Table of Contents
Key points
- Finding the right real estate agent can make buying or selling a house easier and less stressful.
- Finance expert Dave Ramsey recommends asking your agent how long they’ve been in your local market.
- It’s also a good idea to ask for references and see how much the agent will charge you for their services.
Both buying a home and selling a property are major financial transactions. Many people hire a real estate agent to help them through it so they can maximize the chances of a successful purchase or sale. Of course, this means that the agent must be paid commission, which comes directly out of your home sale proceeds or your bank account if you’re a seller.
To help you make sure you have the right agent before you sell your home or get a mortgage loan for one you’re buying, finance expert Dave Ramsey recommends asking a few questions first.
1. How long have they worked in your market, and how many homes do they close annually?
Ramsey believes it’s important to find out both how long your agent has worked locally and how many homes they close each year. This can give you an idea of their level of experience and familiarity with the local market.
Here’s the reality: Your real estate agent is going to have to do a lot of tasks to help you get your home sold. This includes marketing it to an appropriate buyer pool, helping you set your price, and providing you with advice on staging. And, to do these tasks effectively, your agent needs to know a lot about the market in your area.
If your house isn’t priced right, you could end up having to lower the price, which can make you look desperate and lead to lower offers — and which leaves you waiting longer to sell and missing out on the new home buzz. If your agent gives bad advice about staging or improvements, you could waste money on unnecessary upgrades or miss out on potential buyers because your home can’t compete with others in your area.
For all of these reasons, Ramsey is right that you should find out how familiar an agent is with your market.
But, when it comes to how many homes they close, there are a lot of variables that matter. If your agent primarily works on high-priced homes, for example, they may close fewer properties than agents who work with starter homes. After all, they’re working with a more specialized market. So be sure to look at this number in context and consider whether your agent’s experience will benefit you as a buyer or seller.
2. Who will you actually be dealing with throughout the process, and how will they communicate?
Ramsey explained many agents have teams working for them, so you should find out if you’ll have direct communication and with whom.
In addition to asking about this issue, you should also consider the method of communication and make sure it meshes well with your needs. If you like to be able to jump on the phone to get questions answered, you may not be happy with an agent who only responds by text or email. Or, if the reverse is true, you may be annoyed by agent phone calls.
Finally, think about whether your agent’s communication style works for you. If you’re a new buyer, for example, you’ll want to make certain you can get questions answered in terms you understand and that your agent is willing to walk you through the process.
3. What sets them apart from other agents?
Ramsey suggests looking at certifications and credentials to see if your agent stands apart from competitors. But credentials aren’t really what sells a home. Instead, it’s an agent’s creative ideas, market knowledge, and ability to work with people and get deals done.
If you really want to see if a particular agent will be a good salesperson for your property, consider visiting them when they’re hosting an open house and asking questions about the home. See if they’re knowledgeable and can present the house in its best light. This is how we have found all of our real estate agents for past transactions. Their personality can be far more important than if they’ve managed to pass a bunch of certification tests.
4. What do they charge?
You need to know how real estate commissions work and what you’ll pay, which is why Ramsey said to address this issue. This is more important for sellers, though. Buyers don’t usually have much of a say in what they’ll pay to their agent, since the amount their agent gets is based on commission a seller is offering.
The standard is that sellers pay 6.00% commission split between the buyer’s and seller’s agent. So if you sell a home valued at $400,000 and pay the standard rate, you’d owe $24,000 in commission. Obviously, with such big numbers, if you are selling a home, you should find out if this will be the case.
There are a number of discount agents out there who will accept less — and you may want to find one if you don’t want to pay a huge sum to an agent. Even just a small discount — say, paying just 2.5% instead of 3.00% to the seller’s and buyer’s agents — could save you a lot. In this example, your commission fees would be just $20,000 on a $400,000 house instead of $24,000, leaving you with $4,000 extra in your pocket.
5. What references do they have?
Finally, Ramsey recommends asking for references from homeowners who have worked with your agent in the past. And while this can make sense, most people aren’t going to give you a reference from someone who they did a bad job for. Instead, you may be better off looking at online reviews of the agent, which are more likely to be unbiased.
Ultimately, you should make sure you do your research to find a real estate agent you’re comfortable with. You can ask all these questions at an interview, but seeing how agents work in person at an open house could be a better insight into whether you’ll have a positive experience with them.
Since your agent is going to play a vital role in one of the biggest transactions of your life, it’s worth taking the time to find the right one.