You see it on the Internet and hear it on television, an increasing amount of noise about 'outrageous' real estate commissions. The noise is coming, principally, from companies hoping to divert money from licensed agents into their own pockets, but, the nationwide average of a 5.2% commission does seem like a lot of money.
Most good agents actually earn very little on a per hour basis (there are many other hands dipping into that 5.2% and her ultimate net is probably closer to1 to 1.5%) and may return more than her commission to the seller in an increased sales price. The best agents certainly more than earn their commission, often as much after the sale as before it.
So, what does a good agent do? What should a seller expect from an agent in return for that commission?
- An honest listing price.
Pricing is key, and a seller should expect expert advice from his agent. However, sellers dig their own grave when they invite several agents to compete for a listing, and expect each to come up with a suggested listing price. Agents often (rightly) view the competition as hinging on price and have resorted to 'bidding for the listing,' assuming that the highest suggested price will snag the business.
You can't blame an agent for fudging the numbers a little to secure a listing, but since this is contrary to the seller's interests, he should level the field. The big relocation companies do not permit their sellers to discuss price when selecting an agent. When interview agents, question them about their experience, ideas, and references; do not mention price nor allow them to do so. Once an agent is picked on the basis of comfort level, energy, and ideas, then invite him to price the house.
At this point, you have the right to expect an honest evaluation of your home. This means well researched 'comps,' i.e. selling prices (very recent ones) on similar homes in or near your neighborhood. Selling prices are readily available from newspapers, the county assessor, or any number of other places, but an agent can quickly provide this information and give valuable insight beyond the mere number. 'Yes, the house was the same size as yours and on a similar lot, but it had a brand new kitchen with granite countertops, a master bath to die for, and a water view.' Or, 'Yeah, three bedrooms and two baths, but there was probably $10,000 needed to make it sanitary before a real human would move in.'
An agent can also supply information on the competition, houses currently on the market in your price range. You cannot get this elsewhere without prowling open houses or posing as a buyer and scheduling home showings. The agent may also have inside information on the selling price of homes under contract even though this information is not yet a matter of public record.
- Straight talk about EVERYTHING.
An agent's hardest job may be telling a seller the truth. Many sellers are outraged when they hear it, but if you are planning to pay 5.2% to the agent, prepare to welcome the bad news as well as the good.
The most painful truths are about odors, dirt, and clutter. An agent must fess up if that nice, cozy 'I'm home' smell is actually flattening buyers at the door, and then be willing to help identify and remove it. There was a perfectly lovely home for sale in my town. Where houses rarely lasted for the weekend, this one was for sale for over a year, listed with three different agents; the price reduced four or five times. The owners were desperate. They finally employed a totally unabashed older agent who told them that their home smelled awful and spent over two weeks tracking down the smell and hiring someone to eliminate it. There was immediate competitive bidding and the house sold near their original asking price. This was a good agent who more than earned her 5.2%.
If a house needs some basic maintenance, is cluttered, dirty, or smells, a good agent should not be afraid to tell the truth and help improve the situation.
- Advice and Guidance
A good agent should be prepared to help the seller accent the positive and eliminate the rest. This does not mean that she should get down on her hands and knees to scrub away gunk that might stick buyers to the kitchen floor, or go through and throw away the 30 year collection of magazines and newspapers that are obstructing entry to the guest bedroom. It does mean, however, that she will have the names of people or businesses that will do this and more. A truly good agent has a truly wonderful Rolodex (ok, a Palm Pilot) with hundreds of contacts who run yard sales, wash windows, appraise antiques, and so forth.
Much is being made of the need to 'stage' a home, there is even a new cable television show about it. Some agents are very good at staging, some even keep a garage full of furniture and accessories which they will haul in and use to stage. Don't count on this! Most agents are too busy to even stage their own homes, but they probably have the name of a good interior design person who specializes in homes for sale. Some will ask for a staging or home improvement budget and handle all of the arrangements (you just pay the bill.)
- Access, feedback, and follow up
If a buyer can't see it, he can't buy it. An agent is responsible for guaranteeing access to each and every buyer with an interest in the home. Depending on your arrangement, you have a right to expect that the agent will either (a) put a lockbox on the house in a manner that guarantees both access and security; (b) make keys readily accessible in her office; or (c) be available at reasonable times and with adequate notice to admit buyers or other agents with buyers. If an agent agrees to accompany every showing, you have the right to expect that she will be available to do so or will arrange for another agent to replace her in the event of illness, vacation, or other occasions of unavailability.
This, incidentally, does not end with putting the house under contract. You should expect your agent to be available to admit and accompany all of the people who will want to enter your home ' pest and structural inspectors, the appraiser, and the buyers who usually have a guaranteed right to several visits prior to closing.
An agent should keep in touch with you and keep you up to date. Don't expect feedback after every showing (this annoys the hell out of cooperating agents), but your agent should report general information, particularly any negative comments on price or condition, particularly if these can be easily addressed.
We will talk next about a few other things a seller has the right to expect from his agent. And, since all relationships, even business ones, are two way streets, we will also discuss what a seller should not expect from an agent, and what an agent has a right to expect from the seller.