Real Estate Agent: Why its important to have an agent
You put your house on the market, but the estate agent is the one who actually sells it. Choosing the right real estate agent is a critical decision – it can make the difference between getting a really good price, and not selling your house at all. But how do you tell the difference between good agents and bad ones?
Remember: the real estate agent works for you
As the seller, you choose the estate agent, and the agent works for you. But the decision to accept an offer remains with you. As the seller, you are usually in a strong position with estate agents – unless they have properties to sell on their books, they won’t make any commission.
Choosing a sole or multiple agents?
You have to decide whether you are going for one, two or more agents. Clearly, if you are going for multiple agency agreements, then you can just put your property on with any agent you like, and you don’t really have to choose between them. The following comments are only really relevant if you are going for a sole or joint sole agreement.
Select a short list of real estate agents
- Ask family, friends, and neighbors – there is nothing better than a personal recommendation
- For most properties, it is best to stay local – local agents know the area, and can be close to meet prospective buyers
- If yours is a particularly unusual or expensive property, you might want to choose a national estate agent who specializes in homes like yours
- Make sure the agent has experience of selling property like yours – and the best way to do that is to check there are properties similar to yours in his profile portfolio, or visit the company office and find out if he has enough human resource to sell your property. Are you impressed?
- Look at the agent’s website – are the pictures well taken, and the descriptions clear and relevant?
- The “sold” boards outside properties are good indicators of which agents are doing well (but beware – some agents put up boards outside multiple occupancy houses just to look like they are busy)
- A good agent will invest in marketing to ensure they get the best price, while a poor one will just wait for customers to come to them (see below)
- Do not feel pressured to hire the estate agent you bought your house from. Obviously, if you were impressed how they sold your house to you, you might decide to go with them again
- What is their viewing policy – check if they will accompany potential buyers when you are out? Do they have a follow-up policy on potential buyers?
- Narrow your choices down to a shortlist of about three and invite them to do a valuation.
Find out how good they are
- What recent sales have they made of comparable properties and at what price? Ask for details so you can check them out
- After they value your property ask them to explain their reasoning
- Do they have any estate agency or sales qualifications?
- Are they members of a professional trade association, such as the Kenya Professional Realtors Association or Institute of Surveys of Kenya?
- Can more than one person in the office talk enthusiastically and with knowledge about your property?
- What would they do if your property was not selling as well as expected? What do you think about their answer?
- Are they open at weekends? A surprising number of agents only work during the week, and perhaps do half day on Saturday, which means they are less accessible to potential buyers
How will they market your property?
- Assuming they will advertise on the internet, which portals are they using? Their own website is not worth worrying about. It is the big property portals you want to be listedon:
e.g. Olx, Property24
- Will they use local business magazine or newspapers? Which ones? Find out what local business magazines there are and if they will feature your property in them. If you are selling a more expensive property, will it feature in any national newspapers or magazines?
- How good are their brochures – including the photography and text?
Don’t be fooled by the valuations they give
Agents know that one of the main reasons people pick them is the valuation they give. They take two general approaches:
- A real estate agent can give deliberately optimistic valuations, to make you think you can get a higher price with them, and then try and talk you down after you have chosen them
- Some agents insist they are giving a realistic price, and tell you not to be fooled by falsely high valuations
However, it is you and not the agent who decides what price to put the property on at, and how effective an agent is at marketing a property has little to with the valuation they give. You should choose an agent who you are impressed by but who gives a realistic valuation, rather than a second rate agent who gives a high valuation. You can always ask the good agent to put the property on at a higher price when you have tested the market.
Traps to watch out for in the real estate agent agreement
Different estate agents have different terms and conditions, and their fees cover different things – although, in practice, many are open to negotiation. In particular, things to watch out for include
- Do their fee cover marketing and other costs, such as for preparing the property details and For Sale boards? Clearly, it is best to have all this included
- Avoid agents who insist on “sole selling rights” – that means that even if you find a buyer yourself, then you still have to pay the agent their fee. If you do give away sole selling rights to an agent, it must only be for a very limited period
- Never sign an agreement that commits you to paying the agent just for finding you a “ready, willing and able purchaser”, rather than for actually selling you the property. This would mean you still have to pay the agent a fee even if the sale falls through because you have had to pull out – such as if you lost your job. You should only use an agent who expects a fee as a result of exchange of contracts
- Make sure the agreement has a time limit, so you can change agent if you are not happy. A normal period is 12 weeks but can be as little as 4, but try to get a no-penalties notice period of 2 weeks
We strongly advise against, in this era when conship is on the high and evaluation of a potential buyer may be difficult to do when property marketing is not your core business. In the business of property sale, there is a process to follow to ensure a smooth process of sale. A good real estate agent will have a face to face interview with the potential client to establish his financing options e.g. bank mortgage, cash or even batter trade with another property he is willing to dispose of in exchange.
Once an interest has been established and a written offer given then ability to pay and proof of funds should follow before exchange of copies of ownership documents. In essence it’s an intricate process that protects you as the property seller from ending up in court or losing your property altogether. Beware that not getting the best price for your home can be much more costly than paying an agent Ksh.50, 000 off a Ksh. 1,000,000 home may not seem like much but will completely erase any savings from not using an agent.
Final thoughts when choosing a real estate agent
Do you get on with them and trust them – you will have to spend lots of time with them, and trust them with your most valuable asset. Remember to read the contract carefully and check your sole agency tie in period and required notice period. If you don’t understand something, ask. If you are not happy in any way do not sign the contract