Coach Unlimited

In the first part of this post I discussed the necessity of using a real estate agent when buying or selling a home and I discussed some of the factors you might want to look at, but that should not be decisive. I ended by saying that when you are hiring someone to assist you with a very major financial decision and paying them thousands of dollars, you should base your hiring on a thorough job interview. In part II I took a look at what to look for in an agent if you are a seller. In part III I want to look at what you want in an agent if you are a buyer.  Here are things to discuss with a prospective agent in your job interview.

• A Buyer’s Agent You want an agent who works for you and that isn’t always the case with every agent you will talk to. Up until quite recently all of the agents in a residential real estate transaction were agents of the seller and required by law to put the seller’s interests first.  They were not allowed to lie to and cheat the buyer, but other than that their job was always to get the best possible deal for their client, the seller.  That has changed and in pretty much every market today you can find agents who will work to represent the buyer. So the first question you will want to ask an agent is, “Will you work for me as a buyer’s agent?” Assuming they say yes, you should expect to be asked to sign an employment agreement with them stating how long they will work for you, what they will do for you and how they will get paid.
  • Percentage, hourly rate or flat fee Most buyer’s agents get paid a percentage of the sale price just like listing agents do and it is usually 2.5% to 3% of the price. Almost always this fee is collected from the sellers at the closing.  It is important for you to know that even though the seller is writing the check, you paid the commission because it was built into the price of the house. If you don’t like the idea that your agents fee goes up when you pay more for a property you may want to talk with an agent about a flat fee or an hourly rate instead of a percent of the sale price.
  • Guaranteed payment Another issue regarding commission is what would happen if you bought a property where the seller wasn’t offering a commission such as a for-sale-by-owner property or a foreclosure.  Would you be required to dip into your own wallet to pay your agent?  Would your agent be willing to work for you if there was no provision for them to be paid? If you want the highest level of service from an agent you should consider an agreement in which you guarantee that they will be paid in the event that there is no other agent involved.
  • Paying regardless of a sale In the great majority of real estate transactions you will only pay your agent if there is a sale. In reality this means that you are paying for all the services you received and you are also making a contribution towards the agents time and expenses for the transactions that did not result in a sale. After all they can’t really work for nothing.  If you are sure that you will be purchasing, you may find it to your advantage to negotiate a much lower fee that you guarantee to pay whether or not there is a sale. In some states you might even be able to get a rebate or credit out of the proceeds of the sale for the unused portion of the commission the other agent was offering to your agent.
• Market Analysis You will want to use an agent who agrees to give you a written price analysis for any property that you seriously contemplate buying.  The asking price is sometimes related to what the sellers need to get rather than actual worth.  You don’t want to reach an agreement to purchase and then have the bank’s appraiser tell you the property is worth what you agreed to pay.
• Property search How hard will the agent you hire work to find a property. Any agent will look on the Multiple Listing Service.  Will your agent also search the Internet in places like Craig’s List or the for-sale-by-owner sites? Will they look in the for-sale-by-owner magazines? Will they advertise on your behalf in print or on the Internet for property wanted? If you are interested in a particular area will they send out a mailing, or telephone or knock on doors in the area to see if anyone who’s home is not on the market would like to sell? By the way, they are only likely to be willing to perform these services if you have guaranteed to pay them a fee.
• Negotiation You will want an agent who is willing to negotiate on your behalf. Sadly in many real estate transactions the agents do little negotiating.  There are several components to a good negotiation and you will want to be sure your agent is willing to do them.
  • Develop a strategy When you find the right property you will want to work with your agent to develop a negotiating strategy. This should be based on the actual value of the property, your needs such as timing, finances etc, the perceived issues or needs of the seller, work that may need to be done on the property and anything else that figures into your decision.  You may not ask for everything you want in the opening offer however if you have to go up in price you add in the other things that are important to you or you may choose to make a full price offer and ask for everything including owner financing and all the furniture.  It is important to have an agent who understands all of the things that are important to you including price, and will help you to get everything with a good strategy.
  • Presenting the offer You will want an agent who is willing to try to present the offer in person to the sellers. I need to tell you this isn’t usually done. In most places your agent would simply call the other agent and tell them about your offer over the phone and then fax them a copy. The listing agent would then present the offer to the seller. This is not in your best interest. What if that other agent has an offer of his own working or someone in their firm has an offer. What if they just forget some of the stuff your agent told them?  By insisting on presenting your offer in person your agent assures that it will be properly presented and nothing left out. It also gives your agent a chance to observe the reactions of the sellers which can be very valuable when it coms to crafting a counter offer. I would go so far as to say that if an agent says they won’t present in person you haven’t found the right agent yet.  By the way, when I say it isn’t done this way in most places, the rules of most MLS’s and the Code of Ethics of the National Association of Realtors® give the buyer’s agent the right to be there when the offer is presented to the sellers.

  Choosing the right agent to represent you when purchasing a home is an important decision. Don’t just pick the first agent you talk to or your friend from the bowling league. Be sure to spen some time interviewing the person you are hiring. Remeber you are the one who is paying them and choosing the wrong agent could cost you thousands of dollars.