People hire real estate agents because buying or selling a home or condo is no walk in the park. Between chasing down the right properties and looking for suitable buyers, an agent’s connections to a wider network can be an invaluable asset.
But that’s where the difference lies: while any real estate agent can do the job in some way or another, a great one gets it done right and leaves their client in a significantly better position than they would have been had they been left to fend for themselves.
This article will cover everything you need to know about why you’re better off hiring a competent real estate agent, how to hire one, as well as how to tell if the one you’re dealing with is a winner.
Know The Difference: Agents, Brokers, and Realtors®
Before we proceed, it’s important to note the different classifications of real estate professionals, since you will likely hear the term agent, realtor, and broker used to describe the same person. The fact is, though, they are all different.
Real estate agents are a broad category of professionals. Simply put, this includes anyone with a license to buy or sell a property, as provided by a relevant authority (i.e. a managing broker or the state itself). If they are legally permitted by law to dispense advice about real estate and involve themselves directly in the process, they qualify as an agent. Finally, if a person qualifies to be a real estate agent and ONLY a real estate agent, they have to work under a broker and cannot operate independently.
2 Types of Agents
There are two types of real estate agents; one for the seller and one for the buyer. The seller’s agent is a real estate agent who works on behalf of the seller. They will help the seller when listing their home, all the way up until the closing process. On the other hand, the buyer’s agent has the buyer’s best interest at hand. They work to help the buyer from the time they begin looking for a house, to the time that they close.
Brokers, on the other hand, are a cut above your standard agent. These are people who’ve received more education and are required to have met a certain level of experience–not every agent is a broker, but all brokers count as agents. Brokers can opt to run their own firm and employ agents, or work under existing firms as broker associates. Brokers are accountable for the agents under their employ and step in when deals hit complications.
Realtors® are agents (meaning anyone with at least an agent’s qualifications) who are members of the National Association of REALTORS® (NAR): America’s largest trade association, which promises to deliver on its brand of ethical and professional real estate assistance. Not every real estate agent is a member of NAR.
Why Bother with an Agent?
It’s commendable when an individual buyer or seller has the confidence to navigate the market alone, but confidence can only get you so far. Most who try and go it solo end up dealing with a number of challenges that an agent can easily workaround.
Beyond direct access to a wide range of properties for sale and prospective buyers, good real estate agents are also well-versed in negotiation. Anyone can believe in their own ability to land an optimal deal, but agents have years of training and the kind of experience that makes it clear when to push and when to fold when it comes to real estate. They’re also great at absorbing the damage when negotiations go sour (which they do, even in spite of our best efforts); this keeps the buyer or seller insulated from their negotiation partner, allowing them to try a different approach if they’re truly interested in what the latter has to offer.
Real estate agents are also familiar with the ins and outs of the trading process. Nothing ruins a deal like failing to meet bank deadlines, missing out on an important requirement, or overlooking a crucial detail like hiring someone for a particular inspection. Newcomers to the process can lose their way when faced with the sheer volume of things to do, but a good agent knows the whole affair like the back of their hand. And even assuming you’re familiar with each sheet in that mountain of paperwork, who wouldn’t prefer to have someone else go through the hassle?
Good real estate agents can also offer an insider’s perspective on the situation of your local market. They know which locations are on the rise, which is headed for a downturn, and whether the price attached to an offer accounts for the present and potential value of the property. Unless you’ve spent a significant amount of time studying the market (in which case, you would have stopped reading by now), you’d be likely to miss out on a number of factors that could drastically affect the outcome of your investment.
Finally, hiring a real estate agent means that many important steps along the way can be handled by someone who has no emotional stake in the deal. For buyers, this means each viable property can be assessed without the rosy tint of optimism, and the financial half of the equation can be insulated from the little tricks and emotional appeals that sellers use to hook a buyer. No perfect kitchen, yard space, or decor can distract a good agent from seriously problematic aspects of an offer.
Where to Find a Reliable Agent
One of the best ways to locate your real estate agent is to interview them. There are plenty of ways to find real estate agents you can interview and eventually choose from. After having conversations with several agents, hopefully, you’ll have a clear understanding of who will best meet your needs.
Here is a short list of sample questions that you can base your interviews off of:
Here is a list of questions that you can base the interview off of:
- How long have you been in the business?
- What is your best strategy to meet my needs?
- Can I please have a list of references?
- How much do you charge?
- What haven’t I asked that will be beneficial for me to know?
Many prefer to start with their friends and family who’ve worked with agents before. Chances are they’ve at least had a pleasant experience, and can provide you with an initial shortlist of candidates for your own needs. If you’re working with a financial adviser or have consulted one in the past, you can ask them for recommendations they might have as well.
