These days a home is like a stock. It’s something you can research in quite a bit of depth online (and with the new DOJ vs. NAR settlement, this will become even easier). Some people are even buying homes sight unseen thanks to online virtual tours, and the ability to research almost relevant aspects of the home remotely. The quantity of information now available means that the same way you don’t visit a company’s factories before you invest in its stock, you no longer have to do a lot of ‘real world’ investigating before buying a house. As this world migrates online, so will the rest of the real estate universe. Mortgages, real estate agents, etc. better get used to it.

Lots of people these days consider trying to sell their home themselves. And you would think why not, when you can take the agent’s 6% commission and put it in your pocket. The story is not so simple. Not only can you avoid paying anywhere close to 6% by finding an agent at SeekingAgents, but the idea of saving a commission without giving up anything in return is quite misguided.

Below are 10 good reasons why you should work with a real estate agent when buying or selling your home.

1) Release of liability

Practicing real estate agents are forced to buy something called Errors and Omissions (E&O) insurance. This protects you in the case of a mistake in the sales process by giving you someone who is financially liable for the mistake — the agent’s insurance company. Without an agent, you will have no-one to blame but yourself if a mistake you make causes you financial loss down the road.

2) Local expertise

A large part of a real estate agent’s full-time job is to understand their local real estate market. This gives them insight into supply, demand, and many other relevant market factors. Having this expertise at your fingertips is definitely to your advantage when you are looking to buy or sell a home. Knowledge is power.

3) Experience in closing

Do you know how prepaid property taxes should be distributed between buyer and seller in your area? Do you know whether you can receive interest payments on your escrow payment? Most people don’t.

By knowing small, less obvious, details related to the closing of a real estate transaction, a real estate agent can save you many headaches as well as cold hard cash.

4) Sell for more / Buy for less

Research shows time and again that homes sold by real estate agents sell for a higher average price than homes sold “by owner.”

Real estate agents tend to be experienced negotiators. Some people are comfortable handling this part of a real estate transaction themselves, while others are not. For those who aren’t, selling a home at a 5% discount or buying at a 5% premium is a serious risk. A real estate agent can help you make sure you are receiving fair value.

Moreover, an agent could give you tips on how to present yourself and your home to get the best possible price. There are many things you could do to improve the value of your home, but only a small number are cost-effective. An agent can help you determine which improvements are right for you and your home.

5) Save money

This may sound a little odd, but many people who choose to sell their home “by owner” actually end up paying more to sell their home than people who list with an agent right away. How could this be you ask?

Over 3/4 of people who begin with the intention of selling their home themselves end up enlisting the help of a real estate agent. This means they pay twice. First, to market their home on their own, without the help of a real estate agent — and then again when they decide to pay an agent a commission anyway.

6) Going “By Owner” doesn’t actually save you a full commission — this is a myth

For Sellers:

1) More often than not, to attract buyers with real estate agents to your home, you will have to agree to pay the buy-side real estate agent. Typically this is half of a standard commission. This means if your commission would have been 6%, you reduce it only by 3% by selling “By Owner”.

2) Buyers are not stupid. If you are selling “by owner”, buyers know that you do not have to pay a 6% commission and will thus factor this into the bid they make for your home (they want a portion of the profits too). So your savings will actually be between somewhere between 0% and 6% depending on how good you are at negotiating. Moreover, if the buyer has a real estate agent, your savings will be only between 0 and 3% for the reason described above.

For Buyers:

1) Going with an agent costs you nothing as a buyer. In fact, if you use the agents at http://www.seekingagents.com/, your agent can get you a rebate check for up to 75% of the buy-side commission* at closing that you could not legally be entitled to on your own.

7) Objectivity

An agent is trained to look at your home as an asset like any other (like a share of stock). This is the attitude you must have when buying/selling a home, in order to achieve the optimal financial outcome. Unfortunately, it is very difficult for most people to keep this objectivity when dealing with their home. An agent can help you avoid the many problems you may cause for yourself if you are not objective about your transaction.

