Here Are Some Questions Sellers Should Ask When Hiring a Listing Agent

Do you know what to look for in a listing agent, and the questions to ask during a listing presentation?

You’ll probably want to know their level of experience, competence and success in selling similar properties, hopefully within your city or neighborhood.

Like you, I monitor the real estate activity where I live, and I’m astonished how many homes are listed by agents I’ve never heard of. As I write this on Monday, there are 50 active or pending listings in my area, represented by 40 different agents!  No agent has more than three listings. And despite practicing real estate here for 17 years, I only recognize the names of 11 of them.

This is typical of every city. Where did the sellers find all those different agents to list their homes? Many, I suspect are friends and family — every agent’s biggest “competitor.” In some cases, the seller had just bought their replacement home elsewhere and was convinced by that listing agent to list their current home — not the best decision if that agent is unfamiliar with your neighborhood, lives far away, and is unable to show the home on short notice, answer questions from buyers, or keep your brochure box well stocked.

Or perhaps the agent sent a letter or taped a note to your door claiming to have a buyer for your home. That earned him or her an interview, in which the agent said that his buyer found another home but convinced you to list with them.

Let’s say, however, that you want to interview  listing agents and make a rational hiring decision.

First, choose the agents to interview based on their location and experience in your neighborhood or city. Second, study their active/sold listings to see (1) their geographic distribution and (2) how well they are presented on the MLS. 

For this you can use a shortcut I created,  FindDenverRealtors.com, which takes you to the page on Denver’s MLS for searching agents by name. In my case, you’d see a profile and my active, pending and sold listings. Search for the agent(s) you’re considering. Read their profile, if they created one. Look at their current and sold listings. Click on one or more of them to see how they described the home on the MLS. Did they list all the rooms, not just bedrooms and bathrooms, providing dimensions and descriptions, or just enter the mandatory fields? Keep in mind that, the best indicator of how they will serve you is how they have served previous sellers.

Looking at those listings will answer the most important questions which you’d ask in person, but you won’t have to take their word — the truth is there in front of you. You’ll learn, for example, whether they did point-and-shoot pictures or had a professional photographer shoot HDR (magazine quality) photos, and whether they created a narrated video tour or just a slide show with music.

Having chosen who to interview that way, ask these questions of those you invite into your home for an interview:

What commission percentage do you charge? Keep in mind, there is no standard commission. It’s totally negotiable, and the industry average is in the mid-5’s, not 6%.

See whether the agent volunteers that they reduce their commission when they don’t have to pay 2.8% to a buyer’s agent. If you have to ask them, consider it a red flag. They hoped you wouldn’t.

Ask the agent whether he or she will discount their commission if you hire them to represent you in the purchase of your replacement home.

Hopefully the candidate will have researched the market and make a sound recommendation of listing price. Beware of agents who inflate their suggested listing price so you will list with them.

When setting the appointment, ask the agent to bring a spreadsheet of their sold listings with dates, days on market, listing price and sold price.

Lastly, how will they promote your listing?  Measure their promises against what we do, published at www.HowWeMarketListings.info.

Off-Market Transactions Hurt Sellers By Shutting Out Buyers Who Might Pay More

The sale of homes without listing them on the MLS frustrates would-be buyers who are waiting for just such a home. Those frustrated buyers might have paid more than the actual buyer, in which case it’s fair to say that both buyers and sellers have been harmed.

This is an update of a column with the same headline published exactly a year ago. On March 22, 2018, I wrote that in January and February of that year 4.4% of the sold listings were only entered on the MLS after closing. It’s even worse this January and February, when the percentage of Denver sales showing zero days on market rose to 6.3%. Another 2% sold in one day, which is still not enough time to expose a listing to all potential buyers.

I have determined that with proper exposure, 4 days is the “sweet spot” for listing a home and getting the highest possible price for it. That is office policy at Golden Real Estate, violated only when the seller insists on selling sooner for one reason or another, such as to a friend.

Analyzing the 101 Denver sales in January and February, the median sale was for full price, which makes sense. However, half the 86 Denver homes which sold after 4 days on the market garnered from 1% to as much as 10% above their listing price. That can amount to a lot of money “left on the table” by sellers who chose (or were convinced by their agent) to sell without exposing the home to more buyers via the MLS..  

It’s reasonable to ask how listing agents may have profited (at their seller’s expense) from keeping listings off the MLS. An analysis of the Denver listings that were entered as sold with zero days on market this January and February reveals that 20.8% of them were double-ended, meaning that the listing agent kept the entire commission instead of sharing it with a buyer’s agent. Not one of the homes that sold after 4 days on the MLS was double-ended. It seems obvious to me that many listing agents are convincing their clients to sell without putting their home on the MLS so they can increase the chance of doubling their commission. Putting their self-interest ahead of their clients’ is a serious violation of both ethics and law.

This is not to say that zero days on the market is never in the best interests of the seller. For example, the seller and buyer might know one another, or otherwise found each other, and simply asked an agent to handle the transaction without seeking other buyers.  Or perhaps it was a for-sale-by-owner property where an agent brought the buyer and entered the sale on the MLS after closing as a courtesy to other agents and to appraisers. Or a seller might ask to keep the home off the MLS because he/she does not like the idea of opening their home to lots of strangers.

One would hope, however (and sellers should expect), that when a broker double-ends a transaction, he or she would at least give the seller a break on the commission, rather than keeping the portion (typically 2.8%) that would have been paid to a buyer’s agent. This practice is referred to as a “variable commission” and is office policy at Golden Real Estate. Unfortunately, however, only two of the 21 listings that was double-ended and sold without being put on the MLS offered their sellers this discount. The other 19 enjoyed the windfall of keeping the full commission to themselves, without sharing that windfall with their sellers.

Some agents put listings on Zillow as “coming soon” while holding them off the MLS as a technique for attracting a buyer before other agents know about the listing. The Real Estate Commission addressed this practice in a 2014 position statement, stating that “if the property is being marketed as ‘coming soon’ in an effort for the listing broker to acquire a buyer and ‘double end’ the transaction, this would be a violation of the license law because the broker is not exercising reasonable skill and care.”  Further, the commission stated, “a broker who places the importance of his commission above his duties, responsibilities or obligations to the consumer who has engaged him is practicing business in a manner that endangers the interest of the public.” 

Sadly, that is still happening.