The relationship between you and your real estate agent is not too dissimilar to an (extremely PG) summer fling: brief, intense, possibly life-altering. And then before you know it, it’s over. Here’s how to search for the right one.
Where to look for a real estate agent
Word-of-mouth is often the best method, so if you have a friend who had a good experience with a similar type of property, start there. If that doesn’t work out, explore the online listings for some properties you like and contact the agent who’s representing them, especially if you see their name popping up often. Most real estate agents have specialties — price points, neighbourhoods, types of homes. “See who’s active in that space, who’s got listings, who might’ve sold something recently,” says Khalil Ebrahim, a veteran real estate agent and principal broker with Pine Financial in Toronto (the Toronto-based company Wealthsimple recently partnered with to offer mortgages).
What questions to ask a real estate agent
You’re hiring for an important job, so don’t take the search lightly. Interview multiple candidates and ask plenty of questions. The two most critical pieces of information that you’ll need to ascertain are the window of exclusivity and the size of their commission.
What are the exclusivity terms? When you’re shopping for a home, a quality agent will want to establish a period of exclusivity during which you work only with them. If you buy a home during that period (even if you found it on your own and they never set foot on the property with you), they get their commission.
Depending on your level of urgency — whether you need to buy a home fast, or you’re in no hurry at all — this period could be a week, three months, or six months. Most quality real estate agents will prefer three months or more, but if you’re an educated buyer who’s done lots of your own research, you can offer as little as a week. Why? Let’s say you have five properties in mind that you already know you want to visit. Ebrahim says, “You might say, ‘If we can go see these next weekend, why don’t we sign up for seven days?’ The best of the best agents will have no problem with that. In those seven days, they know they can prove they’re worth your time.”
What are your commissions? The seller and their agent set the fee on a listing — usually somewhere between 3% and 7%. (This percentage could change, however, if a recent settlement of a class action suit against brokerage fees in the U.S. has a ripple effect here.) In most cases, the buyer’s agent gets half of that fee. That means your negotiation options are limited, but it’s still worth discussing. If the seller’s agent offered to do the deal for only 2% of the sale price (instead of, say, 5%), your agent could be unhappy with their 1% split and expect you to make up the difference between reality and expectations. Similarly, if the seller’s agent smooth-talked their way into a 10% commission, you might want your agent to give the extra 2% they collect right back to you.
The biggest challenge in all of this? You won’t know what the seller’s agent’s percentage is until you’ve agreed to buy the home. At that point, there’s not much you can do. “The buyer has no line of sight into how much the seller is paying their Realtor,” Ebrahim cautions. “It’s not public.” That’s why it’s best to discuss the details up front, establishing a base percentage for their services — along with what will happen if the commission is higher or lower.
And finally, whatever you agree upon regarding commission and commitment, get it in writing. A good agent will offer you something called a buyer service agreement, because they’ll want it in writing too.
The most important asset a real estate agent can have
One of the most beneficial attributes of a real estate agent can often be hard to glean from an interview: their network. The people they know and the speed at which they hear about new listings (or homes that are about to be listed) can make all the difference between you buying your dream home and you wondering how someone else moved into your dream home so quickly. This is especially true in larger, more aggressive markets, or smaller, in-demand neighbourhoods. These homes can be sold before they’re even listed. Called “pocket listings,” these properties are spread through the real estate agent network. If your agent isn’t connected, you won’t even have a chance.
What to expect from a real estate agent
Open houses are your first real chance to see your agent in action, Ebrahim says. Properties can be staged to distract you from the stains on the ceiling, the cracks in the walls, or the loose floorboards. A good real estate agent will save you from wasting time on a property that shows better than it actually is. On the flip side, they might spot a bargain before you do and begin swapping numbers with the seller’s agent before you even walk out the door, giving you a valuable head start on what could be a cutthroat bidding process. They’ll also have a strong network to help you navigate the other parts of this process — real estate lawyers, home inspectors, mortgage brokers. Maybe most important, a good agent will help you stay focused on your goals and not let you convince yourself that, say, you can live with just one bathroom if it means getting a built-in bowling alley in the basement.
How a real estate agent can help you get the right price
Real estate agents can’t tell you the perfect bid to make, but they should be able to give you a general sense of the market, advising you when it might be reasonable to place a lowball offer, or suggesting that you bump up (or down) your “best and final” offer. They should also find creative solutions to getting you a better deal. For example, if the seller won’t budge on price, maybe they’d be willing to chip in on closing costs.
One more important thing: do you like your real estate agent?
This is a question most people overlook. “You’re going to be working quite intimately with this individual,” Ebrahim points out. “You’ve going to be in empty houses with them, touring around a city with them, potentially in a car with them.” Personal chemistry, he says, “is honestly going to be a large component.” Some qualities to look for: are they good at explaining things, or do they talk in circles? Are they mindful of your time, or do they flood you with details you don’t feel like you need? Are they firm and confident (good) or just downright pushy (bad)? And as you’re going down your list of prospects, make note of how responsive they are. Do they have support staff? An assistant who follows up quickly? Do they seem as engaged with you as you are with them?
