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.
Related: A Detailed Look At The Ridiculous Cost Of Selling A Home Today
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.
Michael Woods says
When you say you got the commission down to 4%, does your seller’s agent also pay for inspection reports and staging?
Harry Kobe says
Flat rate or 2-2.5%
Just say NO to the vestige, 5-6% bloated commissions for basically pushing pre-populated paperwork and smiling. That 5-6% rate was a hold over from the days when houses were 1 5-30K. Now many houses are >800K, or start at 1M. What they heck do they do for that 5-6% besides smiling and being a glorified showman? Our experience is and has been extremely poor with these house salesmen.
Financial Samurai says
I totally agree. Flat rate or 2-2.5% is fair.
So what do you do when your agent is a moron? Selling my home quickly turned into a nightmare. The agent did not listen to me and in fact, was combative. When things began to unravel due to a home inspection where another moron, the inspector, suggested that there “might” be wood rot without testing for it, cost us thousands of dollars. I wanted to pull the listing and regroup. Get another inspection. My realtor fought me on it. I hired my own contractor who assessed that there was in fact, no rot and that the stucco was fine. My realtor acted like I was lying and accused me of holding up the closing. She didn’t even try to hide her annoyance and was very snarky. I felt like I had been hijacked. I felt like she had absolutely no regard for my interest and was definitely not on my “team”. And for this, I am forced to pay 6 percent commission at a significant loss, no less! I am disgusted to say the least and worse, I hired this moron because she was a friend of a friend. I would not wish the incompetence and unprofessionalism of this realtor on anyone! What can a person do? Is there any recourse?
Financial Samurai says
Never pay 6% commission. You can negotiate down to 4.5% – 5% all the time. Maybe even 4%. But, you probably signed a listing contract.
Didyou gt the price you want? If so.. that’s the most important thing.
Margie O. says
1. Flat rate with RE attorney. Offer 2-2.5% to real estate buyer agent showmen, or refund that 2-2.5% if the buyer is not represented by the real estate sales showman.
Ron Booker says
You made a point about how the realtor will make you feel comfortable working with them. My sister wants to buy a house, but the last real estate agent she had didn’t answer her and made her feel uncomfortable when seeing the properties. I will pass her the tips so she can look for someone more professional to help her buy a house.
Eli Richardson says
My dad wants to invest in a second home and needs to hire a real estate agent. It makes sense that he should consider an agent that will make him feel comfortable. This info will help him find the right individual to purchase a home.
Jeff Wilcox says
I like the tip that you gave to choose a realtor who you could be comfortable with. My wife and I have been talking about finding a realtor to help us if we decide to find a new home, and it would be important for us to know that we could find one who we could trust in. If we decide to find a realtor, I will be sure to look for one who we could be comfortable with.
You absolutely MUST trust and be comfortable. There are many personal decisions in buying a home and you need to be able to tell your realtor what you want without worrying about judging.
Whether you need an ideal place for litter boxes or a proper fence for big dogs, or a windowless room to make a sex dungeon, your realtor can help you better if they know what you really are looking for.
If you edit yourself they cannot find what you really need. If you try to impress them with your mad construction skills when you really want a move in ready shiny low maintenance home then they will never be able to really help.
As Realtors, w need the information, we are not here to judge, we want YOU to be happy! For some happiness is a shiny new townhome, for others it is a run down fixer on 2 acres.
R Stewart says
It is important to understand that the old adage applies. You get what you pay for. Do you also complain about paying your Doctor? Oh, yeah, I guess you could operate on yourself. I can see the sense in that.
Look, you are paying a professional to REPRESENT you (that’s what agent means) to the best of his or her professional ability, whether you are a buyer or seller. And that is what most agents do. Do you really feel that they should not be well compensated for their investment in education, licensing, and the time they spend on each and every client, whether they buy, sell or simply walk away? I represent Buyers most of the time and prefer not to work for free. Agents make their living based on these commissions and most actually do work for them. Would you feel as good about espousing a plan to cut your own compensation by 50% or more? B
BTW, take a look sometime at what loan brokers make in commissions….
The dumb comment of the century goes to you. You do not get what you pay for when you give a realtor thirty thousand dollars. There is no reason a $500k home should cost twice as much to sell as a $250k home. Are the doors harder to open? “You get what you pay for.” Realtors have no philosophical education because they think platitudinal, fluffy non arguments not grounded in economics constitute as sage advice. Not hiring a doctor or a plumber results in costs ten times what their fee is, that is how they can unpack and justify their value. The cost of not hiring a realtor with 3 months of training is zero. IN FACT, a scholarly study found that by owners achieve sale prices $12k higher than realtor assisted sales. When realtors sell their own homes, they too sell for more than when they sell their clients property. They undervalue homes to sell them fast. Hire a realtor and youre paying extra to sell for less. Realtors are some of the dumbest and most untrained and disorganized people in the professional world. They are former bar tenders and mattress salespeople. The 5% fee is 80 years old, and percentages fluctuate too wildly causing homeowners to pay in excess of the vakue provided. Economists refer to this as social waste. The only people that think realtors arent overpaid are realtors.
The retarded comment of the century in fact goes to you. Grouping 1.2 million agents into the same bucket is of course idiotic. Like any profession, there are people really good at what they do, mediocre people, and bad people.
And in fact different price points are harder to sell than others, as just about any layman with 100 iq could explain if they gave it a tiny bit of thought. Median priced homes, where the majority of the population would be buying will be the easiest to sell. Simple supply and demand. Where there is higher demand, easier to sell. Where there is less demand, such as above an areas loan limits, there will be less demand, and thus harder to sell.
« Buying a listing » is the usual US sales tactic by those realtors. Hustlers and conartists at 5% to play price reduction games.
You are not hiring a realtor for 3 months of training, you are hiring for years of experience. Higher end homes do in fact require more marketing and more work on the part of the Realtor.
If you did not like your realtor then you should never have hired them. You demand all the professionalism, but also demanded a discounted commission. The best Realtors do not discount their commission, they do not need to, they have all the expertise and professionalism you wanted. You simply did not want to pay for that.
Margie O. says
Keep reciting the script and the typical American hu$tler talking points from that special US huckster lobbying group…. There is NO reason why USA real estate salesmen still charge 5-6%. Glorified showmen and form coordinators.