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| How to Select a Real Estate Agent |
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The real estate industry has its share of
true professionals - dedicated men and women that provide superior,
value-added service to their clients. And it has its share of those
that fall short of this mark. Given that a home  is
typically the largest, most valuable asset that most people own it
certainly makes sense to entrust the purchase or sale of that home
to someone that is truly an expert in the very dynamic, very complex
real estate industry. At Professional One Real Estate we have a solid
understanding of what makes a solid real estate agent. Below is some
advice you can follow to ensure you hire a true real estate professional.
General Advice
While "local knowledge" is certainly a good thing, do not
select a real estate agent just because they purport to be "the neighborhood
expert."
So much good data and information is available to the typical real
estate agent that neighborhood specific information is not critical
to successfully selling a given home. Obviously, the more the agent
knows about the subject property and its immediate surroundings, the
better. But what separates a good real estate agent from a great real
estate agent are the intangibles: knowing how to properly price a
home, how to properly market a home and how to skillfully negotiate
a successful sale. An agent that possesses these attributes can work
in any area, as long as they have access to the applicable comparables
data. When evaluating two otherwise equal agents neighborhood familiarity
may be the factor to tip the scale in favor of one agent over the
other. See further discussion of this overall point at Four
Myths.
Professional One agents have the expertise to successfully market
and sell homes throughout the Metro Detroit Michigan area, and our
knowledge of the Canton, Novi, Northville, Livonia, Farmington Hills
and Plymouth real estate markets cannot be beat!
Do not utilize the services of someone that is not a full-time
practitioner.
Your home is likely your most valuable asset. Why would you entrust
this to someone that is not fully committed to the business of buying
and selling homes? Would you use a part-time builder to build your
dream home? Would you use a part-time surgeon to perform a surgery?
Don't be impressed because an agent claims to sell all of
his or her listings quickly.
This may simply be an indication that the agent under-prices their
listings, which is the last thing that you would want your agent to
do.
Don't be impressed because an agent claims to sell hundreds
of homes every year.
This is a business where quality of service is far more important
that quantity of service. There is positively, absolutely a limit
to the number of transactions a real estate agent can do in a given
year before quality of service suffers. To use another analogy, would
you be impressed by a neurosurgeon that claimed to perform "500 surgeries
last year"? A better choice would be the professional that performed
50 surgeries PROFESSIONALLY and COMPETENTLY than the person that did
500 quickly. While you may scoff at this analogy, please remember
this: the difference between a good real estate agent and a great
real estate agent can often be measured in thousands, or tens of thousands,
of dollars in your bank account. You WANT an agent that is fully focused
on your specific situation at all times. When agents take on more
than they can handle the quality of the service they provide suffers
to your detriment.
General
Questions to Ask
Following are general questions you should ask when interviewing a
prospective real estate agent.
What percentage of your total
business comes from repeat clients?
This is one of the most important questions to ask. The hard part
is being able to substantiate what an agent tells you. Read "May
I have a detailed list of your sales within the last few years?" below
for further discussion related to this point. back
to list...
Do you guarantee your services?
As of the date of this web site update, Professional One Real Estate
is the ONLY company of which we are aware that literally guarantees
its work. Any client can rescind any contractual relationship with
us at any time, for any reason. This is not to suggest that other
companies or individual agents that do not provide such a guarantee
are inferior. But with which philosophy would you be more comfortable
working? back to list...
May I rescind your listing
agreement if I am not satisfied with the quality of your service?
When listing your home, virtually all Realtors require you to sign
a listing contract. One of the terms specified within this listing
contract is the duration of the listing. Most agents try to get you
to agree to the longest possible listing term, for obvious reasons:
the longer the term, the more likely that your home will sell. But
what happens if, 30 days into a 90 day listing contract, you discover
that the agent is not doing what they promised? You owe it to yourself
to ask this hard question, straight up. If the agent says, "sorry,
but you signed a contract," that tells you a lot about their character. Our
philosophy is that we really, sincerely want you to be happy. If you
aren't happy with us, then, by all means, please seek the services
of another professional. back to list...
May I have a detailed list
of your sales within the last few years?
Most agents tell you how much real estate they've sold recently without
a lot of prompting. This is logical, as past success is frequently
a good predictor of future success. If your potential agent does not
volunteer this information, just ask. When they respond, ask for a
detailed report that lists the individual transactions that support
the total that they mentioned.
