The biggest mistake that home sellers make when choosing a listing agent is in selecting one based solely on two factors: the highest list price for their home and the lowest commission.
At first glance, a seller might ask, "What? Are you nuts?" because sellers want the highest possible price and to pay the lowest commission. But those two criteria have very little to do with hiring a competent agent and, in many instances, are completely irrelevant. Let's look at why.
- Don't just choose your listing agent based on getting the highest list price for your home and the lowest commission.
- Ask specific questions about what your listing agent will do for you in regards to marketing your home.
- Experience, education, honesty, and other factors are important when choosing your listing agent.
The Highest Suggested List Price
Agents can't tell you how much your home will sell for. To say that they can is a fallacy. A listing agent can show you comparable sales, pending sales, and active sales. But you choose the sales price, and a buyer will tell you whether the price is right. An agent can suggest the list price that will attract a buyer. Where it goes from there is generally up to the buyer.
While choosing a listing price may initially sound intimidating, it may be a relief to learn that, in 2019, home sellers received a median of 99% of their asking prices—and their properties generally sold within three weeks' time. This is proof that choosing a proper listing price is possible if you do your research and work with a competent agent. Here are some tips worth considering when shopping around for an agent.
- To get the listing, some agents distort the truth. Since agents can't guarantee your sales price, the listing agent who suggests the highest price could very well be untruthful. Ask the agent to show you numbers supporting the suggested list price. If the agent has no stats, or if the home sales are located in a different neighborhood, that could be a red flag.
- Look for a listing agent who gives you a range of prices. There is often, but not always, a price range. Many factors determine the range, among which are location, the temperature of the market, and improvements in the home.
- Pricing is an art. If the home is priced right, you'll likely get an offer. If it's priced too high, you might not get any showings at all, and you'll eventually end up having to reduce the price, leaving buyers wondering what's wrong with your house.
For reference, in 2019, the average time it took to close a home ranged from 40 to 48 days, depending on the month. If it's taking far longer, your price is likely too high.
Should You Choose an Agent Based on Commission?
Real estate agents are not equal; each is unique. Each has their own marketing techniques and advertising budget. By choosing an agent with a large advertising budget and company dollars to match it, you might gain greater exposure to a larger number of buyers. That is ideal, since reaching a greater number of prospective buyers means a better chance of getting a good offer.
Why would an agent willingly work for less than competitors? There is always a reason why a broker or real estate agent would discount a real estate fee. Sometimes it's the only way the agent feels it's possible to succeed in a highly competitive business, because they can't otherwise stand apart from the competition on service, knowledge, or negotiation skills. If the sole benefit that an agent brings to the table is a cheap fee, ask yourself why. Is the agent desperate for business or unqualified? Consider these questions before committing to working with an agent.
- You're buying a home and selling a home at the same time, giving both transactions to one agent.
- You're willing to do all of the legwork, advertising, and marketing, and pay for expenses related to the sale.
- You promise to refer more business to the agent.
- You're selling more than one home.
- You don't have enough equity to pay a full commission.
- The agent accepts you as a pro bono case.
- The agent will lose the listing unless he or she matches a competitor's fee.
- The agent wants the signage (exposure to traffic) over charging a full commission.
If you are interviewing agents who offer similar services, and you can't decide between or among them, ask to see a track record of each agent's original list price and final sale numbers. Odds are that the lowest-fee agent will show more price reductions and more days on market (DOM).
If your home is located in a hard-to-sell neighborhood, consider an agent with experience closing on hard-to-sell homes.
The Importance of Agency Marketing
A good listing agent lives and dies by marketing. That is because proper publicizing of a home is what makes the sale. Ask to review a complete copy of the agent's marketing plan. You should specifically ask what the agent's plan is for selling your home. For reference, here is the bare-bones minimum you should expect:
- Professional signage, including an agent's cell phone number
- A real estate lockbox
- Daily electronic monitoring of lockbox access
- Follow-up reports on buyer showings and feedback to the seller
- Broker previews
- Incentives for broker and office previews
- Staging advice
- Digital targeted marketing
- Advertising in local newspapers, only if it's warranted
- Multiple listing service (MLS) exposure with 36-plus professional photographs
- Virtual tour options
- Distribution to major websites
- Four-color flyers, if warranted
- Financing flyers for buyers
- A minimum of two open houses, provided that its location is a candidate
- Direct mail to surrounding neighbors, out-of-area buyers/brokers
- Exposure at Board of Realtor meetings
- Feedback to sellers on buyer sign calls and buyer showings
- An updated comparative market analysis (CMA) after 30 days
- Email feeds of new listings that compete
- Updates on neighborhood facts, trends, and recent sales
Remember: No single tactic sells homes. It's a combination of all of these methods that sells homes.
Characteristics of a Good Listing Agent
You will be in a relationship with your listing agent for a month or two (or longer). Choose an agent you like and can relate to. Here are some of the characteristics that sellers say they want in an agent:
- Experience: You want an agent who's sold many homes in the past and has learned from his or her mistakes elsewhere.
- Education: Ask about degrees and certifications.
- Honesty: Trust your intuition. Your agent should seem sincere.
- Networking: This is a people business. Some homes sell because agents have contacted other agents.
- Negotiation skills: You want an aggressive negotiator, not somebody who is out to make a quick sale at your expense.
- Effective communication: Sellers say that communication and availability are key.
Finally, ask for a personal guarantee. If the agent won't guarantee performance and release you from a listing upon request, don't hire them.