Having been in the construction business for over 40 years, I have been associated with Realtors for my entire life. Whether the Realtor was selling my own home, or involved with commercial, industrial or multi-family projects, they are a part of the team. A Real Estate Broker can wear several different hats and I have had experience with them, in all aspects of the industry. However, I would assume that the majority of questions regarding Realtors on this website would concern the aspect of residential properties. I will address this aspect of the profession first, and will then provide some brief comments regarding other aspects of the profession.
The residential Realtor and what should we look for when selecting my real estate broker?
1.) It is my opinion that a successful relationship between a home owner and a real estate broker should start as a comfortable, mutually respectful relationship. In today’s real estate marketplace, this relationship may last a long time, until that residential property is either sold or purchased. It is very important that you feel comfortable with your real estate agent. I consider any Realtor that I deal with as a friend that I respect and whose opinion I value. This is important, the relationship must be honest and friendly to allow decisions to be made that are beneficial to both parties.
2.) Do not be afraid to interview a number of different realtors prior to making a selection. A realtor is like any other professional and should be capable of presenting themselves properly during an interview. I do not suggest that the initial decision on a Realtor be made due to a family commitment or on the simple recommendation of a friend. Take the time and the effort to research the available Realtors and ask specific questions that will allow you to make a formal and educated decision based on the knowledge that you have accumulated.
3.) Real estate is an analytically represented profession. By analytical, we mean that the success or the failure of a realtor can be relatively judged by numbers. This is a good way to measure the success of individual Realtors and a simple spreadsheet identifying each Realtors numbers will be helpful. What are some of these numbers?
a.) A percentage number, based upon the Realtor’s average selling price, in comparison to the original asking price, of the properties that they have sold. This comparison as a percentage, will identify the amount of value that is lost, to make a sale, as compared to the value that was originally asked for the residential property. This is an important number and is significant to identify how accurate the original asking price was in comparison to the marketplace.
b.) A timing number, based on the market time for the homes that the Realtor has sold? It is obvious that if the home is priced correctly initially, the selling time, should be consistent with the present market. If homes appear to be selling in your neighborhood within 60 days of posting, and your home has been on the market for the last 120 days, either the value of the home is too high, or there is some issue that is specifically causing the home to remain on the market. This is important to understand and evaluate. Of course it will require some research and investigation of the market to understand the nuances that either stimulate or suffocate your specific real estate market.
c.) Compensation number, basically what is the fee? Some realtors are independent and can offer special, or more economical rates, others are with larger organizations that establish the fee for a sale. In most cases, the fee is a percentage of the selling value of the home. In a normal situation, the seller pays the realtor fee, not the buyer of the property. Of course, special incentivized programs or special considerations, can be customized to the specific property sale, however, in general, the seller will pay the realtor. The amount of money that will be taken off of the sale of the home is an important factor in selecting your Realtor.
These are the basic three numbers that can be researched and analyzed to assist you in making the best selection of your Realtor.
There are other specific factors that should also be considered, that are not number driven.
1.) How do you establish my initial selling price? There are several different methods, that realtors use to establish the value of a property. There certainly is a very analytical means of this process, but there is also an impression of the market, and the innate knowledge of the inner workings of the local real estate market as well as the attitude and physiological aspect of the real estate market immediately around your property. Your Realtor should have an intimate awareness of this marketplace. I have found that the local Realtors are much more tuned into the local politics, the local school systems, etc. and can represent the seller in a much more intimate way.
2.) Can the realtor provide a comprehensive study and history of the real estate market in your neighborhood? There is a lot to learn from past real estate sales, and the historical data of the marketplace. Can your realtor provide comparisons and historical data to support their suggested initial market value of your home and can this information provide some guidance as well as prediction of the future. If a Realtor understands the local marketplace and supports this understanding with analytical historical data, they will be better able to service you as the seller. Real estate is definitely a trending industry and the marketplace needs to be clearly understood and predicted to properly sell a property.
3.) What are the types and forms of marketing that the realtor will engage in, to sell your home? Will the home be placed online, in the paper, in real estate brochures, etc.? This is important, because these types of advertisement, signify money coming out of the realtor’s pocket. In some cases, the attitude of some Realtors is not to spend much money on advertisement up front, until it becomes obvious the property is not selling. In other situations, the initial advertising campaign is hit hard and heavy, in an effort to immediately sell the home, and not allow the home to bog down. It is fair and honest to identify the two strategies with your potential Realtors, and specifically ask your Realtor how they intend to sell your property.
4.) Will there be opportunity for open houses, and how many are anticipated? What is the management of the open house, and will there be a principal from the Realtor at the open house? An open house is both a positive and a negative issue, when it comes to advertising your home. The positives of an open house is the obvious, publicity and advertisement. By allowing individuals to enter and tour your home, you are advertising the home to their families, friends and other relations. However, by opening your home, you are allowing total strangers into your home, without any means of true identification and vetting. There are two different views on open houses, and the Realtors that you are considering should acknowledge how they feel about open houses.