8) Save time

Time is money. A real estate agent is a specialist. When it comes to real estate transactions, a real estate agent can often do in one hour something that might require you 10 hours. By paying a real estate agent, you are saving lots of time that you could spend on other activities that are important to you.

9) A network of experts

A good real estate agent will know several top title insurance companies and real estate attorneys in your area. While it’s always a good idea to make sure these service providers are independent of the real estate agent themselves, you should not hesitate in asking for a short list of recommendations. This can save you the headache of looking for your own experts, and working with the first ones you find.

10) Peace of mind

When you buy or sell with a real estate agent you know you are in experienced hands. For most people, the purchase/sale of their home is the largest financial transaction they will ever make. A mistake can be exceedingly costly. It’s worth a few percent in commissions to ensure that you live happily ever after.

The long-standing feud between the Department of Justice and the National Association of Realtors is close to reaching an end. And it’s a pretty big win for consumers.

Two main positive emerge from this agreement. One is that those who run real estate websites can now know exactly what is and is not allowed according to MLS rules. Before, you were never sure if you were about to get kicked out of your local MLS for your activities online.

Second, it is now possible for brokers to post detailed information about listings, sold properties and other off-market properties as long as they make users register with an e-mail address to see this information. While that’s a burden, it’s not a huge one. If someone is motivated enough to use the information, surely they could come up with an e-mail address to get to it.

This is the type of information that internet users have been craving and will make it even easier for consumers to manage their relationship to their home transaction and the amount of involvement they want from their real estate agent.

More competition online means better service for homebuyers and sellers. This is exactly the type of consumer-empowering move that we at SeekingAgents support.

Check out the article at Inman to read more.

It’s official, we are experiencing the worst home price crisis since the 1930s. In the past year, home prices have tumbled by almost 15%. So much for the old dictum that you should put your money in real estate because at least then it’s safe.

That said, it’s amazing how resilient the economy has been to this drop. Most pundits wrote that the reason we stayed clear of a recession after September 11th is the massive increase in wealth people experienced thanks to appreciating real estate values. Why hasn’t the reverse of this trend caused a massive receession?

Some might say it has, but real estate is definitely not the only issue facing the American economy. I’d say if this slap is all the punishment we get for too loose monetary policy and dubious lending incentives for the last 7 years, then we’re getting off pretty easy.

5b) What is the average price of your listings in the past year?

Ideally, you want this response to be fairly close to the price of the home you’re looking to buy or sell.

5a) What percent of your listings sell within 90 days?

The average home in the US takes about 120 days to sell. If your agent sells over 50% of his homes in 90 days, they are above average. However, this is somewhat dependent on the market you’re in. In a hot market, the average time to sell can drop dramatically and vice-versa in a cold market.

4) How many years have you been working as a real estate agent? How many years have you been working as an agent in this area? Have you received any professional awards in this time?

Anything above 5 years as an agent in a given area is very good. Less experienced agents will sometimes be willing to go lower on commissions. Recognition within the industry is often a sign of a high-quality Realtor.

3) Are you a full-time broker? How many transactions have you personally closed in the past 2 years?

A full-time broker is generally preferable to a part-time one as they will have more experience and should be more accessible to help you through the purchase/sale process.

The average real estate agent only closes about 3-4 transactions per year. Generally you want an an agent that has more transaction experience to make sure they know what it takes to make your purchase or sale go smoothly. On the other hand, someone without a ton of clients may have more time to devote to you. Ask this question to understand where you will stand.

2) What is your policy on cancelling a listing agreement if I am not satisfied with what you are doing? Or if I decide I no longer wish to sell my home?

