Real Estate Advice for Sellers
Advice on Finding the Right Real Estate Agent to Sell Your Home
Choosing a real estate agent is easy, but choosing the right real estate agent to sell your home is much more complicated. Selecting the right agent can mean the difference of tens or hundreds of thousands of dollars once your home finally sells. People often make uninformed, emotional decisions when hiring a realtor. They tend not to make these decisions when hiring an attorney or CPA, which is disconcerting because a home is often the largest investment a person has. Why be so cavalier about your net worth? Why let emotion cloud what is surely one of the most important business decisions that you will make in your life?
These tips should help prepare you against the pitfalls of hiring the wrong real estate agent. Start by choosing the right real estate agent and save yourself time and money.
Often, when people decide to sell their home, they turn to family and friends. Among them is usually a person who has a real estate license. This person will occasionally do a deal once every year or so in order to earn a quick commission.
Turning to family and friends is expected because people want someone they can trust to handle what is probably the biggest investment that they own. However, hiring anyone who isn’t a full-time professional real estate agent is one of the biggest mistakes that a seller can make.
Agents who dedicate themselves to the field full-time are acutely aware of market conditions, the competition, and how to properly market and sell a home. They stay up-to-date on the latest regional and national real estate trends and are more fully informed about the legal circumstances surrounding a home sale. They personally invest a lot of time in attending real estate seminars, continuing education, and training to stay on top of their profession. They don’t do solely what is required by law, but they go above and beyond because they like and have respect for their profession.
Full-time agents also have a large network of other experienced agents with whom they’ve worked for years. Sometimes the agents are in the same company or a competing company. These agents often become invaluable when selling a home, as they become “word of mouth” for the property. They are often representing competing properties or buyers who are actively searching for a new home.
Because these agents often work closely together, they frequently preview each other’s listing once they come on the market. They become part of that “silent sales force” that is helping to sell your home. Word spreads rapidly in the real estate community, and despite the fact that it sometimes seems that everyone is selling real estate, the number of full-time professionals is much smaller.
Before hiring a part-time Realtor, ask yourself these questions: Would you hire a friend to do the taxes of a corporation you managed, or would you turn to a professional CPA who is well-versed in corporate taxes? What about an attorney? The same standards apply to any professional, and realtors are no exception.
Naturally, all sellers are concerned with getting the highest price possible for their home.
Regardless of a booming or declining market, it’s important to be aware of what your home is worth relative to the competition. A professional real estate agent will carefully assess the “comps” or “comparables”, which are the selling prices of homes similar to your own. The market can and does change, and every home is different. However, if most homes in your neighborhood sell for $1 million, and yours is the same size on the same size lot and has no incredibly distinctive features, such as historic worth, incredible views, or the like, it would be unrealistic to think that your home is worth twice that much.
Overpricing a home when it is first listed is a common mistake that many home sellers make. Research shows that when a home is initially overpriced, it ultimately sells for less than what it would have had it been realistically priced from the get-go. That’s because homes get the most attention when they are new to the market and are first listed.
An overpriced home makes other homes in the neighborhood look more attractive because buyers are comparing them to yours. Agents routinely do not show these overpriced homes to their clients, and why would they? Would you want a realtor showing you a home listed for $4 million dollars when it is only worth $2 million? Realtors don’t want to advocate to their client a home that is too overpriced.
The downside to overpricing a home is that once the seller wakes up and reduces, the newness has worn off. Most buyers have already chosen another home and are no longer on the market. Newer buyers perceive the seller to be desperate and will offer even less than what the house is worth. The offers usually come in lower and lower. It becomes a game of cat and mouse, and waiting and waiting, until finally, a respectable price is agreed upon. But this price is most often much less than what would have been achieved if the house were properly priced initially.
Some agents will list any home for sale, at any price. They take on the listings in order to present to the world that they are actively involved in real estate, are incredibly successful, and have a very busy business. Sometimes, they take a listing simply to have their name advertised in the neighborhood. New agents often do this. However, taking on the listing is merely a stepping stone. The home doesn’t sell at the exorbitant price, and the agent usually moves on to selling more realistically priced homes. Or the agent leaves the profession altogether.
Be leery of any agent who will list your home at any price. Full-time realtors, just like people of any profession, are not interested in wasting their time. The best realtors concentrate on selling each home that they list. They don’t wish to spread themselves too thin or to concentrate on sales that will not come to fruition. For them, each transaction has a personal connection because usually a family is moving or making some other life transition.
An important question to ask is whether the listings that an agent have sold. Some agents list a lot of homes but actually sell very few of them. It may be a sign that the realtor doesn’t have a good pulse for what homes are worth. Or they may not be marketing their properties properly. Or they may have developed a difficult reputation and will not show their listings to other realtors.
As with a good attorney or tax advisor, you don’t want a real estate agent who will tell you simply what you want to hear.
Big Name realtors also have large staffs of assistants and sub-agents. The “Big Agent” him or herself often only gives attention to the highest priced listing that he or she has because that’s where he stands to make the most commission. Such teams are often “mills,” listing homes without any personal interest or regard for your particular home or situation. The sub-agents are often enthusiastic but not experienced. You need a combination of both.
