The Four Secrets to Interviewing Real Estate Agents When Selling Your Home

Real estate agents will tell you, and rightly so, that selling a home is the biggest dollar transaction in which most people will ever engage. And yet few home sellers take the time to find the best real estate agent to sell their home. Studies show that a majority of home sellers list their home with the first agent with which they speak, which is usually a referral. Those are the two biggest mistakes you can make when choosing a listing agent: limit yourself to only referrals and then do not even bother to interview them to see if they are a good fit for you. Never forget, you are entering into a business partnership in which you will spend thousands or tens of thousands of dollars. Your choice of agent is critical.

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I think the reason most sellers do not interview agents is because they do not know how to do it. So, here are four secrets to interviewing agents (that you will never hear from them).

1. Do not conduct the interview at your home. Find a neutral location near your home (I suggest Starbucks). Once a real estate agent gets inside your home it can be difficult to “reject” them. They have no reason to leave and you may have difficulty asking them to leave. At a neutral location, nobody has to ask anybody to leave.

2. Do not have the agent bring a CMA to the interview. Most real estate agents like to bring a CMA (competitive market analysis) to their listing appointment. These help the seller determine a suitable listing price for the home. But having an agent bring one to the interview is a bad idea for several reasons. First of all, it will make you feel a sense of obligation toward them since they have already done some work for you. Second, the agent can bring a CMA with an inflated home price, which could distort your selection decision. And finally, since you have not chosen the agent yet, there is no need for them to work for free.

3. Have a list of ready made questions. You should have a few standard questions to ask every agent you interview. The answers from any one agent are useful, but what is really useful is asking the same questions to multiple agents. Comparing their answers is where the real education takes place. You simply cannot make an informed real estate agent choice by interviewing just one agent.

4. Understand your objective. The objective of interviewing agents is simple: you want to find one whose answers make you feel comfortable. If you interview at least three agents, I assure you that you will one whose answers make you feel more comfortable than the others. Their answers will make sense with you. And their demeanor will resonate with you. And you will have no doubt about which one to choose.

When you are done, thank the agent for their time and give them a commitment when you will let them know of your decision. And you should get back to each agent, whether you chose them or not. And if you really want to be helpful to the agents you did not choose, make it worth their time by telling them, in a kind way, why you did not choose them, so they can improve in that area.  

To learn how ReaListing is changing the way real estate is bought and sold, click here.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

If It Is So Important, How Come I Know So Little About You?

Real estate agents will tell you, and rightly so, that for most people, selling their home is the biggest dollar transaction in which they will ever engage. And it would follow that choosing a partner in that transaction (i.e., the real estate agent) is the most important decision they can make in preparation for that transaction. If all that is true, why is it we know so little about real estate agents?

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Real estate agents will be quick to point out that there are all kinds of information available about them on their web sites, and that is true. But all that information is subjective and controlled. If there is something the agent does not want you to know about them, you can be sure they will do their best to hide it from you. For example, suppose the agent does a particularly poor job with one of their clients. Do you think that client’s testimonial will be prominently posted on their web site? Doubtful.

It is true that the real estate intermediaries like Zillow and Redfin post all customer feedback they receive for agents (as far as we know), resulting in a more comprehensive tally in their “star” ratings. But these too are highly subjective ratings. Real estate agents who are likable and give good service are more apt to get the five star ratings. There is certainly nothing wrong with giving good service and being likeable. (If I were a real estate agent, they would be the two core tenets of my business.) But if you had a choice between a likable agent that got you one price for your home, and an old curmudgeon of an agent that got you an additional $10,000 for your home, who would choose? I know which one I would choose. After all, I am not marrying them, I am just paying them to sell my home.

The problem is we know almost nothing objective about real estate agents, especially about their performance. Which makes it particularly difficult to assess their capabilities in a quantifiable and objective way. Without such information, agents who list the most homes become the “Top” agents, not the ones who sell fewer homes but get top dollar—we have no way of knowing that.

