10 Questions to Ask Before You Hire a Real Estate Agent

Photo (cc) by Mr. Littlehand

Imagine spending $9,000 for a service, then finding out you could have had the same thing for $350? That’s exactly the kind of money you could waste if hire the wrong real estate agent to sell your house.

As you saw in the video above, the way many people find a real estate agent is through a personal relationship. That’s not the way to hire a pro.

When I sold a home in Cincinnati years ago, we listed it with an agent whose primary qualification was that she was a personal friend. She initially told us the house should be listed for $300,000. But after finding no interested buyers, several weeks later she suggested we drop the price to $275,000. While we did get some showings, still no bites.

Ultimately our house sold to a person who happened to be driving by, saw the sign in the front yard, knocked on our door, walked around the house and immediately fell in love with it – she made an offer the next day. Despite the fact that our buyer didn’t find the house through either her agent or ours, didn’t locate it through the Multiple Listing Service and didn’t even walk into it accompanied by either her agent or ours, we still had to pay 6% of the sales price – in our case a total of $16,500 – to two different real estate companies. That’s a lot to spend when the sale of our home came from a $20 sign in the front yard.

I’ve been a vocal critic of real estate agents for many years. Not because their services aren’t useful: they often are. The problem is that their services too often aren’t worth the high price.

When you hire an agent and agree to pay the traditional 6% commission, that commission is being split basically in half, with half going to the listing agent – the person who markets the home – and half going to the buyer’s agent – the person who finds the buyer.

In days past, only a full-service, full-price real estate agency would put your home in the MLS. These days, however, you can find any number of real estate companies that will put your home in the MLS for a one-time upfront fee of as little as $350. (Here’s one of many examples.)

So rather than paying the full 6%, you could simply pay $350 – $500 to list your house in the MLS, thus exposing it to buyers and their agents. When a buyer shows up through an agent, you’ll still have to pay the buyer’s agent 3%. But paying 3% rather than 6% to sell a $300,000 home means saving $9,000. That’s a nice chunk of change.

Most people, however, don’t want to handle the marketing of their house themselves. They feel that it’s important to have an experienced professional on their team to help with the paperwork and show and market the house.

If that’s you, fine. Just remember that if all your listing agent ultimately does is to put your house in the MLS, then sit back and wait for a buyer’s agent to show up with an offer, you just wasted a lot of money.

Here’s a quick tutorial to make sure that, if you pay big bucks to sell your house, you have a good shot at getting your money’s worth.

Finding and interviewing agents

Since all real estate is local, a good place to start the process of finding an agent is to look for one who either lives or specializes in your neighborhood. Call local real estate offices, or better yet, drive around your area, look at signs and if one or two names keep cropping up, write them down. Visit local open houses and meet a few agents – and while you’re at it, start getting an idea of how much your house might be worth based on others in your neighborhood.

Another source for potential agents is referrals from friends and business associates, but remember it’s better to have someone intimately familiar with your neighborhood.

Once you’ve got a few names – three to five – call them up and schedule interviews at your house. When they show up, they’ll (hopefully) come armed with a basic market value for your home that they’ve put together in advance with recent neighborhood sales statistics. More than likely, they’ll then walk around your place and sharpen that number by considering your home’s unique features and/or problems.

Be suspicious if one agent suggests a listing price much higher than the others. This is a common technique to secure a listing – telling you your $300,000 house is actually worth $340,000 is an effective way to get a listing. Unfortunately, listing your house for more than it’s worth won’t sell it. After getting no offers, a few weeks later the agent will drop by and tell you to reduce the price to one that probably closely resembles the ones you received from the other, more honest, agents you interviewed. You’ve wasted time, effort, you’ve devalued your home (buyers will know you’ve reduced the price) and the worst part: you’re stuck in a legally binding contract with someone who began your relationship with a self-serving lie.

Questions to ask when interviewing agents

When you’re interviewing agents, try to ask the same questions in the same order and take detailed notes of the responses. That makes apples-to-apples comparisons much easier.

Approach these meetings as if they’re a job interview, because that’s exactly what they are. You’re about to pay someone a great deal of money entirely for their marketing expertise, so stay focused on that. Keep in mind that these are sales people with experience in controlling the conversation. Don’t allow it. You’re the employer, they’re the hopeful applicant. Job applicants don’t control interviews.

1. How long have you been in the business?

An agent who’s been in the business for 30 minutes will charge the same 6% as one who’s been in the business for 30 years. Which would you rather hire? That being said, the young and hungry might provide better service. The ideal candidate is one with plenty of experience (10 years+), but still has lots of energy and interest in their business. Like many professions, real estate marketing is changing rapidly, thanks largely to the Internet. The person you hire should be experienced, engaged and keeping up with the times.

2. How much real estate have you personally sold in the last 2 years in my neighborhood?

This is a great way to compare agents. Obviously the one who’s sold the most must be dong something right.

