Last Updated on May 25, 2022 by Mark Ferguson
Finding a real estate agent is not difficult, but if you want to find a great real estate agent, it takes a lot more effort. The difference between a mediocre agent and a great agent can mean thousands or tens of thousands of dollars to a buyer or seller. While it may not seem like real estate agents do much, real estate is a very complicated business. Experience and knowledge can make a huge difference in selling a house for the most money, finding the right house to buy, or getting a great deal for an investor. In fact, investors may want a different type of agent than would a regular buyer or seller.
How can a real estate agent help a buyer?
Most buyers do not know exactly how the house-buying process works. A lot must happen in order to purchase a home:
- The buyer must get a loan.
- The buyer must find a house.
- The buyer needs to write an offer and negotiate.
- The buyer needs to complete an inspection.
- The buyer needs to complete the loan process.
- The buyer needs to avoid doing anything to mess up the deal, like buy a car right before closing.
A real estate agent can help with all of these aspects, and the great thing for buyers is the seller usually pays for their agent! If an agent messes up one thing, it can cause the whole deal to fall apart and cost the buyer or seller a lot of money.
The traits of bad agents are a lack of communication, knowledge, honesty, and timelessness.
- Communication: one of the most important things an agent must do is communicate often and openly with everyone involved in a transaction. The agent needs to check with lenders, title companies, inspectors, appraisers, and more to make sure everything goes well. Not all lenders are great either, but a great real estate agent will be in constant contact with the lender to make sure they are doing their job.
- Knowledge: real estate agents need to know what they are doing! That may seem obvious, but every real estate transaction is different. The best agents have experience and have worked in the business for a while. That does not mean new agents cannot be great if they have a team or a mentor to help them.
- Honesty: one of the worst things an agent can do is lie. Most of the lies I see are when an agent does not know something, so they make something up instead of admitting that they don’t know.
- Timeliness: in today’s hot real estate market, the agent must also communicate quickly. If it takes an agent two days to call someone back, it can easily cost the buyer a deal. The agent must also make sure the home inspection, appraisal, and other items are completed on time so the buyer does not lose their earnest money.
A really good agent will not only do their job but go above and beyond for their client. Real estate can be one of the best investments if you buy the right houses. A real estate agent can help buyers figure out what values are, what things to watch out for, and how to find an awesome deal on a house. Not every house for sale is listed online with Zillow or Realtor.com. Real estate agents have access to the MLS, where almost all houses are listed.
Why is it important for a seller to use a real estate agent?
The seller usually pays for both their agent and the buyer’s agent. Real estate agents can be expensive, and many sellers question whether using and paying for a real estate agent is worth it. I am biased because I am an agent and broker, but even if I were not, I would always use an agent. They may be expensive, but they are worth it! They usually make the seller much more money than they cost by pricing a house right. They also help with:
- Negotiating price.
- Negotiating inspections.
- Negotiating appraisals.
- Negotiate title resolutions.
- Negotiate multiple offers.
- Negotiate seller concessions.
- Negotiate earnest money.
- Negotiate inclusions and exclusions.
- Negotiate conditional sale contingencies.
- Negotiate survey resolutions.
- Negotiate due diligence resolutions.
- Obtain and review the buyer’s qualification letter.
- Negotiate closing and possession date.
Pricing a home right and listing it in the MLS is the most important part of selling, and you need an agent to both right.
What are the best ways to find a great real estate agent?
There are many real estate agents, and they advertise all over. One sign of a good agent is advertising because it means they are making enough money to market themselves. Here are some tips on finding a good agent:
- Ask friends and family who they have used. A referral from someone who has used a great agent is a good place to start. If someone suggests you use a certain person, ask them if they used that agent. They could be referring their friend or brother, but if they have never used them, it is tough to know if they are any good.
- Zillow or other online real estate sites. Zillow, Realtor.com, Trulia, and other sites all suggest real estate agents. These sites charge real estate agents to advertise. The problem with these sites is if you ask to be put in touch with an agent, you may get 5 agents calling you at once. You can still find good agents on those sites, and you should be able to contact those agents directly without submitting a request for someone to contact you. I would look for agents that have the most local reviews and sales.
- Ask the professionals in your area. Most people have an accountant, doctor, chiropractor, lawyer, or another professional they can ask. The nice thing about asking them for a referral is they don’t want an agent to make them look bad. Hopefully, they are referring agents who do a good job or someone they have used themselves.
