Friday, April 3, 2015

Kick-Ass Questions to Ask a Real Estate Agent before...You’re Hired!

Buying or selling a home is a huge financial decision.  If you’re a buyer, whether a first timer or someone who is moving up the ladder from a starter home, you’ll want the best home you can get for the available money (financed amount) you have to spend with the lowest possible transaction (commission, closing, etc.) fees.  If you’re a seller, whether you’re selling your starter home or a step-up one, you’ll want top dollar in the shortest time span possible, and again, with the lowest possible transaction fees.  It’s as simple as that in both cases.  A real estate agent should act like your partner, a sounding board that behaves like a trustworthy financial planner with fiduciary duty, and NOT a pushy car salesman.  Unless you are taking the “For Sale by Owner” route (selling the home with little to no assistance, or buying the home directly from an owner), you will have the difficult task of finding the perfect real estate agent as your number one priority once you’ve been pre-approved.  And this is where the fun really begins!

Top 7 Ways To Be A Successful Real Estate Agent

The interview is the most powerful tool you have at your disposal when shopping for a real estate agent.    
I’ve scoured the Internet for the best questions to ask a real estate agent before you hire them.  There are some great resources out there for would-be buyers and sellers.  Here are three I like:
I have interviewed many real estate agents in the process of buying five homes and selling one.  My strategy has always been first in finding the right person for the job, not necessarily the most popular, highly sought-after agent.  I have my own criteria for what would be the surface of the iceberg, as an analogy, and criteria for what would be under the surface, i.e., the big chunk of ice.  Questions like:

How long have you been in business?  What’s your average list-price to sales-price ratio? What commission do you charge? How many days does it usually take you to sell the average home?  What designations do you hold?  What’s your marketing strategy? What’s your termination policy?
are standard, run-of-the-mill type that should make your tip of the iceberg criteria.  There are more, of course, but these should give you an idea.  I suggest you have at least 10, factual type questions like those above.  Now onto the hard stuff!
How do you determine what type of person you have before you?  How can you get an initial vibe about the realtor you may hire?
Big point to stress: Don’t fall for the fancy suits and looks.  Our minds work in mysterious ways and it is easy to get caught up in the world of appearances.  Realtors and other professionals who provide services dress and look the part.  That’s what they’re supposed to do!  Men, take a female to your interview if you are buying a home solo; a friend, your girlfriend, your sister…heck, even your mom!  They will keep the beautiful real estate gals honest, if you get my drift.  Women are smarter in this area than men, so I will not suggest as strongly that if they are single, they take a male friend or relative.  If dude looks like Brad Pitt, then okay, you may want to take a male friend to check any unwarranted charm.  Moving on…
Here are below the surface and strategic questions I’ve devised to expose the big chunk of ice that are people in this line of work:
How many homes did you transact last year? (Anchor question).  How many homes were you unable to transact last year?  Aha!  You want to obviously be sure that your potential realtor has experience, so the more homes they transacted the better, but…you also want to know how many homes they were unable to transact, for whatever reason.  This is their effectiveness ratio.  Homes transacted : Homes not transacted.  What good is it if they closed on 10 homes, but couldn’t close on 15?  The more positive the ratio the better.  If they don’t know how many homes they didn’t close the previous year give them a -1.  Either they’re lying to you or don’t care about their metrics.
Without names or private details, tell me about a time your client terminated their agreement with you.  Response: “I’m not comfortable sharing this with you” = -2!  Why not?  Everyone has failed in life.  It’s how we learn.  Response: “I’ve never had a client terminate an agreement with me” = -3!  Surely an experienced realtor has had a client terminate an agreement.  This response is the most dangerous of all.  You can’t trust this person.  Get out!  If they humor you and begin to respond, stop them mid-way (they’ve already proven being human) and ask this follow-up question: What did you end-up learning from this experience?  Responses that deflect with traces of bitterness are not good.  They should be humble enough to accept the circumstances as they were and lay blame on no one.
Without names or private details, tell me about a time You terminated an agreement with a client.  Responses will vary, but here you’re looking to see under what circumstances the realtor will move on.  This question is a measure of their self-interest or self-preservation.  There are times when it is best for the agent to sever the agreement.  Give them plus points if they say something like, “I started resenting the client and the time I spent interacting with them was no longer productive…I could tell they too were frustrated…for the best of both parties we came to a mutual understanding that it would be best to part ways.”  If they should start talking about there not being enough money in the deal or the client’s ridiculous commission request, give them minus point.  These responses fall under the self-interest spectrum.

Do you have a rental home portfolio?  Why this question?  I want to know if they drink from the same Kool-Aid as me.  Are they investor-minded or simply pushing a business model with a narrow lens?  Give rookie Realtors a pass.  They’re just starting out so probably wouldn’t have the investment capital yet to start building a rental home portfolio.  Seasoned realtors who still just own their own personal residence get a big -1!

So in all a good set of interview questions deal with what's on the surface, and begin to expose what's also underneath. You will want to have prepared anywhere from 10-15 questions total before you meet with a prospective realtor. Though in many cases you get what you pay for, there are still great realtors who are willing to work with you and give you the service you want for a fair commission. Your experience when buying or selling a home should not be traumatic on account of your realtor. All of that will of course depend on how well you did hiring the best person for your particular job.

Thanks for reading!      

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