Dear Monty: Using the same agent when downsizing homes
Reader question: My neighbor downsized recently and encountered a poor buying experience using the same agent. Should I use the same agent for selling and buying? Jane G.
Monty’s answer: Hello, Jane, and thanks for the question. In many circumstances using the same agent for both assignments is appropriate, yet there are situations where this may work against you. A bit of background will be helpful.
Agents are independent contractors
Real estate agents work under an Internal Revenue Service (IRS) ruling that lays out a set of “tests” to qualify for independent contractor status. As an independent contractor, an agent has significant latitude as to how they practice. Real estate companies who contract with agents are very conscious about the tests as non-compliance could mean heavy fines for the company. For example, the company can encourage, but not require, an independent contractor agent to attend meetings. Many agents do not.
Real estate agents go to great lengths learning to be successful. The industry is a hotbed of trainers and coaches, who make videos, conduct training seminars and study courses to help. Their suggestions and tactics can be very different, and local market characteristics also affect strategies. Not all agents use these trainers; some instead will watch other successful agents and mimic their activities. Some accept training from the company they affiliated with, while others feel they need little training. The result of this fragmented industry training is agents operating very differently. This training is virtually invisible to the consumer.
Here are some considerations
1. Some real estate agents are generalists, and they are good at it. They are comfortable with all types of property in all price ranges, and they can handle both the listing and the selling side of a transaction. There are also agents that practice as generalists but are not so good at it. Only the sharp, well-organized agent with the energy and knowledge to work efficiently with multiple tasks in progress gets good grades on both transactions.
2. The client is selling in “suburb A” and is buying in “suburb B” which is outside the area the listing agent works. Some agents can quickly learn about local facts and will invest time to make sure they have all the information about the new location. Some agents may agree to help buy in “suburb B” but will not be able to locate helpful information or take necessary time to gather it up.
3. Ask about their transaction records. If they had 40 transactions over the past 2 years and 95% of them where their listings sold, they may not be the best choice for helping someone buy a home. Other agents may have a history slanted toward the buying transactions. The fact is many agents prefer listing transactions and do not like the buying side of transactions, or vice versa.
4. Other agents restrict the prices ranges and neighborhoods they work, particularly in larger communities. Many agents do very well with an average transaction value of less than $150,000. Other agents will dismiss a transaction if it is below $500,000, or some other large number.
5. Agents also screen other factors. For example; client objectivity, credit scores, property type, higher crime areas, pets, children, personality and more. As the real estate market improves agents make choices because they have too many prospects. To make the point, the ultimate buyer for an agent is a cash buyer who calls from the front yard of a home they like with their furniture coming from out-of-state the next day.
Some agents will openly share their preferences, even stating their restrictions on their web sites or personal brochures and stick to them fairly closely. Others state them, but do not stick to them, and yet others do not share their preferences at all and “test” the client. Here is a column where the client failed the “test,” and the agents disappeared.
Interview three agents
The bottom line is agent selection can make a difference in both the customer service experience and the outcome of real estate transactions. According to the National Association of Realtors, 70 percent of home sellers interview only one agent. Here is an article about “Choosing a real estate agent” that may be helpful. It takes effort to determine your best choice, but considering the importance of handling a large investment, maybe there should be better due diligence.
Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. You can ask him questions at DearMonty.com.