Are you thinking about selling your home? If the answer is yes, you will need to decide whether to sell it yourself or hire a professional. I will talk about the self-selling option, also known as For Sale By Owner or simply FSBO, in a separate article. In this one, I will focus on selling through an agent and on what you need to know before you hire one to help you with the sale. All sellers want the same three questions answered: 1. How much is my house worth? 2. How long will it sit on the market? 3. What is the agent going to do to get it sold? If an agent gives a seller satisfactory answers to all three questions, they will normally get the job. But to only have answers to these questions is not enough though. These could be empty promises and so you need to probe and ask until you have a more complete picture of what the agent is capable of.
Many sellers would hire an agent by proximity. If they have a family member who happens to hold the license - that’s their natural first choice. No questions asked. The second option we see often is an agent friend, and the third - a referral from somebody the seller knows. Any of those natural choices are going to work well in the “sellers market”. This is the market place where there are more buyers than there are sellers. Properties, once on MLS, sell themselves, and no particular effort or skill is required. As a seller though, you would likely not know what market you are in and it would make sense to apply a more rigorous approach to proximity agents, just as you would to someone you don’t know at all. You see, if you make a mistake, your house will either not sell at all or will sell at a discount. Either way you loose. Let’s go over additional questions you need to ask, so that you have a more complete profile of an agent you are planning to hire and that you are happy with the end result. Here are the questions:
- How many homes did you sell in the last 12 months?
- What is your listings taken to listings sold ratio?
- What is your list price to sale price ratio?
- Why couldn’t you sell your expired or terminated listings?
- What is your ratio of buyers vs. sellers?
- What are you ten client references?
Now, let’s go over each question in detail and compare what we get to an “ideal” agent scorecard.
How many homes did you sell in the last 12 months? This is a key performance metric that will give you a good sense of what this agent is about. Most agents will sell 3 to 4 homes per year. Great agents will sell 40 or more homes per year. And there is a lot of agents in between those two groups. Great agents will have the network of clients and other agents that they engage with regularly to promote their homes. They will price your home correctly and will convince you that this is the right price to get the job done. They will market your home to the buying public and will negotiate the best possible terms and the price for you. There are few additional questions you would need to ask to make sure you are about to hire a top performer.
What is your listings taken to listings sold ratio? What if the agent listed 100 properties in the last 12 months, but only sold 40? Either the market took a catastrophic downturn or, more likely, the agent does not price property correctly. And if it is not the market you should stay clear of agents that can’t sell the bulk of what they list. A healthy ratio here would 80% and higher.
What is your list price to sales price ratio? If an agent routinely lists homes for $999,000, but sells them for $70,000 less, their ratio would be around 93%. This may mean that they bend the truth in the first meeting with potential clients and tell them what the clients want to hear, instead of pricing the property at the true market value. The ideal ratio needs be 98% and higher. Over a 100% is pure excellence and you often see it with great agents.
Why couldn’t you sell your expired or terminated listings? Listen carefully to what they say. It is not going to be a number. What you will learn is how well the agent understands the seller’s motivation and how effective she is in resolving conflict. If the seller’s home expires or the sellers terminate and do not want to put it back on the market - they were not motivated to sell in the first place. It is worth asking, why did the agent take the listing? If the sellers put it back on the market with somebody else - they were unhappy with the agent’s performance or lost their trust and the agent couldn’t resolve the conflict with the seller to list the home again.
What is your ratio of buyers vs. sellers? There are agents that mostly work with buyers and agents that mostly work with sellers. These two groups have different skill sets that only overlap in some areas. For example, pricing and marketing property isn’t what a buyers agent does regularly and hiring them to sell property will produce less than optimal results. Again there is a ratio here and you want to hire someone, who works with sellers about 65% to 75% of the time.
What are you 10 client references? You want to check for references to see what the clients think about the agents performance. Check online ratings and go with 4.5 to 5 star agents. If online ratings are not available or you would like to actually speak with someone, ask an agent to provide you with a list of phone numbers for 10 clients they serviced in the past 12 months. Call 3 random people from the list and see what they have to say. Did this agent’s personality and approach work for them? Call anyway, even if there are online ratings. This will give you a better feel for how this agent works.
Now, go and ask those questions and you will have a great selling experience every time!