Choosing an Agent
Let's face it, we all know someone in the real estate business. A lot of us even have a friend or family member in the business. A lot of us know the names of agents that we see on a sign or in advertising. Some of us even know names of agents because of their celebrity in another field. It's not uncommon for former athletes, media personalities or others who have achieved some level of fame to attempt to leverage their name recognition into a successful real estate career.
Moreover, there are a lot of us. The Great Louisville Association of Realtors represents more than 4,000 members. The National Association of Realtors had about 1.1 million members nationwide at the end of 2007. That was down from a high of 1.35 million in 2006. Between then and the end of 2013, nearly a quarter of those members left the business. Since then, membership has seen a steady annual increase to 1.4 million recently. The obvious conclusion one can draw from these numbers is that it's not for everyone, but at any given time, a lot of people think it is.
So, how do you choose an agent? As with the number of agents, there is also no shortage of so-called experts with opinions on this subject. We'll give you our opinion here and attempt to debunk some of the myths we've seen.
From A Seller's Perspective
Let's start with what sells homes. There are six components. You can control price, condition and exposure, but you can't control market conditions, location and value. Your agent needs to be expert at the things you can control. They should also have consummate knowledge of, and be able to adroitly navigate, what you can't control. Click here for more details on the six components of selling a home.
Your agent should present compelling and understandable evidence of the appropriate price for your home. Beware of those that would price your home too high. There are all kinds of reasons to not do this, not the least of which is that your home won't be seen by the right buyers and, in the end, won't sell. This tactic is known as 'buying the listing' and though your home may not sell, it can be profitable through the selling of other homes to the prospective buyers that call about it. Click here to review appropriate pricing of a home.
Your agent should also have the expertise to evaluate the condition of your home and provide a list of professional service providers where the need is indicated. They should also be able provide you with a robust list of things to do to prepare your home to sell. Click here to review things you can do to prepare your home to sell.
Your agent should have a solid and proven marketing plan that covers all of the bases and targets the most prospective, qualified buyers for your home. Putting a sign in the yard and placing it on the local multiple listing service (MLS) is a good start, but not near enough. Print ads are no longer relevant. Technology is the name of the game in today's real estate marketing and your agent should have the technical savvy to take advantage of all avenues and devices available. Click here to review things you might expect to see in a marketing plan.
The commission rate that your agent charges for their services should be competitive. We're all familiar with the phrase 'you get what you pay for'. This has never been more evident than in today's market. The services provided are generally commensurate with the rates charged.
Lastly, your agent should explain the course for termination of the listing agreement and any costs involved should you become dissatisfied with the services provided. Keep in mind that your agent can't fix what they don't know is broken. Therefore, communications is key to a successful relationship and outcome.
Selling a home has its emotional moments and affects one of your largest assets. Do your homework, then choose the best - choose Daugherty Group!
From A Buyer's Perspective
As we stated on our Buyers Information page, before you start clicking through pages of online listings or falling in love with your dream home, there are things you need to do to prepare to buy a home. The most important of these is choosing your agent. We're always amazed when we meet buyers searching for a home without an agent for a couple of reasons. First, buying a home is a multifaceted and complicated process. There are many of those facets about which most people know little or nothing. The second reason is that using an agent costs you, the buyer, nothing as the commission is paid by the seller. It seems to us completely illogical that one would not take advantage of the free services of a knowledgeable and experienced real estate professional in this endeavor and have someone to work on behalf of their best interest. What follows will explain why.
Your agent should first, have the expertise to help you begin to analyze your personal finances. The first step in this is checking your credit. They should show you how to get your credit scores, understand what they mean, how to correct any errors and explain how they will effect your ability to buy a home. Next, they should explain how to analyze your budget to determine how much you can afford to pay for a home. Then, if you don't already have a lender, they can provide you a list of reputable lenders that can solidify and/or adjust your findings. Your chosen lender can then assess your current ability to buy a home and get you pre-qualified and/or pre-approved. This will equip you with verified knowledge of what you can spend and the confidence that your home search will succeed. Click here to see more details on analyzing your financial situation and working with a lender.
