Your Real Estate Team
What is my role in the home selling process?
You don't have to become an expert in property values, mortgages, tax and real estate law, title insurance, escrow, pest-control work, and construction techniques in order to play the house-selling game well. Instead, you can hire people who've already mastered the skills that you lack. House selling is a team sport. Your job is to lead and coach the team, not play every position. After you assemble a winning team, your players should give you solid advice so you can make brilliant decisions.
Because you probably don't have an unlimited budget, you need to determine which experts are absolutely necessary and which tasks you can handle yourself. You are the one who must determine how competent or challenged you feel with the various aspects of the house-selling process.
For a more detailed description of the possible roles on your team, read the section on The Team and the Players below.
What does the listing agent do?
The real estate agent you hire to sell your house, known as the listing agent, must be able to accurately answer your most important question: "What's it worth?" Houses sell for fair market value, which is whatever buyers are willing to offer and sellers are willing to accept.
A good agent can be the foundation of your real estate team. An agent helps you price your property, orchestrates the marketing and showing activities, negotiates with buyers on your behalf, supervises property inspections, and coordinates the closing. A good agent's negotiating skills and knowledge of property values can add 5 to 10 percent to your house's sale price.
What qualities should I be looking for when selecting a listing agent?
All the best listing agents have certain important qualities in common.
- They educate you: Your agent knows the selling process and carefully explains each step so that you understand exactly what's happening at all times. Agents should be patient, not pushy. A good agent never uses your inexperience to manipulate you.
- They enable you to make good decisions: Your agent always explains what your options are so that you can make wise decisions regarding your best course of action. They advise you if they think that you should add other experts (property inspectors, lawyers, and so on) to your team -- experts don't threaten a good agent.
- They voluntarily limit themselves geographically and by property type: Good agents know that trying to be all things to all people invariably results in mediocre service. Even though real estate laws are the same throughout your state, different areas within the state generally have radically different market conditions, local zoning ordinances, and building code restrictions.
- They have contacts: Folks prefer doing business with people they know, respect, and trust. You can make use of your agent's working relationships with local lenders, property inspectors, lawyers, title officers, insurance agents, government officials, and other real estate agents.
- They have time for you: Success is a two-edged sword. An agent who is already working with several other sellers and buyers probably doesn't have enough surplus time to serve you properly. Occasional scheduling conflicts are unavoidable. If, however, you often find your needs being neglected because your agent's time is over committed, get a new agent.
What kind of obligations does my agent have in regards to me, the client?
Agents are bound by certain obligations which you are due as a client:
- Loyalty (act in the best interest of the client)
- Obedience of all lawful instructions
- Accountability (for all monies)
- Reasonable skill and care
- Declaration of all material facts
- Honesty and fairness to all
State laws clearly define the duties for each type of brokerage relationship. States have mandated agency disclosure forms and rules to provide meaningful and timely written disclosure and describe licensee's duties upon termination of a client relationship.
As you start communicating with an agent, ask for a clear explanation of your state's current agency regulations. Also request a copy of your agent's company's policy regarding agency so you will know where you stand on these important matters.
What is seller's agency?
This agent works solely for and represents the seller. A seller's agent has no fiduciary responsibility to the buyer.
What is buyer's agency?
This agent works solely for and represents the buyer. A buyer's agent has no fiduciary responsibility to the seller even if the buyer's agent gets a portion of the commission paid by the seller.
What is dual agency?
One agent may represent both buyer and seller in a real estate transaction, but only if both parties consent. Buyer and seller must sign a dual agency disclosure statement that describes the duties and obligations of the dual agent. A dual agent may not disclose any confidential information that would place one party at an advantage over the other party, and may not advocate or negotiate on behalf of either of the two parties.
Most states permit dual agency relationships as long as the agency status is disclosed to both the sellers and the buyers in advance, and both parties agree to it. Undisclosed dual agency, which occurs if the buyer and seller have not been advised about or consented to dual agency, can be used as grounds to have a purchase agreement revoked and could permit the injured parties to seek recovery against the real estate agents.
What is the best way to select an agent?
Start the selection process by inviting agents to tour your house to prepare a comparable market analysis (CMA) for your property. The CMA establishes your house's value by comparing it to other houses in your neighborhood that are approximately the same size, age, and condition as your house.
