Step 3: Find a Listing Agent
During the planning phase, selling your home was more of an idea. Now, it’s about to get real: it’s time to find a listing agent. But what is a listing agent, exactly?
A listing agent, sometimes called a seller’s agent (not to be confused with the selling agent, which is the buyer’s agent), works almost exclusively with home sellers. Your agent will assist you with pricing, staging, and marketing your home. They’ll make sure your home is listed on a Multiple Listing Service, or MLS. An MLS is a database that features homes for sale and distributes those houses to other real estate agents. This is the best way to get your home in front of buyer’s agents.
Some agents, called dual agents, represent both buyers and sellers. Some states don’t allow agents to do this, so research the laws in your state to learn more. While some sellers may prefer a dual agent since it often results in a quicker closing and less negotiating, there’s a potential conflict of interest if your agent ends up representing both you and the buyer. However, if this does happen, a dual agent representing both parties won’t have to split the commission, so it may be possible to negotiate a lower fee. It’s up to you if you choose a dual agent or not but be sure to ask about it when interviewing agents.
Once you sign with a listing agent, they will lead the effort to market your home and get it sold quickly for the best price possible. Your agent may recommend other professionals, such as a home stager, a photographer, a contractor to make any necessary repairs, and a real estate attorney.
Choosing the right agent is crucial, so let’s review what to look for in an agent, what your listing agreement might look like, and the role your agent will play in your home sale.
Researching Real Estate Agents
When looking for a real estate agent to sell your home, you’re like an employer searching for the right candidate. Just as you wouldn’t hire someone before talking with them, you should be equally selective when choosing an agent. Even if you already have an agent in mind (perhaps one recommended by a friend or family member), you still should interview them and at least two additional agents. You’re looking for someone who isn’t just qualified, but someone you connect with on a personal level. This is a major decision, and you need someone in your corner that you trust. Here are some questions to ask when interviewing agents:
- How long have you been an agent? While the agent’s experience level is up to you and what you’re comfortable with, a good rule of thumb is someone with at least two years of experience. After two years, they’ve experienced many of the surprises that can occur during the selling process. A good agent may use this question to tell you about themselves and how they got into the business.
- How long have you been in this market? This is a good follow-up to the question above if the agent doesn’t volunteer this information. Real estate agents tend to specialize in a specific location, and you want an agent who is an expert in your market.
- How many houses did you sell last year? Look for an answer in the double digits, somewhere around 15 to 20.
- What is the list-to-sell ratio of your listings? To find the list-to-sell ratio, you take the sale price of a home and divide it by the last list price. If the ratio is over 100 percent, this means the house sold above list price. This ratio tells you if the listing agent is accurate when analyzing data and is listing houses correctly, so you want this percentage to be high – about 90 percent – even if you are in a difficult market.
- How many clients do you work with at one time? If the agent is working with dozens of clients at a time, it’s unlikely that you’re going to get a lot of personal attention. A good agent may use this question to talk about time management.
- Do you work with a team? Many agents work with a team of specialists who handle different parts of the process. There are some advantages to this, but your agent should be forthcoming with this information. You don’t want to be surprised when someone you don’t know shows up to your house.
- Do you work with buyers? This will let you know if your agent is at least familiar with the buyer’s side of the process. It’s also a good lead-in question to ask if the agent works as a dual agent.
- What’s your marketing plan? You want an agent that utilizes tried-and-true methods like yard signs, but also someone who knows how to navigate social media. Ask how much they plan to spend on advertising.
- What’s your communication style? After speaking with the agent for a bit, you probably already have an idea about their communication style. Asking this toward the end of the interview will give you some insight into how the agent thinks they communicate, and you can determine if it matches up with what they’ve already shown you. You’re looking for an agent with whom you can communicate with easily and effortlessly.
- Do you have any questions for me? You shouldn’t have to ask this question; the agent should have plenty of questions for you. These questions should go beyond the basics like your timeline and selling price. They should try to get to know you. Selling a home is an emotional process, so you want an agent who understands your specific concerns.
The Role of a Listing Agent
Here are some of the things you can expect your listing agent to do:
- Determine your home’s value. Finding the right price is tricky, and homeowners often over-price their homes. Your agent won’t tell you what to ask, but they’ll advise you as to the best price.
- List the home. While you can get on an MLS without an agent, it will cost you. Your agent already has access to this important service.
- An experienced agent will have go-to contractors, home stagers, and photographers on hand to make your home shine.
- Show the home. This may include an open house, special showings, or both.
- Negotiate with the buyer. In many home sales, the buyer and seller never meet. While the contract is negotiated, your agent will meet with the buyer’s agent to work out the details. Since your agent has experience reading these contracts, they know what’s typical vs. what’s unusual. They are also able to stay detached enough to negotiate effectively.
- Be There at the Close. An agent, especially one with some legal knowledge, is helpful when it’s time to close. Along with a closing attorney and/or an escrow officer, they can help you review the final documents before signing and completing the sale of your home.
Signing a Home Listing Agreement
Once you find an agent, you’ll work out a contract with them. Most states have a standard legal agreement that agents use to make sure both the seller and the agent are protected. Before you get to this point, it’s a good idea to know what you’ll be signing, how to negotiate, and what to watch out for. Here’s what is typically included in a listing agreement:
In most cases, the commission is six percent, which is split between your agent and the buyer’s agent. If you use a dual agent, the commission is usually the same. However, you may be able to negotiate if your agent winds up representing both you and the buyer. While some agents may be willing to negotiate a lower commission, especially on sales over $500,000, this is uncommon. Also, keep in mind: the less you pay often translates into getting less from your agent.
Right to Sell
The agent will likely ask for an exclusive right to sell, which means only they have the right to list the house. Other types of contracts will stipulate that the agent gets their commission whether you find the buyer or they do. The advantage of exclusive rights is that it incentivizes the agent doing the work for you.
Length of Agreement
Standard contracts for the home-selling process are between three and six months. Shorter time frames benefit you, the seller, because if you decide the agent isn’t working out, you can find someone else quickly. Longer agreements are better for the agent because the more work that can be done on the house, the better price they might be able to get.
Agents must protect themselves from homeowners who make an agreement with the buyer to wait out the length of the agreement so that no commission needs to be paid. This means that if you sell to a buyer found by the agent, you’ll owe them a commission even if the agreement has been terminated. You’ll want to protect yourself from the protection clause, though, in case the agent fails to perform. Make sure this clause has an exemption in the case of finding a new agent so that you aren’t paying double commission.
Make sure that payment is owed to the agent when the sale is closed – not when a buyer is delivered. If the language of the contract involves payment when a buyer is delivered, then it is possible that the sale could fall through in negotiation with the buyer, and you’ll be on the hook for the commission.
The agreement should state exactly what the agent is expected to do. This may include using an MLS, setting up yard signs, a monetary amount to be spent on advertising, being present at walk-throughs, handling buyer negotiations, and conflict resolution. The list should be very detailed.
The agreement will likely stipulate that you verify certain legal standards, such as owning the property in good faith and there being no other claims on the title.
Negotiating the Contract
In real estate, everything is negotiable, even your listing contract. This is an agreement between you and the agent only, so if you both agree, you can add or change any part of the agreement. Usually, though, agents use a boilerplate form that’s fair to both of you.
As with all important legal documents, go over this agreement carefully. If anything seems strange, have it looked over by a lawyer. Even if everything looks fine, it doesn’t hurt to have a lawyer review it for you. If the agent is pushing you to sign the contract quickly, pay attention. This may not be the right agent for you.