Real Estate: How to choose a Realtor
January 26, 2009
The term Realtor is a trademark of the National Association of REALTORS® (NAR), and anyone who uses that term as part of their professional identity must be a member, not only of NAR but also of their state and local associations. Anyone who is not a member, but is legitimately working in the real estate profession, is still licensed by their state real estate commission and can be identified as an agent, a real estate salesperson, a real estate broker and so on. When Realtor is used however, it means several things. NAR members have training available only to members. They have the benefit of local meetings and state and national conferences where they can network with other Realtors. Many deals are actually made for buyers and sellers at those events.
Let’s Get Started
There is a price to pay: Members subscribe to a Code of Ethics, which commits them to conduct their business with a sense of fair play. The public has some recourse when they feel they have been lied to, mistreated, or cheated. They can file an ethics complaint with the local association requesting the Realtor® be disciplined, or request arbitration if they feel they have actually been cheated out of money. The Grievance Committee and the Professional Standards Committee of the organization handle these complaints. While a member is not bound to submit to the grievance process when a complaint is initiated by buyers or sellers, most do because it is a much simpler and less costly method of justice than going to court.
Members have to pay dues, and the MLS charges their fees to maintain a membership in good standing.
Although some lawsuits have forced various Multiple Listing Services to allow access by non-Realtors®, many non-Realtors still do not have the benefit of MLS access. The bottom line is that members are in a position to provide much better service to you than non-members. Those who do not have the Realtor® designation are operating independently, and they are often not doing enough business to justify the costs involved in belonging. A non-Realtor may have a high level of ethics, but they are not bound by the same code of ethics that governs a Realtor’s professional actions.
So for starters, get a Realtor. You’ll usually find the designation on their business cards.
If you were taking in a roommate or boarder, you would screen that person to see if you were compatible. If you were renting out property, you would take a rental application and check out the renter’s references and credit history. If you were going into business with someone or hiring someone, you would be smart to conduct a background check. It never hurts to know who you are working with. The same is true with a real estate agent. In one survey of the National Association of REALTORS, one-third of the respondents said they would not use the same agent for a purchase in the future. That is a high degree of dissatisfaction.
As consumers, we have a terrible history of picking professionals”doctors, lawyers and, yes, real estate agents. We get a referral from a friend, attend the appointment, and that’s usually as far as we go. If we end up dissatisfied later, it’s our own fault for not taking responsibility for our own selection. We need to prescreen, ask questions, get a feel for how compatible we might be and determine how well that professional can meet our needs.
It is sometimes difficult to avoid working with a friend in the business and to select someone else, but it might be the most valuable decision you could make. We have known people who listed their home with a friend who specialized in commercial sales and never sold a house. Maybe they were feeling sorry for them. You need to ask some questions before starting with any real estate agent. Don’t sit down and say,
“We’re looking for a house in the $200,000 range.” Try something like, “Before we start, I’d like to learn a few things about you.” Interview your potential agent, ask questions, and determine the following important issues to your satisfaction.
Get a Full-Time Agent
Most full-time agents work 50-60 hours a week or more. They are committed to their work and to their clients.
A part-time agent is there to make a deal when it comes along but either doesn’t need the income a fulltime career will produce, such as a retiree, or isn’t making it yet (and may hold two or more jobs). Within reasonable limits, a Realtor should fit their schedule to yours, not the other way around.
Questions to ask:
– What other type of work do you do?
– Do you work full time in real estate?
– How flexible is your schedule?
– How available are you to show properties on weekdays, weekends, mornings, evenings?
Get an Agent Who Is Busy
A successful Realtor® is busy and will not be able to spend all day, every day with you, but spending a couple of half-days a week to look at property is generally sufficient.
Again, it depends on your circumstances. If you are only in town for two days, you might need their full attention while you are there, and you should ask for it.
Ask your potential agent how many sales they closed last year and the year before. A “side” is one side of the sale. When one Realtor had the listing and another one brought in the buyer, each produced one “side.” An agent who has closed only four to eight sides in a year is not doing enough business to merit having yours. Either they need money, just got started, or can’t get enough business to survive and they are on their way into another profession. An agent who has done 15 or 20 sides is not making a great deal of money but is surviving and probably growing, and believe it or not, they’re far above the national average.
An agent who is doing 40-50 or more sides a year is very busy”usually for a reason.
They have attracted business, hopefully because they have served people well, although some Realtors generate lots of business simply through smart advertising. It is, therefore, important to get a sense of how many transactions were results of referrals from past clients.
Questions to ask:
– How many sales did you close last year?
– Is that usual for you?
– How many sales did you close the year before?
Make Sure the Broker Works Mostly With Buyers
If you are considering a real estate purchase, make it a top priority to select a Realtor who has a history of working primarily with buyers. Now that you know how busy the agent is, ask how many of those sides were working with buyers and how many were listings. We suggest this ratio should be weighted two to one in favor of buyer representation.