- Call real estate offices. Most real estate offices have “floor time.” Agents can sign up for floor time, and whenever the office gets a call or visit from a client who does not have an agent, the floor agent gets the lead. When you call a real estate office asking for an agent, you will most likely get the floor agent, who may or may not be any good. This is probably not the best way to choose an agent.
- Call on listings or go to open houses. Another way to contact agents is to go to open houses or call yard signs for listings you may be interested in. I think this is slightly better than calling an office because you know these agents have a listing or are working an open house to get clients.
- Call agents who have advertisements in local publications. You most likely see agents on billboards, in grocery stores, on bus stops, and in local magazines. Advertising in these publications can be expensive, and it is usually a good sign when agents advertise. It at least means they have some money to market, which means they sell houses.
The more you see an agent’s name around town, the more experience they will have. Advertising does not guarantee they are a great agent, but it gives you a good idea that they sell houses and might be good.
My book: How to Buy a House, goes over how to find agents in detail as well as the rest of the house-buying process. It is available on Amazon as a paperback and eBook.
How do agents get paid?
Real estate agents only get paid when they sell houses. If you want your real estate agent to work hard for you, it is important that they know you will not go behind their back and use another agent. If they think you are going to use other agents to find a house, they may just stop helping you all together. It is important to be honest with your agent and tell them if you want to work with them or someone else.
How do you know if your agent is any good?
Many buyers will have no idea if their agent is any good unless something goes wrong. By that time, it may be too late to switch agents or save the deal. Here are some things to watch out for when working with or looking for a great real estate agent.
- How much experience do they have? Brand new agents are not always bad, but they have a better chance of messing something up. On the other hand, new agents can be a great resource for investors or someone looking for a great deal. Often, new agents make up for their lack of experience by having more time and more drive than experienced agents. I would not write off new agents, but make sure they have a team or a more experienced agent helping them learn the business.
- Are they part-time or full-time? Many real estate agents only work part-time. They have a full-time job and try to work their real estate career around that job. This can earn the agent some extra money, but it can hurt their clients. Real estate agents need to be available almost all the time. They do not have to work all the time, but they have to be on call. Some buyers want to see houses during the week, some at night, and some on the weekend. When a good deal comes up, most buyers cannot afford to wait a day or two to see it. When there is a problem with a loan, the lender may not be able to wait all day to get a hold of the agent. If an agent works part-time, it does not mean they are bad. You have to make sure they have a flexible schedule or have help if they are not available.
- How fast do they respond? I have looked for real estate agents myself when buying out-of-state properties. I have also looked for real estate agents to refer clients to. In my experience, most real estate agents are not very good at communicating. I would estimate 1 out of 3 real estate agents I contact will respond. If an agent will not call or email you back, do not use them! If it takes two days for someone to get back to you, do not use them! The best agents will answer their phone or get back to you within an hour or two. That is not always possible, but if an agent takes a day to get back to you every time you contact them, that is not a good sign.
- Do they know the market? You may not be able to tell if an agent is knowledgeable about their work. There are many terms that buyers may not be familiar with, and there is a lot going on behind the scenes. A buyer can still ask their agent questions to see how knowledgeable they are about neighborhoods or houses. Real estate agents who know what they are doing should know the answers to these questions or be able to look them up very quickly. If they have problems answering them, they may not be very experienced.
- How old is this house?
- Are most of the houses in this neighborhood the same age?
- Is there an HOA fee, and how much is it?
- Is the home priced at market value, above, or below?
- Would this home qualify for a loan based on its condition?
- How much would an inspection cost?
- Have you had any problems with homes appraising in this market?
- How long does it take to close?
- What are the costs associated with buying a house?
- How much is the house worth after it is fixed up (assuming it needs repairs)?
How to find an investor-friendly agent
If you are a real estate investor looking for a real estate agent, you may want a different type of agent than a regular buyer or seller. Real estate investors are trying to get very good deals, especially house flippers. Many people think real estate investors should look for agents who are also real estate investors. The agent/investors can help the investors learn the business and find deals.
I am a real estate agent and real estate investor. I flip from 20 to 30 houses a year, and I own more than 20 rental properties. I am a horrible agent to use to find deals because I am looking for those same deals for myself. I also do not have time to work with buyers.