Your agent should next focus on your home search. They should begin this process with thoroughly exploring your needs, wants and desires for your new home. This discussion should end with your agent having a complete understanding of such details as your preferences for style of home, the number of bedrooms and baths, the finishes and amentities, the lot size and the location to name but a few. Your agent should then find homes that meet or exceed your criteria, review them with you to determine which that you want to see and then get appointments to peruse them with you. Your agent should help you assess the viability of the home for you and your family during the tour and ensure your knowledge of its conditions and costs for purchase and ownership. Click here for more details on searching for a home.
Once you've found the home you want, your agent should share evidence of the home's value with you and then promptly craft an offer that is clear and accurate, inclusive of all of your demands and fair to both you and the seller. They should use their knowledge, skills and experience to promote the offer for acceptance to the sellers agent and skillfully negotiate any counter-offers between you and the seller. They should also be ready with viable options for you in the event of multiple offers on the home. Once you offer is accepted, your agent should direct you to your lending and insurance vendors to finalize your financing and protect your contracted interest in the home. Some have the mistaken impression that a better deal can be had by dealing with the sellers agent. Always remember that they have a fiduciary obligation to the seller. Click here for more details on the offer and purchase process.
With your offer accepted, your agent should assist you in promptly coordinating the processes needed to ensure the health and safety of your proposed investment. They should provide you with a list of vendors to perform any and all necessary inspections and tests of the home's integrity as well as other vendors available to remedy any issues. This is a critical part of the home buying process and the part whose elements are least understood by most buyers. Your agent should be there ensure the integrity and thoroughness of each process and your understanding of all issues and resolutions. Click here to learn more about performing due diligence.
Having resolved any due diligence issues and clearing all remaining contingencies from your purchase agreement, your agent should now prepare you for closing on your new home. They should review with you the costs involved, the documents to be promptly processed, the final settlement statement and the proceedings of the closing. They should be readily available to answer your questions and there to aid and reassure you at the closing table. Click here to learn more about closing the deal.
Buying a home is an involved and complicated process that requires the knowledge, skills and experience of a real estate professional. Do your homework, then choose the best - choose Daugherty Group!
From The Perspectives Of Both
Now that we've examined facets of choosing an agent from opposite sides of a home sale transaction, let's look at what both sides have in common when choosing an agent.
Agents are independent contractors and derive their income from commissions. However, you're hiring them for a specific job and, as such, you need to conduct a job interview. Following is a list of questions you should ask in that interview:
- What separates you from the competition? This is probably the only question that can end the interview on the spot. If they can't distinguish what they do that differs and/or improves upon what others do, you've learned all you need to know about their sales ability. However, if in answering this first question they satisfactorily answer all of the questions that follow, you've found your agent.
- How long have you been in the business? If they have a freshly minted license, you'll want to pass unless they're co-listing with an experienced agent to whom you should then direct your questions. If the answer is 30 years, you'll want to dig deeper as there have been immense changes in the business in that period of time. This is subjective.
- Is this your full-time job? Yes is the only acceptable answer.
- Summarize for me your knowledge of the business. Getting a license requires education on the principles of real estate and state law. Said education is designed to get you through the licensing test. There is little gained on the working knowledge of the business. Again, this is subjective, but will give you insight into the depth and currency of the individual.
- Tell me how you will communicate with me. The right answer is for them to ask you for your preferred method and frequency of communicating. The options are face-to-face, phone calls, texting and email. A good agent will use any and all means to keep your informed while keeping your preference in mind. An answer with a singular choice of these options will also provide insight.
- What is your personal availability? Few things are more frustrating than being unable to reach someone with whom you've engaged to provide a service, be it a doctor, a lawyer or a real estate agent. You're not hiring an agent's unlicensed assistant, so don't accept having to go through them frequently. They exists for the convenience of the agent. Make sure you get their personal mobile number. Do respect your agent's time and avoid late-night calls and known periods of privacy that we all sometimes require.
- Tell me about your negotiating strategy. There is no one strategy for negotiating. Not all situations are unique, but they probably involve unique individuals. Negotiating strategies should be created by analyzing the given set of circumstances.
