[REVISION 7/4/08 (original post 7/3/08): The purpose of this post is to educate the public regarding the value a GOOD agent will bring to the transaction, why their fees are justified and how to find a GOOD agent]
Over the past few days there has been a HEATED ongoing debate regarding whether agents and in particular, listing agents are worth their commission (here's a link to the Member's Only version of this post with links to the debate). Since I don't have a horse in this race i.e., I am not a realtor nor am I someone promoting an investment business model that shuns the use of listing agents, I'm going to address the value that GOOD Buyer's and Seller's Agent's bring to the transaction and how to select them.
Agents and other Real Estate Professionals: if you have comments that are helpful to the consumer please post them here. If you have a comment that more appropriately belongs in the Member's Only forum, please use your discretion and post it here.
Definition of a GOOD Agent
A good agent will hold their clients' best interests above their own. They honor and respect the fiduciary relationship they owe to their clients. They are committed to providing professional guidance throughout the transaction. Honesty and integrity are integral character traits of the GOOD agent. They are fanatical about returning phone calls in a reasonable time frame (at least 24 hours). They have chosen real estate as a profession not a hobby or a short cut to making a quick buck.
At the same time, a GOOD agent is NOT a slave to the whims and emotions of an unreasonable client.
The Value a GOOD Listing Agent Brings to the Transaction
A GOOD listing agent will dramatically decrease the amount of time your property is on the market through realistic/effective pricing, a thorough marketing plan, established connections with reputable agents, appraisers, home inspectors, title, escrow and other service providers.
Here are some guidelines to finding the agent that will bring the most value to your transaction. Please do not pick an agent simply because they have spent money for billboard, bus bench or other advertising. Look for an agent who is respected by their peers and other professionals in the industry.
Remember that an agent uses their own resources (read money, gas and time) to market and sell your property before they are paid a dime.
1. Experience - An agent experienced in your local market will provide exceptional insight into the value of your property at a specific time in a specific locale. Be wary of the agent that instantly agrees with your assessment of the value of your property (most likely they are telling you what you want to hear and not giving you accurate pricing information about your property, which will dramatically affect how fast your property sells). A GOOD listing agent will suggest a selling price based on a variety of factors in your market and they should be able to support the price they suggest. Realistic pricing is the key to properties selling in this challenging market.
If you're selling investment property, the agent should also have experience with 1031 exchanges.
2. Marketing Savvy - Ask how they plan to market your property. They should have detailed plan that may include staging, advertising, open houses, agent-to-agent networking and Internet presence.
3. Professional Negotiation Skills - A GOOD listing agent will know how to negotiate effectively and professionally. Stay away from those who have a reputation for bullying and strong arm tactics, those who have a reputation for losing their temper and those who do not return phone calls. Those tactics are typically employed by those who have not developed effective and professional negotiation skills.
4. Word of Mouth Reputation - What is this agent's reputation among other agents (this is critical) and among their former clients. The agent should be able to provide you with references from other agents (outside of their brokerage) and former clients. A good reputation among other agents usually indicates that they are professional and facilitate the transaction rather than stalling it through ineptitude or inexperience.
5. A GOOD listing agent will coordinate and schedule showings, arrange for inspections and other professional services that your property may need prior to selling (some of these are included in their commission and some are not, have a candid conversation about what out-of-pocket expenses you will need to budget) they will receive the offers and present them to you with their recommendations regarding a counter-offer and other strategic aspects. A lot will depend on the urgency of your sale. You should candidly discuss your urgency or lack of urgency with your agent because this will impact the negotiation strategy.
The Value of a GOOD Buyer's Agent
A GOOD Buyer's agent will save you substantial time by sorting through available inventory and selecting properties that meet your criteria. They will have relationships with credible and ethical lenders that may assist the loan process. The will guide you through the negotiation of the transaction representing your best interests.
In selecting a Buyer's Agent look for:
1. Experience in the local market. A good understanding of historical property prices and the current trends will prevent you from spending more than you have budgeted. They will also be able to give you historical data regarding appreciation, school districts and neighborhood desirability relative to your needs. Remember that no one can predict the future.
The agent should spend at least an hour interviewing you to discover both the tangible and intangible factors that will affect your buying decision. At the end of the session, they should be able to reflect back to you the requirements you have and also any other intangibles that may affect you.
***If the properties the agent is showing you do not in any way reflect what you are looking for and you have been specific about why those properties aren't appropriate, consider looking for another agent. The agent should be responsive to your needs.***
2. Responsive - The agent should be responsive to your questions and phone calls. Remember, however, that you are not their only client. Try to make a list of questions you have rather than calling every time you think of something new. It will make it easier for the agent to assist you and reduce the number of phone calls. Help them, help you.
3. Professional Negotiation Skills - A GOOD listing agent will know how to negotiate effectively and professionally. Stay away from those who have a reputation for bullying and strong arm tactics, those who have a reputation for losing their temper and those who do not return phone calls. Those tactics are typically employed by those who have not developed effective and professional negotiation skills.
4. Word of Mouth Reputation - What is this agent's reputation among other agents (this is critical) and among their former clients. The agent should be able to provide you with references from other agents (outside of their brokerage) and former clients. A good reputation among other agents usually indicates that they are professional and facilitate the transaction rather than stalling it through ineptitude or inexperience.
The above list is not exhaustive but it should give you a GOOD start to finding a GOOD agent for your needs.
GOOD agents (whether Buyer's or Seller's agents) are worth their weight in gold. They are passionate about serving their clients and passionate about their industry. There are many, many agents who do not qualify as GOOD agents. The only way to reduce the number of BAD agents is to not use them for your transactions.
As a consumer, it is up to you to find the best agent for you.
Do your due diligence. Check references. Don't assume they are GOOD references because they gave you references. Google their name with the word "complaint," "bad," and "unethical."
It is possible to have a bad experience with a generally GOOD agent. It's just the nature of business but there are ways to increase your chances of a good experience.
This is my personal opinion only and it is a general opinion. Please feel free to add to this conversation.
[REVISION 7/4/08: I use both Buyer's and Seller's agents despite the fact that I'm an attorney and could easily negotiate my own contract. It is indispensible to have a third party's perspective and guidance, not to mention the amount of time they save me.]
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