So we’re a little past mid January 2020 and the real estate market appears to be in full swing… yes you read that right. The market has actually been quite active in what is typically a slower month of the year. This month many consumers are just staying in from the cold and getting over the hectic holiday season, while some are holding their collective breathe as their credit card bills start to trickle in. (*Side Note - A good rule of thumb here is to always keep it at 30% or under your cards max limit…if any at all!)
But it got me to thinking about how last year ended and what really stood out over the second half of 2019 and that was the continual drop of New and Active listings. Sales were up, prices were up, but less people were listing their homes for sale and our months of inventory (MOI) started to dwindle.
If you’re not sure what months of inventory is I will quickly break it down. If we were at 2.5 MOI and no new properties came on the market, we would run out of listings in roughly two and a half months. A Sellers market tends to be in the 1-4 MOI range and balanced market is around 4- 5 MOI and anything 5.5+ MOI is a Buyers market. Make sense?
So it appears to be much the same this year as my brokerage is very busy and I’ve been fielding more calls than usual for the time of year. (which is great) This got me thinking this morning that if this path continues there could eventually be less sales, because of less properties coming on the market, which also means less deals for the agents out there… following my train of thought so far?
So this got me daydreaming of the 2014-2016 real estate markets and how not fun it was to be a part in certain offer negotiations during this time. But it also got me thinking how it’s human nature to either sink or swim and this coming market could bring out some real competitiveness amongst agents. So my train of thought continues…
Now this made me think about the consumer and how to some, the market may have drastically changed since they last moved? Or maybe they’re investors or have done this a few times recently and are very market savvy? Or maybe they are completely green and scared to even make the leap into homeownership but feel they may be missing an opportunity?
Either way the questions and viewpoints I’m about to share are something you should tuck away for when your day comes that you may again need the services of a real estate professional. Have you asked these questions before? Did you miss a few? Remember this is going to be one of your largest investments of your life and who you choose to be your representation is extremely important as they are your face at the negotiation table. Make sure you’re comfortable with how they answer all your questions.
Also don’t be afraid to ask how they got their numbers they came with. Numbers can be easily skewed to make certain aspects appear more impressive than they really are, as well as words. For example, I saw on one agents site that claimed to be voted best blah blah blah …and yes they were voted that part is true….they didn’t win…but yes voted for. See how the wording isn’t wrong, just misrepresented. I look at this like anyone can buy a trophy. I can be a champion kick boxer by the end of the day if I really wanted to, lol.
Just be sure things add up to you. This is a profession that is very competitive and there has to be a fairly high level of patting yourself on the back, self proclamation, etc (unfortunately, I don’t care for this part of the job)
So first off a smart consumer will interview several potential agents before making a selection. Many agents will also want to present to you last over the other agents so be prepared to have that request. Again keep in mind the agent is also interviewing you to see you’re a good fit, if you’re realistic in your listing price and if you have actual motivation here and are not just testing the market. (I’m giving you all the dirt here)
So I generally group these three questions all into one package:
How long have you been in the business, where do you sell and do you specialize in certain types of properties? I can’t stress that the length of time someone has done this profession isn’t always something to focus on. Someone can do 2 deals a year for 30 years and have gotten by, but in turn those doing 100+ deals a year, will they have time to give you 100% attention?
It all really comes down to what you want and are comfortable with. Make sure you get someone that deals in the market you are looking in and you may not want a condo specialist helping you with a freehold or farmland purchase. I wouldn’t get my dentist to give my car a tune up either…lol. Just ask your agent to refer you someone, this way they would still receive a referral fee from the agent they get for you and you in turn get a trusted area/property specialist.
Are you a part-time agent? There are a lot of these out there and there is nothing wrong with that, but consider this one aspect is that you may have to see properties based around the times of their other job. Newer agents tend to have to hold another job until they can make the leap to full time agent as well. Hey, I had to do it as well and it wasn’t an easy time of my life either. So props to my fellow agents working their tales off, you’ll get there. I’m not implying newer agents can’t be good ones either, just something to think about in regards to your viewing timeline requirements. You could miss out waiting is all.
What’s your Average List-Price-to-Sales-Price Ratio? This is an important question and one that you really have to look at. You could even ask your interviewed agent to bring a breakdown of how they get their numbers. Great Listing agents tend to have numbers close to 98-100% of list price and Buyer agents would likely be a bit lower as they try to negotiate the numbers down for you. Again these can all depend on the market you’re in. Be wary of those that boast the 105% list prices or silliness like that. Sometimes you get lucky but if you have a record like this then you are clearly under listing your properties and are not pricing them right. (IMO) Not the time to play games with someone else’s largest investment.
