Only in stabilized real estate markets do consumers and commentators on the market want to maintain common sense purchasing and selling practices, such as getting a buyer agent to purchase a house, requesting home inspections and getting referrals from Realtors on the residual services needed to buy or sell a home.

When the market heats up, buyers are willing to forego the protection they need to complete a purchase. Home inspections are the first to go, it seems, to both the buyers’ and sellers’ dismay. Buyers usually find something glaringly dysfunctional in the house when they finally move in and sue the seller. Ouch…but so goes the throwing away of good advice.

One particular standard practice I’ve seen attacked in many markets during the last few years is the use of referrals from the Realtor for residual services. The Realtor, in essence, is the center of the transaction. He or she is the one that puts the seller’s house on the market and starts the selling/buying process by placing it in the MLS.

Once a buyer places a contract on the house, the residual services kick in – some of them even before a contract is presented. Buyers and sellers on average go through this process about once every 7 to 10 years. So it would be in their best interest to ask the Realtor for a referral in the business to fulfill the necessary tasks that must be completed. These residual services include the mortgage provider, appraiser, home inspector, pest inspector, environmental inspector, title company (with homeowners insurance), contractors for repairs, and others.

Some of my cohorts in the media encourage buyers and seller to take a real hard look at the list of referrals they receive from their Realtor, arguing that they may be in cahoots together just to get the transaction through. They’re not so concerned about your needs, you see, and just want to get their money. (Let’s forget that most agents I know want your business for life and understand fully well, they are in heated competition with their colleagues and want you to remember them in seven years for a job well done.) But in the minds of many in the real estate media, that’s beside the point.

They encourage you to go find your own lender, inspector, appraiser, home inspector, etc., because then you know they’re not trying to pull the wool over your eyes. Poppycock! Since the transaction begins with the Realtor, this is where your first referral should start. Ask around for a good Realtor. Talk with your friends who just sold or bought a house. It’s really not that hard. If you decide on a Realtor the way you decide what fast food restaurant to eat lunch (who can get it to me hottest, fastest for the cheapest) then you’re probably asking for nothing more than a quick fix, followed by a prolonged case of indigestion.

Ask around. Then trust the agent for the referrals. If they’re top notch, they’ve been through transactions scores of times and have developed professional relationships with the residual service providers who get the job done, when they say they’ll get it done, for the price they say they’ll get it done for.

You’ll be faced with two types of referrals, usually -- the one where the agent’s company owns the residual service company and the second where it’s an agent’s personal sphere of professionals she does business with.

Ask them upfront if they’ve ever used the particular referral in a business transaction before. How did it go for their past clients and how many times a deal got messed up with that person. (And trust me, there’s always a deal that gets messed up – it’s just part of the industry.) Very important is the fact that they’ve built their referral network through professionalism and not family, religious, political or other ties. You don’t want to use a referral solely because it’s the Realtor’s brother or fellow Moose Club member.

I’m not saying that all referrals guarantee a bump-free transaction. However, successful Realtors don’t let a lot of people in their sphere unless they are professional and can get the job done.

Published: April 18, 2003

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Mr. Carr is an award-winning real estate broker in Northern Virginia and authored "Real Estate Investing Made Simple: a commonsense approach to building wealth." He also contributed to Donald Trump’s book, "The Best Real Estate Advice I Ever Received," and is an active trainer and coach of top producers in the Washington DC market. As a sought-after expert on real estate, Mr. Carr has been featured on CNN, various broadcast outlets and was the former real estate editor for The Washington Times. He accepts questions at his blog www.RealEstateOlogy.org.