Author Topic: how to: Choose a real estate broker  (Read 1022 times)

nereo

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how to: Choose a real estate broker
« on: May 10, 2018, 07:16:29 AM »
About to sell our first home, and I'm now at the stage where I'm looking for a broker to work with. So far the only criteria I've come up with is to look for individuals who have properties listed in my neighborhood for roughly the same pricepoint as we are dealing with, and to look for an agent who can provide service in both English and French (this is in Quebec).

From articles I've read I gather I am supposed to interview a few agents, but other than their rates I'm not sure what I'm supposed to be looking for.  I'm of the mind that I don't have to necessarily love the person, I just need someone who can do the job. I'm also not sure whether to prioritize an agent who gives a higher asking price (which might be lofty and unobtainable) or not.

Also, in my area there's about 20 brokers who have active listings within a mile of me. Roughly half work for one real estate company (RE/MAX), a quarter work for another, and the rest work for themselves or much smaller groups.
I feel stupid for asking this but what's the practical difference between working with someone who works ofr a mega-company vs. a smaller or single-person firm? As I see and understand it, each realtor uses MLS and connects with the others, so all the buyers get to view all the sellers' properties, correct?

Jon Bon

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Re: how to: Choose a real estate broker
« Reply #1 on: May 10, 2018, 10:21:36 AM »
About to sell our first home, and I'm now at the stage where I'm looking for a broker to work with. So far the only criteria I've come up with is to look for individuals who have properties listed in my neighborhood for roughly the same pricepoint as we are dealing with, and to look for an agent who can provide service in both English and French (this is in Quebec).

From articles I've read I gather I am supposed to interview a few agents, but other than their rates I'm not sure what I'm supposed to be looking for.  I'm of the mind that I don't have to necessarily love the person, I just need someone who can do the job. I'm also not sure whether to prioritize an agent who gives a higher asking price (which might be lofty and unobtainable) or not.

Also, in my area there's about 20 brokers who have active listings within a mile of me. Roughly half work for one real estate company (RE/MAX), a quarter work for another, and the rest work for themselves or much smaller groups.
I feel stupid for asking this but what's the practical difference between working with someone who works ofr a mega-company vs. a smaller or single-person firm? As I see and understand it, each realtor uses MLS and connects with the others, so all the buyers get to view all the sellers' properties, correct?

Ok so I am in the US so this might not translate.

Here in the states, the MLS is everything. Anyone who says they can do XY and Z to make your house sell better, and faster is probably just trying to win the business. So assuming you have done the minor repairs, de-cluttering, and deep cleaning any agent is probably as good as the other. Size of the agency is really irrelevant because they all end up marketing to the same exact place.

That being said. I am sure an agent will tell you how hard they will work for you. They might, but most likely a sellers agent never shows the house. The buyers agent does all of that leg work. I've had about 50 showings and it has always been the buyers agent taking the potential buyers though. Here the agents usually split 6% of the sale price. 3% to the seller agent and 3 to the buyers agent.

The language thing might be an issue, but again your going to be negotiating with a buyers agent, so its them you would be communicating with. If that be English, French, or Pig Latin. You are the one with the asset, they need to be accommodating to you if they want to buy said asset.

Check and see if you have flat fee agents available in your area. I paid $500 to get into the MLS and handled the showings and negotiation myself. So I as able to save the 3% that the sellers agent would take. I have done this twice and highly recommend it.

YMMV good luck out there!

Shinplaster

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Re: how to: Choose a real estate broker
« Reply #2 on: May 10, 2018, 07:51:39 PM »
Not an agent, but have bought and sold several houses.   We will be moving again in the next year or so, so I am actively watching listings now.

Agents in a larger operation will rarely reduce/negotiate their fees.  By the time they pay the percentages to the owner of the brokerage, they don't get the full 3%.  Smaller/independent outfits will sometimes cut commissions since they have lower overhead.  If your agent is ill or out of town does the brokerage have enough staff to cover?  Large ones do, small ones not always.

If you have a conflict with your agent in a larger office, you can ask to be reassigned to a different agent.  Your agreement is actually with the firm, not that particular agent.  If you sign with a one person firm, you are stuck with them.

Look at listings of agents you are thinking of signing with.  Do they post excellent photos on MLS?  I see so many horrible photos - no one wants to see a closeup of an unmade bed thanks.  The photos are what many buyers use to determine which places they will bother seeing.  Sloppy, badly lit photos are a big red flag for me.  If they don't care about that, what else will they be careless about?

Will the listing agent set up all viewings, or expect you to field calls from other agents and set appointments?  That is something that annoys me - I expect the agent to filter the calls and appointments.  I am not letting unknown/unvetted people wander my house thanks.

