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10 questions to ask a real-estate agent

If you're trying to sell a house, the right help is crucial. Here are the questions you should ask to hire the right professional.

By Stacy Johnson Aug 3, 2010 1:02PM

This post comes from Stacy Johnson at partner site Money Talks News.

 

Imagine spending $9,000 for a service, then finding out you could have had the same thing for $350? That's exactly the kind of money you could waste if you hire the wrong real estate agent to sell your house.

 

The way many people find a real estate agent is through a personal relationship. That's no way to hire a pro.

 

Watch the following video, then meet me on the other side for more.

When I sold a home in Cincinnati years ago, I listed it with an agent whose primary qualification was that she was a personal friend. She initially told us the house should be listed for $300,000. But after finding no interested buyers, several weeks later she suggested we drop the price to $275,000. While we did get some showings, still no bites.

 

Here's how our house sold: A person happened to be driving by, saw the sign in the front yard, knocked on our door, walked around the house and immediately fell in love with it. She made an offer the next day.

 

Despite the fact that our buyer didn't find the house through either her agent or ours, we still had to pay 6% of the sales price -- in our case, $16,500 -- to the real estate agents. That's a lot to spend when the sale of our home came from a $20 sign in the front yard.

 

I've been a vocal critic of real estate agents for many years. It's not because their services aren't useful; they often are. The problem is that their services too often aren't worth the high price.

 

List it yourself

In days past, only a full-service, full-price real estate agency could put your home in the Multiple Listing Service. These days, you can find any number of real estate companies that will put your home in the MLS for a one-time up-front fee of as little as $350. (Here's one of many examples.)

 

So, rather than paying the full 6%, you could simply pay $350 to $500 to list your house in the MLS, thus exposing it to buyers and their agents. When a buyer shows up through an agent, you'll still have to pay the buyer's agent 3%. But paying 3% rather than 6% to sell a $300,000 home means saving $9,000. That's a nice chunk of change.

Most people, however, don't want to handle the marketing of their house themselves. They feel that it's important to have an experienced professional on their team to help with the paperwork and show and market the house.

 

Finding and interviewing agents

Here's a quick tutorial to make sure that, if you pay big bucks to sell your house, you have a good shot at getting your money's worth.

 

A good place to start the process of finding an agent is to look for one who either lives or specializes in your neighborhood. Call local real estate offices. Drive around your area, look at signs and, if one or two names keep cropping up, write them down. Visit local open houses and meet a few agents -- and while you're at it, start getting an idea of how much your house might be worth based on others in your neighborhood.

Once you've got three to five names, schedule interviews at your house. When they show up, they'll (hopefully) come armed with a basic market value for your home that they've put together in advance with recent neighborhood sales statistics. More than likely, they'll walk around your place and sharpen that number by considering your home's unique features and/or problems.

 

Note: Be suspicious if one agent suggests a listing price much higher than the others. This is a common technique to secure a listing -- telling you your $300,000 house is actually worth $340,000 -- but listing your house for more than it's worth won't sell it.

 

Questions to ask

When interviewing agents, ask the same questions in the same order and take detailed notes of the responses. That makes apples-to-apples comparisons much easier.

 

How long have you been in the business? The ideal candidate is one with plenty of experience (10 years plus), but still has lots of energy and interest in their business. Real estate marketing is changing rapidly, thanks largely to the Internet. The person you hire should be experienced, engaged and keeping up with the times.

 

How much real estate have you personally sold in the last two years in my neighborhood? Obviously the one who's sold the most must be dong something right.

What is your average list price-to-sales price ratio? You  want to avoid an agent who attempts to secure a listing by deliberately overstating the value of your house. The way to uncover that tactic, as well as gauge the overall effectiveness of the agent, is to ask for his or her average days-on-market  and list-to-sales price ratio. To verify those numbers, get a list of houses they've sold in the last year.

 

Be aware, however, that the easiest way to sell a house immediately and for 100% of the listing price is to sell it for less than it's worth. That's why it's crucial for you to visit as many houses as possible currently for sale in your neighborhood. If an agent thinks your house is worth way less than you do, ask why.

 

What's your plan? Ask the agents specifically how they intend to market your house. In addition to the MLS, what else will they do to expose your house to the greatest number of potential buyers? Before you give anyone a listing, get a written marketing plan. Ask to see samples of ads, brochures or other marketing materials they've used in the past.
 
Remember: This is the most important thing they're bringing to the table, and the best way to compare agents.

 

How about a few references? This isn't the best method of picking a professional -- nobody's likely to give you the name of clients who hate them -- but it's part of any interview process, including this one. When you get the list of references, call them.
 
What am I going to be signing? All agents will arrive at your first meeting with a packet that includes a copy of the listing agreement -- they're hoping you're going to sign it on the spot. You're not. But you do want a copy so you can read and understand it in advance. Other documents you might ask for are the agency disclosures and seller disclosures.
 
Can you hook me up with other pros? An experienced agent will have a list of other professionals you might need: home inspectors, title companies, handymen and others. Ask for that list, but also ask if the agent is collecting a referral fee.

 

How much do you charge? If you've followed all the advice I've listed thus far, you're probably talking to the highest-quality and most experienced professionals in your area. That means they're probably the least likely to discount their commission. That’s OK.
 
However, I've negotiated commission discounts with agents before, but it's almost always in the final negotiation of a contract, when the parties are close to a deal but deadlocked.

 

Example: When I sold my father's house, the buyer and I were $500 apart and at an impasse. So I asked both the buyer's and listing agent to contribute $250 each from their commission so we could get a deal done. They both readily agreed.

 

Will you let me out early if I'm not happy? A good agent will let you out of the agreement if you're unhappy with the agent's work.

 
What can I do to make my house as marketable as possible? A good agent is going to have lots of tips. Compare the suggestions you get from various agents.
 

Approach these meetings as if they're a job interview, because that's exactly what they are. You're about to pay someone a great deal of money entirely for their marketing expertise, so stay focused on that. Keep in mind that these are salespeople with experience in controlling the conversation. Don't allow it. You're the employer, they're the hopeful applicant.

 

More from Money Talks News and MSN Money:

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