More often than not, once you sign a listing agreement you are bound to its terms for the duration of the contract. Cancelling a listing agreement once signed is generally not allowed to protect the agent’s investment of time and resources into helping you buy/sell a home. To protect yourself, consider the following.

a) Make sure your listing contract is not longer than 90 days. If you are happy with how your agent is working, you can always renew. Many times agents will aggressively push longer contracts. For them this makes sense, since it locks you into paying them a commission even if they are not doing a good job and the home sells itself. Don’t allow this. 90 days is sufficient in decent markets to sell a home (so what are they so worried about?).

b) Consider opting for an open listing or a exclusive agency listing. An open listing means that you will pay a commission to whichever agent brings you the customer who buys your home or shows you the home you buy. An exclusive agency listing (vs. exclusive buyer agency and exclusive right-to-sell) means that if you find a home buyer or home yourself then the agent is not entitled to a commission. However, you may only work with one agent.

1) How much do you charge in commissions?

When selling a home:

Some Realtors will imply that there is a ’standard’ commission rate; there is no such thing, a commission rate is always negotiable by law. While the difference between 4% and 6% may only be 2%, the difference in terms of money in your pocket can be quite significant. 2% saved in agent fees on a $300,000 home is $6,000 in your pocket. Not bad for a little negotiation.

When buying a home:

Most agents sell you on going with them to buy a home because after all, “It’s FREE!”. In reality, it is but it isn’t. The buy-side agent splits commissions with the sell-side agent. So, if a sell-side agent is getting paid 6% by the seller, the buy-side agent will generally receive half, or 3% of the sale price.

What many people don’t realize is that agents in most states* (footnote states where not allowed) are allowed to rebate you as much of the commission they receive from the sell-side agent as you can negotiate with them. In many cases, you can 50% or more of their commission as a cash rebate to you the moment you buy your home! On a $300,000 home, this means you can get as much as $4,500 cash back!

If you are interested in having high quality real estate agents bid on their commissions for your business, check out http://www.seekingagents.com/

Note: Rebate is not allowed in Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, New Jersey, New York, Oklahoma, Oregon, Tennessee and Wyoming

So you have a a real estate agent you might want to work with. What do you do next? How should you evaluate whether this is the person with whom you want to execute one of the more important financial transactions of your life?

Why through an interview! Here are some suggestions of what you should discuss. I’ve broken it up into 2 posts because it’s pretty long.

10) Can you provide me with some references I can call to learn more about your past work and your working style?

Ask references about their experience with the agent in question. Ask them what they liked most and least about working with this agent. Ask whether they would work again with the agent. Of course, since the agent gave you the references themselves, these people will be pre-screened. But, you sometimes can still learn a lot by learning to understand the finer points of how references say what they say.. and what they don’t say.

9) Do you pre-qualify buyers before showing them my home?

It is a good idea to have an agent who does this to avoid wasting your valuable time and nervous energy with people who are just looking.

8) What % of your business is referral-based?

A high number is better here. But be wary - agents with 100% referral business don’t really need your business. Make sure this won’t be reflected in the way the agents handles your home.

7) How do you plan to market my home to other real estate agents? Will you hold an all-agent open house when I first list my home?

Often it is good practice for a real estate agent to hold an open house exclusively for Realtors when a home is first listed. A professional open house introduces other local agents to your listing and makes it easier for them to show your home to any of their clients who may be interested.

6) How do you plan on marketing your home? What do you bring to this process that is unique from other agents? How often do you plan to hold open houses?

Look for an agent that will cover all the bases. He or she should have a detailed plan for advertising your home online, in print, through flyers, and open houses. If there is a particular marketing channel you would like to see the agent use (for example, open houses), this is the time to make this clear and included in the contract. Also, you should make sure that the agent pays for marketing expenses, and not you. An open house is an investment of time for both you and your agent; negotiate beforehand how many open houses your agent will hold for you.

Welcome to the SeekingAgents.com blog. Our goal as a website is to change the way you find a real estate agent away from the traditional “ask a friend for a recommendation, then pray” approach.

We want you to decide for yourself what you want in a Realtor and the best way for you to find one. We’re just here to help.

This blog will be our way of communicating with all of our visitors directly. If you have any questions, comments, etc. please feel free to contact us directly via e-mail: contact@seekingagents.com