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Selecting A Broker

You’ve planned to sell your house, and decided to find a broker to assist you in that process. How do you decide which broker, or which brokerage firm, you are going to use? Whole books could – or should – be written on the subject of seller-broker relationships. But here are a few essentials that you should keep in mind.

First, there are a lot of real estate agents in the field, but not all of them are “Realtors,” and you want to deal only with agents who have that ® designation. That indicates the agent belongs to the National Association of Realtors, which implies (although it doesn’t necessarily guarantee) a level of professional training and commitment, and adherence to ethical standards that you can’t otherwise assume. Realtors also have access to the Multiple Listing Service (a computerized listing of properties available for sale), and it definitely is to your advantage as a seller to have your home listed there.

You will want to verify the reputation as well as the competence of any agent with whom you deal, so check with both the Board of Registration for Real Estate Brokers and Salesmen and the Better Business Bureau to see if there is a history of complaints against the broker or the broker’s firm. Also contact friends, acquaintances and references the broker provides. Their experience, as buyers and sellers, will be a good indicator of the performance you can expect.

Reputation and professionalism are important, but so is the agent’s personality. You’re going to be working closely with this individual and he/she may have to give you advice you don’t particularly want to hear. So trust is essential. The better the rapport between you, the more productive your relationship is likely to be.

You’ll want to interview several agents – at least three or four – before making your choice. And yes, the broker should prepare a market analysis recommending a selling price for your house. You should insist that the agents you interview provide detailed market information supporting whatever price they propose. You want to see “comparable sales” – that is, the selling prices of properties similar to yours, located in the same or similar neighborhoods, that have sold recently.

You also want the agents to provide detailed information about current conditions in your market area. That information should include the average time properties are on the market before they sell, and a listing of homes similar to yours that currently are for sale. How are those homes priced and how does the broker explain the speed – or lack of speed – with which they are selling? You want to know where your home sits in this market. Is it more or less desirable than the properties with which it will be competing?

You are not going to select the broker who recommends the highest selling price, tempting though that may be; you’re going to select the one who seems most knowledgeable about your market, who gives you the most realistic assessment of how much you should ask for your house, and who can articulate the factors that are likely to enhance or impede its sales prospects.

Insist that the brokers you interview submit a comprehensive marketing plan, explaining precisely what steps they plan to take to sell your home. The plan should specify, among other details:

• How, where, and how often the broker will advertise your property. Bear in mind that the major daily newspapers are not the only, or necessarily the best, advertising media; depending on the property, the location and the market, community newspaper, direct mail and even hand-bills may be equally appropriate.
• Will your broker list your house in the Multiple Listing Service, and if so, when? (The answers should be, “yes,” and immediately after the listing agreement is signed.)
• Will the broker hold one or more open houses for other brokers to introduce them to the property? (Definitely a good idea.)
• How many buyer open houses will be broker host and how will those be advertised?
• What repairs or improvements, if any, does the broker think will be needed to enhance your home’s appeal? You should be concerned if the broker recommends a gut rehab, but listen carefully to suggestions that you do some repainting, trim the hedges, and repair broken railings.

Once you’ve selected your broker, pay careful attention to the terms of the listing contract. Make sure it obligates the broker to implement the key components of the marketing plan and allows you to terminate the agreement if the broker fails to do what the plan specifies. You also want to require the broker to report periodically, preferably in writing, on the marketing efforts and the response to them. Don’t agree to an unnecessarily long listing term. Some brokers may want you to commit to a six-month listing, but you shouldn’t accept a term any longer than 90 days. You always can renew a listing if you’re satisfied with the broker’s efforts, but you don’t want to be stuck any longer than necessary with an agent who isn’t doing a good job.

Also make sure you understand the listing terms. Most brokers will require what is known as an “exclusive agency” agreement. That means the broker will be entitled to a commission if the house is sold any time during the listing period (and for a specified period of time after it expires), even if the broker is not directly responsible for the sale.

You should expect to pay a commission of around 6 percent. Although the fee is negotiable, as a practical matter, you won’t find too much variation. The stronger the market (and the current market is quite strong), the less inclined agents are to negotiate.

As for your responsibilities as a seller, one of the most important, I think, is to be well-educated and well-informed. You can and should depend on a competent broker for marketing expertise and professional advice. But you need enough independent knowledge of real estate generally and of your market in particular, to be able to evaluate the advice and information you receive, and to make informed decisions during the selling process.

Equally important, although admittedly difficult, is your obligation to be objective, especially about how much your property is worth. Remember that the amount you “need” to realize from the sale is not necessarily the same as the price buyers will be willing to pay for it.

Finally, but by no means least important, you have an obligation to be honest – with your broker as well as with prospective buyers. Many brokers will ask you to sign a seller disclosure form detailing basic information about the house, and identifying any structural or other problems of which you are aware. Certainly there are legal implications here – if you lie outright or intentionally withhold negative information, you could be sued for damages. But there are practical (not to mention moral) considerations as well.

Most buyers are going to have the home inspected before they make a final purchase commitment, and you’re much better off acknowledging and dealing with any major issues up front, rather than trying to salvage an agreement threatened by the discovery of problems you neglected to disclose. Also, if buyers are going to walk away from a problem, you want them to walk at the beginning of the process, when there still may be other prospective purchasers in the wings; not after the house has been off the market for several weeks, and your sales prospects have been significantly diminished.