Things You Should Know Before You Sign an Agreement
Smart consumers will interview several potential real estate agents before they settle on which one they want to work with, and good agents are selective about their clients, too. Just as you’re sizing up a good fit, the real estate agent will likely be interviewing you as well. Be wary of agents who don’t ask you questions and probe for your motivation.
The interview stage of the relationship is important for everyone involved. You can interview the agent over the phone, or get together at his office for the first meeting. But don’t expect a top-producing agent to meet you at your home before you’ve made a selection.
You’ll also want to confine the questions you’ll ask your realtor to certain areas, but be sure to hit on these 10 areas if they’re important. You don’t want to overlook critical issues.
How Long Have You Been in the Business?
The standard joke is that there’s nothing wrong with a new agent that a little experience can’t fix, but that’s not to say that freshly-licensed agents can’t be good ones. Much depends on the level of their training and whether they have access to competent mentors.
A newer agent might have more time to concentrate on you unless he’s holding down another job. You can ask about this as well.
That said, there’s no bar exam for real estate agents, and no school offers a degree in how to handle problems in a transaction. Agents learn on the job. The more sales an agent has completed, the more he knows.1 It’s even possible that he’s taken courses and attended seminars, and it’s OK to ask about this, too.
What’s Your Average List-Price-To-Sales-Price Ratio?
An agent’s average ratio depends on the market. A good buyer’s agent should be able to negotiate a sales price that’s lower than the list price, at least if you take sizzling sellers’ markets out of the equation. A competent listing agent should have a track record for negotiating sales prices that are very close to list prices.
Listing agents should have higher ratios that are closer to 100%, while buyer’s agents’ ratios should fall below 99%.2 Keep in mind that sometimes market value has no bearing on the asking price, and ratios are meaningless in this case. Don’t put too much emphasis on them.
You might also want to find out just where most of these homes were located. Is the agent familiar with the neighborhood you’re interested in or where your property is located? This area-knowledge can be an important consideration.
What’s Your Best Marketing Plan or Strategy for My Needs?
You’ll want to know how the agent plans to search for your new home if you’re a buyer, and how many homes she thinks you’re likely to see before you find the one you want. Will you be competing against other buyers? How does the agent handle multiple offers?
As a seller, you’ll want to know exactly how the agent will market your home. Is a direct mail campaign appropriate? Where and how often does she advertise? What kind of photography does she offer? Does she market online? What steps will she take to prepare your home for sale?
Ask if there’s anything about your home that might detract from its potential for sale. Perhaps, you could remedy and avert the problem.
Can You Provide References?
You might not need references if the agent has tons of reviews online, and some experienced agents might feel insulted if you ask for them, but a new agent most likely won’t.
Even brand new agents should have references from previous employers. Ask to see them and find out whether any of the individuals are related to the agent. Find out if you can call the references with any additional questions.
What Are the Top Three Things That Separate You From Your Competition?
A good agent won’t hesitate to answer this question and should be ready to fire off several reasons why he’s best suited for the job. Everyone has their standards, but most consumers say they’re looking for agents who say that they’re honest, trustworthy, assertive, and excellent negotiators.
He might tell you that he’s always available by phone or e-mail, or that he’s a good communicator. He might indicate that he’s friendly and able to maintain his sense of humor under trying circumstances—and there will be some.
It all comes down to the characteristics and qualifications that you value most.
Can I Review Documents Ahead of Time?
A good real estate agent will make important forms available to you for preview before you’re required to sign them. Ask for these documents upfront, if at all possible. And, make sure during the interview stage that an agent is agreeable to this.
As a buyer, ask for copies of the buyer’s broker agreement. Is it exclusive or non-exclusive?3 Ask for copies of agency disclosures, any purchase agreements, and buyer disclosures.
You’ll also want to see the agency disclosure if you’re the seller.4 Ask for a copy of the listing agreement as well, and of your seller disclosure.
How Will You Help Me Find Other Professionals?
Your agent should be able and more than willing to supply you with a written list of vendors such as mortgage brokers, home inspectors, and title companies.5 Let her explain who she works with and why she chooses these particular professionals.
Ask for an explanation if you see the term “affiliated” anywhere. This designation could mean that the agent and her broker are receiving compensation from that particular vendor. If so, you could be paying a premium for the service.
How Much Do You Charge?
Don’t ask if the fee is negotiable because all real estate fees are negotiable. Agents typically charge from 1% to 6% to represent one side of a transaction, either the seller or the buyer. A listing agent might charge 3.5% for herself and another 3.5% for the buyer’s agent for a total of 7%.6
The adage that you get what you pay for is also true in real estate. Top agents tend to charge more.
What Kind of Guarantee Do You Offer?
Will the agent let you cancel the listing or buying agreement if you sign only to realize later that you’re unhappy with the arrangement? Will the agent stand behind their service to you? What is their company’s policy about canceled agreements? Has anybody ever canceled an agreement with her before?
What Haven’t I Asked You That You Think I Should Know?
Pay close attention to how the real estate agent answers this question. There’s often something else you might need to know, something you forgot to mention. You want an agent who will take the time to answer this one and make sure you feel comfortable and secure with her knowledge and experience. She should know how to listen, how to counsel you, and how to ask the right questions to find out what she needs to know to serve you better.
The Bottom Line
Not all real estate agents will welcome an opportunity to be interviewed, and top agents probably won’t want to fill out a survey. Try to limit your questions to the most important issues for you and your needs. And, don’t interview agents from the same company.
BY ELIZABETH WEINTRAUB Updated May 22, 2020