Once you obtain this report, do the following:
| See if the total sales per this report equals the sales they
disclose in their advertising, if applicable. If it does
not, then you should be very wary of the integrity of this agent. |
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| Randomly select five or six transactions
from the report and do the following: |
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Obtain contact information for
the agent's client. Contact that party and ask the following
questions: Did the agent perform satisfactorily? Would they
recommend the agent to their friends and family?
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Ask the agent to highlight all of the transactions in which a client
was utilizing the agent's services for more than the first time. Contact
several of those people to confirm that they really are repeat clients.
What you are trying to do here is ascertain the percentage of the
agent's business that comes from repeat clients. The higher the percentage,
the better, as the best measure of agent quality is people coming
back and using that agent again and again.
| Many of the "marketing specialists"
mentioned within this page get the majority of their business
via mass mailings, billboard advertising and other marketing
techniques that draw in clients from the sheer volume of their
correspondence to the general public. These are precisely the
people that you want to avoid. |
If the agent provides you a list of references,
do not call those references. Obviously, the agent would not provide
you the names and numbers of people that are going to say anything
negative about him or her. back
to list...
If you
have access to a PC and an internet connection, ask the following:
Would you please walk me through the process of preparing the Comparative
Market Analysis that you prepared for my home?
| This is a great way to separate
the "listing specialist" from the real agent. Many of the top-producers
in the industry are nothing more than "listing presentation
specialists" that know how to charm you with a great listing
presentation. But the reality is that most of these agents have
no idea how to even navigate their way around RealcompOnline.com,
which is the database that all realtors use to obtain information
about real estate in this market. It is the source of virtually
all the "comparables" data that every Realtor uses. A good agent
will be able to walk you through, step by step, the process
of preparing a "CMA" (Comparative Market Analysis), which is
the tool that agents use to determine the market value of any
home. If the agent cannot do this quickly and easily, the red
flags should go up that this agent is not a Realtor, but rather
a marketing specialist. Marketing specialists rely on others
to do their research for them, because they lack the knowledge
to do this incredibly vital, fundamental part of the process
themselves. This harkens to a quote from a former colleague
at a different company that made the following remark to one
of our agents: "I don't know about you, but the last thing on
earth I want to be is a Realtor. I have no idea how to operate
a computer, let alone RealcompOnline.com. That's why I have
assistants that will do that stuff for $9 an hour." This agent
sold more than $20 million last year. Imagine if you hired an
attorney at $250 per hour, and then found out that that attorney
was handing your case off to someone that he was paying $9 per
hour to actually do the work for him or her. Would that upset
you? It should... back to list...
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Would you please show me
your "Inventory" report?
This is a report that shows all activity for a given Realtor, including
active listings, sales, pending sales, listings that have expired,
and listings that have been withdrawn. Ask the Realtor for contact
information for several of the listings that were withdrawn or that
expired. Contact those people and find out what went wrong. In all
fairness, this is in some respects a "loaded question" type situation. Obviously,
when people fail to deliver in any area of life, the party that was
not satisfied will typically not say good things about the party that
failed to satisfy. However, here is the purpose of this exercise:
there is a radical difference between someone saying "they worked
hard but they just couldn't sell my home" and someone saying "the
person did nothing to sell my home." That's what you are after: did
the person work hard, or did they not? No agent sells every home that
they list. Many sellers are unreasonable about pricing, and sometimes
well-meaning agents are drawn into situations that just don't work
out. But avoid at all costs the dreaded "listing phantom" that locks
you in on a listing contract for 60 or 90 days and disappears. back
to list...
Would you please let me see
your specific, detailed marketing plan that shows exactly what you
intend to do to market my home?
To give you something with which to compare the agent's plan, see
Why
Professional One, which represents the specific things that we
do at Professional One. If they do as much or more than we do, then
you very likely have found an agent worthy of consideration. If they
do less, or if they have no specific, written plan, this is a good
indication that you should move on to the next name on your list of
Realtor candidates. back to list...
What recourse will I have
if you do not do everything detailed in your marketing plan?
If you have no recourse, of what value is the plan? At Professional
One, you can rescind your listing agreement with us at any time, for
any reason. back to list...
How many hours per week do
you typically work?
And then proceed to the next question...
How many listings do you
have at the moment?
