What Is the Commission Split?
When hiring a real estate agent to sell your home or help you through the buying process, you should be aware of the commission they charge you. It’s their job to help you sell your home, and the last thing you want is for your agent to get rich even if it means you’ll lose money on the deal.
Real estate agents split their commission into two components: a buyer’s commission and a seller’s commission. To compare the two commissions and their corresponding agent fees, consider this example.
If you’re using an agent to sell your house, the seller’s agent’s commission may be as little as one percent of the sales price. In contrast, if you’re using someone to buy a house, the buyer’s agent’s commission might be as high as 6 percent of the total cost.
The return on investment for an agent depends on the home, the time of year, the housing market demand, the location of the home, etc. Take the time to research your home in depth and get a second opinion from a reliable, licensed professional before signing on with any agent.
What Is the Desk Fee?
This is a flat fee the broker charges you without hourly charge for face to face meetings. The desk fee is often a percent or flat of the sale price or other metric like percentage of the list price which the broker will provide. The broker will typically not charge a broker fee that is greater than 2%, regardless of sale price. For some lower volume transactions this allowance would be greater, but it is a good idea to find a broker who charges less than this.
What Are the One-time & Ongoing Fees?
When you buy a house, there are a number of fees that are going to come with it – the closing costs. These are the expenses you’re going to have to pay no matter what. When you’re looking to purchase a home, you will want to balance these fees against the price of the home, since you won’t be able to roll these fees into the mortgage.
When you’re shopping for a home, you’ll want to know the one-time and ongoing fees you’re going to have to pay the second you move in.
What are the one-time fees? First you’ll want to know what’s going to be included in the sale of the house, free and clear – the roof, the chimney, the cellar and the yard (if it’s a condo). Any other items will be the one-time fees. In addition to the fees that are included in the sale of the home, you will also have to pay for mandatory items like the house payment and insurance.
Are Commissions Negotiable?
Yes, but only the amount charged by the person recruiting for your listing.
How do Brokers Make Money?
Any agent listed on the MLS (multiple listing service) is tracked and monitored regularly. One of the things the MLS looks at is the average number of showings and the average length of time on the market. It’s not necessarily the selling price, but it is the sales price that comes into play in home sales.
What Are Your Turnaround Times?
However fast that brokers think they can do it, they are held accountable for a certain amount of time to get the listing done. If a buyer’s offer lapses, the buyer’s agent will start looking for another buyer.
What are My Expectations?
How long do I have to list my home for?
The longer you list for, the more it is going to cost you.
How Quickly Do You Pay the Clients?
The faster you sell the home, the more money you’ll make.
Can You Show My Home to Clients and If so How Often?
To generate more business, the faster you can get your home listed, the better.
Are There Any Fees or Do I Have To Pay You Anything When I Buy or Sell My House?
What Kind of Training Is Provided?
The first thing to consider if you’re looking for a realtor to help you with your real estate needs is to find out whether they have the appropriate training and experience. Not all real estate broker’s have the training to help you buy a home or find the right one. Make sure you check out the real estate broker’s professional training record, including any accreditations. The better accreditations are the ones that indicate the broker has taken the training to a nationally recognized realtor accreditation board.
Find out if the real estate broker’s training is updated regularly. When you go to a lecture for professional development, the instructor will usually cover the most up to date information. Your real estate broker may not be keeping up with the most up to date information if they are several years behind.
Another question to consider is how many bona fide clients is the broker currently helping. Unfortunately, there are unscrupulous real estate brokers out there who are not licensed and not bonded. These brokers will begin the real estate buying process and gain your trust. If something were to happen during the real estate buying process, you’d lose your chance to buy a home. I’m sure you don’t want that.
Is There a Company Policy Manual?
If you’re an employee working for a company, it’s important to understand the company policy manual so you can make yourself familiar with what’s expected of you on the job.
When you’re interviewing for a new job, a key aspect to consider is whether or not your future employer has a company policy manual. If they don’t have one, you might want to let them know you’re interested in learning about the policies and procedures being used in your prospective workplace. Doing so shows that you’re proactive and proactive people are looked upon favorably.
If they do have a company policy manual, you might want to make it a point to ask about what the current policy manual says about background checks. Background checks are something you should be familiar with if you don’t want to be placed in a position of potential liability or misconduct. It’s important to know whether there’s a policy on background checks and what it says about them. You might want to have the policy manual to refer to when you’re applying for new jobs.
Is There Administrative Support?
Within the real estate industry, the term “real estate broker” refers to an individual who buys and sells real estate (either short-term or long-term) for their clients. They are a licensed agent who represents both the buyer and the seller in a real estate transaction. A broker typically acts as an intermediary between buyer and seller, and the responsibilities are very similar to those of a typical agent.
When you interview a broker, you want to make sure that they’re capable of handling all the paperwork, leases, and the myriad of details involved in the real estate transaction.
