Are you thinking of entering the housing market? Between 70% and 80% of homeowners use a real estate agent or broker when buying or selling a home, so choosing the right agent is crucial to a successful real estate transaction. Here is a guide to help you find a good real estate broker, and a breakdown of how broker fees work.
The standard commission rate for most real estate brokers is 6%. This is usually split between the sales agent (listing agent) and buyer's agent. However, that full 6% isn’t really going to the sales agent and listing agent. It first goes to the listing brokerage. The agent then receives a cut of between 60% and 90% of that commission, but it can be lower.
If you’re going to hire an agent, we highly recommend researching their professional past. If that agent has an excellent track record, it might be worth paying a premium for their services, which essentially means paying full commission. Here are some tips to help you find a quality real estate broker.
Questions to Ask Before You Hire A Real Estate Agent
Selling your home is likely the largest financial transaction of your life, so choosing the right real estate broker is an important, though daunting, responsibility. To help with the task, we asked Victoria Vinokur, a New York City-based real estate agent with Halstead Property, to comment on the most important questions to ask when you interview brokers. Here's a summary of what she had to say:
1.What experience do you have?
This does not necessarily mean how long a broker has been in the business; rather, such a question will help you understand how well they know the local market and your kind of property. Ask them what has sold in your area in the last three months, the last six months, for how much, and after how long. Ask questions like, "What are the prices of comparable properties?"
Since listing your home at the correct price is key, ask how often they’ve had to reduce the price of a property to make a sale. A good broker will not agree to market a property they consider overpriced. Brokers should have all this information at their fingertips and be able to back it all up with data. They should be versatile and understand the psychology of the market. Also, don’t be fooled by a pitch that includes what celebrities the agent may have helped. That has no relevance to your sale. You need to know what they can do for you.
2. What’s your marketing plan?
You want a detailed description of everything the broker is going to do to put your property 'out there'. Does the broker have creative ideas proven to work, such as blogs or special events, like an invitation-only cocktail party for select brokers and prospective buyers? How will they make your property stand out from the field of the others a buyer will encounter? Since digital marketing is crucial (more than 90% of buyers search online), have them show you sample web listings, and be sure that a professional photographer is included in the marketing budget. Not a photographer who will simply shoot ho-hum wide-angle photos, but one who can capture the detail and the important and interesting aspects of your property – the spectacular view from your balcony, perhaps, or a unique feature of one of the rooms.
3. How will you keep me informed of your progress?
Tell the broker how you like to communicate: text, phone, or email. (Note: texting is not appropriate for any important, legal-related communication). Ask if they’ll commit to a regular schedule of detailed written marketing and activity reports (every two weeks is a reasonable expectation) and make sure that they can be easily reached when you have questions or need an update. Also, find out whether they have a skilled colleague to cover for them if they are ever unavailable, and make certain that they will never let anyone view the property unless they or their representative is present.
4. What’s your commission?
Remember that the amount of the commission is never set in stone, and that there may be room for negotiation. Ask to see the budget, and be clear about what sales-related expenses will come out of the broker’s commission, and what you may have to pay for yourself (stagers, etc).
5. How well connected are you?
This doesn’t mean that you want to know how many friends the broker has on Facebook. Rather, it means that you care how well connected they are within their own firms and in the real estate field. A seasoned broker will have solid connections to other real estate-related professionals: stagers (a broker can help you decide whether hiring one will enhance or speed up your sale), real estate lawyers, photographers, and even moving companies whom you can trust.
6. Do you have references you can give me?
Don’t overlook this one. Be certain to get the names of recent clients. It’s always helpful for the broker to have a page or two of quotes from clients for that first meeting, but don’t rely solely on that. Make the calls.
The Real Estate Broker Hiring Checklist
Beyond the above-mentioned questions, here are other criteria to consider when hiring a real estate agent.
While there are competent part-time agents who sell propertiest, it is crucial that you hire someone who can show your home at varying hours or, if you are a buyer, can take you out to see properties at a time that is convenient for you. Thus, ask your real estate agent whether they work full-time; those who do, tend to take their jobs more seriously, and are generally more flexible when it comes to showing your home.
Find Someone Who Offers Suggestions
Savvy real estate agents know what sells houses in the area – whether it's a pool, office, or some other desirable characteristic. To that end, they will be in a position to make suggestions on the rooms or features to emphasize or de-emphasize. During the initial interview, ask the agent if there are any changes you could make to the house that would improve its desirability. More often than not, the best agents will make these suggestions without prodding on your part.
Find an Area Expert
Hire or retain an individual who knows a great deal about the area. These agents will also be more aware of the typical offering and selling prices than those agents who do not typically work in that area. One way to find a local expert is to ask a local brokerage or your friends or relatives if they know anyone who has sold a large number of homes and/or businesses there. Another suggestion is to look through the real estate magazines and see which agents have the most listings in certain areas.
Sellers – especially so – should seek out agents whose personalities mesh with theirs. For a house to sell quickly, and at a favorable price, the listing party and the agent must be on the same page in terms of how they are going to market the property, the price that will be set, and how and when the home will be shown. Coordinating these ideas will be much easier if the parties involved get along and understand each other intuitively.
Keep Your Options Open
Even if you've retained someone you believe is an ideal agent, think twice before signing an exclusivity agreement. While your agent might be competent, if you are a seller, the more agents you have that can potentially show and sell your home, the better the odds of the sale. Unless some extenuating circumstances exist, retain a listing agent, but insist that the property is placed on the Multiple Listing Service (MLS).