Check Local Signs : Good Agent Vital to Sale of Home

With interest rates down and home sales up, millions of Americans hoping to cash in on the nation’s hot housing market will soon be asking themselves one simple question: “How do I find a good real estate agent?”

Surprisingly, it’s a question that few people bother to answer. According to one report, two-thirds of all sellers list their home with the first agent they contact.

“Most people spend more time trying to sell their car than they do finding someone to sell their house,” says Stan Ross, co-managing partner with the real estate consulting firm of Kenneth Leventhal & Co. “A house probably represents 75% of your net worth, so why would you turn it over to some idiot?”

Indeed, getting a bad sales agent can mean your property will sit unsold for months, while homes around you are snapped up faster than cashews in a bowl of assorted nuts.

Active in Neighborhood

If you’re looking for an agent to help you sell your home, experts say you should ask friends and family members for recommendations. Ross suggests finding firms that are particularly active in the neighborhood by checking local “For Sale” signs, and then attending the firms’ open houses to see how professional and persuasive the sales agents are.

It’s also wise to query neighbors who have recently sold their home, and ask if they would use the same agent again.

Once you’ve compiled a list of potential agents, call each one and arrange for them to give a “listing presentation” in your home. This is the agent’s chance to convince you that he or she should get your listing.

Among other things, the agent should present a thorough marketing plan for the property--including how the home will be advertised, how often “open houses” will be held and how much you should ask for the home.

Skepticism on Overvaluation

The agent will probably suggest a listing price based on an analysis of recent sales of comparable properties in your neighborhood. If so, make sure you see the list, and find out how long it took for those homes to be sold. If a house took a long time to sell, it may have been overpriced; a home that sold quickly may have been undervalued.

Be skeptical of an agent who says your home is worth a lot more than what other agents are estimating. If the suggested price is off by several thousand dollars, says Ross, the agent might be trying to snare your listing with the hope that you’ll slash your asking price several weeks down the road.

Agents representing buyers will avoid your home if it’s obviously overpriced--and might not bother looking at it even if it’s reduced later.

Make sure your property will be included in the Multiple Listing Service. The MLS, considered the bible of the real estate industry, is a book containing information about all the homes for sale in your particular community and surrounding areas. It’s read by agents who are looking for homes to show their buyers.

“You want to give your house as much public exposure as you can, and the MLS and ‘For Sale’ signs are the two best ways to do it,” says Richard J. Rosenthal, a Venice broker and president of the California Assn. of Realtors (CAR).

Some sellers insist that the agent’s marketing plan be in writing and included as an addendum to their listing agreement. By doing so, they can encourage the agent to adhere to the plan--or use it as documentation if he doesn’t live up to what he originally promised.

The agent’s personality can be just as important as his professionalism. “You need a broker you can feel comfortable with,” says Bill Podley, owner of Podley Caughey Associates, a Pasadena brokerage firm.

‘Legal Hot Line’

“There’s a lot more than just dollars involved when you sell a house. There’s also a lot of emotion.”

It might also be helpful to determine whether the agent is a realtor. The term “realtor” is a professional designation for an agent who belongs to at least one board of realtors and who promises to follow the National Assn. of Realtors’ code of ethics.

About one-third of California’s 291,227 licensees have the realtor designation, estimates Steve Kolb, a spokesman for the state Department of Real Estate.

Only agents who are realtors have access to the CAR’s “legal hot line,” a telephone network staffed by lawyers who offer free advice in case a sticky legal question arises.

Once you’ve decided on listing a home with a particular agent, you’ll probably be asked to sign an “exclusive right to sell.” Such a contract guarantees the agent a commission, regardless of who actually sells the property.

If another agent produces a buyer, your agent will split his commission with the buyer’s agent.

Commissions Negotiable

Although surveys have shown that the majority of sellers believe commissions are set by law, they aren’t. Most agents expect the homeowner to pay a 6% commission on the sales price, although some want 7%.

“The law is clear,” says Larry Alamao, an attorney with California’s Department of Real Estate. “Commissions are negotiable.”

You might succeed in getting the agent to reduce his commission if, say, you agree to pay for advertising, your home should sell quickly, or you will show the home yourself. Also, you can try to reduce the fee if you are selling more than one property through the agent, or by promising (in writing) to use the same agent to buy your new home.

You might also get a reduction in the commission if your home is high-priced. “If the agent is going to get a $50,000 commission (at 6%), I think you might be able to bargain with him and reduce it,” says Lawrence Krause, a former broker who now heads his own financial planning firm in San Francisco.

Some experts suggest that the listing agreement should expire at the end of three months, allowing you to get another broker if you’re unhappy with your initial one. Most agents, however, generally want a six-month contract.

Open Houses Held

“There’s really no hard-and-fast rule as to how long the listing agreement should last,” says Rosenthal, who adds that he’ll even agree to a 30-day listing if a seller is anxious to move and the home should sell quickly. On the other hand, some of his clients have agreed to list their property with his firm for much longer periods because they could afford to wait for a buyer willing to meet their asking price.

Most agents sponsor a “brokers-only” open house as soon as the home comes on the market. In many California communities, the event is held on Thursday or Friday, so agents who will be out shopping with potential buyers on the weekend can tour the home in advance.

A good agent will contact you at least once a week to tell you how many people have toured your home and keep you informed about recent sales or new listings in the neighborhood. State law mandates that the agent inform you of any offer for your property, unless you instruct otherwise.

A key test of an agent’s professional ability is the way offers are handled on your home. By the time an offer is made--and preferably before--the agent should prepare a “net sheet” that estimates how much money you would actually get when the deal closes.

The sheet represents the sales price of the property, less any expenses you would incur, such as loan pay-offs, commissions and fees.

Agent Smoothes Way

If the offer is slightly below your asking price, you’ve got one more chance to reduce the agent’s commission: Consider telling him you’ll accept the lower price if he’ll make up at least part of the difference by charging a smaller fee.

“That’s a fair request in some circumstances, like if you need the extra money to get into your next house,” says Krause. “But if you’re asking him to reduce his commission just because you’re being cheap, you’re really not being fair.”

Once a deal is struck, a good agent will work with the escrow company, inspector, the lender and others to make sure the transaction goes smoothly.

There are several paths you can take if you feel that your agent isn’t doing a good job. The first, of course, is complaining directly to the agent.

If you’re still dissatisfied, air your complaints with his supervising broker. Ask the broker if your listing can be transferred to another agent within the firm, or if the broker will release you from your listing contract so you can take your business elsewhere.

Recovery Fund

If the agent is a realtor, you may wish to lodge your complaint with the local board of realtors. Litigation is another possibility.

You can also report your troubles to the California Department of Real Estate, which can suspend or revoke an agent’s license under certain circumstances. The department also runs a recovery fund for consumers who have been burned by their brokers.

In the end, experts say, a seller who carefully selects an agent should be able to avoid such messy confrontations and disappointments.

“A good quality agent can recognize potential problems, solve them, and really make things happen,” says CAR President Rosenthal. “Agents who aren’t up to par have things happen to them--and their clients.”