How do you find out if a broker has administrative support?
When you’re interviewing a broker you’re dealing with, ask them to walk you through the process a seller must go through to sell a home. Make sure that they have adequate staff and resources to perform the duties of a real estate broker.
Where Do You Focus Your Online Marketing Efforts?
Real estate agents may use different marketing tactics when marketing to different properties. Some may choose home staging to drum up interest in a house. Others may stay local and earn more name recognition through newspaper and online listings. What should you look for when interviewing real estate agents to sell your home or rent it out? Remember, when you want to switch realtors, you might have to go through other agents. Don’t go through another series of hassles and headaches. Be sure to select an agent that will treat you fairly and will ensure you get the best price.
You need to find an agent that specializes in online marketing to help you sell or rent your property. Look for an agency that has an online presence that allows you to take a virtual tour of every property in the development. Look for an agent that uses the Internet to update every property and that creates a strong online presence to attract clients. Be sure your agent has an online presence (and offline presence), that optimizes search and that secures clients.
Remember, all of this is about marketing your property. If you have a limited budget, the agent you select for your home will determine how well your property is marketed. If you are a good negotiator, you can negotiate a commission for your online efforts, but agents have limited time to market their properties. The more exposure your property gets, the higher you should be paid.
What Kind of Software or Technology Is Provided?
Real estate brokers are local entrepreneurs whose primary revenue comes from the commissions they earn on deals they broker. In turn, many brokerages promise to pay their real estate agents commissions-based on the percentage of their sales they close. But as it turns out, the support and technology that real estate agents receive may do the exact opposite. You can read more about that and more in the following article published at Buffer Blog on July 10, 2016:
Since a real estate agent is responsible for all of the closings themselves, their quality of work is the only fair measure of a broker’s success. When you’re interviewing a real estate broker, you want to ask the most important 20 questions that you’ll probably ever ask during your negotiations.
Are There Mandatory Meetings?
When you hire a real estate broker, they will normally initiate a list of pre-appointments with you lined up. You’ll normally be expected to attend these appointments so that you can meet the real estate broker and assess their credentials.
Most real estate brokers have physical offices. Some may offer virtual offices and some brokers will provide you with email contact information that you can contact them at when you’re in need of real estate services.
If you are interested in working with a particular real estate broker, make sure you ask them the questions listed below to ensure they are a good fit for you.
How Many Agents Work Here?
Most real estate agents work with a team in order to shepherd their clients through the buying and selling process. There are many different team building approaches, but the key is to choose agents with complementary skills. Partners who work well together are likely to have success working with one another as a team — and this makes for a smoother buying or selling experience for the client.
There are many different ways for a broker team to work, but the best teams exhibit a unified approach. A team must be cohesive to interact effectively, creating a seamless experience for clients. Colleagues who have a clear understanding of each other's strengths, weaknesses, and day-to-day duties also make for a more cohesive team.
Asking about the size of a real estate team is a great time to hear about any potential organizational difficulties and how they've been resolved.
How long have you been in business?
Do you have offices in multiple markets?
How many agents work here?
How long have you been with us?
Who do you focus on representing?
This is just a sampling of the questions you can ask a real estate broker. For a full list, visit Addison & Vaughan, a national real estate brokerage.
How Many Agents at This Brokerage Work Part Time & Full Time?
When you call a real estate agent you’re not really calling the person you’re calling, you’re calling their real estate brokerage. Real estate agents are scattered all over the country and by having multiple agents in a rolling geographic area you are able to offer a local service to your clients. So when selecting a real estate brokerage it is important to consider how many full time agents are in your area. A large brokerage may have numerous agents but just be covering a broad geographic area. On the flip side, comparatively smaller brokerage serve a slightly smaller area and you can expect to have a higher level of customer service.
When I first started real estate investing I was frustrated by my lack of knowledge of the local market and the listings available and started studying more about the brokerage I used. I found that the more local the brokerage the better service I received and the more motivated the agents.
I’m not saying that there isn’t that level of service in a large brokerage, it just takes a little longer to get to you. A large brokerage can do bigger projects and can likely get bigger listing fees for me, but for many smaller projects it is best to work with an agent locally.
Although I do generally recommend working with local agents, there are instances where it is more cost effective to use a large brokerage where the agents work in your area anyway.
What’s the Average Number of Years of Experience of Your Agents?
According to the NAR, the average agent’s experience in 2013 was 8.7 years. That’s up from 8.1 years in 2012 and 8.6 years in 2011. That’s a trend that’s been in place for nearly a decade.
Because most salespeople will want to work with a broker with more experience, they will be more likely to refer you to a broker they’ve worked with in the past.
This makes it important to check the experience of the broker with whom you are interviewing. It’s not enough to look at the number of years of experience they have gained. It’s important to check the level of experience they’ve gained in order to determine whether it’s sufficient to be able to sell your house.
