When it comes to selecting a Realtor, numerous misconceptions abound. Let's dig into these, explaining why they might not be the best benchmarks and offer you a more informed approach to make your choice.
Frequently Asked Questions When Selecting an Agent:
1. What is your sales price vs asking price ratio?
Using the distance between the sales price and the asking price as a yardstick for an agent's performance is flawed. The asking price is, at best, an estimate—it's often influenced by the seller's personal expectations, which can vary widely.
2. Which agent will suggest the highest price for my house?
For many sellers, their primary concern is, "How much can I get for my home?" Although it's pivotal to understand potential returns, this shouldn't be the lone factor in choosing an agent. It's essential to discern the reasoning behind the price they suggest. Consider the uniqueness of your location—are you in a high land value zone? Is your neighborhood undergoing a redevelopment with new construction? The agent should recognize these intricacies and understand the math behind the development and how that impacts the price of your home.
Moreover, remember that property markets are dynamic. Between your initial discussions with an agent and the actual listing, market conditions can shift. Thus, it's wise to reassess pricing closer to the listing date to reflect the most recent market data.
If you put too much importance on selecting an agent that gives you the highest price for your home, you may find someone who doesn’t excel on all other metrics and is giving you an inflated price to win the listing.
3. Should I select an agent because they have a buyer for my property?
When selling any item, greater visibility typically results in better outcomes. For instance, if you were to sell your car, would you only showcase it to your neighbors on your street or list it on a digital platform? A digital platform would expose you to more buyers and likely get you a higher, more accurate price.
The same logic applies to houses. An expansive buyer base often results in better offers. While some exceptions arose during the pandemic's heated markets, it's rare for the listing agent to represent the potential buyer for your property directly.
For residents of states like Texas, where dual agency is prohibited, agents claiming to have buyers for your property should be viewed with caution. The question arises: Whom will they truly represent—your interests or the buyer's?
It's disheartening when sellers, after hearing of a potential buyer from the listing agent, select this agent only to see the buyer vanish after there is a listing agreement in place. Sellers who select an agent based on this hope can find themselves listed publicly weeks later because the initially mentioned buyer didn’t materialize. This tactic tarnishes the professional image of Realtors.
4. Should you select an agent that states they specialize in your area?
Sometimes yes, sometimes no.
Some agents might only close 5-7 deals a year, all within a specific area, and claim specialization. In contrast, another agent might handle 50 transactions city-wide, including 5-7 in your neighborhood. The latter, with a broader experience, is often better equipped to handle unforeseen challenges.
Instead of asking about area specialization, a better question might be about the percentage of the overall transactions they've handled in your locality. This offers a clearer picture of their market familiarity. An agent that has done 5-10% of the volume in your area in the past few years is very familiar with the pricing and likely has other colleagues that contact them for upcoming inventory in the area. This helps you as the seller to work with a local area expert.
5. Should you pick an agent who is newly licensed or a friend who “does real estate on the side”?
Choosing professionals based on personal relationships isn't always wise. Just because my husband excels in data science doesn't qualify him as my go-to tax consultant. Likewise, I don’t want to have a friend do my taxes who “does taxes on the side.” I respect the value my CPA brings to me, and I respect the value a professional Realtor brings to a transaction.
If the consumer perceives Realtors as adding little value to the home selling process, all they do is put a sign in the yard and enter the property in MLS; they may undervalue the breadth of a seasoned agent's services. This makes it more likely that a consumer will select an agent for their personal proximity rather than research for a deeper skill set.
It's imperative to research agents, ask about their process, determine that this is their full-time employment, examine their past clientele, and read reviews. Making an informed decision when selecting a Realtor is akin to choosing any other professional. The right Realtor can offer invaluable insights, reinforcing the importance of their role in property sales.
Let’s examine some great criteria when finding an ideal Realtor for your sale:
1. Sales Record:
The volume of homes an agent has sold can indicate their proficiency. Experience finely tunes an agent's skill set, and an agent who sells a great deal likely has a well-honed process.
