Grandpappy told me to “find a Realtor”
Most people would consider the sale or purchase of a house to be a pretty big life decision filled with complexities. In most cases, it’s the biggest financial decision one makes in their life. But there’s good news: there exists an entire industry filled with educated and state licensed individuals who stand ready to help you with this complex process – the “real estate agent or broker” industry.
You know who these folks are. They put their faces and phone numbers on diner placemats, magnetic car signs, grocery store shopping carts. They have business cards tacked to walls in such varied locales as convenience stores, dry cleaners, beer shops, bank lobbies, and day care centers. They wear name labels on their shirts and they display “The Highest Compliment I Can Receive is The Referral of Your Friends, Family & Business Associates” bumper stickers on their cars.
If you stood up in a crowded movie theater and shouted “I’m pre-approved for a mortgage and I want to buy a house” you’d likely have at least one eager agent approach you before the closing credits scroll across the screen.
The National Association of Realtors (NAR) reported a membership of 1.37 million Realtors in November 2018. When you add in licensed agents who are NOT members of NAR, the U.S. total surpasses 2 million with a median gross income of just $39,000. That’s a lot of hungry real estate agents all trying to make a buck – many of them only part-time while they work full-time jobs elsewhere. So when you decide it’s time to sell or buy, you won’t have any trouble following Grandpappy’s advice to “find a Realtor”. But taking the steps to find a good Realtor…an experienced Realtor…the right Realtor for you…well, that’s another matter.
Realtor vs Real Estate Agent
You can be a real estate agent or broker without being a Realtor but you can’t be a Realtor without being a real estate agent or broker. And you can’t be a real estate agent AND a broker. It’s one OR the other. Got all that?
It can be confusing. Know this: the word Realtor is a trademark referring to someone who’s an active member of the aforementioned National Association of Realtors. And you must be a properly licensed agent or broker in the state you operate in to qualify for NAR membership.
Real Estate Agent vs Real Estate Broker
In the U.S., each state has its own requirements for becoming a licensed real estate agent and real estate broker. Agent requirements generally include some degree of classroom instruction (30 to 90 hours) and the successful completion of the agent’s state exam that includes real estate standards and practices, national real estate law and laws that pertain to the specific state.
To be candid, it doesn’t require all that much effort, education and money to get a real estate license. A real estate broker license, though, is another matter. Most states require some number of years as an active real estate agent, extensive classroom instruction over and above that required for an agent license, a predetermined amount of successful real estate activity and the successful completion of a broker’s state exam. Also, most states mandate that for someone to own and operate a real estate business, they must be a licensed broker. Licensed agents must work within a licensed broker’s operation.
It’s one thing to initially obtain a license – agent or broker. It’s another thing to maintain that license over the long haul. Aside from the obvious economic constraints – ie someone not making a living as an agent or broker will not likely stay an agent or broker – there’s also the state requirements of ongoing license renewal, usually every 1 to 2 years. That means paying for and taking continuing education classes and completing and paying for a renewal application.
Ok but I still need to find a Realtor
Now that you have a better understanding of what it takes to become a licensed agent, broker and Realtor…and what it takes to maintain such licensure…it’s time to zero in on finding the best real estate agent for you.
Two important places to start:
- Ask someone you know and trust, someone who recently bought or sold a home, which Realtor they used and would they recommend that person and why or why not?
- Whether or not you get a name or names from someone, you should still do an online search of agents in your general area. Google “Top Real Estate Agents” in your zip code and check their personal real estate agent websites and company websites. But remember, it’s easy for agents to brag about themselves and they all do it. Dig deeper by checking independent online review sites like Yelp, Google Reviews and Zillow.com. Zillow is especially helpful as it will provide agent activity and client real estate agent reviews which are authenticated by Zillow Staff.
When you’re ready to move forward, contact a handful of agents, maybe 3-5, introduce yourself, explain what you want and ask for an appointment. If you are buying, arrange to meet agents at their office. If you are selling, arrange to have the meetings at your home. At the meetings, let each agent know you are interviewing others, be prepared to ask some questions about how the agents will be able to help you get what you want, and be prepared for some questions from the agents. In short, they’ll want to know how “ready, willing and able” you are to do business. Agents are generally paid on commission – no sale = no income = hot dogs for dinner. Understand responsibilities and timelines. Ask about the agent compensation process and make sure you know what costs will be your responsibility. Take notes. And remember, the home buying and selling process is lengthy – sometimes a few months, sometimes many months. It’s important that you feel comfortable with the agent you select as you’ll be spending some significant time together.
In deciding on an agent, experience in the business and degree of success should factor into your decision. 10 years in the business may be an impressive number until you delve a little deeper and find that agent has been struggling to hit the national gross income median of $39,000 throughout those 10 years. In other words, he isn’t closing many sales and he isn’t doing much business. So does he really have the experience you are looking for? And how can you find out exactly how he’s doing? Don’t ask him for copies of his last 3 income tax returns but you can ask for a detailed list of properties he has listed and sold (and successfully closed) over those same 3 years. Also ask if he works full time in the business and if he’s able to attend meetings and respond to calls and emails during weekdays, evenings and weekends. The complexities in real estate transactions demand this type of flexibility and your agent should be able to provide it.
Making a Commitment.
Once you and your real estate agent have “exchanged engagement rings” you’ll need to sign a contract before you can “get married”. If buying, your agent will present you with something along the lines of a “Buyer’s Agency Contract”. If selling, you’ll be presented with something along the lines of a “Listing Contract”. Read these documents and understand these documents. And ask questions until you do understand them.
The bottom line: these documents will lay out the agent’s rights and responsibilities, his company’s rights and responsibilities, and your rights and responsibilities. And once everything is signed, a divorce can be difficult. But divorce won’t even be in your vocabulary because you did a very thorough job of understanding the real estate process, understanding how agents and brokers operate, and most importantly, you did your due diligence in selecting the best real estate agent for you – your realtor “mate”, right?
The author, Rick Sheppard, is a licensed real estate broker in Collegeville, PA and a 30 year veteran of the real estate trenches. He knows a lot because he’s seen a lot. If you have any questions about this or any real estate related topic, feel free to contact Rick at [email protected] and he’ll do his best to answer your questions.