How to choose the right real estate agent

 In some ways, real estate agents are like lovers.

It can be hard as you start the relationship to know exactly where it’s going to end. Will the relationship fall apart on a bad note? Will this person end up acting crazy? Or will they become a lifelong friend with whom you never lose touch?

To make matters worse, it’s much more important to choose a good agent than to choose a good date. Without too much trouble, you can change the person you’re dating at any moment — and with very little lost.

With a real estate agent, you enter into a contractual agreement. You are putting your most valuable asset in his or her hands. If it goes wrong, you could lose both money and time — and gain a great deal of stress and aggravation.

Choosing an agent, then, is one of the most important steps in the sale or the rental of the property. I believe that your choice of real estate agent probably has a bigger impact on the ultimate success of your real estate transaction than any other decision you make. That means the agent you choose affects how much you will get for your property, how quickly you will be able to rent or sell it and the degree of emotional strain the whole process causes you.

My most important tip for selecting an agent is to choose one based on their professional qualities. I would be wary of selecting a friend or family member to sell or rent your property for you.

The main problem is the natural fear we all have of upsetting someone near and dear to us. Your real estate agent must be willing to challenge you when you make mistakes. If you want to price your property much too high, or insist on an unrealistic marketing plan, for example, your agent must be willing to tell you so. A close friend or a family member may be afraid of this confrontation.

On the other hand, you also have to be willing to say things to your real estate agent that might offend a close friend or loved one. In a transaction involving so much of your personal wealth and wellbeing, you don’t want to feel restrained by fear of hurting a long-standing relationship.

It’s not that you have to be nasty to your agent. You do, however, have to be able to speak plainly and insist on what’s important to you. It is sometimes difficult to make explicit demands in a close personal relationship.

In my experience, there are three key ways in which vendors and owners choose an agent to sell or rent their home. More than anything else, they choose based on: 

• The agent’s market share, visibility and brand name
• The agent’s record of experience and success in the area
• The speed with which the agent responds to their request 

All of these are in fact very good indicators of how well an agent will work for you.

The agent’s visibility in your suburb is a good indicator that he or she is successfully working on behalf of many other customers. For an agent to be highly visible, he or she must be receiving a large percentage of their business via referrals, which means customers are happy with his or her work.

It’s true that past performance is no guarantee of future success. Still, it is the best indicator available. An agent with a record of success in your area is likely to do well for you.

It also makes sense to choose from the agents who respond most quickly to your request. An agent who responds promptly is clearly interested in your business. He or she is more likely to work hard for you than a slower-moving competitor.

The pattern of a relationship is often established in the very first interaction. An agent who is responsive in the beginning is likely to continue to be so, just as an agent who is unresponsive is not likely to improve over time.

What you don’t see on this list of reasons to choose an agent is the commission rate that the agent charges. I have overseen literally thousands of transactions in which consumers choose from among several agents to sell or rent a property. Only very seldom do they make their choice because of the lowest commission.

This shouldn’t surprise you. Psychological research shows that we all instinctively assign more value to things that cost more, and less value to those that cost less. Entire marketing campaigns for perfumes, jewelry and fashion have been built on the premise that the more expensive a product is, the better it is. In an event as important as a real estate transaction, few of us want to risk using a cheap — and therefore probably less competent — agent.

Psychology also shows that we tend to think of money in relative terms. An agent’s fee is a small percentage of the value of our property. The extra fee charged by a good agent seems minuscule compared to the total value of the transaction, and thus well worth the expense.

The last reason it makes sense to choose the best agent instead of the cheapest is this: if an agent isn’t smart enough to negotiate a higher fee for himself, how well will he negotiate the sale of your house at the highest possible price?

So, choose an agent based on his or her visibility, record of success and responsiveness. Certainly, take the fee into consideration, but don’t let it become the primary factor in your decision.

Andrew Menzies is CEO of sellmycastle.com.au, where agents compete to sell your property. Sellmycastle.com.au handles thousands of transactions each quarter, and each property receives an average of five bids from competing agents.