- Tell me how you organize your business and meet deadlines. There a lot of ways to organize your business. Computer applications like 'Top Producer' are popular in the real estate business. Different methods work for different people, so this is another item that is subjective. Meeting deadlines is not. For further insight, ask when they last missed a deadline and why.
- Tell me about your technical knowledge and skills. Technical knowledge is absolutely essential in the sale and purchase of real estate nowadays. If your agent can't use a computer, navigate their way around the internet and use popular desktop applications, they're living in the dark ages and will be marketing your home in the same manner. Knowledge and use of all technical avenues and devices is critical. Having a geek on staff to perform the actual technical functions is acceptable as long as the agent knows what to do with the products they produce.
- What do you expect of me? Selling and buying real estate is a partnership. You work as a team to achieve your goals. Sellers and buyers both have unique responsibilities in the process. It's hard to make a plan work if the tasks are not properly assigned. This answer will also provide valuable insight.
- Can you provide the names of vendors I may need? A working agent has continuous need of quality service providers. This should be a no-brainer. Your agent should have a list of multiple vendors for a given task and allow you to make the choice if you don't already have a preference.
- Do you have incentives or guarantees to offer? Incentives are governed by codes of ethics and by law. Your agent should have a firm grasp of acceptable practices. Guarantees may take the form of pledges to perform certain tasks to your satisfaction with specific consequences.
- What could go wrong? Hopefully, nothing goes wrong. However, there are humans involved and humans can knowingly or unknowingly make mistakes. Your agent should review common industry maladies and their remedies with you so you're not surprised should one of them occur.
Just like any job interview, you will be sizing-up your potential agent's general demeanor and personality. Are they friendly? Are they approachable? Are they analytical? Are they assertive? Can I trust them? Lastly, can I work with them?
Do your homework, then choose the best - choose Daugherty Group.
We have to laugh sometimes when we read some of the suggestions given from various sources on how to choose an agent. There are abstract questions like, "How has your business changed in the last five years?" This question was intended to reveal an agent's currency on the technical aspects of the business. Why not just ask the real question in a clear and concise way? Another was, "What surprised you in your last two transactions?" This was vaguely intended to have the agent tell some sort of success story. Be direct, so there's no confusion. Then there was, "Where do you live?" Why is that relevant?
We also love the suggestions to go with the 'speclialist' and there are a variety of these high achievers. You have the neighborhood specialist. You have the property type specialist. Then, you have the price range specialist.
We did some research early in our career on one of the largest and most transient developments in the area. We found 56 properties for sale. These were listed by 41 different agents. Eight of these were new construction listed by one company/agent which is the norm for new construction, so let's disregard them. Of the remaining 48 properties, one agent had 3, and 6 others had 2 each, leaving 33 with different agents. The style, size and amenities of the properties in this development vary widely from ranches with 1,800 square feet to luxury homes over 10,000 square feet. The prices range from the low $300s to well over $1 million. The listings being offered when we did the research ranged in size from 1,800 square feet to 8,436 square feet. They ranged in price from $318,500 to $1,099,000 with the median price being $475,000.
Given that there were 40 agents marketing these 48 properties, who do you pick as the neighborhood specialist? How about that property type specialist? Maybe you can zero-in on the price range specialist. We can tell you that any of these agents would love to lay claim to any of these 'specialist' titles for this development and many have tried through the years. After all, listing side commissions available on these properties at the time of the research was pushing $1 million. As they say, nice work if you can get it.
Technology changes and the realities of the recent 'Great Recession' have changed the way agents do business. It's not 1984. Agents have access to all of the information needed to know a neighborhood and the types and prices of the homes available to sell in them and any special conditions tied to a sale. There are a broad range of tools to market homes in a given neighborhood and target appropriate buyers. Will all agents use the available information and tools? No, but the good ones will. Find those that do.
Finally, does a homeowner ready to sell their modest home priced at $120,000 deserve the same level of service and the same plan of action as the homeowner selling a luxurious estate at $3,000,000? You bet they do! So, resist asking what part of town an agent works, what price range they sell or their specialization. An agent worthy of your business will work any part of town, selling any price range and deliver the same level of service and the same plan of action. It's why at Daugherty Group our only specialty is your dreams. Do your homework, then choose the best - choose Daugherty Group!