2. Operational Years:
Seasoned agents, having navigated through various market conditions, are equipped with invaluable insights into market behaviors, which can only come with time and experience. While length of time in the business doesn’t always mean proficiency, it can indicate experience with many different market situations, which can be valuable to you as a seller. An agent who has a good feel for a market can better give you meaningful risk-reward perspectives while negotiating for the sale of your property.
3. Their Process:
Always ensure there's a comprehensive plan. Inquiring about their process provides insights into their diligence. It's a misconception that Realtors merely erect signs and list properties on MLS. Their preparatory work, before the actual listing, is extensive. Grasping the depth of this pre-listing process can reassure you of their capability to handle your property's listing adeptly.
4. Local Transactions:
Although I earlier cautioned against relying on area specialization, understanding the proportion of their deals in your locality can be insightful. An agent with a high transaction rate in your area probably knows the region intimately. They will also likely have an expansive network, enhancing your property's visibility. Our team is known for working in Hyde Park and Barton Hills in Austin as I have lived in both places for long stretches of time. This means that colleagues contact us to inquire about off-market inventory that we may have coming up. In addition, our colleagues come to us with questions which puts us in a better position to have more information about these areas.
Feedback from past clients can be enlightening. While numerous positive reviews are encouraging, diving deeper can reveal more about an agent's expertise and service quality. Read the reviews to see if the agents have a process that they follow and the past clients feel as though the agent was managing the process for them. Did past clients speak to any specific skills the agent had that is important to you and your experience?
Consult friends and family. Trusted recommendations often lead to dependable professionals. Use the suggested questions to gauge the suitability of the recommended agents.
7. Team vs. Solo:
Both team and individual agents have their merits. Well-structured teams can offer diverse expertise, ensuring all aspects of your listing are meticulously handled. Determine who will handle critical activities like contract negotiations. Senior agents, aided by support staff, can concentrate on networking and promoting your listing, while administrative tasks are managed by their team.
There are many things that need to be clarified about how a consumer should select a Realtor.
Let's take them one at a time and explain why they are suboptimal criteria for selection, and then give you some other better criteria.
What is your sales price vs asking price ratio?
Selecting an agent by how far above or below the asking price they sell homes isn’t meaningful for several reasons. The asking price is arbitrary; it is only as reasonable as the seller’s expectations.
Picking the agent that gives you the highest price?
Many sellers ask this as their first question, “what do you think my house is worth?” While this is, of course, one of the most important parts of selling the house, - everyone wants to know what they will walk away with. This shouldn’t be the criteria for selecting an agent. When you do get a price from an agent, look for the logic they use to explain the price they come up with. Do you live in an area with high land values, and does the agent understand that? Do you live in a neighborhood that is undergoing redevelopment, and builders are building new construction? If so, does the agent understand that process and the math behind it?
Not only is it important to avoid choosing an agent just because they give you the highest price, but it is also important to remember that it may take several weeks for you to decide on an agent and get your home ready for market. During that time, the market can change dramatically. Markets move daily, and the pricing is never static. From the time you first meet your agent until the day you list, the market will shift several times, and you should review pricing the week before you list your home to be sure you are working with the most current data.
Picking an agent that says they have a buyer for your property?
When it comes time to sell your car, do you think you are best served by exposing it to just the people on your block, or would you be better served by putting it on a digital marketplace where other people can see it? Exposing it to the greatest number of people whenever you have anything to sell will help you find the true market price and give you the most market information. Likewise, when you sell your home, exposing it to the greatest number of buyers will give you the best results. There were some exceptions to this during the overheated markets of the pandemic, and even then, the listing agent was not the agent that had the buyer for your home, most likely.
In a state like Texas, where dual agency is not allowed, anyone who tells you that they have a buyer for your house raises other questions. Are they going to represent you, or will they represent the buyer's interest?
Too often, a consumer is excited because the listing agent told them they had a buyer for homes just like this one, only to see the property go on the market two weeks later because the buyer vanished. This is one of the tactics that diminishes the stature of agents in the public eye.
