By Joel Cone, Special to Auction.com
Unless your best friend or your favorite uncle just happens to be a real estate agent or broker, the task of selecting someone to represent you in a real estate transaction can be daunting. Thanks to computers and the Internet, not only is there a real estate office on almost every corner, but today’s buyers also have online access to an unlimited number of possible agents and brokers.
Sorting all of this out can be time consuming and fraught with landmines along the way—especially for first-time home buyers, since they most likely have little or no experience in what’s involved in the real estate buying process.
Fortunately, clearing a path through this minefield is neither hopeless nor impossible. But first there are some basic concepts you need to understand before you start the process.
Agent, Broker or REALTOR®?
Too many times, the terms real estate agent, real estate broker and REALTOR® are used interchangeably by people who don’t know any better. So let’s clear up the confusion from the get-go.
A real estate agent is anyone who’s taken some basic training classes and then has applied for, and passed, a state licensing exam. Basically, anyone can become a real estate agent and continue to practice as long as they hang their sales license with a licensed broker. They’re also required to take a set number of hours of continuing education courses in order to renew their license periodically.
A real estate broker, on the other hand, is required to take an additional number of classes in various subjects in order to qualify to sit for the broker’s license exam. Unlike a sales agent, brokers can open their own office and sell real estate without affiliating with anyone else. Brokers must also take continuing education courses in order to keep their license active, and meet other requirements that are beyond the scope of this article.
Both a real estate broker and a sales agent, once licensed, can legally represent buyers and sellers in real estate transactions. However, what they cannot do is call themselves a REALTOR® unless they’re a paid-up member of the National Association of REALTORS® (NAR) and follow the strict Code of Ethics delineated by that organization. NAR also owns the REALTOR® trademark, and it takes violations of that trademark very seriously.
What Is a Buyer’s Agent, and Why Should You Consider One?
No matter how strong or weak the inventory of available housing is at any particular moment in time, not all real estate professionals like the idea of pursuing would-be sellers in order to rack up listings that may or may not sell.
Some agents and brokers prefer to only represent the buyer’s side of the transaction; these are known as buyer’s agents, and they don’t need any additional licensing in order to use that title. However, the NAR has instituted a specific course of study for people who want to earn the Accredited Buyer’s Representative (ABR®) designation.
Agents and brokers who have earned that designation have completed these courses and have done at least five transactions acting solely as the buyer’s representative. They must also be members in good standing of both the Real Estate Buyer’s Agent Council and the NAR.
As a first-time buyer, you may want to consider a buyer’s agent to represent you, since they have advanced education and experience working strictly with buyers, and may be more up to speed on loan programs specifically geared toward first-time buyers. That said, you certainly can work with anyone you choose to—buyer’s agent or not.
Sorting It All Out: Finding Good Representation
Whether or not you sign a contract with them, an agent or broker legally has a fiduciary duty to treat you—and everyone else associated with a real estate transaction—fairly while keeping your best interests in mind.
“First-time home buyers in particular should take their time in selecting a real estate professional who they feel confident will guide them through the purchase process,” said Rick Sharga, executive vice president of Auction.com. “In addition to keeping you informed all along the way, your agent or broker should be tech-savvy enough to help you do a complete search for all of the inventory currently on the market. That includes properties available online for sale at auction, not just those on the multiple listing service.”
In compiling data for its 2014 Profile of Home Buyers and Sellers, the NAR found that buyers wanted two things from an agent or broker who represents them: A good reputation in the industry, and honesty.
As a first-time buyer, finding an agent or broker with those qualifications may seem like an insurmountable hurdle, but there are many ways to find someone you’ll trust and feel comfortable working with. One of the best ways is through referrals.
Finding a Real Estate Agent Through Referrals
Veteran real estate professionals who have been successful over time have survived the many ups and downs of the real estate cycle mainly thanks to referrals from satisfied clients.
Your best source of referral to a real estate professional is going to be someone you know who has bought or sold real estate and was happy with their agent or broker. A friend, a relative, a business associate, a neighbor—anyone you know who has had a good experience with their agent or broker is going to be a good source for you.
Don’t be afraid to ask your source detailed questions about their agent or broker, including:
- How did you like their agent or broker?
- What did you like the most about him or her?
- What did you like the least?
- How long have they been in the business?
- Was the agent or broker good at staying in touch via phone, text or email?
- Did the purchase or sale process go smoothly?
- How did they handle any bumps in the road?
- Did the agent or broker refer them to a source for obtaining financing?
