Considerations for Selecting a Real Estate Agent
I avoided the temptation to compose this post in the form of a “Top Ten List” with a desperate and catchy title. Instead, I just want to impart some basic and common-sense wisdom with regard to choosing a real estate agent.
To be honest, I don’t have a strong opinion as to whether an agent is even necessary. Conventional wisdom suggests that hiring a seller’s agent is de rigeur while buyers’ agents are less common. While both charge significant fees, the idea is that you can “earn” the money back in the form of a higher or lower sales price- depending on which side of the transaction you fall on. Meanwhile a seller’s agent should theoretically be able to sell home faster, as a result of advertising and business relationships. A buyer’s agent should likewise be able to exploit his networks to find you the house that best meets your requirements.
If you’ve made the decision to hire an agent, what is the best approach? Obviously, a friend’s introduction/word of mouth is one of the safer ways to select an agent. Regardless of how you found them, though, you should be certain to “interview” them. You should obviously inquire into their background, training, affiliations, and licensing, as well as confirm that they are a full-time agent. Ask to see a list of the properties they have sold, and compare the final sale prices to the corresponding listing prices. Make sure they have experience in your regional area and with the type of property you want to sell/buy. Engaging an agent from a big firm carries the advantage of standardized practices, but the disadvantage of bureaucracy; some of the time, your agent may have assistants helping you.
Of course you’ll want to negotiate the commission. Under no circumstances, should you pay the agent before the home is sold; in other words, no upfront costs. Choosing an agent solely on the basis of fees is not advisable, since fee level is not an accurate indication of quality. That being said, unless your agent has an excellent track record, it doesn’t make sense to pay them significantly more than the industry average.
When negotiating the contract, begin by examining whether the engagement is sole agency or multiple agency. The latter means multiple agents will be working on your behalf, and almost certainly for a higher fee. Also, avoid signing long-term exclusivity arrangements. Chances are your agent will insist on exclusivity for 90 days. Anything longer is probably a losing proposition, since if your agent hasn’t generated any strong leads in that time, you don’t want your contract to prevent you from changing agents.
Ultimately, your selection should be made in part from your intuition; if he/she has a terrible personality and seems trustworthy, find someone else, even if it means settling for someone who’s not as good “on paper.” After all, you want someone who scores high on the intangibles scale- someone who you feel confident will represent you fairly and look out for your interests.
There are sellers agents who will pressure you into accepting a lower price simply so that that they can close the deal faster, collect their commission, and move on. Then there are buyer’s agents who will pressure you to look at houses beyond your price range with the goal of earning a higher commission. I’ve heard stories about real estate agents that discouraged buyers from conducting inspections, for fear that they would find something that would wreck the deal. There are agents who are unreliable, who don’t return phone calls, answer emails, etc.
Sometimes, you get an obvious indication that the agent is wrong from you. Most of the time, however, it will be difficult to discern, and if you end up making the decision solely based on their history/fees instead of in combination with an assessment of their character, you will certainly regret it.