With interest rates down and home sales up, millions of Americans hoping to cash in on the nation's hot housing market will soon be asking themselves one simple question: "How do I find a good real estate agent?"
Surprisingly, it's a question that few people bother to answer. According to one report, two-thirds of all sellers list their home with the first agent they contact.
"Most people spend more time trying to sell their car than they do finding someone to sell their house," says Stan Ross, co-managing partner with the real estate consulting firm of Kenneth Leventhal & Co. "A house probably represents 75% of your net worth, so why would you turn it over to some idiot?"
Indeed, getting a bad sales agent can mean your property will sit unsold for months, while homes around you are snapped up faster than cashews in a bowl of assorted nuts.
Active in Neighborhood
If you're looking for an agent to help you sell your home, experts say you should ask friends and family members for recommendations. Ross suggests finding firms that are particularly active in the neighborhood by checking local "For Sale" signs, and then attending the firms' open houses to see how professional and persuasive the sales agents are.
It's also wise to query neighbors who have recently sold their home, and ask if they would use the same agent again.
Once you've compiled a list of potential agents, call each one and arrange for them to give a "listing presentation" in your home. This is the agent's chance to convince you that he or she should get your listing.
Among other things, the agent should present a thorough marketing plan for the property--including how the home will be advertised, how often "open houses" will be held and how much you should ask for the home.
Skepticism on Overvaluation
The agent will probably suggest a listing price based on an analysis of recent sales of comparable properties in your neighborhood. If so, make sure you see the list, and find out how long it took for those homes to be sold. If a house took a long time to sell, it may have been overpriced; a home that sold quickly may have been undervalued.
Be skeptical of an agent who says your home is worth a lot more than what other agents are estimating. If the suggested price is off by several thousand dollars, says Ross, the agent might be trying to snare your listing with the hope that you'll slash your asking price several weeks down the road.
Agents representing buyers will avoid your home if it's obviously overpriced--and might not bother looking at it even if it's reduced later.
Make sure your property will be included in the Multiple Listing Service. The MLS, considered the bible of the real estate industry, is a book containing information about all the homes for sale in your particular community and surrounding areas. It's read by agents who are looking for homes to show their buyers.
"You want to give your house as much public exposure as you can, and the MLS and 'For Sale' signs are the two best ways to do it," says Richard J. Rosenthal, a Venice broker and president of the California Assn. of Realtors (CAR).
Some sellers insist that the agent's marketing plan be in writing and included as an addendum to their listing agreement. By doing so, they can encourage the agent to adhere to the plan--or use it as documentation if he doesn't live up to what he originally promised.
The agent's personality can be just as important as his professionalism. "You need a broker you can feel comfortable with," says Bill Podley, owner of Podley Caughey Associates, a Pasadena brokerage firm.
'Legal Hot Line'
"There's a lot more than just dollars involved when you sell a house. There's also a lot of emotion."
It might also be helpful to determine whether the agent is a realtor. The term "realtor" is a professional designation for an agent who belongs to at least one board of realtors and who promises to follow the National Assn. of Realtors' code of ethics.
About one-third of California's 291,227 licensees have the realtor designation, estimates Steve Kolb, a spokesman for the state Department of Real Estate.
Only agents who are realtors have access to the CAR's "legal hot line," a telephone network staffed by lawyers who offer free advice in case a sticky legal question arises.
Once you've decided on listing a home with a particular agent, you'll probably be asked to sign an "exclusive right to sell." Such a contract guarantees the agent a commission, regardless of who actually sells the property.
If another agent produces a buyer, your agent will split his commission with the buyer's agent.
Although surveys have shown that the majority of sellers believe commissions are set by law, they aren't. Most agents expect the homeowner to pay a 6% commission on the sales price, although some want 7%.
"The law is clear," says Larry Alamao, an attorney with California's Department of Real Estate. "Commissions are negotiable."