Note from Adam: Two weeks ago, I wrote a blog about the three Be’s all buyers should follow in a seller’s market. This little bit of creativity on my part lead to my current idea for a series of blog posts. Welcome to the ABCs of Buying, Selling and Investing in Real Estate. Each week, I cover an aspect of real estate and tie it back to a letter. I decided to go back a letter to the letter A so I present to you the Three Awesome Asks When Hiring a Listing Agent. I will provide a fictional scenario in each article and focus on how I would respond to that person. This gives my creative juices a chance to flow as well as show how much I know about real estate.
Jody is a kind lady in her mid-30s and has decided to sell her house. Jody has done some research on selling the house herself, but knows it is well worth it to hire a listing agent so she doesn’t have to deal with buyers, negotiations, planning and contracts. Please no contracts, Jody thought to herself. However, now Jody has to figure out which of the listing agents she wants to use to sell her house. Her Great Aunt Melody suggested her agent, but that guy always gave her the creeps. All of her friends have their own listing agents, but she has no idea where to even start in picking one. What should Jody do?
Here is what I recommended to Jody.
You have to interview at least three listing agents. Most people just select the first agent they meet without knowing much about them or how they conduct their business. If you want to get your house sold in the most painless way possible, you need to find the agent that is the right fit for you. And, that does not mean the agent who charges the least commission. You have to look beyond your pocket book to figure out what value the agent brings to your selling experience. You also have to find someone who matches you own personality. If you are an introvert who does not cherish social gatherings and detests the typical salesman getup, you probably do not want to work with someone who fits the stereotypical real estate agent.
Ask about the Agent’s Commission – You might not know this, but Agent’s work on a negotiated commission. Most will say its 6% and that is the accepted realized industry standard. However, it is illegal for brokers to established a true number when it comes to commission rates due to laws preventing monopolies. Should you take the agent with the smallest commission? Personally, I would not. You have to judge in part the worth of an agent to get the best price for your house. If the agent is willing to go down on his own pay, what does that mean he is willing to do for the sale of your house. Will this person be able to get the highest price for your house? The old adage of you get what you pay for applies to real estate agents as much as anything else. It is also important to remember that agents are required to give a minimal amount of work with their commission no matter what they charge. Agents who charge a discount rate, might tell you that for the lesser amount they will do less in return, but in realty, they are required to provide a set of minimal services. Check out the Information about Brokerage Services for more information.
Ask about the Agent’s Marketing Plan – You might think that sticking a sign in your front yard, putting your house for sell on the internet is all it takes to get your house sold. However, there is so much more that a listing agent can do to market your property beyond these two inherent steps. For this reason, you need to make sure to ask all the listing agents about how they go about marketing your property. Do they send it around to other agents in a flyer email blast? Do they hold open houses for the property? Do they reverse prospect the property by contacting other agents who have clients expressing an interest in the property? What do they do on social media? Do they have a website including displaying your own listing? What is their short term plans? What are their long term plans if the property does not sell? There are lot of things agents can do to help get your home sold. You just need to be sure to ask them about what they do. Of course, a huge part of the marketing for your home is the sales price you set. Please make sure to ask the agent how they would price the property and how they determined this price. Nothing kills a house sale quicker than an overpriced property. Ask the agent what their plans are on the sales price if it does not sale in two weeks, or three months.
Ask about the Agent’s Experience in Staging – When you go to the IKEA to buy some new furniture, you are seeing some great salesmanship. IKEA has mastered the concept of helping the consumer visualize what a room would look like in their own home. If you want a new kitchen, you can go to IKEA and browse several kitchens already set up. It works wonderfully to entice my wife to say, “I want this!!” This is the reaction you want to have when they come into your home you are selling. As with anything else dealing with sales, you have to put on a good presentation in order to more quickly sell your home. You want to make it as easy as possible for a buyer to say yes. With all this in mind, you need to ask your listing agents if they have a plan to stage your home. What IKEA plan do they have for your home? What experience do they have in staging? Ask them what they would do in each room to get it ready for buyers to visualize the house as their own.
In summary, then, Jody was ready to list her house and needed a real estate agent. I told her she needs to make sure to include three awesome asks when interviewing at least three listing agents. First, ask about what they charge for their commissions. You don’t have to pay the industry standard of 6%. This is negotiable. Ask about the marketing plan the agent will have to sell your house. How will they get the world out about your house? Finally, ask about what they know about staging as this will help you to better understand if the agent truly understand what it takes to sell a house.