5 Questions to ask before you hire your real estate broker
5 Questions to ask before you hire your real estate broker
Inefficient markets are breeding grounds for opportunity. And no major investment asset class is less efficient as real estate. There is no stock exchange for property where thousands of investors push prices towards something approximating a fair value. Information is far from perfect, timing is everything and no honest real estate investors can ignore the role of luck in their performance – good and bad.
In this kind of market, brokers play an essential role in ensuring that sellers can achieve the best offer for their property. And there’s more to selling real estate than just getting the highest price. All too often buyers offer a big number with the intention of renegotiating before coming to the closing table. Good brokers sniff this out. Bad ones walk you into a trap.
Broker fees are the often the largest single expense when selling property, and unfortunately far too many brokers are dramatically overpaid for the lousy service they provide their clients. But good ones can make up their brokerage fee many times over.
So before choosing one based on positive Yelp reviews, here are five essential questions to ask before picking a real estate broker to list your property. You wouldn’t hire a new employee based on a resume alone – interview potential brokers like you would any potential job candidate.
These questions are meant to solicit responses from which you can discern whether the broker knows their market, is ethical and is ultimately the right fit for you and your property.
1. Tell me about some a recent listing similar to mine in this area and how you achieved a great result for your client.
Chances are, a great architect isn’t a great choice to perform plastic surgery, so why would you hire the town’s best high end residential agent to list your prime retail building? Make sure your broker has not only experience in your area, but experience in your area with your kind of building.
Listing commercial properties is a specialty business and not every broker has the right network of contacts, marketing skills and local knowledge to represent you well.
Listen closely to not only the broker’s story about the property, but about how they define “a great result for the client.” Sometimes a quick sale is essential for a seller, but not always. Did the broker inadvertently just tell you why the sale was a great result for him or her, but not the client? Good brokers understand their clients’ unique motivations and strive for results that meet those criteria.
2. What improvements or changes to my property should I make before listing?
Rather than frantically making a punch list and freaking out about construction costs, listen for the reasons the broker is suggesting these changes. Good brokers understand what buyers want, not just what will make a better looking marketing flyer. Oftentimes small, inexpensive improvements can make a huge difference in selling for a great price or languishing on the market.
Things like lighting, furniture or a coat of paint are small costs that can result in a big return on investment, and your broker should be your guide in choosing to how spend money at your property prior to hitting the market.
3. Tell me about your relationships with other brokers in the area and a recent deal you closed with one you liked working with.
Just because a broker has been doing this for decades, doesn’t mean they’re plugged in with today’s market. Brokerage is, at its core, a business about people and relationships and most markets are small enough where brokers know their competitors well.
Brokers with good relationships within the brokerage community can represent their clients well and spread the word to the most potential buyers. But those with a bad reputation or with whom other brokers don’t like working do their clients great harm. Why should a buyer’s broker spend time on a listing with a problematic broker who won’t call them back when there may be other, more amicable options?
For retail and other commercial properties, often an “owner user” (ie, someone who will buy the building to run their business out of it) will pay the highest price. Brokers well-connected in the local business community with a network of this kind of potential buyer are invaluable to their clients.
4. Should I list my property on the market or do an off market sale?
Many outside the real estate business wonder why a seller would ever choose an off market sale. And usually, a full-blown marketing campaign, listing on MLS and aggressive advertising is the way to go. But not always. Even if you would never consider an off-market sale, listening to the broker’s response will tell you a lot more than asking them to name the 10 websites he or she uses for posting flyers.
For brokers, off-market deals can be more lucrative since they don’t have to spend money on marketing and often end up representing the buyer as well as the seller. Ask probing follow ups about the ethics of representing both sides of a transaction and how to make sure you don’t leave money on the table.
5. Why should I hire you instead of another broker?
Good brokers don’t just get you the highest price, but make the experience of selling your property a positive one. Let’s face it: selling can be stressful, even in a good market. Your broker should reduce the stress associated with selling real estate, not add to it.
You’re going to be interacting with this person a lot over the next several months – you may as well enjoy their company. Of course he should be qualified. Of course she should be ethical. Of course she should get you the highest and best offer. But shouldn’t he be able to do it without aging you unnecessarily?
Listen for your broker talking up his or her good points rather than putting down the competition.
Ask questions where you want to hear certain answers, rather than generic questions where a broker trying to fake his/her way through may have a canned response. The right broker should demonstrate that he or she truly knows what they’re doing, not just say the right thing.