There are two types of real estate agents. The agent who represents the buying side, referred to as a Selling agent and the agent who represents the seller, referred to as a listing agent. Even agents get this mixed up so if you are confused don’t worry about it.
Let me first state that I am a Licensed California Broker and member of the National Associations Realtors Association. With that said I would not buy property listed in the MLS (Multiple Listing service) unless the listing price was sixty-five percent of appraised value or less. Here is the problem; properties listed by real estate agent tend to require both cash and credit to purchase. Both of which I do not like using when buying real estate. And although I could write low ball offers on properties in hopes that the seller would say yes I know from experience that if I used the money paid to the agents as commission for my own advertising I would have a much greater return. That being said, in a time when the REO (real estate offered) market has a high amount of inventory and is selling that inventory at greatly reduced prices then the MLS would be a great source for undervalued bank owned property. Also know that if a REO is on the market more than five days without multiple offers it probably isn’t a good deal. Good deals tend to be gobbled up by real estate agents in the listing office the first few days or by clients of the listing agent.
If you do plan on writing offers on properties listed in the MLS request to your agent that they request to the listing agent that they be present to present the offer to the seller. As long as the agents are Realtor members the listing agent must allow the selling agent the right to present the offer to the seller unless the seller has requested them not to.
When I resell property I always list the house in the MLS. Here is why. The highest and best use of your time is to constantly be making offers to buy houses at an equity value of 30 percent or more. Therefore if a good agent charges six percent to sell list your house, and causes it to sell, if you sold your house yourself then you would be losing twenty-four percent, besides there are over one million of real estate agents country wide. There is no possible way you can compete with their mass. Not to mention the fact that your house will be displayed on the MLS it is also displayed on hundreds of local, state and national websites.
When wanting to hire, or locate an agent to hire, there is a little trick you can use to find the right agent to use. Call your escrow company and ask for the sales manager. This may take a couple of telephone calls as these are extremely busy people, so don’t give up. When you finally do reach the sales manager, ask him, or her, to assign you a sales representative. Most of these representatives are very beautiful and friendly people, willing to do almost anything that is legal to earn your business.
Once you have a sales representative assigned to you, ask him, or her, for a list of the top five agents in town who understand real estate investment strategies and are the “Top Producers”. Interview them for the job of selling your property. The key here is that most “Top Producers” are listing agents and have a handful of selling agents who work underneath them. There are two distinct mind frames between listing agents and those agents who like to put buyers in their cars to drive them all over town and look at houses hoping they will buy a house. The “Top Producing” listing agent’s goal is to double end the transaction, thus making the entire commission. Also, these “Top Producers” have a fairly large advertising budget, which means your property will be advertised more than if you had hired the “Normal” agent. If you are going to pay the same, you might as well hire the best.
These “Top Producers” have also established a reputation for their abilities and have earned the respect of the real estate agent community for “getting the job done”, something that a less seasoned or new agent will not have. I guarantee that an agent’s reputation will either hinder, or help, you in selling your houses.
These “Top Producers” will not lie or over-price the property, whereas a new agent might due to his, or her, need for business or lack of experience. It isn’t uncommon for a new agent to over-price a listing to justify his, or her, commission to a seller and have that listing sit on the market. Although you are trained to guide him, or her, to list your property for the correct amount, this inexperienced agent has already over-priced homes so much that unfortunately his, or her, peers will not show your listings as often.
One more note, arrange to have the selling agent receive a greater portion of the commission. Most commissions are split equally between the listing and selling sides. However, it is your option and you should request a different split. I would suggest at the very least that you pay to the selling agent 3.5% commission and 2.5% to the listing agent. The reason that you will benefit by a higher selling side commission is the selling agent may be more inclined to recommend your property to his, or her, buyer when everything about the property is equal to another property where the commission is less. Let’s face it pricing concessions sell property.
Real Estate Commission Split Guide
3.5% to 4% to the Selling Agent
2.5% to 2% to the Listing Agent
You may also want to consider offering a “Close on Time” and “Full Offer” bonus to the selling agent if escrow closes according to the contract and the contract is for listing price. I suggest an extra $750.00. The extra $750.00 paid is a great enhancement and will put money in your checking account faster.
When you pick the agent that you are going to be doing business with I would want them to be a “Top 10 Producer”. Here is why.
• They can afford you.
• They have the infrastructure necessary to do multiple deals efficiently and without procrastination.
• They have access to and they do a ton of advertising which you could piggy back on… They typically buy full page ads and can sell/give you a small corner to promote your business, not to mention that they can advertise your resells more than by just using the MLS alone.
• They always want to double end the transaction, which means you have buyers agents “Pushing” your property.
• They know the difference between escrows started and escrows closed. Most new agents don’t.
• They are a source of funds when you need them for a concurrent close… The top ten typically make a 1,000,000 a year in earned commissions and most are extremely frugal. Having someone attached to the outcome is very nice.
• The perks they receive from the vendors will reduce your costs… i.e. free inspections, quick turnaround time etc.
• They won’t steal your deals or steal your business model. They are happy right where they are.
• They tend to see the big picture more.
• THE MOST IMPORTANT QUALITY; they have a reputation for getting the job done. Other agents know this and know when they enter a deal it will close. No BS
I have found that there are factors or characteristics that I want my agent to have, they are.
• Can the Agent do the Job at hand?
• Will they reduce their commission on the listing side and offer more to the Selling side?
• Will the field my referrals aggressively?
• Will they feed me the Expired list so we can co-market?
• Are they one of the Top Agent in their field? I would want top 10?
• Is their advertising Budget large enough to consistently run Ads?
• Are they respected amongst their peers and looked at as a “Gets the job done” Agent?
• Are they willing to and do they understand Investors Strategy?
• Do they have sufficient Buyers agent employed to double the transaction?
• Are their vendors willing to service my needs as aggressively as theirs?
One more caution, although I have owned a flat fee listing company it is not my recommendation that you use this type of service during all market cycles.
This was cut from a reply in the marketing forum and the rest of it is there…
Good Luck