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Finding a Good Broker Takes Work

21st February 2012
By Ankan in Real Estate Law
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You can sell your house without a broker — and save yourself a ton of money in the process. But there are times when going it alone just doesn’t make sense. You may need to sell fast, or simply not have the time to devote to selling your house yourself. In that case, a real estate broker is your only option. But don’t just pick the first one who walks in your door and tells you selling your place will be a cinch. Here’s how to find the best one.

First of all, you want someone who has a strong track record selling your kind of home in your neighborhood. Some brokers specialize in starter homes while others sell more trade-up homes. Put together a list of brokers by asking friends and neighbors for referrals. If you’ve lived in the area for a while you probably have a sense of which firm has the most market share. If you have time, attend a few open houses one weekend to see some brokers in action. You may be tempted to give your listing to a friend, but that can easily backfire since disputes with brokers are common.

Interview brokers over the phone. A top broker will know your particular market, as well as the schools, taxes and local transportation. At least four to five years of experience is ideal, but someone new at the game may devote more energy to your sale and be more negotiable on the commission. They should have access to and use your area’s Multiple Listing Service (a database of all available properties that brokers use to find homes to show to buyers), and be willing to split their commission with another broker who brings a buyer to the table.

We don’t put much stock in titles, but here’s what they stand for: All real estate “agents” must be licensed by the state (requirements vary). They can take an additional test to become a real estate “broker,” which means they can run their own office. A “realtor” is an agent or broker who is a member of the National Association of Realtors. That only means they promise to adhere to a code of ethics.

Of course you want someone who will give you a break on the commission. If yours is a seller’s market, just tell brokers that if they want your listing, they’ll have to shave a point or two off their rate (that may not sound like much, but one percentage point amounts to a 33% cut in pay for the broker, assuming they will split a 6% fee with another agent). If it is a buyer’s market, you may have to be more creative to get a break. Many agents will give you a discount if you give them an “exclusive” — that is, let them show the home for a couple of weeks without putting it on the MLS. That way the agent won’t have to split the commission with another agent. If it is a very high-priced home, or if you are moving up to purchase another home through this same agent, you can usually get a break.

In some areas it’s worthwhile checking in with a discount broker. An expanding field, these agents will take a flat fee or reduced commission to provide a lower level of service. Some will list your house on the MLS and handle negotiations with the buyer, leaving showing the home up to you. The problem is that other agents don’t like to work with discounters so you may not get much traffic through your home. If you go with a cut-rate broker, make sure they have a good track record.

On a second visit, top brokers will usually make a formal presentation, giving you a detailed marketing strategy that describes their plans for advertising, open houses and marketing to other brokers. You should also get a suggested list price for your home (based on comparable sales in the neighborhood) and an estimate for the amount of time it will take to sell. Don’t be fooled into choosing the broker who gives you the highest price. Some brokers will set an unrealistic price just to get a listing.

You can’t be sure you’ve found your sales agent until you actually sign the listing agreement. Some brokers will balk at the guidelines we recommend and you may need to alter the agreement a little. You want the right to take the property off the market for any reason, to switch brokers or cancel the agreement without penalty if you are unsatisfied with the broker’s efforts. The agreement should be in effect 90 days and should only have a six-month period where you would owe this broker a commission if someone they showed the home returns to buy it later. The listing agreement also puts in writing the agreed upon commission, parameters for marketing your home and receiving offers. Your agent should agree to continue to show the property as a “pending sale property” on the MLS until closing.

All this may seem like a lot of work before you’ve even put your house on the market. But if you choose your broker wisely, the selling process should be fairly hassle-free. After the sale you may even feel like the agent actually deserves the fee.
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