Chicago Real Estate: Agents and the MLS
You certainly don’t have to be an expert to buy or sell property in Chicago, but you do need the use of certain tools or professionals, in some cases they’re one and the same. As part of my degenerate’s guide to real estate series I’m here to offer up a few tips on hiring a real estate agent and using the multiple listing service (MLS). I’ll make a rare stab at validating my opinions by informing you I’m a licensed Real Estate broker in the City of Chicago and was at one point a peddling salesman. Having said that, I offer no statistics or facts here, most of my summations are generalizations and every licensed Real Estate salesperson is at least a little full of shit.
If you’re a buyer I always suggest getting a real estate agent. That likely sounds biased from someone who used to be one, but I’m saying this because you don’t have much to lose by using one. Just make sure you trust them, and that doesn’t necessarily mean your Uncle Albert who sells out in Aurora and used to have a place once in the city. Buyer or seller’s agent, make sure they are organized and have actual experience with the type of property you’re dealing with in the neighborhoods you would want to live or sell in. This might seem obvious, but some big haired Gold Coast studio specialist isn’t going to be as prepared at buying a three flat rental building in Avondale. To understand Real Estate Brokers you should first understand how and why they get paid.
Every Real Estate Agent makes money on the commission, they don’t get paid until the whole deal closes and the seller gets paid. Hence, the seller is the one who pays the commission and these days 5% on residential in Chicago is most common. There is no required percentage that a real estate agent may charge. However, the agent’s broker (boss who holds the license) might demand they charge a certain rate. If we’re talking big big money then smaller percentages usually fly. But remember a small commission doesn’t always do a seller good. On every property listing there’s the co-op in the bottom corner, a cooperating percentage. If it’s less then 2.5% then a buyer’s agent might just decide that property isn’t worth visiting.
The chances of a buyer personally getting their hands on that commission split by cutting out the use of a real estate agent is sort of impossible, since a buyer can’t legally make a commission without a license. If there’s no buyer’s agent then the seller’s agent will just act as a dual agent, giving the buyer lip service advice to help make the deal happen while absorbing the other half of the full commission.
Even if you flaunt your lack of representation as a negotiating tool it likely won’t work, since the seller has already made a written agreement with their agent for the full 5%. From a buyer’s perspective it’s usually best to ignore the commission side of it, make sure your agent is working hard for you and you’re getting what you want and the advice you need. From the seller’s side the commission weighs far heavier on your mind, but few properties are an easy sell these days and if they get you the most the market has to offer then you can consider it money well spent.
Hunting the MLS
The Internet has turned the Real Estate world on it’s head. For most Real Estate Agents that includes a fine spanking to boot. Not only is all the hunting and gathering done on the web, but Illinois has recently passed a law giving everyone access to the MLS, or Multiple Listing Service. This is the listing services for Real Estate across the state. Deals are still done outside this all-encompassing beast, but for residential purposes this is pretty much it. Most agents live and die by the MLS and can navigate the system with ease. Buyers and sellers going without representation have a trickier path ahead.
While the MLS is technically accessible by anyone now, the service still requires members and quarterly fees for use of their system. This means anyone claiming to give you free access to the MLS is getting something in return, one way or another. Some seller’s are paying small fees to post their properties for sale instead of using a Realtor, the words “For Sale By Owner” making every agent grumble and glare. What the seller doesn’t realize is most buyers are using agents and those agents don’t want to deal directly with a home owner. Home owners have emotional attachment to their places and usually think their home is worth more than it actually is. Plus, being a home owner who isn’t offering a commission is like trying to flag down a waiter after telling him he isn’t getting a tip.
On the flip side, buyers are all experts now that the MLS is “free,” happy to click and poke at listings in their area rather then commit themselves to full-blown searches. The problem is that real estate website they’ve been using for free searches is reverse prospecting them. Not only are the listings that keep cropping up mostly listed by the website company, but some of them have been under contract for a week and nobody’s bothered to update it. Meanwhile some young starving agent in designer jeans is filling a time slot and licking your email for an easy sale opportunity. Maybe the agent takes you out to see some things and he/she turns out to be your ideal helper. It happens, but wouldn’t you rather pick your representation instead of the agent picking you?
Navigating Chicago’s real estate scene requires the proper tools. You either have these tools at your disposal or you need to hire a guide to see you through it. For further information on buying, selling or renting, then check out my other articles. Just remember there’s a lot of advice out there and none of it, including my own, is the last word on Chicago real estate.
Check out David’s other Chicago Real Estate Articles: