This post will teach you how to choose the right Realtor to help sell your home for top dollar. You’ll also learn how to choose the right Realtor to help you buy a home and get the best deal.
Despite the pandemic, the real estate market is very strong right now due to record-low mortgage rates and more time spent at home. Perhaps you are thinking of buying too or selling into strength.
For the right price, everything is for sale. So when my real estate agent friend pitched to put my home on the market in the summer of 2012 given the lack of inventory, low interest rates, pent-up demand and Facebook going public, I figured why not test things out.
I had a single family home that is suitable for a young internet couple looking to start a family. I told my Realtor that if I don’t get X amount, then I’m not selling. He agreed to the terms.
My asking price of $1,700,000 was $100,000 over estimated market value, but he still thought a sale was possible. Given he was the one who was going to do all the staging, marketing, photographing, and showing, the burden was on him. For me, I was just going to tidy the house and get out of the way during showings.
It felt good not having to sell if I didn’t get your aspirational price. It’s kind of like going to a bar with your buddies and having no fear talking to the most attractive person there because you already have the most beautiful wife already. Or it’s kind of like getting a free roll at the casino.
My biggest goal is to gain enough insight to write this post! I want to teach people how to choose the right Realtor because mine was terrible.
How To Choose The Right Realtor
Unfortunately, my Realtor was a bad choice. He was a tennis acquaintance that I thought could do a good job. Here are some reasons why my Realtor was terrible.
Showed up dirty to an open house.
I was shocked when my realtor strolled up to my house 5 minutes before a private showing in a sweaty shirt, shorts, and sneakers after playing a 1.5 hour tennis match. His appearance was completely inappropriate and disrespectful to the buyers, and to myself. I would never dare go to a meeting that way and am absolutely baffled he would show my house in his getup.
I e-mailed him after, insisting he keep a full change of clothes in one of my bedroom closets. His presentation caused my blood pressure to rise. Maybe if my property was a studio in a bad neighborhood, it would be OK for him to come show my place in shorts and a t-shirt. But, at least take a shower beforehand dammit!
Didn’t listen to my wishes.
My Realtor pushed me to do an open house multiple times. I told him NO each time, because all open houses do is open yourself up to nosy neighbors and potential robbery. I even sent him a report from the National Association of Realtors saying that only 2% of transactions ever come from open houses. I’ve personally been to over 100 open houses and I have never bought a thing!
I told him I cherished my privacy. 90%+ of buyers find their homes on the internet anyway. He continued to push back, saying he wants the house to generate this “frenzy factor.”
I asked him why can’t he just host a private open house where each prospective buyer and agent is pre-screened to create a similar wow factor? I did that with my rental property and had 30 people come in a one hour window. He shrugged. Open houses are for the real estate agent to find new clients!
After saying I wouldn’t have to pay anything out of pocket, he sprung the $440 pest inspection fee I have to pay for the disclosure packet. I’m all for a thorough disclosure packet. However, if I’m going to pay him a 5% commission on $1,700,000, you’d think he would just cover this expense. What was originally a “no cost to you” listing, became a $440 pest inspection fee, a $1,000 paint job in the living and dining room and other things.
Not in my corner.
My realtor is on a tennis league team which I was thinking of joining. I use the word “was” because when I asked him whether I could join his team, he told me that it would be hard for me to join because the singles players have all been members for a long time already.
In essence, he didn’t believe in me. He didn’t even offer to talk to the captain to try and work me in as a sub. I don’t want a Realtor who isn’t 100% in my corner. The funny thing is, months later I took him down in a double match with ease.
Frankly, not being supportive was the main reason why my Realtor sucked. It already irked me that I would have to pay $85,000 in commissions if I sold the property. But to not have a Realtor even vouch for me felt terrible.
Today, I’m a 5.0-ranked tennis player. My Realtor is ranked 4.0. He should have gotten me on his 4.5 team because I would have had a 80%+ winning percentage.
Things To Look For When Hiring A Realtor
Here are some key questions to ask when you’re thinking about how to choose the right Realtor.
How big is his or her network?
The longer he’s been in the game, the larger his network. Realtors can work from anywhere, so they don’t necessarily have to be a 10 year veteran of one firm. In fact, if they’ve moved every 3-5 years, that could be a good sign they are in high demand. There is a virtuous cycle on one’s reputation the longer they have been working.
Does s/he have a web presence?
If your realtor doesn’t have a hisname.com website in this day and age where 90%+ of properties are found on-line, then you should be a little leery. The website should have basic info such as his bio, his previous transactions, thoughts on the market, some pretty graphs, and so forth.
I’ve been telling readers since I started Financial Samurai in 2009 to start their own website. Plant your flag on the web and you’ll naturally gain tremendous amount of opportunity. It’s so cheap to start one.
Does he do what he says he’s going to do?
If he says he will be at your house at 1pm, does he arrive at 12:45pm to prepare the house and gather his thoughts beforehand? When he says he will handle the upfront costs, does he pay for everything or try and get you to pay some of the bill?
Does he have a reasonable level of intelligence?
You must ask them questions about their thoughts on the markets and see if they can put together a coherent argument. Realtors get a bad wrap for being dumb by just regurgitating what CNBC, or the National Association of Realtors write.
The realtor should have his own opinions, and facts that buttress these opinions. With good intelligence, also comes good salesmanship, because the more you know, the more you are able to sell convincingly.
Does s/he have strong integrity?
The one thing I like about my realtor is that he has great integrity. I asked him whether I should disclose a minuscule leak in the ceiling that I fixed and he said, absolutely. I asked him whether I should turn on the portable air-filter in one room to help drown out some outside noise. He said it was best to leave it off to be completely upfront. Good integrity goes a long way because it minimizes the risk of negative surprises.
Does he make people feel comfortable?
If you don’t feel comfortable being around your Realtor, the buyers probably won’t feel comfortable either. The good thing about my realtor is that he leaves people alone to walk the property and doesn’t pepper them with questions. He lets people take their time and follow-up with him. I generally see this as a positive sales attribute, because I dislike pushy sales people.
Can you feel and see his hustle?
When you wake up in the morning, has he sent you some new thoughts and a marketing game plan? Has he created a Google Docs spreadsheet to track all the prospective buyers who have come through and shared the file with you? Has he suggested you go with him to make appointments to see the competitive properties on the market?
You need to see and hear his hustle. You don’t want him strolling to your house in the nick of time in his shorts and t-shirt because he had a practice match beforehand!
The Other Realtor Is Incredibly Important
The oligopoly priced 5% minimum commission fee is ridiculous for expensive cities such as San Francisco and New York. For example, why on earth does it cost $150,000 in commissions to sell a $3 million dollar house. I can maybe understand a $10,000 commission on a $200,000 house, but it doesn’t take 15X more work to sell a $3 million dollar house.
Despite the price fixing, don’t underestimate the power of the 2.5% commission for the buyer’s agent. The 2.5% commission for the buyer’s agent is an incredible incentive that makes Realtors hustle to do whatever it takes to make the buyers happy, which hopefully leads to a smooth transaction.
Paying a 5% commission makes me sick. However, I do feel I’m getting better “value” that the fee is split and incentivizing both parties to make something happen.
Don’t feel their commissions are fixed, either. Both sides should definitely be willing to negotiate down their commissions if the choice is between walking away, and making a transaction happen.
When volume is way down, like it is during a coronavirus pandemic, Realtors are naturally making less money. Therefore, I’ve noticed many more Realtors willing to accept 4.5% at least.
What If You Want To Change Your Realtor?
There is a situation where you may want to change Realtors given your terrible experience with him or her. Your main option is to wait out the listing agreement. Usually, you sign with a Realtor for 30-90 days to sell your home. It’s only fair that you give the Realtor a chance.
