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Choosing a Realtor

USING A BROKER

If you’re considering selling your home, you should first make the decision as to whether to sell the house yourself or to list it with a broker. Using a broker does not necessarily mean that you will end up with less money for your house, as a result of the broker’s commission. Accomplished real estate agents can often negotiate a higher sales price in selling your home. In selecting a real estate agent, you should be aware of terms relating to the name “real estate agent” and there is a significant amount of confusion related to the name.  Real estate salespeople are often called brokers, real estate agents and Realtor®- with the little r-ball after the name.  This r-ball indicates that the real estate agent is a member of the National Association of Realtors.  It does not necessarily indicate that a real estate agent without the r-ball is less qualified than the Realtor®, it simply indicates the real estate agent has opted not to join the National Trade Association.

In deciding to sell a home yourself, don’t be frightened into thinking a real estate is required to close the sale.  While having a Real Estate Broker involved in the sale will make the process much easier, the Home Buyers Handbook has assembled a complete step-by-step procedure to make selling your home without a real estate agent much easier.  The following questions should be asked to establish whether which path to take.

1. Are you rushed to sell the house quickly? If you are, you may be better served by getting an agent.  Your real estate agent can do a better job of showing your home to other agents who could eventually sell your home.  Simply planting a For Sale sign in the front yard and waiting for drive-by buyers can become very frustrating if prospective buyers don’t show up quickly.
2. Are homes in your area in high demand?  If this is the case you may be better served in selling the home yourself.  My first home in Indianapolis sold in 18 months using an agent, while my second home in Boca Raton was sold in three days “By Owner”.  Of course Hurricane Andrew helped move the house more quickly (no pun intended).
3. Will you need to assist the buyer in finding a mortgage?  If so, a real estate agent can become very motivated in helping the potential buyer find a mortgage at a competitive rate.  During times of low interest rates when mortgage lenders are overwhelmed with a plentiful supply of borrowers, loans may be more difficult to obtain.  A good broker can help seek out motivated lenders.
4. Do you know which features of your home to stress based on current market conditions?  The Home market can be very competitive.  Buyers can be trendy, as well.  If your potential buyer has been utilizing a broker in his/her search, the broker may have created demand (for specific features) based on the inventory of available homes in the area. An intuitive agent will carefully and discretely find features that a potential buyer likes and steer the buyer to homes with this feature.  When a potential buyer arrives at your door seeking the feature that every house in the area has (a far as they know), you may be left short-handed.  An accomplished agent would “sell-through” this missing feature and accentuate other features that your home has that the other homes did not.

There are many other factors that could be evaluated in arriving at a decision to use, or not to use, a broker.  In most cases the use of a broker is well worth the cost. Remember, the broker will not walk away with pure profit from the commission earned from the sale of your home. 

• Imagine having to write your own ads and find the best place to advertise
• What wording will entice buyers to mark your home as a “must-see”.
• How many Sundays are you willing to offer open houses.
• How difficult will it be to leave work 30 times to show your home to 30 different “lookers”.
• Do you have time to develop an attractive “sell sheet” with floor plan diagram, features, energy usage records, property tax info, and so on.
• Do you know what to “spruce up” based on buyers attitudes?
• What features should you high light.
• Will the buyer believe local schools are great simply because you say so?
• A broker can provide sense of security to the buyer, because they feel a sense of protection that the agent is recommending the home.
• Many sellers try to sell too high or sell way below the fair value of the home.  An agent who receives a commission based on sale price will try to get the highest price possible for your home to increase their payout.  In my own case, I earned a nice 30% increase (in 18 months) over the price I paid for the home, but with the Hurricane Andrew housing shortage. I probably lost 40% of the potential.  A real estate agent would have prevented this occurrence.

If I sound like a professional real estate broker, I’m not.  I sold my second home by owner, only because Hurricane Andrew had created a slim (housing) supply and robust demand.  You must weigh all the benefits in making the decision.  The key factors remain “how much time do you have?” and “How quickly is housing inventory moving?”  Remember, commission on the sale of a $100,000 home amounts to only $6,000+/-.  At $500 in interest payments per month on this amount, in six-months, you will have lost half of this commission in interest payments alone.  In most cases, it will take far longer to sell your home “by owner” as compared to using an agent.

What factors should I use in hiring a real estate agent?

The first factor you should investigate is how familiar is the agent with your area.  With my Indianapolis home, this was my primary mistake.  The older lady (agent) who helped us find our first home was pretty much put through the wringer, by my young wife, who had a champagne taste on a beer pocketbook.  I felt indebted to her by the patience she had exhibited when we originally bought the home and opted to use her to resell the home.  Unfortunately, this kind lady lived and worked on the North East side of Indy and our home was located on the west side, near the Speedway area.  After more than a year on the market (we had moved to Boca Raton 12 months earlier), I regretfully moved our listing to a West side (local) agent.  This local agent sold our home in six-weeks.

An agents’ activity level in your area is a good sign.  Look for “for sale” signs with the agents name.  An agent with 400 listings in your area may not have the time to properly market your home, but a hungrier agent with multiple, but few, listings may be just what the Doctor ordered.  It seems that some agents are simply great at getting listings, but other agents may sell these listings.  The listing agent gets a share of the commission.  If I were to become an agent, getting a lot of listings is a great way to gain a high profile exposure and earn commissions on the sales skills of others.  Multiple listings (by an agent) give a seller the impression that the agent is “good”, but it is important to know what percentage of the listings the agent sells on his/her own.  The lack of a large inventory of listings (by an agent) may be a good sign (so to speak), because the agent will work harder to sell your home (and not share commission).

In evaluating an agent that you see numerous (for sale) signs, look at the Multiple Listing Service (MLS) records to establish how long the house(s) remained on the market.  Talk to the sellers (with the for sale sign in their yard) about how happy they are with the agents’ passion in selling their home.  Ask homeowners with “sold” signs in their yard how happy they were with the transaction. 

Never be fooled by an agent who says he/she can get $X for your home or an inflated estimate.  These types of agents may have a multitude of listings, but a low supply of ethical standards by supplying an unrealistic sale price estimate.  These agents typically make these unrealistic promises, then quickly pressure the seller to lower their price for a quick sale.  Some agents may even use this technique on buyers.  For example the agent may communicate to the buyer, “The seller is asking $150,000 but the seller is really motivated and would probably accept much less”.  While most agents have high ethical standards, remember, a lot of Florida Swampland was sold during the 1960’s.  (seems as if Walt Disney bought a bunch of it, though)

• In interviewing agents, ask about recent sales in your area and the sale price versus list price.

• What houses have sold and which haven’t, and why haven’t they sold?

• Ask the average listing time on the market for your area.  This gives you an idea of what you might expect.

• Ask the agent about specific strategy she/he will use in marketing your home. How many open houses will the agent hold for your home?

• How many agents work for the firm.  The firm may encourage other agents within the firm to help move inventory.

• Does the agent sell homes in your price range, more expensive, less expensive?

• Is the firm an MLS member or a member of another listing service?

• If you must move before the house is sold, will the agent provide lawn maintenance and other minimum maintenance tasks?  Is there an additional charge for this service?

• Ask about commission rates, remember commission rates may be flexible.

In evaluating an agent, make sure you have interviewed several before reaching as decision.

The following is a list of other questions you may find useful in performing a more formal evaluation of the agent.

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