Sarah and I recently sold our house and bought a new one … or to be accurate, the house is new to us and was built in the 1920′s, which is part of what drew us to it. I’ve received numerous questions from friends about the criteria we used to find our realtor. Since a home can be the biggest, most expensive piece of “gear” any of us may own, I thought I’d share our lessons we learned here.
We sold our home on the second go-around. The first time we listed it, we didn’t click well with the realtor, and the housing market was still reeling from its lows. On top of that, our area was flood-prone, and Hurricane Irene had recently flooded the area. Even though our house was bone dry, no one came looking in our town for quite a while, fearing that all the homes were waterlogged. When we finally decided to re-list it, we went into it knowing that we’d have a list of criteria as well as questions that needed to be answered before we would be comfortable with our chosen realtor.
First, we wanted to know how many active listings the realtor had, and how much experience he or she had in selling homes? This seems like it would be an obvious thing to ask, but we were extra concerned because we knew our area was a tough sell. That tied into our second question – how comfortable was the realtor in the area? Our first realtor was familiar with our town but normally dealt with much more polished communities, and that led to a disconnect in how our home was presented and marketed. We also wanted to see examples of how a realtor advertised and promoted a home.
- Did they do open houses?
- Would they be making color flyers and brochures?
- How many pictures did they plan to post online?
- Did they have concrete advice on how to stage our home so it would look appealing to potential buyers?
Finally, we wanted to know how aggressive they would be in pricing the house. We knew we wanted to sell, but we also knew we didn’t want to sell at any price. A realtor who saw price as a marketing technique would not be a good fit, since we were not interested in dropping the price repeatedly to sell as quickly as possible.
So once we were armed with questions, we set up appointments with three realtors in the area. We found one through word of mouth, where a friend of a friend said their family had used a particular realty firm. Another one sent us a flyer in the mail and actually called us after our first listing expired, so we set up an appointment with him as well. Finally, I used my running route to look for repeat names, figuring it would help us find an agency or realtor who seemed to do a fair amount of business in town. Sure enough, one agency kept popping up, so I called them too.
Upon sitting down to meet with realtors, we learned a very important point: Always have a signal defined in advance that you will use with your spouse, or whoever is with you while you interview realtors. We had one man come to our house who we both disliked immensely (pro tip: Do not tell two women that they should have a man talk to car mechanics for them, so no one takes advantage of them), but we didn’t know how to politely ask him to leave. So we sat through his entire sales pitch, then locked the door and swore to never speak of him again. Come up with some sort of “no way in hell” signal in advance, even if it’s faking appendicitis.
A good realtor will come armed to a second meeting with lots of details on your area. The biggest buzzword that gets tossed around is “comps”, as in, “what are comparable homes being listed and sold for in your area?” This is very, very important, because it helps shape what price to list your house. You may think your house is worth one number, but if houses with the same basic style and structure are selling for 10% less, you will either need to adjust your expectations or have some incredible upgrades to make the price difference worthwhile. A good realtor will be able to articulate both sides of that for you; they will also be able to point out areas that may need to be repaired, and they will help you fill out a seller’s disclosure of things that were previously repaired, don’t work properly, etc., so potential buyers understand the condition of the home.
Another area to consider, especially if you’re selling an older home, is to ask potential realtors to discuss how they handle negotiations over home inspection issues. We had major clashes with our buyers over the home inspection, and I know of at least two people who had deals fall apart or get very dicey during inspections. In New Jersey, most buyers and sellers retain the services of an attorney once a sales contract is signed, but the realtors still work behind the scenes to help broker the deal; after all, in the end it is in their best interests to get the sale closed, and that means trying to come up with solutions that are amenable to everyone.
You’ll want to ask how the realtor has handled home inspection issues in the past — Did they work with the attorney and the other realtor? Did they step aside and just let the attorneys fight it out? Were they aggressive in fighting for their clients? This is a bit more of a gray area, because you may want a realtor who is aggressive, or you may prefer that your attorney deal with issues that come up in these later negotiations. But it’s worth knowing how your realtor has reacted in the past, as it gives you some idea of the guidance you may receive if an issue does pop up later on.
One of the big concerns I’ve been asked about regards the realtor’s commissions. The concern is that if someone gets a commission to sell your house, they aren’t working for you but in their own best interests. On some level that’s probably true, but at the same time, the realtor is doing the legwork, marketing, and behind the scenes negotiating to sell your home, so if they sell it for a higher price then they will get a higher commission. But on the other hand, if they don’t do all the work, and the deal falls apart, they get nothing.
On more than one occasion I joked that our realtor was really working to earn his commission, as we had him running all over the place meeting with contractors, trying to organize inspections, and really, right down to the closing we were sweating bullets that the deal might still fail. Up until that deal closed, our realtor hadn’t been paid a dime for his efforts. He worked weekends and evenings with us, would send us emails late at night with updates, and more than once we received updates from him at 5am! Much of that was before we even sold the house. So we weren’t too concerned with him earning his commission, and really — it was only fair. If you broke down what our realtor earned over the time that he knew us, it was a very modest amount per month. It’s just that he received all at once (after our deal had closed) due to the structure of realtor commissions.
In the end, there are two basic things to remember about how to shop for a realtor (or any other salesperson who will represent you, really):
#1) Is this person knowledgeable in the field and your area in particular?
#2) Do you feel comfortable with them? In other words, doo they answer your questions effectively, come highly recommended, or present a professional attitude and work ethic that will justify the (likely very large) monetary transaction that’s involved?
If the answer isn’t yes to both, don’t hire the realtor.
Sarah and I were fairly picky when we chose our second realtor, and we’re grateful that we found a true professional who would be able to help us through what turned into a very messy, emotional, and complex transaction. If we had gone with the first person we stumbled upon, I don’t think any of it would have worked out as well as it did. We took our time, interviewed people, and really made sure we were happy with our realtor choice. Selling and buying a home is a big decision, and having the right business partner while doing it makes all the difference!