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.

How Do You Know the Real Estate Agent You’re Interviewing Is Telling You the Truth?

This is a difficult topic, but it’s one that deserves discussion. As I’ve pointed out before, there are so many licensed real estate agents that fewer than half of them earn a living solely from brokering real estate transactions. (FYI, all ten Golden Real Estate agents are full-time, earning enough from their real estate careers not to require a second job.)

That means that the agent you are interviewing may feel lucky to have two or more transactions per year, and capturing you as a seller or buyer could be super important to him. This could cause him (or her) to exaggerate their level of success as well as their experience and market knowledge.

I can safely recommend every Golden Real Estate broker associate, not only because they are full-time and successful, but because they adhere to the Realtor Code of Ethics. I have let go previous associates when I observed or learned about ethical lapses. Unfortunately, all of us can recount times when we have observed ethical lapses by agents on the other side of a transaction.

The Pareto principle applies to real estate agents as it does to other occupations, with 20% of us doing 80% of the transactions.  And since the average real estate agent has only four closings per year, the median number of closings is probably closer to two. In other words, half of the licensed agents have two or fewer closings per year. That does not translate into a living wage.

In researching this topic, I googled the phrase “what does the average Realtor make,” and I urge you to do it, too — especially if you are considering real estate as a career.  It’s very discouraging.

A posting on www.TheStreet.com, for example, includes the following: “If you think you can just devote a few hours a week and make a nice income as a real estate agent, you are badly deluded. A national survey of agents and brokers who belong to the National Association of Realtors finds that agents who put in 60 hours or more a week have median earnings of $100,000 a year. By contrast, for those who put in less than 20 hours a week, the median is $8,930 a year.

    At Golden Real Estate we had about 100 transactions in both 2017 and 2018, or an average of 10 transactions per agent. We don’t need to mislead a buyer or seller regarding our level of experience and success. Also, we have weekly office meetings where we discuss all aspects of the business, often with guest speakers. We take the annual commission update class and the biennial Realtor Ethics class together in our office, so we’re all on the same page.

REcolorado.com, the Denver MLS, makes it easy to verify the level of experience of its members, and I have made it even easier by creating a shortcut URL, www.FindDenverRealtors.com, enabling you to search for an agent by name and not only see active and under contract listings but also their sold listings going back several years. Then you could click on a listing to see the quality and thoroughness of it.  That’s the best indicator of how well they’ll serve you.

One common mistruth told by agents is, “I have a buyer for your house.” All too often it’s a ruse to get your listing, after which they tell you that the buyer found another house, “but we’ll find you another buyer after it’s on the MLS.”

Another lie is “Our listing fee is 1%.” If you pause the end of that commercial (as I did), you’ll read that it doesn’t include the commission owed to a buyer’s agent (2.8% in our market), and if a buyer has no agent, the 1% fee is increased to 2%. Below is that freeze frame. The “fine print” is so small that I have transcribed it below the picture:

“Minimum commissions apply. 1% listing fee not available in all locations. Commission is subject to change. Buyer’s agent commission not included. For example, if the buyer’s agent commission is 2.5%, seller will pay a total commission of 3.5%. Listing commission increased by 1% of sales price if buyer is unrepresented.”