Please note: the following article is from chapter two of my book, “Get the Best Deal When Selling Your Home in Silicon Valley”.
A real estate agent and a Realtor® are not the same thing. Both may be experienced in the industry, but a Realtor® is a member of the National Association of REALTORS®, and follows a specific code of ethics. Anyone who passes their state’s real estate licensing exam can become an agent. They may also be referred to as a licensee or real estate salesperson in other parts of the book. There are no cost differences between hiring an agent and a Realtor®.
Although there are some costs associated with enlisting an agent or Realtor®, there are also substantial benefits. For instance, not only do Realtors® have access to thousands of potential buyers that a homeowner may not be aware of, but they also have the knowledge to make sure that you are protected both financially and legally. Additionally, there is some element of risk involved in selling your home, besides the obvious economic one. Realtors® know important legal disclosure requirements. Agents are well aware of the fact that you are allowing complete strangers into your home, and therefore know what precautions you should take to protect both your family and your possessions. But these are just a few of the reasons why enlisting the help of a Realtor® is a good investment. A Realtor® can:
✓ Use extensive data and professional experience to assist in determining the best asking price for your home.
✓ Provide information about your home to thousands of potential buyers and their agents.
✓ Screen buyers and negotiate an offer and a purchase and sale agreement.
✓ Take on potential legal obligations and risks.
✓ Take you through every step of the process, all the way to closing and beyond. A good agent will be happy to assist you long after closing if need be.
Real Estate Credentials
What to Look For
Picking an agent is a business decision that should be taken with the same deliberation as any other important financial decision. You will want an agent who specializes in your community, who is experienced and who you are confident will work hard for you. You’ve probably noticed that when we’ve used the term Realtor® in this book, it is capitalized and the registration mark is used. There is a reason for that. The term Realtor® is a trademark of the National Association of REALTORS® (NAR), and anyone who uses that term as part of their professional identity must be a member, not only of NAR but also of their state and local associations. Anyone who is not a member, but is legitimately working in the real estate profession, is still licensed by their state real estate commission and can be identified as an agent, a real estate salesperson, a real estate broker and so on.
When Realtor® is used, however, it means several things. NAR members have training available only to members. They have the benefit of local meetings and state and national conferences where they can network with other Realtors®. Many deals are actually made for buyers and sellers at those events.
There is a price to pay: Members subscribe to a code of ethics, which commits them to conduct their business with a sense of fair play. The public has some recourse when they feel they have been lied to, mistreated or cheated. They can file an ethics complaint with the local association requesting that a Realtor® be disciplined, or request arbitration if they feel they have actually been cheated out of money. The Grievance Committee and the Professional Standards Committee of the organization handle these complaints. A member is always bound to submit to the grievance process when a complaint is initiated by a buyer or seller.
Members have to pay dues, and the Multiple Listing Service (MLS) charges other fees to maintain a membership in good standing, but the bottom line is that they are in a position to provide much better service to you than nonmembers.
Those who do not have the Realtor® designation operate independently. They often do not do enough business to justify the costs involved in belonging to the NAR. While not always the case, many are retired from other professions or otherwise part-time in this profession, so they are not bound by a code of ethics that governs their professional actions, and in some areas they do not have the benefit of MLS access.
So for starters, get a Realtor®. You’ll usually find the designation on their business card.
History
If you were taking in a roommate or boarder, you would screen that person to see if you were compatible. If you were renting out property, you would take a rental application and check out the renter’s references and credit history. If you were going into business with or hiring someone, you would be smart to conduct a background check. It never hurts to know who you are working with. The same is true with a real estate agent.
As consumers, we have a terrible history of picking professionals—doctors, lawyers and, yes, real estate agents. We get a referral from a friend, attend the appointment, and that’s usually as far as we go. If we end up dissatisfied later, it’s our own fault for not taking responsibility for our own selection. We need to prescreen, ask questions, get a feel for how compatible we might be and determine how well that professional can meet our needs.
If you have a friend in the business, it can be difficult to select someone else, but it might be the most valuable decision you can make. We have known people who listed their homes with friends who specialized in commercial sales but had never sold a house. You need to ask some questions before starting with any real estate agent.
You want to make sure that they are the right person to represent you.
Get an Experienced Full-Time Agent or A Professional Team
Many consumers find it uncomfortable to ask an agent questions about their background, experience, and so on. In Silicon Valley, we have many former high-tech workers who have come into real estate sales (as well as lending, appraising, and inspecting). It is believed that at least one-quarter of all licensees in the U.S. have been licensed for less than five years (and Mary suspects that number is a low estimate for the Silicon Valley). So check and see if the agent you’re talking with is really experienced by viewing the California Department of Real Estate’s licensee lookup site: http://www2.dre.ca.gov/PublicASP/pplinfo.asp.
Most full-time agents work 40 to 60 hours a week or more. They are committed to their work and to their clients. A part-time agent is there to make a deal when it comes along, but either doesn’t need the income a full-time career produces, or isn’t making it yet, and may hold two or more jobs. Your Realtor® should be available and easy to get in contact with regardless of their hours.
Similarly, real estate teams usually have specialists handling different parts of the transaction, so you will almost always have someone available to provide seamless service. This can be especially beneficial if your Realtor® is on vacation or busy attending to other clients’ needs.
Questions to ask:
✓ Do you work full time in real estate?
✓ How flexible is your schedule?
✓ How available are you to show properties on weekdays, weekends, mornings, evenings?