We’ll talk more about credentials below, but if a Realtor has the ABR designation (Accredited Buyer Representative), they have already taken training specific to buyer representation and have demonstrated a commitment to working with buyers.
Questions to ask:
– What percent of your business comes from representing buyers?
– How much of your business comes from referrals?
– Can I speak with five of your most recent buyers?
Check Out the Broker’s Specialty
If you are looking for a home, select an agent who specializes in residential sales. If you want to buy an apartment building or a business, select someone who specializes in commercial sales. There are numerous specialties in real estate, and your agent’s specialty should be consistent with your goals. Note that in larger metropolitan areas,
Realtors also tend to specialize in geographic areas, in price ranges, or with types of buyers. An agent who primarily sells million-dollar homes won’t have the time for the $200,000 homebuyer. Some agents specialize in helping first-time homebuyers, while others really don’t want the additional responsibility involved.
Questions to ask:
– Do you have a specialty?
– What are the price-ranges of the homes you sell?
– What area/region do you specialize in?
– Do you sell commercial and residential real estate?
Make Sure the Broker Is Technologically Current
In today’s world, it is becoming vitally important to work with professionals who are computer literate and have a grasp on some of the new gadgets designed to improve service to their customers. What does that mean?
First, many states require Realtors to use certain forms in real estate transactions.
These forms are almost always available on computer programs, and this presents the quickest, most accurate way to generate contracts.
Those who continue to hand write their contracts, or who use a typewriter to fill in the blanks on standard forms are living in the past and are demonstrating an unwillingness to keep up with the times, and they may not be capable of providing the best service.
Other types of software allow Realtors to track their customer’s needs, access increasingly more sophisticated MLS systems, and communicate by email. Digital cameras allow photos to be sent by email to out-of-area buyers with information about new listings and hot properties, complete with interior and exterior views as part of the package.
At a minimum, if the real estate agent you are interviewing is not able to utilize a computer, beat a hasty retreat. Make sure when they say they’re computerized, they’re not just relying on an assistant or a shared secretary to do all the computer work for them. Where will you be if their assistant is not around or is too busy to prepare the contract? You could be waiting while a competing offer takes the property you want.
Questions to ask:
– Can I have your email address?
– What is the address of your website?
– Can you send me listings and photos by email?
– What forms do you typically download for use?
– What technology do you use in your business?
How Is a Mutual Commitment Established?
People who commit to work together usually put the agreement in writing. Ask the agent you are interviewing if they regularly enter into a buyer-agency contract. A good agent will generally not work with someone unless there is a mutual commitment”even if it’s only for a very short time, enough to determine if you are compatible.
That commitment can take the form of a written buyer-agency contract in which your agent agrees to represent you, and you agree to work exclusively with your agent. Or it could be an exclusive transaction broker contract, if you do not want representation.
There are Realtors® who will not show property to anyone who has not signed a buyer-agency agreement with them. However, they understand when they and a potential buyer have just met, they know very little about each other, and there is hesitation about signing a long-term commitment. So they will suggest an agreement be signed for one day only. At the end of the day, the buyer will either decide if they want to work with someone else (in which case the commitment is over), or they can’t afford or don’t want to buy in this market, or they want to continue working with this agent (at which time the agreement is extended, usually for several months).
See the next chapter on buyer-agency contracts for a more detailed discussion of this important issue.
Anyone worth their salt in any profession continues to update their knowledge about the work they do. Doctors, lawyers and mechanics face an ever-changing world when it comes to their professions and must take classes to continue to be of service to their customers. The same is true of Realtors®.
State laws require continuing education, but the requirements are usually minimal: three or four one-day classes every two or three years. Good Realtors find the time to take much more training than that. There are a number of designations denoting certain continuing education landmarks and they are often signified on business cards in the form of letters following their name.
While some may be in areas not related to residential sales, all show a commitment on behalf of the Realtor to keep their professional skills honed, and that’s good. Do not work with someone who demonstrates no interest in continuing education. Look for some of the following designations on your prospective agent’s business card.
Accredited Buyer Representative (ABR) ” Requires additional training in agency issues and a thorough understanding of what it takes to represent buyers. While your Realtor does not need this designation to represent buyers, it denotes their commitment to doing so. Graduates are members of the Real Estate Buyer Agency Council (REBAC) and receive continuing information to keep them informed of new buyer agency issues. While the numbers are growing, the percentage of Realtors who have this designation is still low. When you find a Realtor® who is an ABR, talk to them. For buyers, it is more important than any other you will see below. It represents a commitment and a mindset oriented toward the buyer’s best interest.
Graduate REALTORS® Institute (GRI) ” represents approximately 80 hours of advanced education beyond the training that is required to be licensed. It is usually the first step to becoming more informed and professional.
