Why Finding a Good Realtor Matters (but Still Doesn’t Solve Everything)

You’ve completed the prerequisites of home buying: the 4 P’s of buyer preparation. Now it’s time to find a realtor. Maybe.

There are three basic kinds of realtors:

Buyer’s Agents: these agents represent you, the buyer, in negotiations with Seller’s Agents. They will help you find listings, familiarize you with the market, write up your offer when the time comes, and negotiate on your behalf. You don’t technically need a Buyer’s Agent. They can be nice to have since they will typically have a solid grasp on the market and can access databases that you can’t. They split the commission (usually 6%, which the seller pays) with the Seller’s Agent.

Seller’s Agents: These agents represent the seller, and are often known as the Listing Agent. They represent the seller during negotiations, and are compensated by the seller (they either get the full 6% commission, or split it with the Buyer’s Agent).

Dual Agents: These agents purport to represent both the seller and buyer. As you might imagine, there is a significant conflict of interest with this setup (it’s even illegal in some areas), but nonetheless you may encounter Agents who offer to represent both sides. In theory they would act as a sort of mediator, since it’s in their interest that the sale is completed to the satisfaction of both parties. They are compensated by the seller and receive the full commission.

Note: The difference between a “Broker” and “Agent” varies by area–sometimes, the words are synonymous. Other times, there is a distinction. It’s worth a quick Google search to find out the definition in your area. I typically use the term Realtor to encompass both types.

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Do I really need a Buyer’s Agent? People have different opinions on this, but in general I think it’s a good idea to work with a Buyer’s Agent, provided you find someone you get along with and find trustworthy. You’re not going to pay extra to have a Buyer’s Agent (their commission comes out of the Seller’s Agent’s commission).

How do I find a good Buyer’s Agent? Recommendations and referrals are always a great place to start. If you don’t know anyone who has bought or sold a home recently, check out online review sites like Yelp! You can also meet agents at open houses. Seller’s Agents (and their colleagues) often hold open houses for the primary purpose of interacting with potential clients. If you have good chemistry with an agent, by all means get their card and set up an appointment to talk further.

Should I interview potential Agents? Absolutely. You should do your best to get a feel for them before you dive into house-hunting. Many novice buyers feel a bit ambushed and intimidated by the whole process, so before you get overwhelmed be sure you’ve got a solid partner in your agent.

What should I ask? Here are some questions to get you started:

• How long have you been in the business? I tend to like realtors with experience. If they’ve survived the real estate business for longer than a few years (including up and down markets), I feel like they’re more committed to their career and reputation. That said, newer agents may be “hungrier” and willing to work harder for you.
• What is the price range do your typical clients? Your agent’s clients should be similar to you–that way you don’t run the danger of being small potatoes to your agent, or of them being unfamiliar with homes and the needs of buyers in your price range.
• How do you normally work with clients? Some agents come to open houses with you. Some just spend one day touring with you, then send you listings so you can visit open houses yourself. They all will coordinate with Seller’s Agents to show you homes that don’t have open houses. The idea is to find out their work style, and also to see how they learn about your preferences.
• Do you require that I sign an exclusivity agreement? Some Buyer’s Agents require that you not work with any other agent. This isn’t an automatic red flag, but I prefer agents who retain clients through good service rather than through contracts.
• Will I be working directly with you? Make sure that you are a valued client and won’t get passed on to an assistant.

What are my obligations to my Agent? Keep in mind that until you close on your home, your agent gets paid nothing. They do a lot of work that may never lead to payment–buyers change their minds, decide not to buy, or change agents all the time. Your top priority is yourself, but be sensitive to your agent’s situation. Communicate extensively–what do you like/not like? How do you prefer to work? If you’re not happy with something your agent is doing, tell them. Give them the opportunity to serve you, and be respectful if you decide to change agents or not buy. Unless you sign a contract, you don’t technically have to be exclusive with one agent. But it’s typically frowned upon (no surprise) to run around with multiple agents. Unless you have a good reason to work with multiple agents, I think it’s best to find one great agent and work with them exclusively.

What are my Agent’s obligations to me? Your agent should be communicative and responsive to you. They should not show you houses above your price range, unless you say you’d like to see these houses (in some markets, you can reasonably expect to negotiate down the price). Your agent should listen to you–your agenda should dominate. If you feel an agent’s agenda is dominating, it may be time to find a new agent. Once you’re ready to make an offer, the agent should work on your behalf and execute your wishes. You can of course ask their advice and opinion, but ultimately THEY work for YOU.

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The bottom line:

Real estate agents are there to help you navigate the process. And most of them do a great job. But you have to tread with caution. Agents can be a great asset, or a horrible hindrance. The above advice is a good way to protect yourself.

Ultimately there are two things to keep in mind: 1) there is no real quality control in real estate, unless you go through a thorough screening process it’s hard to know if you’re dealing with a good egg, a bad egg, or just not the right egg for you until it may be too late; and 2) even the good eggs only make money when you complete your purchase. Even though an agent may really believe they have your best interests at heart, their job is ultimately to facilitate your home purchase. They are paid only when you buy, and the more expensive the house, the bigger the commission.

So find yourself a great realtor, but never forget that no one cares more about your interests than YOU do.