If you don’t have a resource like that to tap for information, then another good resource would be the local association of Realtors. Ask them for referrals to agents or brokers in the particular neighborhood you want to search.
Beyond that, the local chamber of commerce could be another good resource, since many experienced real estate professionals are active in their communities in various capacities.
When it comes to finding a referral to a real estate professional, the one resource to avoid is online reviews and testimonials from either an agent or broker’s website, or from an online directory. There’s no guarantee that those reviews or testimonials are genuine. And you can’t ask a testimonial or review questions one-on-one.
Interviewing a Prospective Agent or Broker
Although it’s not engraved in stone, the industry in general has always recommended that clients—whether buyers or sellers—should personally interview at least three prospects before selecting a real estate professional to represent them. It can be more or less, of course, depending on how well you seem to hit it off with a particular agent or broker.
Pretty much anything is open game when it comes to the breadth of questions you can ask a prospect. After all, this is a job interview, and they want you to hire them so they can make their commission just as much as you want to find the right property to call home.
In addition to getting their real estate license number, questions you should be asking include:
- How long have you been in the business?
- Have you ever had a complaint filed against them with the state department of real estate? (You can always check that out yourself online if you don’t feel comfortable asking.)
- How many transactions a year do you average?
- Do you specialize in working with buyers?
- What markets do you focus on?
- What’s the median price in the markets I want to search?
Ask them about schools, crime rates, places of worship, shopping centers and malls, entertainment venues. Anything and everything is on the table. And lastly, don’t forget to ask for referrals to former clients who you can call.
One thing you shouldn’t rate too highly is their proficiency with technology (or lack of it). While proficiency with technology is commonplace among most real estate professionals, lack of awareness regarding the latest technology shouldn’t be a deal breaker.
“The truth is that 99% of the expertise Realtors bring to the transaction is general knowledge about the industry,” said John Pinto, broker/owner of Realty World/John V. Pinto & Associates in Napa, Calif. “The fact that the Realtor can use technology to make the customer more comfortable is a skill set.”
Once you find the agent or broker who you feel most comfortable with, and you’re confident in their ability to meet your needs, it’s time to move forward.
As with any agency relationship, there are expectations to be met on both sides: the agent/broker’s and the client’s.
When working with first-time buyers especially, real estate agent Dan Merkle with Transaction Realty in Strongsville, Ohio, says he likes to find out what their expectations are. Once defined, he sets up parameters and then explains what he can and can’t do for them.
“You have to see what their expectations are, and then you have to do what you say,” Merkle says. “I tell them this is how we work. There are going to be ups and downs.”
Some of the most reasonable client expectations are that the agent or broker will give their best efforts in negotiating the deal and will assist them through the loan process, as well as order the title report, the appraisal, the building and termite inspections, and possibly even arrange for repairs, if necessary.
“Clients are expecting competence,” says real estate broker Nova Shank with Champions Real Estate Services in Seattle, Wash. “They’re expecting professional service from someone who takes care of them first and is not just working for a commission. They should also expect an agent who’s well versed in loan programs for first-time home buyers.”
From the agent or broker’s perspective, you’ll need to understand and accept the reality of what your money will buy versus the fantasy home you thought you could afford.
“If you’re a first-time homebuyer right now, you need to be willing to work,” Shank says. “That work is going to be making multiple offers, and jumping to go look at a house the moment your Realtor finds it.”
As a buyer, you shouldn’t expect your agent or broker to submit an unrealistic offer on a home that is 2–5% below asking price, he notes.
“Don’t expect them to be a miracle worker,” Shank says. “You shouldn’t expect your Realtor to get you some kind of secret deal. Don’t expect your offer to be magically accepted just because you think your Realtor has some kind of special edge.”
Finally, Shank says clients shouldn’t expect their real estate professional to be a psychologist, marriage counselor, accountant, lawyer, financial advisor of any sort or a go-between with their parents.
No matter who you end up hiring—whether an agent or a broker—as a first-time home buyer, the most important thing you can do is to cooperate with and assist the real estate professional you’ve chosen as much as you can. That will go a long way to making sure that the purchase process goes as smoothly as possible, and that you end it as a happy homeowner.
Joel Cone is a freelance writer based in south Orange County, California. For nearly a quarter century Joel’s career has focused on the residential and commercial real estate industries. After a decade as a staff writer for the Daily Journal Corp. group of newspapers, Joel was a regular contributor to California Real Estate magazine for the California Association of Realtors; was the original Orange County reporter for GlobeSt.com; wrote executive profiles for OC Metro magazine; and has been published in a number of real estate-related publications.