Agents vs. Flippers

Posted by Annalisa Burgos | March 27, 2009

Future real estate agents learn what it takes to succeed.

I’m about halfway through my 75-hour New York state real estate licensing course, and each class gets more and more amusing. It’s like any other classroom setting — you’ve got the students who ask random questions (“why do we need to learn about property insurance?”), students who act like they know everything (“I’m a property manager so I already knew that”), and students who just observe and take it all in (that’s me).

Literally anyone can get a real estate license. All you need is to be at least 18 years old, pay about 500 bucks for 75 hours of training, and pass a school exam and a state exam. No high school or college education required. No hundreds of thousands of dollars in tuition fees. No experience necessary. All you need is the dedication to get deals closed.

The housing boom may be over, but you can’t tell with how many people are clamoring to be real estate agents. And from talking to some of these people, many are looking to capitalize on one of the hottest buying markets in history. Obviously, this is the best time to be an industry insider.

When I lived in Knoxville, my husband and I wanted to buy a house and went house hunting several times a week. Being investors, we were often surprised to find that many of the homes on the market were owned by real estate agents. It seemed like the agents were buying properties from sellers, making superficial fixes and then putting them on the market at a higher price to make a profit, in one word — flipping.

In a recent class, the teacher said flat out, “This business is not about showing houses. It’s about investing in properties and building your wealth. That’s where the real money is.” And true enough, many of the students agreed that that’s why they’re getting their licenses – to get first dibs on bargains and position them for personal gain.

As we continued to talk about things like ethics and good business practices, I’m concerned about the ethical implications. Personally, I think there’s nothing wrong with agents who are in the biz to flip houses. Heck, if I find a bargain, I may do it as well. But where it gets murky is when an agent’s true intentions are hidden behind promises to be true consumer advocates. Like when a seller says he wants X amount for the house but the agent knows it’s worth more and buys it so he can flip it himself. Or when a buyer is looking at a house and the agent tells him it’s a great buy, though he knows it’s a flipped property. Agents who don’t make their intentions clear are at risk when the public gets wise.

The best way for consumers to protect themselves is to arm themselves with their own research and information. That way, they can tell the difference between a true agent and someone who’s just in for the flip. Ask friends and family for referrals and interview at least three agents before choosing one. Get to know the buying process with FrontDoor’s First Time Home Buyer’s Guide, which gives easy-to-follow, step-by-step information from evaluating your finances to closing escrow. We also offer tools to research homes for sale, cities and neighborhoods, recent sales prices, how much mortgage you can afford and more. It’s all incredibly empowering!

With all this information, today’s smart consumer wants a trustworthy, dedicated real estate agent. Even if an agent has his/her own investments on the side, quality customer service is still the benchmark of this profession.

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