Buying or selling a home or investment property may be the largest single transaction you ever make. Surely such an important transaction – commonly worth hundreds of thousands of dollars – and occasionally millions of dollars, warrants a rational, deliberative process.
There are no hard-and-fast rules to selecting a real estate agent. Experience counts, yes. But sometimes you can be well-served by a young and hungry agent with a lot of energy as well. Here are some general guidelines about what to look for.
A License in Good Standing
The first criterion is to find a real estate agent who is duly licensed in your state. This is crucial, because real estate agents are held to a rigid professional standard of conduct. If agents are guilty of professional misconduct, they can have their real estate licenses suspended or revoked. Even if their actions don’t rise to anything worth killing a career over, state licensing boards do keep a record of disciplinary actions or complaints.
Even great agents occasionally get a client who just can’t be pleased. But if you see a pattern in the agent’s background of issues that come up over and over again, you may want to keep looking.
Another reason to look for a license is safety. Real estate agents carry a special kind of insurance called “errors and omissions” insurance, or “E & O.” Think of this as malpractice insurance for real estate agents and brokers. As hard as we all work, sometimes things go wrong with a transaction. If something does go haywire and you suffer economic damages, errors and omissions coverage helps ensure that the money is there to compensate you. Without it, even if you sue the agent, you may never be able to recover the damages. Use licensed real estate agents. By the way, in some states, a real estate agent whose license is in an inactive status is not required to carry E&O insurance, so check with your state’s licensing division to ensure the agent’s license is in an active status.
Investment Property Experience
People look at investment properties with different eyes than people who are looking at buying a home in which they plan to raise their families. For real estate investors, it’s important to consider non-emotional factors, such as expected cash flow, return on investment, and the costs of expected upgrades and repairs. Some agents have more experience working specifically with real estate investors than others. Just as importantly, some agents may have more contacts in the local real estate investment community than others. For those looking to sell quickly, and who are willing to discount their properties to attract investors, a strong Rolodex of qualified investors – who are both in the market to buy property and who can afford it or qualify to finance it – can be a crucial consideration.
One idea: Ask successful real estate investors in your community what agents they personally use. Sometimes, that investor may be willing to buy the property directly from you – saving you a hefty agent’s commission! More often, though, a good referral can save you weeks or months of waiting for your house to sell in a stagnant market, because your real estate agent just doesn’t have the natural market to place the home.
Match the Real Estate Agent to the Property
Ideally, your agent should routinely handle properties that sell in your price range. If you’re looking to sell a $95,000 condo, you don’t necessarily want the agent who sells a lot of $1 million dollar mansions. The agent should have a database of contacts and possible buyers who are interested in the specific property you are looking to sell.
A Real Estate Agent Who Listens
If you’re buying, look for agents who are sensitive to your concerns. The best agents will listen to your specific concerns – and then go the extra mile to find properties that are suitable for you.
Get an Agent With a Plan
If you’re selling, ask your prospective agent how she plans to market your property. If her whole marketing plan consists of putting your property up on the MLS and praying, look for someone else. The best agents are constantly networking and phoning their contacts, and they go to get-togethers with other real estate professionals in various disciplines looking to make contacts and execute transactions.