Don't Be Fooled by the White Jacket [Competency]

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by Osman Parvez
Growing up, my father would share stories from his medical practice around the dinner table.    Based on the more graphic of these tales, I learned that you should be careful choosing whom to ask for medical advice.  The degree alone is not indicative of competence.   In short, don't be fooled by a white jacket.
It's true in real estate too.    We're not doctors, but we're constantly advising people on financial decisions that involve many hundreds of thousands, sometimes millions of dollars.   It's important to choose a good one.

Look, there are great agents in Boulder and it's always a pleasure doing business with them.  Exceptional agents are masters at marketing, negotiation, and clearly understand their fiduciary duty as advisers.  Sadly, for every great agent,  there are several who are marginal and a few who you should avoid at all costs.   The later have risen to the level of their incompetency, and they're out there soliciting your business.   It's an amended version of the Dilbert Principle.

What Can You Do?

Unfortunately, competency is not easily evaluated by the consumer.  Real estate buyers and sellers tend to trust proxies such as brand name of the brokerage, designations, or the number of years the broker claims to have been in business.   In other words, they are trusting the white jacket.

The Colorado Real Estate Commission knows that some agents who are advising their clients beyond their competency level.    It's a big problem.    Per C.R.S.§12-61-113 (1)(n), a broker can lose their real estate license for "having demonstrated unworthiness or incompetency to act as a real estate broker conducting business in such a manner as to endanger the interest of the public."

Since the Commission doesn't define competency,  you're looking at a “I know it when I see it" style rule.    To help clarify, the Commission wrote a position statement last December.

Commission Position on Competency CP-41
"Prior to performing any acts that require a real estate broker’s license, a broker should determine whether he or she possesses the knowledge, experience, and/or training necessary to perform the terms of the transaction and maintain compliance with the applicable federal, state or local laws, rules, regulations, or ordinances.  If the broker does not have the requisite knowledge, experience and/or training necessary to consummate the terms of the agreement, the broker should either decline to provide brokerage services or seek the assistance of another real estate broker who does have the necessary experience, training, and/or knowledge.  The Commission will have grounds to discipline a broker’s license if a broker fails to take the measures necessary to gain competence and violations of the license law are substantiated."

Asking the broker to evaluate themselves is just asking for trouble.   This language is really more about holding the broker accountable after he proves himself incompetent.   By that point, it's too late.   You're already screwed.  

Pro-Tip:  Know What Questions To Ask

Interviews are one way you can evaluate the competency of your real estate agent.   To help you, I've written Osman's Buyer Agent Interview Questions.

The key is knowing what questions to ask and how to ask them.    Most agents love to talk, so a few open ended questions in the right direction can be deeply revealing.   Just don't forget to notice how many questions they ask you.

Click HERE for my questions.    If you'd like to interview me, call 303.746.6896.

Acing my interview questions are not a guarantee of competency, but they are a step in the right direction.   I also advise you meet with your agent at least twice, maybe three times - including trips out to look at property - before you sign an Exclusive Buyer Agency Agreement.
---Note: Our goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Silver Fern Homes recommends careful and complete due diligence before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

image:  Pam and Phil