When they suggest the asking price, does it sound reasonable?  Many agents will quote an inflated price just to get you to sign with them.  Ask to see comps in your neighbourhood, and for an explanation as to how they arrived at the suggested price.  You don't want to 'chase the market down'.  Pricing too high means multiple reductions, and in the end you usually sell for less than you would have if you'd priced it correctly in the first place.

Will they arrange an agents' open house?  You may not want a public open house, but the agent one is a good idea.  Small, independent agencies may not be able to pull in a lot of agents (maybe not everywhere, but it's a factor in the city we live in.  The big guys don't play well with the little guys).  The more agents seeing your house, the more potential buyers contacted.

Choosing an agent has an emotional component too.  Sometimes you just 'connect' with one better than the others.  It pays to talk to a couple at least, just to see if there's a personal preference.

calimom

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Re: how to: Choose a real estate broker
« Reply #3 on: May 11, 2018, 06:54:03 PM »
@Shinplaster has some really good points.

I'm not a RE agent, but do home staging as a side gig to my main business. The main agent I work with has about one new listing a month. She goes to bat for her clients. She's connected to a big regional firm but is very personable with the sellers and the buyers. In the property we're currently working on, she sold the sellers the house they've moved into, and apparently they negotiated a percent off for the listing. We're painting the entire interior, updating things like faucets and hardware (getting rid of fugly brass) and bringing in furniture, artwork and accessories. This afternoon she came by in her Prius with a couple flats of blooming exterior color and planted it herself - going the extra mile.

With this property in a fairly decent part of town, priced right, she'll do the brokers' Wednesday tour, and host a couple of open houses to the public, well marketed. Then she sets a date where offers are accepted and then reviewed by the sellers. It's a strategy that seems to work well for her and her firm. Not aggressive, not hard sell. Never talks smack about anyone behind their backs, just professionalism all the way.

Do you know anyone who's bought/sold recently who could give a referral? And good luck! Hope your sale goes well.

Finallyunderstand

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Re: how to: Choose a real estate broker
« Reply #4 on: May 12, 2018, 05:25:21 AM »
Broker of 10 (almost 11) years here.

Some points to make:

You mentioned maybe going with an agent who predicts a higher sale price... Ask for comparable sales that can justify that price.  If they can't be provided then they are probably blowing smoke up your behind.

Some agents have teams.  Some are solo.  The Agent with a team may describe it as a benefit.  It possibly could be but if you sign with an experienced agent who then hands you off to an assistant, will you be happy?  Most assistants to a realtor are assistants for a reason.  They most likely don't have the experience to go at it alone.

Make sure the agent does real estate full time.  Part time agents who have another job often have long periods of time where they are unavailable and this can greatly slow down the process.

Ask how long they've been selling real estate.  How many homes they typically sell. What is their average market time of their listings.  What is their list price compared to sale price ratio?  (meaning, do they only get 90% of their list price or do they get 99% of their list price which would indicate they price it well.)

As another poster mentioned, ask about their marketing.  Professional photos or do they simply walk around snapping photos with an iphone.

I could go on and on but this should lead you in the right direction.

nereo

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Re: how to: Choose a real estate broker
« Reply #5 on: May 13, 2018, 09:20:31 AM »
Thanks all for the input.  I have three meetings schedules for early next week and this gives me some specific questions to ask each one.
As near as I can tell from their respective listings, each does this full time; i've avoided individuals who don't have much history selling equivalent homes in the area.  I'm also paying close attention to how they list the properties online, including photos, open houses etc.

Time to sale is definitely one of our core factors, and I'll ask the brokers about their price:sales price ratio. We'd rather it be priced right the first time vs having it sit on the market for 3-6 months before reducing the asking price.

Sounds like there are advantages and disadvantages to a large firm vs. smaller/individual companies.
cheers

nereo

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Re: how to: Choose a real estate broker
« Reply #6 on: May 16, 2018, 01:48:39 PM »
Update:  I met with 3 brokers thus far and it's been... enlightening.  I honestly didnt' expect this level of variance in preparation, estimates and advice.

Starting with things I was less happy about:  One broker gave a suggested listing price I felt was almost comically undervalued.  I'll admit I had an emotional response to that, something I wasn't expecting, and I understand that everyone has their baises.  But for the past 6 monhts we've been casually tracking all properties within a 5 block radius of our home, and she was suggesting a price point about 20% lower than what I expected and what the other two brokers put forward.  As Comps, she used a bunch of homes that were i) about a half mile away and in a less desireable location and ii) seemed to cherry-pick those, as I noticed quite a few properties with similar square feet, bedrooms and specs were noticably absent from the comps she showed.