Certified Residential Specialist (CRS) ” requires completion of numerous two-to-three-day classes held around the country. It takes the average Realtor a few years to complete and usually costs $5,000 to $10,000 in tuition and travel costs. It provides significantly increased and detailed knowledge in residential issues and is the graduate degree of residential sales. Graduates are members of the Residential Sales Council (RSC) and receive continuing information in a variety of ways to keep them abreast of new issues in this area.
Accredited Land Counselor (ALC) ” Similar to the CRS, this usually requires several years and several thousand dollars in costs to achieve. It’s the graduate degree in the area of land sales.
Certified Commercial Investment Member (CCIM) ” Like the CRS, this is the designation for experts in commercial property sales, like shopping centers, industrial, office and apartment buildings. It requires extensive continuing education and graduates are members of the Commercial Sales Council.
e-PRO Certified Internet Real Estate Professional ” This is the only certification program of its kind recognized nationwide and endorsed by the National Association of Realtors. Those searching for a Realtor can have confidence that e-PRO graduates are savvy with all aspects of the Internet. They not only take the Internet empowered consumer seriously, they are also able to meet their online needs.
CyberStar ” An Allen F. Hainge CyberStar is one of an elite group of Realtors® from around the country and abroad who have proven efficiency in the use of technology and have agreed to serve as teaching professionals with Allen. They work well with people on the Internet, with email and yes, in person. They are top producers in their markets, and they have exclusive territories.
And their websites are often the most innovative and provide the most local information.
EcoBroker Certified ” The EcoBroker certification requires completion of a course of study on health hazards in homes, remediation services and resources, energy efficiency, and alternative energy systems. An EcoBroker affiliate can boast that 25 percent or more of its agents are EcoBroker Certified.
There are many other designations. If you see one you are not familiar with, ask about it. Most professionals are proud of their designations and happy to talk about them. After all, they have spent both time and money in making themselves better able to serve you.
What Is an EcoBroker?
EcoBroker International is a company that trains Realtors in the advantages of educating both homebuyers and sellers about healthy and energy-efficient homes.
The course of instruction takes an agent through health hazards of homes, such as mold, radon, dirty air ducts, and other unhealthy conditions, and helps them understand what mitigation sources are available so this can be shared with their clients. It also covers a variety of energy efficient features that tend to make a home more valuable (based on the premise that lower energy costs will make a home more valuable in the market-and more. Alternative energy systems are also explored.
There are numerous national, state and local organizations that support and provide information on energy efficiency in homes. The LEED (Leadership in Energy and Environmental Design) Green Building Rating System® is a voluntary, consensus-based national standard for developing high-performance, sustainable buildings. Built Green is a term used by numerous private organizations. The Colorado organization has one of the easier to use checklists. It is a handy guide for homebuilders, sellers and buyers on what to look for in a home. You can access and download the Built Green Checklist at http://www.BuiltGreen.org. Energy Star is a government organization that not only provides a similar checklist (although qualifying for an Energy Star rating is more difficult than Built Green), but it also tests and qualifies home appliances and building materials so that you can know what to buy and know in advance of your purchase what approximate savings you can realize.
Check out the requirements, the qualifying appliances, and variety of other information on energy efficiency at http://www.EnergyStar.gov.
A Realtor® who is EcoBroker Certified is better able to help you understand (a) if your home already has energy efficiency that should be featured in any marketing, and (b) what steps you might take to make your home more energy efficient. If you check the Built Green Checklist at the website above, you will note than many features are simple to implement and may cost relatively little in comparison to the additional dollars the changes could bring in a sale.
For example, you do not need to convert a forced air heating system to solar, or even in-floor radiant, although such changes may, in fact, make a nice difference in the home. But, simply having the integrity of the air ducts tested, and having them cleaned presents a point that can be explained in marketing materials. It becomes a more efficient and healthier system.
It should be noted that the EcoBroker certification course is relatively new, so finding a certified EcoBroker will be impossible in most areas of the country at this writing.
But, if you do find one, be sure that the added knowledge could enhance your agent’s ability to help you. You can go to the EcoBroker website at http://www.EcoBroker.com to see if there is an agent who is EcoBroker Certified near you.
We just cannot end this section without a discussion about attitude and disposition. We mentioned a good, winning attitude makes up for a lot, and it’s true. We’d much rather work with a newly licensed agent who really wants to help than some old curmudgeon who has been in the profession for years, thinks they know all the answers and will not listen to anything new. There are a lot of worn-out real estate agents who have “seen it all” still occupying desk space in offices across the land.
Your initial interview with a prospective agent will tell you a lot about their approach to life. Work with an optimist, not a pessimist. Listen to their answers to your questions. Are they saying, “There’s nothing available in your price range.” Or are they instead saying, “It might be difficult to find exactly what you want in that price range, but let’s look at some properties so you have a better handle on this market.”
It isn’t brain surgery to figure this out; look for a good, positive attitude as part of your evaluation process.
How to Make Your Realtor Get You the Best Deal is available online at: http://www.snowhome.com/books.shtml