Many of the initial steps of your house hunting run in parallel. So, while choosing an agent is the first topic here, it is not necessarily the first step that needs to be taken. Choosing an excellent agent can help smooth out the other initial steps that need to be taken, as you will shortly see.
Real estate agents are an interesting breed. They wake up every morning, and put their pants on like everyone else. Self-employed, or independent contractors, of the brokerages they work within, real estate agents are borderline entrepreneurs and small business owners. Essentially, agents prospect for new business, negotiate for their existing clients, inform and educate past clients and soon-to-be clients, process paperwork. They are also the chief cook and bottle washer for their small business.
Ultimately, agents are human beings motivated by either a strong desire to see their clients succeed and flourish, the commission they earn from transactions, or an amalgam of each. The key is that nearly all agents are independent folks, that enjoy the ability to work without much immediate oversight or micro-management, yet see success in their business efforts.
This is important to understand as you begin to interface with real estate agents. There is a perception about the industry that agents are slow to respond, drive expensive cars, and are merely in the business to cash fat commission checks. The industry has done little to dispel this perception, yet there are agents that will treat you like family and watch out for your interests from beginning to end.
When you begin to search for an agent to work with, be sure that they communicate in a fashion that you appreciate. Not just the medium of communication either, but the agent’s ability to reduce complex ideas into understandable chunks of information. Describing the purpose of title insurance is a topic that very few people want to engage in, for example, but it is an important concept to understand. Especially when there is a hiccup on the title that needs to be cleaned up post closing.
I’m getting ahead of myself.
To help choose a buyer’s agent, here are four questions I highly recommend be asked before you sign any documents with an agent:
How Long Have You Been an Agent?
It is important to know how long an agent has been practicing real estate. Newer agents that hustle may not have the experience you need, but may have the drive and desire to learn and get the answers you need in your quest to buy a home. Experienced agents should have accumulated a store of knowledge about the real estate transaction and process that will be priceless for you to tap into. So, time is not the only factor here, in how long an agent has been in business. You should also ask how many transactions they have done in total, and how many they have closed in the last 12 months. While your discretion and common sense should be utilized in this instance, I suggest that your agent have closed at least 1 transaction a month in the last year, and at least 50 total transactions.
The rough, back-of-the-envelope averaging out of the combination of years of experience and numbers of transactions comes to a little over 4 years in the business.
What Geographic Areas Do You Focus Upon?
While technically any agent licensed in the state of Michigan can sell a piece of real estate in any part of Michigan, you would merely be relying on the agent’s transactional knowledge to assist you in getting to the closing table. Having regional and neighborhood knowledge will help you in your search for real estate.
For example, an agent specializing in a rural community will be much more well-versed in farm operations and how these may affect an individual piece of property. An agent focused on a suburban setting will likely have a great idea of how the local homeowner’s associations operate, what they allow, and which condo associations actually take care of snow right up to your doorstep, as opposed to the end of your driveway.
Combining your real estate needs and wants, with your existing knowledge of the area, and an agent’s knowledge is a great way to augment your home buying team.
How Can I Communicate With You?
This question is a set up. The correct answer from the agent here is, “Whatever manner and medium best suits your needs.” I jokingly tell my clients that I can communicate in nearly any medium they choose, but that I have yet to figure out how to communicate via smoke signals and carrier pigeons.
A quick story.
I once helped a family moving from India settle in Southeast Michigan. It was a whirlwind house hunting week, while they were in town to search. We found a home, wrote and negotiated an offer, and communicated nearly exclusively via a great smart phone app called WhatsApp. My point is simply, be sure that the agent you work with can communicate with you the way you need and prefer.
If you are a text message kind of person, but your agent is a phone call kind of person, there will be a fair amount of frustration on behalf of you both. To you, the buyer, you need to have the right information presented to you, in the right timing, in the manner that best suits you.
After all, you are the one buying a house. The agent is your guide through the process.
May I Speak To Some of Your Past Buyer Clients?
This may be the most critical question to be answered by an agent you are considering. There are two points here for a buyer to consider. First, whether an agent is comfortable putting you in touch with their past buying clients. Second, the level of repeat and referral business an agent does on a regular basis.
If an agent is hesitant for you to communicate with past clients, well, I’d suggest passing on working with them. If an agent that has been in the business for a good period of time does not have a business mix that consists of 35% or more of repeat and referral business each year, this should be considered a huge warning flag. Additionally, if the agent can not quickly tell you, and then back up, their repeat and referral claim, this is a smaller warning flag. In my opinion, not knowing these numbers as an agent is running a business by the seat of one’s pants, and not actually, you know, running a business.
Putting together the answers from all four of these questions, you are looking for a buyer’s agent with time in the business, knowledge of the area you are interested in, ability to communicate in your desired manner, and satisfied past clients. Finding an agent with these qualities will be an excellent addition to your home buying team.
If choosing the agent is the first step you have taken in your hunt for a home, and you are confident in your decision, be sure to listen well to what your agent tells you. Too often, I hear the stories of buyers that thought they knew better than the experienced professional, and then found themselves in exactly the quagmire the agent warned them about.
One of the biggest headaches buyers may run into is their choice of lender. Listen to what your chosen agent has to say about lenders. Too often, a buyer will get pre-approved with Lender X. However, Lender X traditionally does a poor job in communicating, or pre-qualifying buyers. If your agent mentions that Lender X historically has these issues, and then recommends a few lenders for you to speak with, know that the agent is recommending lenders that they have worked with before, closed transactions with before, and communicate with well. In my own practice, I am happy to connect buyers with a handful of lenders that have proven their abilities, on behalf of my buyers, time and time again.
In summary, trust your agent and their recommendations. If you’ve done your due diligence on the agent, vetted them, spoken with their past clients, or were referred by one of their past clients, there is a reason to trust their word. You would not have been referred to this agent if your friend, family member, etc, did not trust them or care what happened to you in your buying experience. And remember, trusting your agent does not mean blindly following their advice. Communicate, ask questions, be open with your chosen agent. This will help both of you achieve your goal of purchasing your new home.
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