I was left wondering why she would even do that - was my valuation of my own property so far off, or was she underselling?  Isn't commission-based sales supposed to eliminate this?

To that I have a theory (feel free to comment on its validity) - at 4% commission, often split between buyer & seller, the selling broker earns just 2%. For a home that's ~$250k, that would translate to  $5,000, but if the price was dropped to $220,000 it's still $4,400 - a reduction of just $600. By setting a 'rock-bottom' price the agent hopes to move the property in 1-2 months instead of the typical 3-6 months for this area.
In other words, selling by volume beats selling for maximum price.
However, from my perspective I'm better off setting the price $30k higher, even if it means taking an additional 4-5 months to sell

Anyway, with that first agent I mostly listened and felt like she was trying to convince me to set the price as low as I could, while I gave little input to what I thought it was worth.

During the next two brokers I had printed out my spreadsheet listing the metrics for all the various properties.  Both sat with me and talked about the various properties and how they compared (favorably and unfavorably).  In the end both (without me giving them a number) arrived at a very similar evaluation that was actually about $10k higher than I thought we'd list at.

So there you go.  What should I think of it?
Could I be correct that agent #1 was just trying a volume-selling approach and should be avoided? FWIW pre-screened the agents, selecting only the ones who had listed multiple properties in the area in the last year, had very good photos on their websites and had been working for several years.

I'm also a bit frustrated that the one coming from a smaller firm is joining the largest realtor on July 1st.  She assures me it won't change anything for me but now I have two agents from the same company and a third from another large company.

Finally, I can't help but be left with the sensation that we shouldn't even need realtors in the first place. IN my case I do because I won't be in town to show perspective clients, but little of what was offered by any of them was information I didn't already have or could not have gotten online. There's a popular fee-based service here to assist people selling without an agent, but it requires people to actually be around.  C'est la vie.

Shinplaster

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Re: how to: Choose a real estate broker
« Reply #7 on: May 16, 2018, 04:00:32 PM »
I think you're correct about agent #1.  Some brokerages pressure agents to turn over properties quickly, so I'm guessing the lowball one belonged to an office like that. They'll take a lower commission just to be able to say "sold in 3 days".  I hope you do sell in 3 days, but don't think you should have to leave money on the table unnecessarily to do that.  Maybe she was hoping for multiple offers to push the price up, but that can be risky if the market is the least bit soft.

The higher number agents were probably leaving a little room to negotiate a bit, while still arriving at the price you prefer.  That's a reasonable strategy, as long as you don't overprice.   Also watch the listing price - people searching MLS will set filters to eliminate some prices.  For example, don't list at $405,000 when filters could be set for $400,000.  IIRC the filters jump by $25,000 at a time, so choose one that is near your number, but just above it.

When are you listing?  If it's soon, perhaps the house would be sold by the time the agent that is changing firms does so.  What does your gut say?  Which one would you mind least giving a huge chunk of change to for selling your house?   I always resent paying the commissions, but it helps if I at least halfways like the person.   It's an industry that needs more competition and elimination of the stranglehold MLS has on sales.

nereo

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Re: how to: Choose a real estate broker
« Reply #8 on: May 16, 2018, 04:33:12 PM »

When are you listing?  If it's soon, perhaps the house would be sold by the time the agent that is changing firms does so.  What does your gut say?  Which one would you mind least giving a huge chunk of change to for selling your house?   I always resent paying the commissions, but it helps if I at least halfways like the person.   It's an industry that needs more competition and elimination of the stranglehold MLS has on sales.
We'll list probably next week.  From what I understand it could be posted online as soon as next Friday, including the photographer coming in.

My gut says it could sell in 2-3 months priced appropriately - we've seen enough units (both online and in person) to know that our location is solid and the fit and finish are appropriate for this area.  From what I've seen roughly half of the properties sell in 2 months, while the others seem to take 150-200 days.

Shinplaster

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Re: how to: Choose a real estate broker
« Reply #9 on: May 16, 2018, 06:24:21 PM »
I hope it sells quickly.  It sounds like you've done your research, and are going to price it and present it well.  2-3 months would be a long time here - most houses go in weeks.   150-200 days would be so stressful!  It's a long period to keep your house show house neat and tidy.   Easier if you aren't there though.     