3. What is your average List-Price-to-Sales-Price ratio?

As I mentioned above, you definitely want to avoid an agent that attempts to secure a listing by deliberately overstating the value of your house. The way to uncover that tactic, as well as gauge the overall effectiveness of the agent, is to ask for their average days-on-market (the lower the better) and list-to-sales-price ratio (the higher the better). To verify those numbers, simply get a list of houses they’ve sold in the last year. Look at the listing prices vs. sales prices and how long the houses were on the market.

Be aware, however, that the easiest way to sell a house immediately and for 100% of the listing price is obviously to sell it for less than it’s worth. That’s why it’s crucial for you to visit as many houses as possible currently for sale in your neighborhood so you can come to your own conclusion as to what your house is truly worth. If any agent thinks your house is worth way less than you do, ask them why.

4. What’s your plan?

Ask the agent specifically how they intend to market your house. In addition to the MLS, what else will they do to expose your house to the greatest number of potential buyers? Examples of things they should do:

  • MLS listing with at least 10 professional pictures
  • direct mail
  • flyers
  • online marketing
  • newspaper advertising
  • signage
  • open houses for both the public and other agents
  • virtual tour

Before you give anyone a listing, get a written marketing plan. Ask to see samples of ads, brochures or other marketing materials they’ve used in the past. Remember: this is the single most important thing they’re bringing to the table, and the single best way to compare agents.

5. How about a few references?

Any sales person worth their salt has references. This isn’t the best method of picking a professional – after all, nobody’s likely to give you the name of clients who hate them – but it’s part of any interview process, including this one. And when you get the list of references, call them. Ask them what they liked best about the agent, as well as their weak points.

6. What am I going to be signing?

All agents will arrive at your first meeting with a packet that includes a copy of the listing agreement – they’re hoping you’re going to sign it on the spot. You’re not. But you do want a copy of it so you can read and understand it in advance.

Other documents you might ask for would be agency disclosures, and seller disclosures.

7. Can you hook me up with other pros?

An experienced agent will have a list of other professionals you might need: home inspectors, title companies, handymen and others. Ask for that list, but also ask if the agent is collecting a referral fee, which obviously makes the referral less objective and thus less valuable.

Another thing you might ask the agent is who they think is the best agent – other than themselves – at selling houses in your neighborhood. If you can’t find enough qualified agents to interview, that could help fill your list.

8. How much do you charge?

If you’ve followed all the advice I’ve listed thus far, you’re probably talking to the highest-quality and most experienced professionals in your area. That means they’re probably the least likely to discount their commission. That’s OK. Keep in mind that half of the 6% you’re paying is going to the buyer’s agent, and typically about half of the remaining 3% is going to the listing agent’s company. In other words, of the full 6% commission, only 1.5% is going to the agent you’re interviewing: not a tremendous amount of wiggle room.

I’ve negotiated commission discounts with agents before, but it’s almost always in the final negotiation of a contract: when the parties are close to a deal, but deadlocked.

Example: When I sold my fathers house, the buyer and I were $500 apart and at an impasse. I wouldn’t go any lower, she seemed reluctant to make a higher offer. So I asked both the buyer’s and listing agent to contribute $250 each from their commission so we could get a deal done. They both readily agreed.

In short, expect the agent to say that their commission is strictly non-negotiable, but remember that at some point everything’s negotiable.

9. Will you let me out early if I’m not happy?

You’re probably going to be asked to sign a six-month exclusive listing agreement. What if you’re not happy three months into the deal? A good agent will let you out of the agreement if you’re not happy. When you’re picking an agent, your job is to be as specific as possible as to exactly what you expect. Theirs is to fulfill those expectations. Ask for the right for early termination if your expectations aren’t being met.

10. What can I do to make my house as marketable as possible?

A good agent is going to have lots of tips on making your house sell for as much as possible as quickly as possible, from painting to de-cluttering to staging. Compare the suggestions you get from various agents.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 Items Every First-Aid Kit Should Have
10 Items Every First-Aid Kit Should Have

Take control of your health and safety by customizing your own first-aid kit with these Amazon purchases.

5 Home Improvements That Help You ‘Age in Place’
5 Home Improvements That Help You ‘Age in Place’

These safety-conscious home upgrades can help retirees stay in their home.

8 Reasons Your Parents Had an Easier Retirement Than You Will
8 Reasons Your Parents Had an Easier Retirement Than You Will

Here’s why the last decades of life are harder now than they used to be.

13 Brilliant Bulk-Buy Items on Amazon
13 Brilliant Bulk-Buy Items on Amazon

Every household should have these products on hand. Buying them in bulk on Amazon saves you cash.

7 Reasons You Should Consider a Career Change at 50
7 Reasons You Should Consider a Career Change at 50

Wondering how to change careers at 50, or if it’s possible at all? The good news is that many older workers have the energy and experience to pull it off.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

The Next 5 Groups Who Will Get the COVID-19 Vaccine
The Next 5 Groups Who Will Get the COVID-19 Vaccine

The CDC has unveiled a schedule that likely will determine who gets the next doses.

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.