Here is the information I would like to see made available to consumers to help them in choosing an agent. This information should come directly off the local MLS, by DRE license number, to ensure its accuracy. The information should be for the preceding twelve months:

  1. Number of homes sold
  2. Average sale price
  3. Average percentage of sale price to list price
  4. Average number of days on the market

These four data sets may be helpful if you had it for just one agent, but what would make it really powerful is if you had it for every agent. Imagine having this information for every agent in just a single office. You might find that the “Top” agent averages 94% of sale price to list price, but some other agent in the office, who sells fewer homes, gets their clients 98% of the listing price. Now who should be the Top agent? The ironic thing is, this type of information would actually benefit the agents that help their clients the most. But more importantly, it would also serve as a check and balance against the inherent conflict of interest in the industry. How hard would a real estate agent work to get you top dollar when they know their quantifiable results are going to be available for everyone to see, which will directly impact their future business?

As things stand now, with the all-or-nothing commission structure in place, agents are more concerned with getting the home sold than with getting top dollar. But if the above mentioned “report card” were available for every agent, the conflict of interest would be reduced, and agents would be forced to strike a balance between getting the home sold and getting top dollar. And as sellers, that is all we can ask for: get the interest of the agent more in line with the interest of the seller.

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

An Easy Way to Identify Serious Home Buyers

Buyers are liars! Get any two real estate agents alone, and you are bound to hear that sentiment. Where does it come from? Lookie loos. Buyers who waste an agent’s time by looking, but never actually buying, a home.

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As long as there have been lookie loos, there have been real estate agents trying to do something about these time wasters. The objective is to separate the serious buyers from the less-than-committed ones. The idea being that if an agent could somehow identify them ahead of time, they could avoid them and let some other agent deal with them.

One of the tried-and-true techniques used by agents to help spot a serious buyer is if they are willing to get pre-qualified, or better yet, pre-approved for a loan, prior to actually looking for a home. The thinking here is that if a buyer is willing to go through the financial gymnastics of getting pre-approved prior to working with an agent, they must be serious. And it is not a bad idea, but it has one flaw: it may be good at eliminating non-serious buyers, but it may also eliminate serious buyers.

When my wife and I started looking for a home recently, we were definitely NOT serious buyers.  We were just looking…until she found our dream home for sale on the Internet, months before we were ready to buy. So, several months ahead of schedule, and against my better judgment, we decided to make an offer. No pre-qualification; No pre-approval.

We got pre-qualified in about 4 hours. We jumped through hoops to arrange the necessary paperwork and got pre-approved not long after. We were serious buyers, we just did not know it, and neither did the agent we had already agreed to work with. Had she asked us to get pre-approved at that instant we would not have done it—we were not ready yet, or so we thought. And yes, we ended up buying the home.

The fundamental problem of the lookie loo is the structure of the buyer-agent relationship. The way the real estate industry works, the buyer’s agent does not make a nickel unless and until the buyer actually buys something, regardless of how much time and money they spend on the buyer. Is that any way to run a service business?

I think there is a better way to spot a serious buyer, and it is also a much more intelligent (and fair) way to run a real estate business. Ask for a refundable cash deposit up front. The buyer writes a check to the agent, say for $1000, before the agent goes to work. If the buyer ultimately buys a home through the agent, they get their deposit back at closing, so it cost them nothing. But, if they fail to buy, the agent keeps the $1000, to compensate them for their time and effort. Only a buyer truly committed to buying a home (and committed to the agent) would hand over money up front. And if the agent really wants to make it enticing, they could offer to refund $1500 at closing. That way serious buyers stand to actually make money by going through with it.

It will be a tough sell. After all, buyers are accustomed to getting their real estate services for free, which is what they are doing when they don’t buy anything. But it is not fair to expect agents to work for free. Perhaps the real estate industry that established these customary practices in the first place, can come up with a newer “customary” practice that is more fair for the agents they represent.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.