Also use caution on the promises of a certain sale price number if it seems a little too high. This is called "buying the listing” and you get focused on the money, next thing you know you’ve been on the market 2 months and are on your second price reduction and eventually selling for what one of the other agents you interviewed said you would in only a week. This happened to me last year and the Seller actually called to apologize for not going with my suggestion, but how are you supposed to know? Just trust your gut!
Do you have any references? I know we live in a time where everyone goes online to check testimonials and that is great. Do that 100%! Check every agents carbon footprint online. But also ask for a few references that you could call. I wouldn’t ever mind that. I had one company call me a few months back saying they have helped all these real estate agents achieve all these sales. I looked up each agent that made a testimonial on their page online and they don’t even exist… they were made up. So do your research! Nothing is always like it appears, especially online!
Can I review documents ahead of time? I typically have these as part of my listing package, so that you have copies to familiarize yourself with forms and typical things you will face during your whole real estate experience with me. Best to be an educated Buyer or Seller! Be sure that your agent gets you familiar with what you’re about to embark on.
Do you know others that can help me through the home selling/buying process? Most of us agents have our go-to lists of professionals such as home inspectors, mortgage brokers, contractors, tradespeople, cleaners, stagers etc. Careful of the term “affiliated” if you see it on any paperwork please ask for clarification. This could mean the agent/broker could maybe receiving compensation from said vendor, which in translation could mean you’re likely paying a premium for the service.
What are the top three things that separate you from your competition? This is a great question and one you should really listen for the response. Most consumers want the obvious - honest, trust-worthy, accessible, assertive and a good negotiator. This comes down to what you value most. If someone has to step on others to make themselves look better than look at this individual a bit closer. There are a ton of amazing professional agents out there, but as in every profession there are a lot of bad ones as well. Obviously selling price matters ($$$), their average time on market (less inconvenience for you) but what else sets them apart? A good agent will never hesitate on this question.
How much do you charge? Well if you’re a buyer, you don’t really have to be too concerned on this as it’s typically the Seller that pays the real estate fees but check the Buyer Representation Agreement that you sign to be sure. But if you have a Buyer agent that will kick back to you some money so you’ll work with them, then they obviously don’t see much value in themselves and their services. While you may enjoy that $2000 kickback now, think about how hard they will fight for you at the negotiating table and what you could have maybe saved there. They just quickly threw away their own money away that should have been be theirs if they just fought for it.
The same goes for a Listing Agent. Lots of listing agents generally have packages of services that you’ll get for the percentage they charge. Industry average for a transaction is 5% and often 4-4.5% in Halton. Bottom line if you don’t at least offer the average 2%-2.5% to the buyer agents you can assure yourself that your property will likely stay on the market a bit longer and that could affect your overall sales price. (sadly some (not all) agents will skip your property because they see a lower commission payout) This is just one of the reasons why PurpleBricks listings tend to sit for a longer time. Just remember you get what you pay for and this couldn’t hold truer in this profession.
(*Note - Be aware of the HST paid on our services as well. See if your agent includes this in their listing presentation as this can be surprising to some that were not aware of this and get hit with a bit higher expense than originally calculated)
Do you offer any guarantees?
Will they let you out of your listing or buying agreement if you realize you are unhappy with your arrangement? Do they stand behind their services? Has anyone ever cancelled with them before and why? What’s their brokerages policy about any cancelled agreements? Some agents won’t let you out of your agreements and you have to wait out this time period you signed up for. Not many, but I have heard some stories over the years.
What do you think I should know that I haven’t asked you yet?
There will likely be something you need to know or forgot to mention but there is a lot to discuss in little time in these interviews. You want an agent who’ll take the time to answer this and make sure you feel comfortable with their knowledge and experience. They should know how to listen, how to counsel you and to ask the right questions to better serve you.
Run with this…
So to recap, be sure to ask these questions and make sure you like the answers. This is truly a partnership when you sign with an agent and you have to feel comfortable with them and that you trust them. Remember they REPRESENT you, so get someone that makes and takes the time for you. If there is someone you want as your agent but you feel obliged to use someone else, write out the pros and cons list. This always helps me.
This is about you and your interests and with it is your largest financial decision. Just because your cousin got his license last week does not mean you have to use him and if he’s a true professional he should understand that. Worst case make the difficult phone call to let him know. Anyone would appreciate that. All agents have experienced this, it hurts but we get it. I’d rather keep a friendship than have one deal.
Thanks again for reading and tuck this away for when you need it. It will help you.
Lastly I’ll be happy to answer these questions anytime you want! ;)