in May 2015 was $337,000 (https://www.census.gov/construction/nrs/pdf/uspricemon.pdf) while a typical home inspection will costs between $300 and $500 (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/insp/inspfaq. Thats only about 0.12% of the average home purchase to cover the spread on much of the physical risk involved in a transaction. If this exercise is limited to the short time in which the inspection is scheduled, there is a lot of ground to cover. To exacerbate this problem, home inspectors are compensated on a per-inspection basis which, in a way, incentivizes them to complete the inspection as quickly as possible. Additionally, these professionals hold a significantly lower-level certification than an architect and are untrained in many construction related issues- zoning, design, expandability and adaptability.
How do you know when to reach out for a special inspection? How do you know if the design of a house is underutilized or is unlikely to age well? How do you know if there is adequate space to maintain and repair critical building systems into the future? You are welcome to ask these questions of a conventional real estate agent and they will be happy to tell you what they think, but you are soliciting a limited opinion. The agents’ inability to reduce construction-related risk is a substantial deficit in an expensive purchase over the life of ownership.
“Risk comes from not knowing what you’re doing.”
– Warren Buffet, Most successful investor of the 20th Century
Benefits of the Architect- Agent to Sellers:
1) Accuracy and Appreciation- An architect- agent can frame your home from the strongest possible foundation of its unique design and spatial offerings. These points are often incorrectly or inadequately marketed in real estate listings.
2) Identify Contextual Value- An ancillary ability to see potential increase in value due to style, zoning, historic status, the ability to expand, and a strong knowledge of the local technical requirements that surround a piece of real estate.
3) Identify Immediate Potential- Preliminary evaluation of alternative uses and configurations that other buyers may value can be a huge selling point. An architect will be able to identify conversion opportunities and do so with greater certainty than the typical real estate agent. Architects also know that cyclical design trends can have a tremendous impact on aesthetic longevity and eventual resale value. Granite countertops are not always the best option.
4) Industry Prespective- An Architect can more easily step back to take an objective view of the construction industry. When architectural billings are down, it is likely that the real estate market will dip to offer some incredible pricing- this is a great time to buy. Architect-agents will also be able to take a broad view of the real estate industry itself. Some agents dislike Zillow, Trulia, Redfin, http://www.forsalebyowner.com/and even the real estate section of Craigslist because there is a perception that they have diluted their control over their marketplace. It is inarguable that these are critical sales tools that are viewed by a large cross section of the buyer marketplace and must be respected for their visibility and value. In 2014, 43% of homebuyers began their home selection process on the internet according to NAR.
5) Marketing skills- most architects are trained specifically in the art of visual communicating the important aspects of a building which gives them an incredible leg up in the marketing department. Although the primary factor in determining the transaction timeline is cost, this can give a listing tangible momentum as every buyer can be allured by tasteful imagery while at the same time remaining confident that they can thoroughly prequalify the home. Architects have a high level of technological proficiency. Today’s market initiates, reviews and closes transactions digitally. While there are some holdouts, this is a critical skill that can be essential to the execution of a timely transaction. Don’t spend time window shopping or driving around signing contracts and amendments when you can do it at your leisure from home. Graphic design skills and hard copy marketing materials are also an important part of the sales process. A diverse range of well-designed advertising media can translate to higher sales proceeds. An architect can generate tasteful and elegant documentation of your home to help maximize the resale value- it’s all in the presentation. A marketing floor plan or additional documentation of the building may also be a consideration, usually for a small additional fee. Architectural training programs also promote a strong awareness of photograph quality which is the most informative and emotion-inspiring piece of information to communicate to buyers. In fact, many architects uphold a proficiency in photography themselves. Bad real estate agent photography is prevalent, and the following website is dedicated to the celebration of Terrible Real Estate Agent Photos. http://terriblerealestateagentphotos.com/ http://badmlsphotos.com/
6) Network Access- An architect will already have a working knowledge of the local design/ build network in case you need to get anything bid or completed prior to the sale.
7) Insights on local Development – Your marketing position will benefit from the architect’s awareness of the surrounding development environment. What projects are happening around the city that are primary drivers of appreciation? In my area, the website www.urbantonio.com. Is little known but a highly valuable resource frequented by architects and developers. This construction and development community is a diverse network of economically driven investors that can have a huge impact on the trajectory of property values.
8) Awareness of Local Code Environment- An architect will be sensitive to changes in the local regulatory environment that could promote or stagnate development in a given area. If the city is about to implement a development incentive plan in the area you are looking to sell, you damn sure want to advertise it.
Benefits of the Architect- Agent to Buyers:
1) Mitigate Physical Risks- you want to minimize the risks as much as possible. An architect can offer an additional set of eyes on many issues that could result in unforeseen future costs. They will have a heightened awareness of potential construction deficiencies and will be able to identify future maintenance issues. They will also be able to provide insights and evaluation on the building site, topography, drainage, floodplain, and exposure issues. For the typical transaction, this safety net is available at no additional cost to the consumer beyond the regular commission structure offered to a conventional real estate agent.
2) Free Consultation- You will be walking through every step of a transaction with an architectural consultant at your fingertips. This can be an invaluable service in fielding questions and identifying potential issues with a property that you are considering. The national median retainer fee for a licensed architect was $116.10/hr in May 2014 (Bureau of Labor Statistics http://www.bls.gov/oes/current/oes171011.htm) x 3 firm multiplier (http://www.aiga.org/setting-rates-for-a-firm/). Over the course of a transaction, this dual- professionalism can add substantial value to the consumer.
3) Negotiation Leverage- Architects are familiar with the local building codes and the potential shortcomings of a property you are considering for purchase. This information can be used for direct leverage in negotiations that may result in a tangible reduction of the sales price. The more information that you know about a subject property, the more likely you will be to get the best deal.
4) Design Dexterity- An architect-agent is likely to approach the evaluation of your needs differently than most agents. Their fluency in the flexibility of design may allow them to find a better fit and offer alternative suggestions on programming, home size, and location if you are interested in exploring such ideas. In a tight or limited market, an architect can help clients evaluate more options that may not be the exact size or spatial configuration that you’re looking for. If the price is right and you need to update, reconfigure or expand, an architect can give you reliable and actionable advice to help you make a decision. This is especially useful when you are looking for strategies to add value to a piece of real estate.
5) Network Access- Architects are familiar with the local network of design and construction professionals. If you are considering significant improvements, an architect agent will be better informed on the positive and negative attributes of potential service providers.
6) Dignity- You will be treated with respect. The architectural profession is founded on the needs of the client and celebrates team success- an architect knows that you are part of the team. It is wise to give the client as much information and control over the process as possible to make a good informed decision. Some real estate agents view themselves as the gatekeeper to your transaction, but this behavior can be counterproductive.
For all of these reasons, a dually licensed architect-agent or an architecturally-trained agent is an excellent choice for representation in all real estate transactions. At the end of the day, you have a greater assurance that you’ll be in the advisory care of a competent representative with fluent communication skills, the ability to think creatively, and the flexibility to overcome any unforeseen problems. A licensed architect has been through at least 8 years of training… this is not much different than your primary care physician. Why would you seek out the advice of a medical student when you could get a doctor’s opinion for free?
Have you ever considered hiring an architect as your real estate agent? If not, you might want to consider the advisory care of a representative with the flexibility to overcome any unforeseen problems with the building or land that you are considering.