However, if the Realtor is truly terrible, then you can just have a heart to heart conversation asking if you can part ways. The Realtor might decide to cut his losses and null the contract.
The large majority of the time, the dispute has to do with not getting the price a seller wants. If the Realtor can’t get you to go down in price, then he is stuck. Better to cut his losses or focus his attention elsewhere.
If the Realtor won’t nullify the contract, then you’ve got to just wait it out. In the meantime, do your market research and talk to other listing agents.
The Internet Is Your Friend
Even if you are stuck with a dud of a Realtor, it is very hard to screw up a sale if you’ve priced your properly correctly. The market dictates the price.
With sites such as Redfin and Zillow where you can easily find properties for sale and check out their estimated values you have much more pricing transparency.
The listing agent’s main responsibility is to get the word out and show the house. He can list via the MLS or through a pocket listing if he works for a particularly large real estate brokerage house and/or is part of the Top Agents Network. So long as the Realtor isn’t an idiot, the market will set the price.
You need to trust a Realtor will do everything possible to get the word out and fight for your best interests. Good work experience, a web presence, and a great network should be standard.
The problem with my guy is that I couldn’t stop thinking how my Realtor wouldn’t speak up for me to join his tennis team. It’s that awkward moment where a friend speaks to you about another friend’s mutual party. The only problem is you weren’t invited to it!
Finally, paying a 5% commission to sell a property just seems wrong. I’ve made a promise that I will never sell my house unless someone gives me a ridiculous price or until the commission level drops under 5%.
I Ended Up Selling My House
After going through this bad experience, at least I learned how to choose the right Realtor in the future.
After trying to sell my house for $1,700,000 in 2012 with no luck, I tried again in 2017 and someone offered me $2,742,000 so I took it! I got the Realtor to lower the total commission to 4.5% instead of 5%.
My Realtor was great. She was attentive, did her market research, and was part of the Top Agents Network. She found my one and only buyer who was willing to pay more than my aspirational price of $2,500,000. In retrospective, learning how to choose the right Realtor was critical.
I reinvested $550,000 of the proceeds into real estate crowdfunding. My goal was invest in the heartland of America where valuations are lower and net rental yields are higher. As a new dad at the time, all I wanted to do was make income 100% passively, instead of manage property.
Earn Income Passively
If you’re looking to buy property as an investment or reinvest your house sale proceeds, take a look at Fundrise, one of the largest real estate crowdfunding platforms today. They have created eREITs and eFunds that allow you to diversify across mid-market commercial real estate properties and multi-family properties across the country.
Fundrise returns have been stable compared to the stock market. I really like their innovation and diversification for people looking to earn passive income in real estate. It’s free to sign up and explore.
If you are an accredited investor who is interested in buying individual commercial real estate deals, check out CrowdStreet. CrowdStreet focuses on deals in 18-hour cities, secondary cities with lower valuations, higher rental yields, and potentially higher growth rates due to positive demographic trends.
We are seeing people move away from big cities to smaller cities thanks to technology and the coronavirus. Cities like Charleston, SC and Memphis, TN are all beneficiaries of the migration trend. I really like CrowdStreet’s mission. They’ve also created a fund as well.
Take Advantage Of Record-Low Mortgage Rates
Finally, I encourage everyone with a mortgage to refinance. Mortgage rates are at record-lows. A main reason why real estate demand is so strong in the new decade is due to a rise in affordability.
Check the latest mortgage rates online through Credible. They’ve got one of the largest networks of pre-qualified lenders that compete for your business. You can get multiple real rate quotes in under three minutes for free.
How To Choose The Right Realtor was originally published in 2012 after I tried to sell my house. I’ve since updated the post for the new decade. A great Realtor will help you get top dollar. A great Realtor will also provide peace of mind. Although paying a 4.5% – 5% commission is still painful, it’s the cost of doing business.