Likewise, your neighborhood should have at least one or two real estate signs with numbers you can consult to get in touch with agents in or near your immediate vicinity. Better yet, if there are open houses in your neighborhood, you can hit two birds with one stone: drop by to check either a potential home or the local rates (depending on if you’re a buyer or a seller, respectively) and scope out agents familiar with your area.
Finally, you can always run a quick online search for agents working in your area and the reviews they might have received from past clients. Naturally, we recommend you try our own website, Digs, if you’re based in Chicago.
What to Look For In an Agent
Not all agents can offer the same level of quality or skill, and knowing what sets great agents apart from the rest can make all the difference. Moreover, you want to set time aside for an interview phase, where you vet potential agents and narrow your options down to the best few.
A good set of indicators are the following: years of experience in real estate, years spent living in the area, professional resources (i.e. do they work alone?), availability, ratio of buyers to sellers, and the satisfaction of recent clients.
When interviewing your candidates, one of the most important considerations would be their years of experience. While it’s true that past performance isn’t a necessary indicator of future results, and that even newcomers can outperform veteran agents, there’s no better gauge of their ability than the time they’ve spent honing their craft. Candidates with at least two or three years are a safer bet than your average novice.
That having been said, the years count for nothing if they’ve been marked by sub-par performance. Ask your candidates about the successful deals they’ve closed in the past and recent clients who might be free to share their experiences. This gives you a sense of which among them are more accomplished, and it goes without saying that candidates who’ve closed a good number of exchanges are more reliable than those who’ve been in the game for a long time but have met with limited success.
It’s also good to note if your agents live in the area. We mentioned that a major benefit of hiring an agent is their specialized knowledge of the local market, and it stands to reason that agents who’ve been immersed in your community for a longer time should have a better sense of your surroundings.
The kinds of resources available to your candidates should also factor into your decision. Do they work for an accomplished brokerage firm? Are they part of a team with pooled resources? If they work alone, are they a member of any significant associations? Unless your candidate has a stellar record as a lone wolf, you might be better off choosing those who have a strong resource pool of their own. This is arguably more important than the number of years they’ve lived in your community: if they aren’t used to the area but work for its dominant firm, then you can probably count on them to be well informed.
Often overlooked is the availability of your agent. This is especially important for first-time buyers and sellers: an agent with a free schedule will be useful in times that you need to consult. While you might not want an agent whose schedule is too open (after all, the good ones tend to be in-demand), knowing they’re generally available for a call or meeting can make a big difference.
Finally, you want to know how well an agent can handle your particular end of the exchange by inquiring about their ratio of buyers to sellers. Purchasing and liquidating a home are two different ballgames entirely, and you can expect better results from an agent who’s worked both ends of the deal, or at least one who specializes in your particular need. You want a balanced agent because they’d have an easier time assuming the perspective of the person at the other end of the negotiation table. And you naturally want to avoid hiring a seller’s agent when you’re a buyer, or a buyer’s agent when you’re selling –that’s just common sense.
Red Flags When Choosing an Agent
As with any major decision, choosing an agent comes with potential deal-breakers. The following are red flags that may save you a lot of trouble betting on the wrong horse.
The first rule of thumb is to never do business with family. Friends are a generous exception, but working with family can get very messy if things fail to go over smoothly. Just remember that working with a stranger gives you the chance to make fair demands as a consumer and that you can fire an agent for doing a poor job and still enjoy peaceful holiday get-togethers.
Be wary of agents who charge significantly lower commissions than the competition. As a basic tenet of supply and demand, you can expect low prices to indicate relatively poor quality of the final product. Cheaper isn’t always better, as stupendously low rates can be a sign of an incompetent agent desperate for a contract.
In the same way, avoid contracting agents who work the market part-time. The purchase or sale of a home is one of life’s biggest financial milestones; respect the weight of your endeavor by trusting only agents who can claim to build their lives around assisting people with it.
Another red flag to look out for is when an agent knows nothing about the local market. You already know that more knowledge about the situation of your neighborhood is a big plus, but absolute ignorance simply can’t land you a fair deal and leaves the whole process at the mercy of the more well-informed party. A similar rule holds when your candidate isn’t used to handling the type of property or price range that you’re dealing with: never enter a negotiation as the weaker party.
Finally, you have to be thorough in making sure that your agent can keep up with the broad and detailed aspects of your exchange. Real estate transactions involve a dizzying amount of moving parts, and it’s important that you have a handle on everything from your mortgage, to your timeline, to the nitty-gritty of getting a home prepped for sale. An agent who can’t keep up is simply an agent who doesn’t deserve your time.