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How to Choose the Right Real-Estate Agent

Whether you're buying or selling real estate, one of the first things you'll do is find a good real-estate agent. You may know more than one person in your circle of friends and family who sells real estate, and the temptation is often to use the agent you already know. That can be a mistake.

A real-estate agent is not just a person who carts you around when you're shopping for a home or lists your house with the Multiple Listing Service and sticks a sign in the front yard. Real-estate agents can do a number of things right to help you sell or buy a home and get the best deal possible. Any mistakes they make -- even simply forgetting to tell you something -- can cause you frustration and possibly financial loss.

Buying or selling a piece of real estate may be one of the largest financial transactions you ever make. Choose the agent who will help you through this process with care. Here are some things you should know before choosing a real-estate agent.

If you're buying, you need your own agent
Never have the listing agent show you a property. If you do, he or she can reasonably expect to represent you. You need an agent who can represent your best interests and negotiate the best price with the seller. The agent should tell you if other properties might be of interest to you, or if there's a potential problem with the property. Don't expect sellers agents to work for you. They don't.

As a buyer, you're not stuck with the first agent you talk to
In a typical scenario, a person sees a property for sale or goes to an open house. Chances are, the person doesn't buy that house. That doesn't surprise or faze the real-estate agent -- she has other properties to show you, if only you'll give her your name, email address, and two phone numbers.

Regardless of how nice the agent seems, you don't know anything about her. You don't know if she's had her license for 20 years or 20 days. You won't find out until later whether she works full-time or is only available Tuesday and Thursday afternoons and takes her sweet time returning phone calls.

If you haven't signed a buyer's broker agreement, you're still free to find another agent. Even if an agent takes you house shopping, you have no obligation to buy a house from him, especially if you're starting to wonder about his expertise or honesty. He shows houses every day to people, a good percentage of whom never close the deal.

On the other hand, don't use half a dozen different agents and take up their time if you don't intend to use them to complete the sale. They need to make a living, too.

No single agent is best for everyone
Some agents specialize in starter homes and low-end rentals. Others deal with waterfront, commercial, or high-end properties. Whether you're buying or selling, choose the agent with experience in your type of property.

You also need an agent you can communicate with and who is available when you need him or her. Don't sign up with an agent who doesn't work weekends if that's the only time you're available.

Connections matter in this business
Even in the age of the Internet, personal connections still matter. Properties are promoted, bought, and sold every day because someone knew someone who might want to buy or sell, or knew how to find someone who did. This is especially true in certain markets. You need an agent who has been working in the area long enough to know people and markets.

Agents' experience and education vary widely
Real-estate sales is still a relatively easy-entry career. That doesn't mean it's an easy place to make a living. However, compared to professionals whose careers require years of preparation or a college degree, prospective real-estate agents can take a course, pass a test, and start listing and showing houses in a relatively short period of time.

In addition, the turnover rate in real-estate sales is high. Approximately 90% of real-estate agents drop out within 24 months.

The most professional agents keep learning and improving their skills. They take real-estate seriously, and they don't consider it a part-time "filler" job or one they can do until a "real" job comes along. They may have advanced certifications or a broker's license, and they can tell you what areas they specialize in and how long they have been in business.

Don't just think of experience in terms of years. Look for an agent with a track record of closing sales.

Agents in today's market must be tech-savvy, or else. If you're selling, your agent must be able to make your home look good in photographs. The agent's website should look good and be easy to use. If you're buying, your agent should be a whiz at searching for properties online and creating alerts for new deals on the market.

Think twice before using a relative or friend as your agent
Real-estate transactions don't always go as planned. There can be misunderstandings, delays, and nasty surprises. You see a different side of people when you go through the fires of a difficult real-estate sale with them.

You also expose much of your personal information to a real-estate agent. They see you at your finest -- or your worst -- when the deal almost falls through. In addition, they'll probably find out how much you make and what your credit score is.

If you still want your brother-in-law to be your agent, fine. If you'd like to keep your business and personal life separate, however, consider using someone else. There's too much at stake when you buy or sell real estate to use anyone but the most experienced and professional real-estate agent you can find.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 15, 2014, at 1:45 PM, eugened314 wrote:

    Hello, thank you for the very informative article. I am in the market for a new home and need a real estate agent. I can testify to your advice about not hiring friends or family. When I was a young man, I used my father-in-law as a real estate agent. Nothing horrible happened, but this time around I will be looking for the experienced, tech-savvy agent you described.

    Eugene Dean | http://realocation.ca/about/how-to-get-started

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Sally Herigstad
Herigstad

Sally is a new Fool contributor for 2014, but a long-time personal finance writer, columnist, and certified public accountant. Sally wrote "Help! I Can't Pay My Bills" for St. Martin's Griffin.

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