Often, the “Big Name” will only go to the listing appointment in order to secure the listing. Once you agree, a sub-agent takes over the paperwork and then proceeds to handle your sale. The “Big Name” disappears, only to be seen on some paperwork.
So in essence, you are left with someone new to the field, often without much experience. Much of the time, the assistants are not licensed and legally, cannot handle many aspects of the transaction. They will likely handle all showings.
Remember, real estate is utlimately a business that has a great deal of emotion and personal interest in it. After all, we agents are dealing with your home and your net worth. Be confident that the agent you initially deal with is the one that you will be dealing with throughout the transaction.
A good tip is to ask the Big Name to personally show the property at all times, including at open houses. Have this request written into your paperwork. If the agent refuses, it’s a good sign that you’re dealing with a Big Name. Be thee forewarned. You likely won’t see that Big Name again, except as a self-promotional banner in newspaper advertisements.
Because Big Name agents often delegate work to inexperienced sub-agents and concentrate on volume rather than service, it’s important to ask relevant questions during the listing presentation. How many listings does the team have? How many have sold? How many of these transactions were difficult or ended up in a lawsuit? These facts aren’t publicized and are known to only a few.
Of course, the Big Agent will deny that any of this is the case. Because they are consummate salespeople, they will charm you and convince you that this couldn’t be further from the truth. But this agent will not be the one who will handle the sale of your home. By the end of your transaction, you will be wiser.
Every seller is and should be concerned with the bottom line. Exactly how much money should you be left with once your home is sold?
A realtor’s commission, as well as escrow costs, title, inspections and reports, and property transfer taxes, are contributing factors to this bottom line. Most are not negotiable. Most agents have a standard commission structure that is shared by other agents in the community. The same holds true for other professions.
Sometimes fees change, but services also change. A low-commission agent may offer no or limited marketing of your property. Realtors who are part of large firms or established boutique agencies often have access to a wide network of marketing and advertisting opportunities. This marketing is expensive, and the costs are often absorbed in the slightly higher commission that the agent charges. Because an agent is being paid a slightly higher commission to sell your home, he or she will typically invest more in marketing your home than a discount broker.
Ask yourself: Would you go to a dentist and have dental work done because he or she is cheaper than every other dentist in town? How valuable is the investment in your home to you? Should you go with the best or the cheapest?
Another factor in offering commission is the buyer’s agent’s share. The commission is usually split 50/50 between the selling agent and the buying agent. If the commission is low, a buyer’s agent will often opt to show properties that offer a standard commission structure instead. Because the commission is so low, there is little incentive in showing these properties. They are often perceived as less desirable and frequently become stale.
Agents who offer a very low commission are usually interested in representing both the buyer and the seller. This way, they end up with more money personally than if you paid a higher commission which was split between the buyer’s and seller’s agents. This situation can end up with your home selling for less than what it is worth.
Remember the old adage: You get what you pay for. If an agent can’t negotiate his or her own commission, how capable do you think he or she will be in negotiating the sale of your home?
Good realtors acquire knowledge of neighborhoods by representing buyers and sellers of those properties. They often possess detailed knowledge of numerous neighborhoods. The local Los Angeles real estate market is well-connected. Neighborhoods don’t live and survive in a bubble. They are all interconnected and intertwined to some degree.
There are realtors who specialize in one or more neighborhoods. They don’t necessarily live in those neighborhoods because in this day and age, a full-time realtor can get up to speed on a neighborhood fairly quickly by doing his or her homework. Often, this involves talking to trusted colleagues.
But just because a realtor specializes in a neighborhood doesn’t mean that they know more about it than any other realtor. Often, it’s a marketing gimmick. For instance, “Sunset Strip’s #1 Real Estate Team for 5 Years Straight”. Says who? How are these claims substantiated? Simply put, they are not. They are often misleading and if you press for details, you won’t be given a straight answer. Sure, they may be the #1 team, but then there will be a dozen other individual agents who surpass this “team”. Or they may have a rather unorthodox view of what the Sunset Strip really is. Some agents will go to any length to say they are "#1".
A good realtor isn’t afraid of telling you the truth, and those are the ones you should work with.
Professional, full-time realtors spend time educating themselves on their field as well as neighborhood specifics: homes sold, homes listed but unsold, neighborhood schools, community activities and organizations, local businesses, and so on.
Just because a realtor lives in a certain neigbhorhood or has an office in a certain area doesn’t mean they possess intimate knowledge of that area. Speak with several realtors, and choose the one you trust.
Real Estate Advice for Home Sellers
Investopedia recently quoted David for his perspective on hiring a real estate agent to sell your home. Link to the article here, or view as PDF.
DAVID KEAN & ASSOCIATES
Specializing in high-end residential properties throughout the Los Angeles area (Beverly Hills, Hollywood Hills/Sunset Strip/Doheny, Hancock Park, Bel Air, Wilshire Corridor, Brentwood, Pacific Palisades, Century City, Downtown Los Angeles)