What do buyers and sellers need when they select a real estate agent? Are they looking for expertise? Reputation? The latest tech tools? Familiarity with the neighborhood? Or do they conclude that their sale or purchase can be entrusted to a friend, regardless of their experience, because, after all, how complicated can it be? Do consumers devote considerable time to determining whom they should work with, and what criteria they use to choose one agent instead of another? They should.
First, what NOT to look for.
Here is a cautionary tale: An agent at my firm recently sold an apartment, with multiple bids, in less than a week. The apartment had been listed previously for many months with an agent at another firm — a friend of the husband of the couple was selling the unit but was new to the business himself. Incorrectly priced, inappropriately comped, with poor quality photos and a misleading description, the property languished on the market for months with no offers. Once the property was relisted at a better price, with beautiful photos and an accurate description, it attracted extensive interest and sold at once.
Lesson #1 – expertise matters.
In April, the national brokerage firm Compass went public in a much-anticipated public offering. The company, based on its last round of raised capital (much of it from SoftBank), had been valued in excess of $6 billion. This valuation, based largely on Compass’s claim that their transformative technology and artificial intelligence were revolutionizing the brokerage landscape, has failed to excite the public. The stock, which opened at a valuation of $18 and change, trades today, only a month later, for $14 and change.
Real estate brokerage blogger and analyst Mike del Prete noted in the run-up to the Compass IPO that there seemed to be no evidence that the Compass tech tools had made the company’s agents more productive.
Lesson #2 – don’t be fooled by the window dressing.
So the evidence suggests that neither new technology nor friendship should determine the choice of a residential agent, although the former can certainly be useful and the latter is lovely to have. Then, what criteria should a consumer use in evaluating agents in order to choose the best one? Here are a few tips:
- Sellers, Don’t Choose Based on Price! This is the most common mistake sellers make. Overpricing a property guarantees that it will stay on the market longer, and that it will ultimately sell for less. Yet, sellers are frequently drawn to the agent who suggests the highest price, even if recent comparable sales don’t support it. Making a decision based on facts, not emotions, increases the likelihood of a quick successful sale. Flattery isn’t expertise.
- Conduct An Interview, Even If The Agent Is A Friend. Learn about the agent’s experience, their familiarity with your neighborhood, and price range. Make sure you are a fit professionally. Discuss marketing, their experience, and their ideas about preparing the property for sale. Most importantly, listen to the advice the agent gives you! Helping clients sell or buy a property is multi-layered and complex work. It can look easy, but it’s not.
- Buyers, In The Complex New York Market, You Are Better Off With An Agent. There’s a reason why “iBuying” hasn’t taken hold in New York. Our market is too diverse and complex for any algorithm to define. Buyers often believe they are saving money by not retaining an agent to represent them. That’s rarely the case. Commissions may be a point lower for a single agent deal, but without a buyer’s agent to advise them, buyers often overpay. Even more significantly, a buyer’s agent’s expertise can direct buyers to properties that satisfy their criteria, but fall outside the parameters of their search. This outside-the-box thinking, combined with negotiating expertise, and, when necessary, board package preparation, make buyers’ agents invaluable.
- Look For Integrity, Intelligence, Experience, and Compatibility. Get a reference or two, and call them. At the very least, insist on reading a few testimonials. Make sure your agent reflects your own values, has a deep understanding of local market drivers and what factors tie the local market to greater national and global economic trends, and knows how to position your property or bid to best take advantage. It’s also crucial to hire an agent who can deliver difficult messages clearly.
An efficient relationship based on mutual respect will lead to the best outcome in what is, for most people, the most significant financial transaction of their lives. Particularly in an accelerating real estate market, like the one New York City is experiencing today, the best advice can mean the difference between success and disappointment.
