Hiring A Real Estate Broker
How to find a real estate broker that will treat you like the Donald.
The bright, shiny sign you put by your mailbox, reading “For Sale by Owner,” hasn’t brought in much business. Plus, the time you’ve wasted on fruitless showings just to skip an agent’s fee is starting to make you and your spouse bicker. You gave it a good shot, but it’s time to call in a professional real estate broker.
“An industry survey found that people who sell their homes through a real estate professional sell their homes for almost 15 percent more than people who sell their homes themselves,” says Paul Wells of RE/MAX of Barrington in Barrington, Illinois. “So even if an agent charges a 6 percent commission, you'll probably come out ahead.” Of course a real estate professional would tell you this, but we agree that the chance of selling your home increases if you hire one. But don’t hire just anyone: Interview at least three agents, get three references from each, and see how they meet these criteria:
Experience
How long has this person been on the job (look for upwards of a year), and were they full- or part-time? “While experience is no guarantee of skill, real estate, like many other professions, is mostly learned on the job,” says Stephanie Singer, a spokesperson for the National Association of Realtors.
Volume
You want your house to be sold, so you need someone who can close a deal. Find out how many homes they successfully sold last year. While it'll depend on market activity, it’s a good way to compare candidates. “Not to say that sheer volume is the best indicator,” says Singer. “As a seller you might also find factors like customer service to be as or more important.”
Speed
You want a broker who can sell a house swiftly, not one that always takes 10 months to close the deal. Sure, it depends on the local market and the individual home, but it’s a good clue as to an agent’s overall ability. If their listings sell in a competitive time frame with the rest of the market, that’s a plus. If they tend to languish consistently, they're probably doing something wrong.
Pricing
One factor that can keep a home from selling: price. “Look for evidence that an agent can help sellers price their homes effectively and can also counsel sellers at setting the best price,” says Singer. A great clue is to compare how close final sale prices were to the initial asking. Just remember that real estate brokers make suggestions, but the clients have the final word in listing price, so this may alter the stats. According to Wells, follow the “10/1 Rule” when it comes to evaluating your listing price -- “If you've had 10 showings and haven't seen at least one offer, the market feels that you're priced too high,” he says. “Those 10 buyers have decided that there are better values on the market than your home.”
Game plan
You’re hiring a real estate agent not just to save you time, but because they're going to be able to give your home exposure. Ask about their marketing ideas (are they aggressive and innovative?) and how they intend to publicize your listing and bring in buyers. “One of the many avenues that agents use is the Multiple Listing Service, which helps get the home out to over 50,000 other sales people,” says Wells. “Many agents also have their properties on multiple websites, printed in local papers and home magazines, and through their contacts.” A real estate agent with relationships with other agents and offices, as well as with past clients and customers, can help keep a stream of people interested or at least aware of your listing.
Exclusivity
Your broker has found the perfect young couple to buy your home -- their own clients! Eek. It sounds bad, but it’s legal for a broker to represent both parties. Ask for a clear explanation of the rights of each party should this situation occur and see where the broker’s obligations lie. They should be to you first and foremost.
Business style
“A good agent will let you know what to expect and will keep in close communication on all aspects of marketing, selling, and closing your home,” says Wells. But make sure you’re on the same page. Do you want a broker who calls you once a week or emails daily? Find out how often and by what methods the agent will keep you updated on prospects and make sure you inform them about your preferences.
Flexibility
Unfortunately, all of this doesn’t come for free. You’re going to need to pay your agent a fee, which is usually a percentage based on the final sale price. Fixed commissions are actually illegal, so you're free to discuss this with your agent up-front. Commissions depend on the market and agency, but you should expect to pay between 4.5 and 6 percent. You’re also going to need to negotiate and sign a listing agreement which usually includes the commission rate and any exceptions, the length
of the listing period, and the firm's and agent's responsibilities. Your agent will ask you to sign one of three types: exclusive listing, meaning the agent will get commission no matter how the home is sold; exclusive agency, which guarantees that your agent will receive commission even if another agent or firm makes the sale (you'd be exempt from paying if you end up selling it yourselves); and open listing, which means that you'd pay commission to whichever agent sells your home. Once signed, your contract will not be negotiable, but if you have to sign an exclusive listing agreement, be sure to create this loophole: “Add an easy out clause so that you can cancel the contract if the agent isn't living up to your expectations,” says Wells.