If you intend to interview multiple agents, tell the agent during that first meeting. Schedule second meetings with each agent a few days later to review their CMAs, their marketing plans for your property, and their activity lists.
By analyzing agents' CMAs, marketing plans, and activity lists; interviewing the agents; and talking to their clients, you can gather the facts you need to make an intelligent decision. Here are three final considerations to help you select the paragon of virtue that you need on your real estate team:
- Will you be proud having the agent represent you? People who deal with your agent will form opinions of you based on their impressions of your agent. You can't afford to have anyone on your team who isn't a competent professional.
- Do you communicate well with the agent? Good agents make sure that you completely understand everything they say. If you can't understand your agent, don't blame yourself; the agent is probably a poor communicator.
- Do you enjoy the agent's personality? House selling is stressful. You share extremely intense situations with your agent. Working with an agent you like may transform the selling process from a horrible experience into an exciting adventure -- or, at least, a tolerable transaction.
Why do I need a lawyer involved?
The real estate purchase agreement you sign is a legally binding contract between you and the buyer. If you have any questions about the legality of your contract, get a lawyer on your team immediately. No one else on the team is qualified to give you legal advice.
What determines whether I need a lawyer on my team or not?
The following factors determine whether you need a lawyer on your team:
- The location of your property: Your agent will know the role that lawyers play in your particular locale.
- The complexity of your transaction: You need a lawyer if you get into a complex financial or legal situation that can't be covered by the type of standard contract mentioned earlier. For example, suppose that you hold title as a tenant-in-common and are selling a partial interest in the property, or that you want to structure the transaction as an intricate installment sale.
- If consulting an attorney will help you sleep at night: You may have the world's easiest deal. Still, if you feel more comfortable having a lawyer review the contract, your peace of mind is certainly worth the cost of an hour or two of legal time.
- If no agent is involved: For example, suppose that you're selling your house by yourself. If neither you nor the buyer has an agent, get a lawyer to prepare the contract, and have the lawyer do the work that an agent would normally handle. Eliminating the real estate agent doesn't eliminate the disclosures, inspections, contingency removals, and other details involved in the house-selling process.
How do I choose a lawyer?
If you decide that you need a lawyer, interview several before making your selection. A corporate attorney or the lawyer who handled your neighbor's divorce isn't the best choice for your real estate team. Get a lawyer who specializes in residential real estate transactions. Good agents and brokers are usually excellent referral sources because they work with real estate lawyers all the time in their transactions.
A good lawyer has the following characteristics:
- Is a full-time lawyer: Licensed to practice law in your state.
- Is local talent: Real estate law, like real estate brokerage, not only varies from state to state, it also changes from area to area within the same state. A good local lawyer knows local laws and has working relationships with people who administer them in your area.
- Has a realistic fee schedule: Lawyers' fees vary widely. A good lawyer gives you an estimate of how much it will cost to handle your situation. Seasoned lawyers generally charge more than novice lawyers, but seasoned lawyers also may get more done in an hour than inexperienced lawyers can. A low fee is no bargain if the novice is learning on your nickel.
- Has a good track record: If the lawyer you consult thinks that your case may go to trial, find out whether that lawyer has courtroom experience or intends to refer you to another lawyer. Always ask about the lawyer's track record of wins versus losses.
- Is a deal maker or a deal breaker (whichever is appropriate): Some lawyers are great at putting deals together. Others specialize in blowing them out of the water. Each skill is important. Depending on whether you want the lawyer to get you out of a deal so you can accept a better offer or need legal assistance to keep your deal together, be sure that you have the right type of lawyer for your situation.
- Speaks your language: A good lawyer explains your options clearly and concisely without resorting to incomprehensible legalese. Then he or she gives you a risk assessment of your options in order to help you make a sound decision. For example, the lawyer may say that one course of action will take longer but will give you a 90 percent chance of success, whereas the faster option only gives you a 50/50 chance of prevailing.
Who is the broker?
When you select an agent, your agent's broker is part of the package. If your purchase rolls merrily along, you may never meet the broker. But if a problem occurs, guess who you can turn to for a quick fix? Brokers are the invisible grease in problematic transactions.
For more information on brokers, read the section on Who is the Broker below.