Most of the "marketing specialists" carry large inventories of listings. Many
carry 30, 40 or even 50 listings at a time. Let's assume that the
Realtor indicated that they work 50 hours per week, and that they
currently have 30 listings. Do the math: that means that they are
spending, on average, 1.67 hours per week attempting to sell each
of their listings! And that assumes that they are working with no
buyers, which are major time commitments in and of themselves! Does
that seem like an optimal arrangement for you, if you are to be listing
number 31? Trust us when we tell you that you cannot properly service
a listing in under two hours per week. A good Realtor will not take
on more work than they can handle, because that is a recipe for dissatisfied
clients. Sadly, many within the general population are impressed when
an agent tells you about the massive volume of business that they
do. What you should keep in mind is that many hours go into each and
every successful real estate transaction. When you do too much business,
by definition, the quality of the service provided suffers. back
to list...
Technical Questions
to Ask
Following are technical questions you should
ask when interviewing a prospective real estate agent.
What are the main expenses that a
seller typically pays in a real estate transaction?
The costs that a seller is typically required to pay when selling
a home in the state of Michigan are as follows:
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Realtors' commissions, as negotiated with the
applicable Realtor(s) |
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State transfer tax, calculated as .0075 (or .75%) of the sales
price |
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County revenue stamps, calculated as .0011 (or .11%) of the
sales price |
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Title insurance, which varies depending upon sales price and
is state-mandated / regulated |
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Occupancy escrow, if applicable, as negotiated per the transaction |
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Water escrow, if applicable, as negotiated per the transaction
(typically $200 to $300) |
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Payoff of any existing mortgages or liens on the property back
to list... |
What
the various forms of agency that exist in the State of Michigan?
There are a number of agency relationships that can exist between
realtor and client: transaction coordinator, dual agency, and the
two most common, buyer's agency and seller's agency. back
to list...
What is title insurance, who pays
for title insurance, and how is the cost determined?
There are two generic contract types used by most agents in this market:
a "buyer's contract," and a "seller's contract." The buyer's contract
includes additional language that deals with the following issues:
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A higher level of title insurance |
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A provision for a review of easements and restrictions |
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A more liberal inspection provision that makes it very easy
for a purchaser to get out of a transaction based upon inspection
results |
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A risk of loss provision that includes more liberal language |
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An environmental issues provision |
Be wary of an agent that does not have sufficient command of the basic
contract. While Realtors are not attorneys, they certainly should
be able to understand and explain any and every document that goes
into the typical real estate transaction. Also, keep in mind that
your agent needs to be well versed in reviewing contracts that may
be presented by agents representing purchasers interested in buying
your home. Certainly, you should always contact your attorney when
unusual issues arise. But that does not absolve a Realtor from their
basic responsibility of understanding, and being able to explain,
any contract they are asking you to sign. back
to list...
What are the two primary types of
title policies?
The most common form of title policy is called a "title policy with
standard exceptions." A "higher" or "better" form of title policy
is called a "title policy without standard exceptions." While there
are additional differences between these two forms of title policies,
the most significant difference is that a title policy without standard
exceptions typically requires that a staked survey be performed in
order to issue such a policy. back to
list...
What is radon, and why does it matter
when buying or selling a home?
Radon is an invisible, odorless gas that is considered a carcinogen
by the EPA. Virtually every home in Michigan has radon. The key is
how much. You should always have any home that you are considering
buying tested for radon. Even if you are not concerned about the health
risks (radon is often compared to second-hand cigarette smoke), you
should still perform the test as this could affect your ability to
sell your home in the future (many people won't buy a home that has
a radon problem). back to list...
How common are radon failure rates
in our market?
Quite common. Examples of failure rates as of the date of this web
site update: Brighton, 59.3%; Northville, 39.4%; Novi, 25.1% and
Plymouth,
15.2%. For a more detailed, comprehensive synopsis, go
here. back
to list...
What is the Michigan "Real Estate
Transfer Tax," how is it calculated, and who pays it?
The State of Michigan enacted the "Real Estate Transfer Tax" a number
of years ago when real estate property tax was reduced by approximately
40%. The tax is calculated as .75% (that is, .0075) of the sales price.
The tax is paid by the seller at closing. back
to list...
What is the difference between an
offer that is "contingent upon the sale of a home" and an offer that
is "contingent upon the closing of the sale of a home"?
A sale that is "contingent up the sale of a home" is a situation where
a prospective purchaser is attempting to purchase a subsequent home,
and that have no contract for the sale of their existing home. A sale
that is "contingent upon the closing of the sale of a home" is similar,
except that the prospective purchaser HAS a contract for the sale
of their existing home, but the closing for that sale has not taken
place. back to list...
What is "occupancy" as the term is
commonly used in real estate?
"Occupancy" as it relates to real estate refers to the period of time
AFTER the date of closing that the seller can contractually continue
to live in the home. back to list... |
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