The New Investor’s Guide to Hiring a Real Estate Agent
After over 30 years in the real estate industry, I've seen how a real estate agent can make or break a deal, regardless of whether you're buying or selling. Of course, you need them not only to understand what you're looking to do, but also to be your ally in making sure the deal goes through.
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Recently, one of my employees was looking to purchase an investment property. Let's just say the real estate agent wasn't exactly the greatest, and it ended up being a much more difficult experience than it needed to be.
So, it really got me thinking, what should someone new to real estate investing be looking for in a real estate agent?
When it comes to selling real estate, there are so many different types of agents and areas of expertise.
For me, I’ve been a licensed Realtor®, a Certified Residential Specialist (CRS), a Graduate of Realtors Institute (GRI), and an assistant manager who trained other agents and took all of my broker credits. I’ve also been a property manager and a partner in a title company, while specializing in investment real estate and owning several rental properties.
But there’s more to it than that. Let’s start with areas of expertise and designations.
There are many agents who sell everything from cemetery lots to marinas. Today, everyone is a specialist. In the residential real estate arena, there are people who specialize in first-time homebuyers, veterans, investors, senior citizens, vacation homes, REOs (bank owned property), and luxury homes. Some are rental agents and property managers. Some prefer commercial apartment buildings, office space, condos, mobile home parks, storage centers, and industrial space, to name a few.
So, if you're in the market to purchase, you really need the type of agent whose expertise fits what you're looking for.
Usually, you'll want a buyer's agent to represent you and your interests.
[Buyer’s agent: A real estate agent who represents only the buyer of a property in a real estate transaction.]
If you're trying to sell real estate, the type of agent you'll need to interview for the job will depend on what you're trying to sell. Remember, you wouldn't hire an agent who specializes in vacation homes to represent you in selling an REO the same way you don't want a brain surgeon to operate on your foot.
Also, notice I said interview. Don't be afraid to interview several agents as well. This is very important whether you're hiring a buyer's agent or a seller's agent.
[Seller’s agent: A real estate agent who represents only the seller of a property in a real estate transaction.]
Other to-dos are to check their background, experience level, any recommendations from satisfied past clients, along with their particular area of expertise. Be sure to see what designations they have, if any, as well.
So, what does all this alphabet soup after an agent's name really mean?
It’s good to remember that in real estate sales, like many other sales positions, 80 percent of the work is done by 20 percent of the people. It’s also important to note that CRSs tend to earn more money on average and are in the top 3 percentile of all real estate agents in the country.
But there are many other designations, too, like ABR (Accredited Buyers Representative), CPM (Certified Property Manager), CCIM (Certified Commercial Investment Member), etc. Also, an appraiser may have any of the following: MAI, SRA, SRPA, SREA or RM designations.
Remember, real estate agents aggressively market themselves and their companies, so they all love to brag about something, but designations are only one of the ways to determine knowledge and experience level. You also want someone who is a good communicator and who will be patient in explaining all the necessary details of your upcoming transaction and processes.
Keep in mind, commissions are negotiable, and there are many agents today who even charge flat fees and "no-frills" levels of service. But be very, very careful because you quite often get what you pay for, which in some cases could mean lousy service from a lousy agent who doesn't want to put in much effort working for you.
Today, at my firm, we literally sell hundreds of properties, and we're dealing with a lot of agents. Yet we never even ask for as much as a referral fee. I want them to do a decent job for us more than I want the fee. Sure, there are times when an agent may have to take a short sale rate once in a while, but I never want them to have to pay a referral fee on top of that, too.
Length of Service
Most real estate agents require listing contracts for their services, and these can range anywhere from 3 to 12 months. It’s definitely something to be aware of.
Also, make sure that you are shown the comps (comparable properties) that are not only on the market today, but have sold in close proximity in the last 6 to 12 months.
If the agent is requesting a year contract, you can still opt for shorter terms, especially since you can always extend the contract. But you can also switch when the contract has matured if an agent just isn't getting the job done.
Besides knowing what type of agent you want to hire and for how much, as well as how long you want to try them out for, you still want someone with a good reputation, who you feel comfortable with and feel you can trust. After all, for many folks, this may be a very large asset or investment that they're trying to buy or sell.
So, if you're a newbie to real estate investing, maybe some of these tips will help you find the right real estate agent for your deal. Maybe some folks in the BiggerPockets community can chime in, too.
What do you look for when hiring an agent?
Leave a comment below!