Buying and selling a home can be one of the most expensive and complex transactions you may undertake in your lifetime. Many are increasingly seeking assistance from real estate agents; according to the Highlights of the 2012 National Association of Realtors® Profile of Home Buyers and Sellers (realtor.org), eighty-nine percent of home buyers purchased their home through a real estate agent (a substantial increase from the sixty-one percent who indicated they purchased through an agent in 2001), while eighty-eight percent of sellers listed with an agent.
If you plan to hire a real estate agent, conventional wisdom dictates that you should interview several before choosing an agent. However, the logic is countered by the survey results. Approximately two-thirds of home buyers and sellers only contacted one agent. Additionally, a majority of buyers and sellers reported that the top means of finding their real estate agent was through a referral from a friend or family member. Forty percent of home buyers and thirty-eight percent of sellers found their agent through a referral from a family member or friend. First time home buyers were most reliant on their friends’ and family members’ referrals.
Repeat business was also a frequent way indicated in choosing a real estate agent. Although ninety percent of home buyers and eight-four percent of sellers reported that they would work with their agent again in the future; only twenty-three percent of home sellers and ten percent of buyers reported that they had worked with their agent in the past.
The internet is increasingly viewed as an important source of information for home buyers. Ninety percent of buyers surveyed indicated that they used the internet for their home search; the percentage rose to ninety-six for buyers under the age of 44.
Ultimately, your home purchase or sale falls upon the experience and skill of the agent you hire. Because of the increase in specialized transactions (such as short sales, 1031 exchanges, etc), it is probably a good idea to find out if the agent has the experience if your purchase or sale falls in this category.
A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the notion that an experienced agent can yield a better result than an inexperienced agent. They concluded that hiring a “veteran” agent will have a positive effect on your home sale. The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.
Asking friends and family for referrals as well as calling the agent you previously worked with is a good way to find a real estate agent. However, vetting out potential issues can be achieved by asking the right questions before you hire them.
Regardless of how you find your real estate agent, it is probably a good idea to find out more about them. A conversation about their experience, knowledge, and expertise is probably a good way to start. Additionally, knowledge about the local market is extremely important these days as market trends have become hyper-local. Not understanding the neighborhood market can lead an agent to over or under price a home.
by Dan Krell
This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.