Get an Agent Who Is Busy
Ask your potential agent how many sides they closed last year and the year before. A side is one side of the sale. When one Realtor® has a listing and another one brings in the buyer, each produces one side. An agent who has closed only four to five sides in a year is not doing enough business to merit having yours. Either they need money, just got started or can’t get enough business to survive and are on their way into another profession. An agent who has done eight or ten sides is not making a great deal of money but is surviving and probably growing, and believe it or not, they’re far above the national average. Beware of the mega-agent with the mega teams (5 or more on staff). Unless they are extremely well managed you can fall between the cracks because so many people are employed on the mega-agent’s behalf that no one is personally looking out for your single escrow.
An agent who is doing 20 or more sides a year is very busy—usually for a reason. They have attracted business, hope fully because they have served people well, although some Realtors® generate lots of business simply through smart advertising. It is, therefore, important to get a sense of how many transactions were results of referrals from past clients. Keep in mind that many good agents also have teams and assistants working for them. The top 1 percent of agents probably sells about four homes a month but they likely have an enormous team working for them. Clients working with these agents must be prepared to deal not only with the agent they hired, but with a 20-year old assistant as well.
Questions to ask:
✓ How many sides did you close last year?
✓ Is that usual for you?
✓ How many sides did you close the year before?
✓ Do you have an assistant or use an escrow coordinator?
✓ If you have a staff, how big is it?
✓ If I hire you, how often will I interact with you? Will I usually speak with you or with someone else on your team?
Now that you know how busy the agent is, ask how many of those sides were working with sellers and how many were representing buyers.
Questions to ask:
✓ What percent of your business comes from representing sellers?
✓ How much of your business comes from referrals?
✓ Can I speak with five of your most recent sellers?
Check out the Real Estate Agent’s Specialty
If you are selling a Santa Clara County, San Jose or Silicon Valley home, select an agent who specializes in residential sales. If you want to buy an apartment building or a business, select someone who specializes in commercial sales. There are numerous specialties in real estate, and your agent’s specialty should be consistent with your goals. Note that in larger metropolitan areas, Realtors® also tend to specialize in price ranges or with types of buyers. An agent who primarily sells estate properties in the millions of dollars won’t have the time for a $300,000 condo or even a $600,000 starter home.
Questions to ask:
✓ Do you have a specialty?
✓ What designations do you hold, and what do they mean?
✓ What are the price ranges of the homes you market?
✓ What area/region do you specialize in?
✓ Do you sell commercial and residential real estate?
✓ Do you also do property management? Do you also do loans? (Some of the worst agents we have “do everything” and are good at nothing!)
Make Sure the Agent Is Technologically Current
In today’s world, it is vitally important to work with professionals who are computer literate and have a grasp on the new gadgets designed to improve service to their customers. What does that mean?
First, many states require Realtors® to use certain forms in real estate transactions. Silicon Valley is a hightech mecca and agents here have adapted quickly to using these forms, which come in several varieties depending upon their board membership, region, or preferences. In the west valley communities of Los Gatos, Monte Sereno, Saratoga, Cupertino, Sunnyvale, Los Altos, Los Altos Hills and Palo Alto, the real estate board is SILVAR, the Silicon Valley Association of REALTORS®. The forms, Peninsula Regional Data Service (PRDS), are available on the Internet. The rest of the valley, (San Jose, Santa Clara, Milpitas, Campbell, and Alviso) is covered by the SCCAOR board, the Santa Clara County Association of REALTORS®. These areas tend to use forms provided by the California Association of REALTORS® via Win Forms.
It is important to realize that if you are selling or buying a home in our valley, either forms may be used. The purchase agreement, in particular, is quite different from one to the other, so it is important to be educated about the ramifications of using one over the other.
These forms are almost always available on computer programs, which presents the quickest, most accurate way to generate contracts or offers to purchase. Those who continue to write their contracts by hand or use a typewriter to fill in the blanks on standard forms as a matter of practice, as opposed to the exception, are living in the past, demonstrating an unwillingness to keep up with the times; they may not be capable of providing the best service. In all fairness, some agents meet their clients in non-office settings, and in these situations, it is simpler to use the hand-filled forms, but these instances should be the exception to the rule.
Other types of software allow Realtors® to track their customers’ needs, access increasingly more sophisticated MLS systems and communicate by email. Many Realtors® are wirelessly connected to their email via laptop or cell phone too. Mary has found that having email “in the field” is a tremendous advantage in quick response time to clients. Digital cameras allow photos and virtual tours of your home complete with interior and exterior views. Since some consumers use older computers that cannot view virtual tours, it is very important to have photo galleries of homes for sale with multiple pictures.
If the real estate agent you are interviewing is not able to utilize a computer, beat a hasty retreat. Make sure when an agent says they’re computerized, they don’t just rely on an assistant or a shared secretary to do all the computer work for them. Your house should have as much
Internet exposure as possible. Your wonderful home could be passed over while a competing house that is visible on the Internet is quickly snatched up.
Questions to ask:
✓ May I have your email address?
✓ What is the address of your website? Do you have more than one? What others do you link to? What sites link to yours? Where else do your listings appear?
✓ Will you take digital pictures of my home? How many pictures will appear in the MLS, or in other marketing materials? Will you create a virtual tour of my home?
✓ What other unique marketing do you offer? For example, Mary’s website does an Audio Tour and also offers a Fax Flier On Demand for those who call in and hear the audio tour.
✓ Do you also do print advertising or postcards?
✓ Can you show me samples of your listings, flyers, ads, Internet presence and websites?
✓ What is your marketing plan?
✓ What other technology do you use in your business?
This article will be continued in the next post on this blog…