Picking an agent that specializes in the area?
Some agents do 5-7 transactions a year, and they say they specialize in an area because all of their transactions are in that area. While another agent might do 50 transactions a year all over town and then also do 5-7 in your neighborhood. This second agent has more experience and more data points to learn from and prepare them for surprises.
There is a better version of this question to ask… what percentage of the business that transacts in my area do you participate in? This is a far better indicator of the depth of market knowledge than how much of the agent's business is in your area.
Picking someone you know who is recently licensed?
Just as proximity in your social circle isn’t a great way to pick someone to do your taxes, proximity to a realtor isn’t necessarily a great way to select a realtor to sell your home. And yes, my husband is a data scientist. That doesn’t mean I will assume he can also do my taxes.
If the public has the idea that all an Agent does is put a listing on the MLS, then they feel that they can select anybody, even a newly licensed acquaintance, to list their property, but the Agent should be doing so much more than that.
Do your research, ask questions about process experience, speak to past clients, or read reviews and, dear to diligence, find a realtor, like you would, for any other profession. A great realtor can change your perspective on the value realtors bring to the table when selling your home. (Read our article about why the process is so important.)
Real estate is a profession just like accounting, financial planning, and law. Hire someone who treats it as such and practices it at a high level.
Okay, we discussed all of these less-than-ideal reasons to select a realtor; now, what are some great ways to make this choice?
What should you use to select an agent?
How many homes have they sold? More data points make an agent better prepared. As in all things in life, with experience, you sharpen your skills. While longevity in a market isn’t always an indicator of experience, the number of experiences combined with longevity means an agent has had an opportunity to build a process that can help anticipate many different situations.
Agents who have been practitioners for a long time also know how to do business in different types of markets. The study of market behavior can only be gained with time and experience.
We are always learning in real estate, and the longer you practice, the more prepared you are to advise your clients.
What does their process look like? You want to know there is a plan – there should always be a plan. When interviewing vendors of any kind, a great first question to ask is, what is your process? A common misconception with the public is that all realtors do is put a sign in the front yard and put the property on MLS. So much more work happens before the property goes to the market. Ask about the steps the agent goes through before the property hits the MLS to get a good indication of how detailed their process is. This should comfort you that they know how to manage the very important project of listing your property.
Picking an agent that specializes in the area? I know one should not use this as a criterion, but there is a version of this question that is useful.
An agent who transacts a large percentage of the business in your area is likely to know the area very well.
This second agent also likely has more relationships throughout the city, which helps get your listing viability. High-producing agents tend to be super connectors, and their listings get socialized through less official channels at a higher rate than lower-producing agents.
Reviews are a great source of information. Of course, you want to know that an agent has plenty of 5-star reviews, but you can also read between the lines in the reviews and see if this agent offers the type of service you are looking for. Are you an engineer and want to be sure someone has the financial and mathematical savvy that is important to you? Read agents' reviews and look for the nuance of their process and character in their past clients' words.
Ask your friends and family for recommendations.
When selecting a CPA for an attorney or a house painter, referrals are always a great source of information. Great agents get 80% of their business from repeat referrals. Your friends and family have someone they have used and had great experiences with. Ask around and then use the interview questions suggested here to see who feels like a good fit for you and your decision-making style.
Team vs Solo
There are many ways to run a team and many ways to do business as a solo agent. If a team is run well, the consumer can benefit from a broad range of highly specialized people working on the very important project of listing your home for sale. Ask who will be negotiating a contract and who will be following up with the buyers' agents for feedback. You want a senior agent to focus their energies on these activities.
Suppose a senior agent has a lot of support staff. In that case, this phrase them up to focus solely on socializing your listing with their deep relationships across the city while someone else is working on the paperwork details. Lead agents are only sometimes excellent with more information. They have other superpowers that help sell your property. Still, they likely have a fantastic coordinator who sits behind the computer and agonizes over the right photo to select for the brochure and the proper caption for the photos on MLS!
Whether you sell now or never, we are always happy to be a resource for you!