Let’s get down to brass tacks about real estate. There are a lot of real estate agents who are not worth what you are paying them. It’s time you get your money’s worth.
• Your first task is to ask your agent a simple question: “Do you pay desk fees?” If the answer is yes, you need to know that the office you are about to hire spends its efforts on recruiting agents, not selling houses.
Let’s start with some little known facts about real estate offices, most of which run their business by making money off of real estate agents, not by selling homes.
Let that sink in for a moment: Most real estate offices can survive if they never sell a house.
What most offices do is recruit agents and then sell them all of the supplies necessary in order to “be successful” in the business. It starts with classes, then they will sell business cards, note pads, signs, etc. to the new agents at a substantial mark-up.
The next surprise comes when they are charged for using a computer, printer, copier and so on. It’s like being in the hospital and being charged for every tissue you use.
The topper are “desk fees,” they charge agents to “rent” the desk in the office. If an agent does get a listing, they are charged for ad space, office staff and ultimately have to split their commissions with the office.
So before your agent ever sells their first home, they are a profit center for the office. These offices prey on new agents and you will find the turnover of agents is huge. New agents will pay $10,000-$20,000 during their first year in business, whether they sell a home or not. Now, not all agents in these offices are new agents and normally not all are paying these fees. Offices that work this way often recruit high volume agents at very aggressive commission splits in order to entice new agents with how successful the offices are. Sort of like a loss leader at the supermarket. These offices typically have a large amount of agents and most agents last about two years before they realize it’s not profitable to stay at this type of office.
• Next, always ask an agent if they understand they work for you. You pay us a lot of money and in return, real estate agents need to understand who is ultimately paying them.
Now, let’s talk about one of the many myths agents tell you whether you are buying or selling a home. “You don’t pay me, the buyer/seller (whichever is the other party) pays me!” If you’re selling a property, the agent may say, “When the buyer buys your home, they are paying my commission.” If you’re buying, it’s common for the agent to say, “Don’t worry, it doesn’t cost you anything to hire me, the seller pays for it.” It’s costing both the buyer and the seller money, a lot of money, to hire real estate agents, so make sure they know that they should be looking out for both parties’ best interest.
• Third task, make sure your agent is looking at homes for you and not expecting you to find a place on your own. Make sure your agent understands what you want.
When you hire an agent to help you buy a home, there are certain things you should expect. First, you should expect them to find you a home. Duh! It’s amazing the number of people who hire real estate agents to help them find a home and their agent tells them to look online and if you find something, call the listing agent to see it and “then call me back and I’ll write up the offer.”
I get these calls almost daily. The caller will tell me their agent is “too busy” or that their agent “doesn’t show homes” and then they ask me to show them one of my listings. I always show the buyer my listings (because I want to sell your home whether the other agent is lazy or not) and usually, by the end of our meeting, I am their new agent.
Let me explain how the process should work. You hire an agent; they should first sit down with you to find out exactly what you want. Then the agent should start looking at homes online for you, set up appointments to “preview” a number of homes, see them for themselves and only after that, take you to view the properties.
If none of those homes are right for you, your agent should continue to look at homes. I mean they should get in their car and go preview the homes before they waste your time going to look and then make suggestions about which ones you view.
Don’t stop looking yourself. Your agent may miss a home that you may like. You’d be surprised how often buyers tell us that they want a single-story home with four bedrooms and three baths, a pool, no more than 10 years old, in move-in condition, and they end up buying a 19th Century, two-story fixer-upper with two bedrooms and one bath, and no pool or room to put one in.
• Last, check your agent’s previous MLS listings, references and marketing plan. The effort they put into that is the same effort you can expect from their other efforts.
Now, when listing a home, of course you want an experienced agent who knows your market, but here is an easy way to eliminate most listing agents in the marketplace. Ask to see copies of their MLS listings, references and marketing plan. If they don’t have those, they will just waste your time. When you look at an agent’s MLS listing, the first thing to look at is the number of photos they take of listings. Most MLS services allow somewhere between 20 to 40 photos. If the agent you’re interviewing has one or two photos in their listings, you might as well write the information on the nearest public bathroom wall. The only views you will get are from buyers and agents looking for a great deal. You can find the best real estate deals from lazy and stupid listing agents.
Next, check the property description. If they don’t adequately describe the properties they are selling, see my bathroom comment above. Then check with a number of their references and then review their marketing plan. If they don’t have one, there will be nothing to review. If they do have one, make sure it includes internet marketing, print advertising as well as physical marketing that might include open houses, caravans, networking your properties information to other Realtors.
Hiring a real estate agent really is that easy.
1. Make sure to use an office that doesn’t charge desk fees. You want them to pay their bills by selling homes, not renting desks.
2. Ask the agent who they work for – you or the buyer. Too many agents want you to do most of their work and then call them when the hard part is done.
3. Make sure your agent previews homes for you. Maybe ask how many homes they’ve previewed in the last week. A good agent previews homes every day.
4. Make sure your agent has a marketing plan, fully describes their listings and publishes a maximum number of photos.
If any one of these four items is an issue, find another agent. It really is that simple to eliminate 90% of real estate agents from wasting your time. Only make a decision after you have met with three agents that meet these four simple criteria.