Not a lot of thought is usually given by Sellers to determine which real estate agent to use when selling a home. There are a lot of agents out there to choose from and so usually Sellers rely on a referral from someone they know, use someone they have used in the past or pick an agent that has listings in the area already.
The tricky thing is good and bad real estate agents can sell real estate and as a result both types of agents have people that will refer them and (somewhat shockingly) both types of agents can have a lot of listings.
Why can bad real estate agents still sell real estate? What is the difference between a good and bad real estate agent?
Not a lot of people try to sell their property themselves despite the costs of using a real estate agent. Most people decide to use a real estate agent to sell their home for the same reasons they use a mechanic to fix their automobile or a lawyer to deal with a legal matter. Like any important matter where someone feels a need to get something done right most people will naturally go with a professional.
It is possible to sell your property yourself but selling your property yourself usually results in less than ideal results – even from a monetary position. What you save in commission is what you usually lose in sale price and you can exposure yourself to added risk, put yourself in awkward situations and waste your time. You can kind of equate selling your property yourself to hiring a bad real estate agent. The results can vary widely.
As you probably know already, real estate agents tend to help you with the following:
- Get a good price for your property.
- Keep you at arms length from potential buyers so that you can maintain your privacy.
- Provide you with a fiduciary duty to limit your liability of getting into any sort of crippling legal lawsuits and generally work in your best interest.
- Be available to answer questions and screen potential buyers to help make sure they are qualified to buy and not just wasting time.
- Give you insight on current market conditions and provide real estate advice when needed.
- And finally Make sure your property stands out.
Every consumer is different but after years of experience I would guess that this would be kind of the order of importance for the typical Seller. Surprisingly, marketing and real estate advice are typically not a top concern for most consumers when it comes to picking an agent. This is why when you look at properties as a Buyer you can see pictures of listings, and descriptions of properties that are poorly done. A good number of Sellers leave all the details of selling their home to the real estate agent and don’t bother to check work or even really care about it. Here is an example of an advertisement for a home in Kamloops back in 1999:
Despite the picture and the write up this house sold for 96.4% of asking in 4 days. Most people would probably think those are some really good results, and statistically they are. But this is an example of why those numbers don’t really mean much when picking an agent.
If taking good pictures/offering great marketing isn’t that important then what value can a real estate agent offer?
The Value of a Good Real Estate Agent
The real estate industry is big business. For example, in Kamloops with just a population of about 85,000 on average there is about $70 million dollars of transactions per month. Like any successful business having a good management team is critical to being as efficient and productive as possible. A good management team can affect production quite significantly and even be the difference between a successful business and a bankrupt business.
Real estate agents collectively are like the managers of the real estate industry and for their services they charge Sellers a commission usually no more than 4%. In return, Sellers hopefully get a good management team that consistently makes production improve by more than 5% to offset this cost. I say management team because when you hire one agent you are indirectly hiring all agents, even agents that don’t even work in the same city sometimes represent clients that will buy your house, it is not a recommended practice. More on this in a different post.
Typically, sellers rely on referrals or superficial metrics like how many listings an agent has or has sold at any one time when determining which real estate agent/brokerage to hire. Agents who are busy get even busier because of these factors working in their favor.
Good managers not only have good people skills, work hard, and are honest but they also tend to be always looking at ways to make things more efficient, informative and transparent.
When you are seeking a real estate agent keep these managerial skills in mind because they should be at the heart of any good real estate agents business. Surprisingly, better people and information management skills rather than better marketing skills tend to lead to a better selling experience. When a property doesn’t sell or sells for less than it should it usually means the property was poorly managed not poorly marketed.