If you ask a broker to provide you with the NAR Broker Search, they can use that information to research the broker’s experience and qualifications. By asking for the Broker Search, you are able to know their specific experience and how much sales experience they have.
How Long Have Your Agents Stayed at This Brokerage?
How long have you yourself stayed at the agency?
How many years have you been in real estate?
What is your specific niche?
How many transactions do you typically handle?
What do you love/don’t love about your job?
What’s your favorite home type?
How do you find great deals?
What would you say are ethical and unethical practices?
What percent of your business is referral?
What’s the one thing/two things you wish you could change?
What are your top five websites you check on a regular basis?
How Many Listings Does Each Agent Currently Have?
If a potential buyer or seller is considering using the services of a real estate agent, they should be very careful in making the decision to use the agent. Very often, they will make a decision that turns out to be not only unwise, but disastrous.
The best way for potential buyers and sellers to protect themselves is to make sure all their questions are answered prior to making the deal. But this isn’t always possible.
When you make an appointment to meet with a real estate agent, the first thing you need to do is to gain as much information as possible:
- How many listings currently do they have on their own (For those that are realtors, how many other brokerages do they have listing packages?)
- How many listings currently do they have on behalf of their clients?
- Are they licensed?
- Are they on the Multiple Listing Service?
- Are they with a local organization?
- How long have they been in business if they are a broker? If they are a salesperson, how many sign-ups do they have? (Realtors are required to register their residential real estate salespeople with the local MLS).
- How much are you paid if you list your own space? Is your commission split down the middle with the agent or based on a base percentage of the sale?
What Is the Average Income of Your Agents?
First and foremost, when selling your home, it’s imperative that you have a well-qualified agent to represent your interests. It’s difficult to successfully sell your home without an appropriate agent. So before you engage in a real estate transaction, you need to make sure you are choosing a broker to represent you that has the qualifications and experience to effectively market and sell your home. It’s a good idea to ask the broker how many years experience she has in selling your type of home, what past sales she has had and what the average selling prices of homes similar to yours were. It will make you more comfortable with the broker that you select should you end up hiring that realtor to sell your home.
Are There Mentorship Opportunities?
One of the critical pieces to starting a real estate career is finding a good mentor. A good mentor will not only be willing to answer all of your questions, but will also help guide you through the apprenticeships and licensing process.
If you’re the younger real estate broker, you’ll need to learn who your mentor is first. Usually, it’s a broker who’s been in the business for a while that likes to mentor new brokers.
You’re not going to find anyone who’s willing to mentor you unless you’ve been in the business for a while and have some knowledge under your belt. The mentor will be working with you to answer the questions you’re asking and will help you learn how to be successful in real estate.
What Is the Company Culture Like?
- back to basics? Simple is better. Well-lit, clean buildings with few layers of rules and bureaucracy might be what your next employer is looking for.
- is the culture one where the boss is the boss? A little bit of whimsy is OK, but this is no time to try radical new ideas.
- is the culture collaborative? Does the work you produce have a real impact on the company? Do your co-workers trust one another? That’s a great way to work together and most likely helps boost morale.
- is it a company with a sense of humor? How friendly are the people and does joking around happen on a regular basis? It might not seem like it, but humor is a good way to relieve stress.
- does the company get bonuses and increased pay for great work? Money is why most people work, and bonuses for excellent work can take the edge off the daily grind of the work week.
- does the company care about tenure? Some companies value good work and can afford to lock this in with their employees. This is another way to make good work feel more valuable and to encourage good morale.
What Are the Brokerage’s Short- & Long-term Goals?
The brokerage’s goals should be written in a mission statement. This should include, at minimum, sales goals, the number of newly produced listings, the number of new real estate agents trained, the amount of business generated for the broker and the amount of revenue generated for the brokerage by the broker. Every real estate brokerage has a unique business model and how it conducts its business is unique as well. What may work for one broker or firm does not have to work for another.
Many brokerages will also host training seminars where the aspiring agent can talk with other brokers about their businesses, their experiences and mistakes. I am never shy about telling an aspiring agent that my brokerage is niche-based, which means that our brokerage’s model is to attract areas that the broker can obtain qualified leads in. As a result, some agents want to train to work in my brokerage, but do not realize that our model is very invitation-based, meaning that we do not have the highest number of agents in the industry, but are also not in the worst situations. We are somewhere in the middle.
How Are Leads Distributed & Qualified?
Asking the right questions can make the difference between choosing the RIGHT real estate agent or broker to represent you or losing business to a business that will not meet your needs.
Answering all the right questions can make buying or selling a home easier and stress-free and reveal any hidden issues before or during the transaction.
Remember, the only person who can know all of the RIGHT questions to ask a real estate agent or broker is YOU!