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nereo

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Re: how to: Choose a real estate broker
« Reply #11 on: May 17, 2018, 06:24:20 AM »
I hope it sells quickly.  It sounds like you've done your research, and are going to price it and present it well.  2-3 months would be a long time here - most houses go in weeks.   150-200 days would be so stressful!  It's a long period to keep your house show house neat and tidy.   Easier if you aren't there though.   
Yeah, compared to previous places we've lived the market here is decidedly soft; when I was in California we'd have a stream of people come up ot our door offering to buy, bidding wars were not uncommon and sales in under a week were not unheard of. Here the median time on market is just under 3 months, but with this bi-modal distribution (two peaks - one around 2.5 months, another around 7-8 months).

https://www.youtube.com/watch?v=n0rV3ydBhUw
Thanks.  I'm a regular listener of Freakonomics podcast, but somehow I never heard that episode.  Even more amusing, this was the first time I have ever seen what the two Steves looked like.  Not sure what I expected them to look like - maybe a bit older?

Basically supported my idea that agent #1 was likely trying to push me into a fast sale b/c her incentive wasn't worth keeping our home on the market for a few more weeks in order to get many thousands$ more.

Another Reader

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Re: how to: Choose a real estate broker
« Reply #12 on: May 17, 2018, 07:15:04 AM »
I hope it sells quickly.  It sounds like you've done your research, and are going to price it and present it well.  2-3 months would be a long time here - most houses go in weeks.   150-200 days would be so stressful!  It's a long period to keep your house show house neat and tidy.   Easier if you aren't there though.   
Yeah, compared to previous places we've lived the market here is decidedly soft; when I was in California we'd have a stream of people come up ot our door offering to buy, bidding wars were not uncommon and sales in under a week were not unheard of. Here the median time on market is just under 3 months, but with this bi-modal distribution (two peaks - one around 2.5 months, another around 7-8 months).

https://www.youtube.com/watch?v=n0rV3ydBhUw
Thanks.  I'm a regular listener of Freakonomics podcast, but somehow I never heard that episode.  Even more amusing, this was the first time I have ever seen what the two Steves looked like.  Not sure what I expected them to look like - maybe a bit older?

Basically supported my idea that agent #1 was likely trying to push me into a fast sale b/c her incentive wasn't worth keeping our home on the market for a few more weeks in order to get many thousands$ more.

Or she intends to sell it to a friend or long term investor client below market.  She gets the commission and future business from those people if she does that.

nereo

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Re: how to: Choose a real estate broker
« Reply #13 on: May 17, 2018, 08:01:13 AM »
could be anything.  I try assume the best in people while being conscious that everyone has baises and incentives that might not align with my own.

Thankfully (and crediting this forum) we are in a good position where we can leave it on the market indefinitely without being desperate for it to sell.  Obviously 2 months would be better than 8, but we can afford to leave it there longer if necessary and optimal.

rocketpj

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Re: how to: Choose a real estate broker
« Reply #14 on: May 24, 2018, 08:41:16 AM »
Real Estate agents operate in a business with perverse incentives, in my experience.  Their interests do not always align with your own, and they have more information than you (they sell houses all the time, you buy and sell them very rarely). 

They make money on the sale of a property.  The faster that happens the more time they have to focus on making another sale.  That is good, but the conflict comes when they pressure you to lower your price for a quick sale.  Yes, it will sell faster, but would you be willing to wait a little longer for another $25000 (to pick an example)?

The commission on an extra few thousand is trivial to a realtor, but the extra thousands are not at all trivial to you.  And yet, the realtor has a much better knowledge of the local market, so it can be hard to argue with them in the moment.

In a hot market it is worse, because any moron can get a license and make money as a realtor.  Look for the people who have been around awhile and survived a downturn or two.

nereo

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Re: how to: Choose a real estate broker
« Reply #15 on: May 24, 2018, 08:49:50 AM »
Real Estate agents operate in a business with perverse incentives, in my experience.  Their interests do not always align with your own, and they have more information than you (they sell houses all the time, you buy and sell them very rarely). 

They make money on the sale of a property.  The faster that happens the more time they have to focus on making another sale.  That is good, but the conflict comes when they pressure you to lower your price for a quick sale.  Yes, it will sell faster, but would you be willing to wait a little longer for another $25000 (to pick an example)?

The commission on an extra few thousand is trivial to a realtor, but the extra thousands are not at all trivial to you.  And yet, the realtor has a much better knowledge of the local market, so it can be hard to argue with them in the moment.

In a hot market it is worse, because any moron can get a license and make money as a realtor.  Look for the people who have been around awhile and survived a downturn or two.
Thanks - the broker we chose has been in business for 15 years and his partner for 8.  Both have the majority of their listings within a 10 block radius and both live walking distance away.

I am realizing how little commission-based incentives line up with my own goals, but at least I am not cognesent of that.  As you said, at 4% (split) selling for $25,000 less is just $500 less in their pockets and might require an extra few months and more work on their part, but to me it's a 'profit' of $24k for doing little more than being patient for several weeks.