An investor needs an agent who has time to search for great deals and show houses right away. I don’t think agents should be teaching investors how to invest. An investor should know what their buying criteria is, what kind of property they want, etc.
What else should an investor-friendly agent know?
If you are an investor or even a regular buyer or seller, agents need to know how to get a great deal. Here are some more questions you can ask agents to see how knowledgeable they are.
- Have you sold many REO properties? REO properties are foreclosures that are sold by banks. They have a much different buying process than regular listings.
- Have you sold HUD homes? Does your office have an NAID number? HUD homes are government foreclosures, and agents must have an NAID number in order to bid on them for buyers. Buyers must use an agent to bid on HUD homes as well.
How do you suggest buyers handle multiple offer situations? Many houses receive multiple offers if priced well. It helps to have an agent who is knowledgeable about the process.
How do short sales work? Short sales involve a house that needs the bank to approve the sale because the seller is selling for less than they owe on the loan.
If the agent does not know everything (especially if they are new), it is not a deal killer. However, it is a good way to see if they will do some research and find out how these processes work if they do not know.
How can you get an agent to work hard for you?
Many investors are very demanding of their real estate agent. The investor needs to act quickly and may make many offers before getting an offer accepted. If you are an investor who wants to make hundreds of low-ball offers, make sure you motivate your agent. They only get paid when they sell a house. They don’t get paid to make offers. If they are thinking submitting low offer after low offer is a waste of time, they aren’t going to work hard for you. Buy them lunch or dinner and discuss strategies. Show them you care, and give them a reason to keep working hard. Even though lunch won’t make up for the hours of time they have spent, it may be enough to keep them going until you get a deal done and make them some real money.
Is your real estate agent ethical?
Being ethical is a very important issue for investors or anyone using a real estate agent. Many buyers like an agent who stretches the rules to get them deals. Remember, just because your agent was the one who wasn’t ethical doesn’t mean the buyer or seller is not also liable. If the buyer or seller knows the agent is being unethical or breaking laws, then they can be considered just as responsible as the agent. Even if the buyer or seller doesn’t know their agent was being unethical, they can be held responsible.
HUD homes are a great example of how buyers and agents can get in trouble. If an agent helps a buyer bid as an owner-occupant when they are really an investor, both the agent and the buyer can face criminal charges. HUD homes are government property, which means any laws broken involving them are felonies. Buyers can face up to two years in prison and a fine of $250,000 for breaking HUD rules. Agents can lose the ability for their entire office to sell any HUD homes.
Does your real estate agent have a backup?
Another very important thing to consider with an agent is if they have a backup. Agents go on vacation, get sick, or have accidents just like everyone else. You want to make sure they have someone who can take over their business if they are unavailable. Many agents work on teams, and this is a great way to know you will be taken care of if your agent can’t do it themselves. Speed can mean the difference between getting a deal and losing a deal. The last thing you want is your agent to be out of town and unavailable to show you a home or make an offer for three days.
Should you use friends or family when choosing a real estate agent?
Many people have a brother, a sister, a mother, a cousin, or a friend who is an agent. Working with friends and family can be a nightmare, or it can be awesome. I would not use friends or family just because they are friends or family. Use the same criteria to decide if you will use them as you would a stranger. This is a huge financial decision, and you don’t want to pick a bad agent to avoid hurting their feelings. I have had multiple friends not use me as their agent, and I got over it. In some cases, I saw some brilliant ways my friends handled it.
If your friend or family member is a good agent, use them! If you have multiple friends or family who are good agents, put their name in a hat and choose one. Tell everyone how you decided to pick an agent and that it was nothing personal. Some friends have decided to pick someone they did not know to avoid business transactions with friends or family. If you are working with an agent, you should know they will find out about your finances. You could always pick the person you think is the best agent, and tell the other people you drew names out of a hat. You don’t have to lie. Just make sure every name in the hat is the person you want to work with.
It can take a lot of work to find a great agent. If you are an investor looking to buy multiple houses a year, a great agent can mean a difference of tens of thousands of dollars. If you choose an agent who you don’t think is doing a great job, don’t be afraid to fire them. I have had to fire agents who were helping me because I misjudged their abilities, work ethic, or character. If you are a regular seller or buyer, an agent can cost you or make you a lot of money as well. Do not make this decision lightly!