5.) Term of the sale. This relates to the terms of the Realtor agreement. What is the fee, and how long will the agreement last? Some Realtors prefer to have an unlimited agreement, which is only terminated at the point of a sale. Others will initiate a shorter time period, to indicate their confidence of a sale, and therefore secure the deal. I personally prefer a 60 to 90 day agreement, with the opportunity to renew, if the home has not sold. In my opinion, if the home has not sold within a 90 day period, either the price is too high, the advertisements are inadequate , or there is some other factor that is stagnating the selling of the property. If this becomes a concern, why not allow another Realtor to take the property, and try to better the performance of the initial Realtor?
6.) Special provisions / allowances. Is there something that can stimulate the sale of the home, that both you as the seller, and your Realtor can provide? For example, this could include a new car for larger real estate transactions, or a new kitchen, new flooring, etc. Or, in some cases, the accommodation of a financial stimulation, if the home is purchased, such as a monetary sum to provide home furnishings, window treatments or overall interior makeovers. Be creative and open with the Realtors that you are considering, and see what types of special provisions they can suggest. This is an excellent method for establishing an understanding of the individual you are actually going to be dealing with.
In general the overall selection of your initial Realtor will require some research and diligent investigation and work. To make the best decision possible, and to feel comfortable with your Realtor will require you to expend some energy and time. However, once you are into the marketplace and your home is now on the market, you will immediately feel and sense the abilities of your Realtor. Real estate is not a complicated game, due to the limited number of homes on the market, and the amount of new homes that are added each day. What will occur, is that you will be overwhelmed at the onset of the search and will feel that the task is daunting. As you become aware of the homes on the market and the ability to identify these homes on your own computer, each day, you will find that you will become very familiar with the marketplace, and will be capable of determining whether you have selected the proper Realtor or not.
A few observations regarding the use of a Realtor to purchase a home.
1.) Normally the Realtor used to purchase a home will only secure an entire commission if they happen to sell you a home that they represent on the seller’s side. If they sell another Realtors home, the percentage of the commission is determined by the two Realtors, the one representing the seller and the one representing the buyer.
2.) The Realtor selected to help you purchase a home, will try and convince you that their listings are the best real estate deal out there. In most cases, the Realtor representing the buyer will exhibit less energy searching for another Realtor’s home, than pushing their own.
3.) I recommend that, if you decide to engage a Realtor to find you a home, that you pursue the objective also. I can personally remember consistently offering suggestions to our Realtor, of homes that I had found in the paper, that could be interesting. Imagine what I could do now with the ability of researching through the computer.
4.) Although Realtors would like you to think otherwise, there is NO reason why you cannot communicate with a Realtor selling a particular home yourself. The sellers Realtor will all ask you if you are affiliated with a Realtor. You can answer honestly, but indicate that you have no written agreement with that Realtor. Unless you have a formal agreement, that assures the Realtor trying to find you a property, that they have an exclusive, you can simply not include them on a property that you have found. This entire concept is one of intimidation and guilt on the part of the Realtor, when it comes to finding a home. If you find it, you can make whatever decision you want, on purchasing that home. The only formal agreement with a Realtor, if you have not signed anything, is the agreement between the seller of the home, and the Realtor representing the seller. Yes you may feel bad that you have had a Realtor looking for a property for you to buy, however, if they weren’t able to find the property and you did, there is no legal obligation that they be involved.
How does a commercial real estate broker, differ, from a residential broker?
This is a difficult question, due to the fact that there is an overlap that occurs between the residential Realtor and the commercial Realtor. However, I will list some observations regarding the difference.
1.) If the commercial Realtor represents an owner of apartments, retail or office space, then they are usually more interested and experienced in leasing the space. There are commercial Realtors that never actually sell a property. They are educated and knowledgeable with leases and the formalities and legalities of a commercial and residential leases. If the Realtor is experienced with rental apartments or homes, then they are also experienced and knowledgeable regarding leases, and not sales.
2.) Developers, whether large or small, also have Realtors that will represent them, regarding the leasing of their properties. However, they also employ Realtors that are experienced in the selection of large pieces of land to develop, and incorporate construction projects on. This type of commercial Realtor is a highly motivated, experienced professional, who understands the formalities and the legal requirements of sub divisions, acquiring multiple properties to form a larger parcel, right of ways, easements, etc. A Realtor that is engaged in larger multi property acquisitions, is another level of professionalism and knowledge, in the real estate field.
The most important requirement for an individual to select the proper Realtor for their residential property or their search for a home, is their mutual relationship with the Realtor. All of the techniques and questions summarized, at the beginning of this webpage should be followed and used to guide you in making the proper selection.
However, you must be comfortable and secure in the decision, that this individual representing you as a home seller or buyer, is acting on your behalf, and will make the best deal possible for you as the client.
Good luck and take your time in selecting the proper Realtor for your sale or purchase!