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Smart consumers interview potential real estate agents before deciding on whom to hire. The agent you choose will be guiding you through a major sale or purchase and you want to be sure you are getting the best agent for your needs. A good real estate agent should be interviewing you, too. Be wary of agents who don't ask you questions and probe for your motivation. You wouldn't work with just any agent off the street, and good agents are just as selective about their clients, too. Caution: Don't interview agents from the same company! Start off by asking friends or neighbors for recommendations and don't stop at the first candidate. Ideally, you'll want to interview at least three professionals before you commit to working with one of them. Even if you like the first agent you interviewed, speak with a couple more so you can compare and make the wisest choice for your real estate needs.
Picking the right real estate agent is one of those critical issues that can cost or save you thousands of dollars. There are very specific questions you should be asking to ensure that you get the best representation for your needs.
Question 1: Are you a full-time professional REALTOR®? How long have you worked full time in real estate? What professional designations do you have? Is your business primarily listings or working with buyers?
Knowing whether or not your real estate agent practices real estate on a full-time basis can give you a piece of the puzzle in foreseeing scheduling conflicts and, overall, his or her commitment to your transaction. As with any profession, the number of years a person has been in the business does not necessarily reflect the level of service you can expect, but it is a good starting point for your discussion. The same issue can apply to professional designations. Make sure the agent is a REALTOR®. The term "REALTOR®" is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and abides by its strict Code of Ethics. Examples of other professional designations and certifications that REALTORS may earn are CRS, CRE, ABR and GRE. A Realtor with one or more designations has invested much time in making sure they are the most highly qualified professional.
Question 2: What type of business relationship would we have?
You should understand from the beginning of your relationship with your real estate agent what type of relationship exists. In Colorado all real estate brokers are required by law to let consumers know whether he or she is working as an agent for the buyer or seller or as a transaction broker. If you hire a real estate broker as an agent, you are the principal and the broker is your agent.
Specific fiduciary duties owed by a real estate agent include:
A transaction broker may assist you throughout the real estate transaction with communication, advice, negotiation, contracting and closing but is not an agent or advocate for you. A transaction broker can be hired by a seller, buyer or both. Also when a seller or buyer hires a real estate broker, either as an agent or transaction broker, that broker may communicate with the opposite party (buyer or seller) and provide certain assistance without violating the obligations of the brokerage relationship. You should expect an oral and written disclosure of that brokerage relationship.
Question 3: How will you keep in contact with me during the process, and how often?
It is reasonable for you to set your expectations in accordance with how your agent conducts business. You may be looking for an agent who will call, fax, or email you every day to tell you about prospective buyers who have seen your home. On the other hand, your agent may have access to systems that will notify you automatically each time a new visitor tours you home (which could happen several times a day or several times a week). Asking this extra question can help you to reconcile your needs with your agent's systems, which makes for a far more satisfying relationship. If you are a buyer, find out how often the agent is available to show you homes and how often they search for homes that meet your qualifications.
Question 4: Do you have a personal assistant, team, or staff to handle different parts of the sales transaction? What are their names and how will each of them help me in my transaction? How do I communicate with them?
It is not uncommon for successful real estate agents to have a “team” of people who work for or with them. When speaking to a real estate agent who has a team of people working for them, there are a few things to consider. Will you be primarily working with the agent you are speaking with today, or will you be turned over to someone else on their team once the agency contract is signed? How qualified are the individuals on the team?
You may want to be clear about who on the team will take part in your transaction, and what role each person will play. You may even want to meet the other team members before you decide to work with the team overall. If you needed help with a certain part of your home sale, who should you talk to and how would you communicate? Who will show up to your closing? These are important considerations in working with a team.
Question 5: Can you refer me to a reputable mortgage lender, banker, appraiser, inspector, home warranty company, or lawyer?
Let the real estate agent explain to you who they work with and why they chose these professionals. Your agent should be able to supply you with a written list of referring vendors such as mortgage brokers, home inspectors, home warranty companies and title companies. Ask for an explanation if you see the term "affiliated" because it could mean that the agent and the agent’s managing broker are receiving compensation from one or all of vendors, and you could be paying a premium for the service. If the agent is active, committed, and diligent with their practice, they should be able to give you a few names of each right on the spot. It is very important to ask the agent if they receive fees or “kickbacks” from any affiliate company they refer. It is illegal for an agent to accept monies from an affiliate without giving you a full disclosure in writing of all monies received from the affiliate. Let the real estate agent explain to you who they work with and why they choose these professionals.
Question 6: How will you develop pricing and marketing strategies for my home? Do you have A formal and written marketing plan?
A good real estate agent can tell you about how they will market your home. A great agent will show you a written marketing plan and should also be able to show you examples of different marketing materials they use when they have listed a home. Get that marketing strategy commitment in writing, so there is no confusion after your home has been listed. Ask the agent how they assess the best listing price for your home. They should provide you with a complete and thorough “Market Analysis” and be able to explain how they came to the price they are suggesting. Pricing a home correctly is the single most important factor in determining if a home sells quickly, or at all. Access to all current property information is essential, and sometimes a pre-appraisal will help. After your home is listed, you should be regularly updated with buyer activity. Your agent should be able to readily answer such questions as - How many calls did you get on my home this week? What marketing strategies did you use? How many home visits from other real estate professionals did you have (and what were their comments)? How many people visited your open house? Ask the agent where they obtained the information to create the market analysis. Ask whether they utilized For Sale by Owner homes, foreclosed homes, and bank-owned home sales in that list (they should!).
Question 7: Who determines where, when and how my home is marketed and promoted? Who pays for your advertising?
Ask your agent to present to you a clear marketing and advertising budget, and how those dollars will be spent. Ask if there are other forms of advertisement/marketing media that are also available but not mentioned in the budget/plan, and who pays for those. Request samples of the various media that your agent proposes (such as Internet Web sites, social media, print magazines, and local publications).
Question 8: How will you get paid? How are your fees structured?
Don't ask if the fee is negotiable. All real estate fees are negotiable. Typically, real estate agents charge a percentage, from 1% to 4% to represent one side of a transaction: a seller or a buyer. A listing agent may charge, for example, 3.5% for herself and another 3.5% for the buyer's agent, for a total of 7%. This is an issue that can also be related to agency. In many areas, the seller still customarily pays all agent commissions through the listing broker. Sometimes, agents will have other small fees, such as administrative or special service fees, that are charged to clients, regardless of whether they are buying or selling. Be aware of the big picture before you sign any agreements. Ask for an estimate of costs from any agent you contemplate employing.
Question 9: Will you please provide references?
Everybody has references. Even new agents have references from previous employers. Ask to see references. Ask if any of the individuals providing references are related to the agent. Ask if you can call the references with additional questions.
Question 10: If I am not satisfied with your performance, can I terminate our agreement?
Understand that, especially in the heavily regulated world of real estate, it can be increasingly difficult for an agent to offer a performance guarantee. Sometimes you may find an agent who is willing to guarantee that if you are dissatisfied in any way with their service they will terminate your listing or agency agreement. If the agent does not have a performance guarantee available in writing, it is not necessarily an indication that he or she is not committed to perform.