Do I have to pay a Realtor® to sell my house?

Is paying commission worth what an agent brings to the table? A little math can help us figure that out. While Canadian statistics on FSBOs (for sale by owners) are limited, the US-based National Association of Realtors has done some research on the subject. The typical FSBO home sold for $200,000, versus to $280,000 for agent-assisted transactions.If you subtract the national average commission rate (2.5% buyer, 2.5% sellers agent) from the agent-assisted price, you get $266,000 ($280,000 – $14,000), still well above the FSBO seller’s bottom line. Still, 5% of the sales price is significant, and not all agents are created equal. So, it’s critical to hire someone worth their salt.

Does it cost money to talk to a Realtor®?

No, it does not cost money to talk to a Realtor®. Real estate agents don’t get paid until your home closes. You can interview real estate agents and they will not charge you anything for it. They know that this will be part of their business generating process, and that some clients will end up hiring them, and others won’t. A Realtor® will likely even walk through a home with you and provide you with a recommended price as part of their listing presentation to you.

Once you decide to hire an agent, you’ll receive paperwork and likely sign a listing agreement. Most listing agreements are the “exclusive right to sell” kind — meaning that for a designated period of time (usually 2-6 months) this agent will receive the agreed-upon commission if and when the home sells.

Should I interview real estate agents?

Absolutely. Interviewing real estate agents is a great idea and an important step in your ultimate goal of hiring one.

I would interview at least two to three agents and really talk about your needs. You’ve got to feel good with this person. You want to be able to laugh and cry with them. You’ve got to feel that you’re being heard.

If you’re not outgoing by nature or just don’t have a lot of practice in this role, the idea of interviewing strangers can be a little intimidating. For that, I have a helpful guide on how to interview a Realtor® in a brief 15-minute phone call.

When should I contact a Realtor® to sell?

The ideal window for contacting an agent is around three months prior to selling, and no sooner than six months before you aim to list the property. By connecting with an agent early on, however, you can get professional input on which upgrades and repairs to invest in, and which ones to skip so you don’t waste time or money on unnecessary fixes.

For example, an agent might advise you to focus on curb appeal rather than updating the kitchen countertops, as buyers in the area will be likely to gut and remodel the whole kitchen anyway. It all depends on area trends, though, and how hot the market is.

11 signs you should hire that Realtor®

OK, so now that you know the basics around real estate hiring norms, how can you tell whether someone is the right fit, and that they’re not going to disappoint you? Look for these 11 signs.

1. They get back to you right away.

“We can’t come to the phone right now. Please record your message and we’ll get back to you…” That’s the last thing you want to hear when you’re trying to accept an offer on your property, or chomping at the bit for a response on a counteroffer.

Phone, text, and email tag is never fun. That’s why “What’s your response time?” is one of the first questions you need to ask every agent you interview. You might just be surprised by the answers you get:

And don’t just settle for a vague window of “within 24-hours.” Dig into the details by asking:

• Do you take client calls before 8:00 a.m. or after 8:00 p.m.?
• What is your policy on taking calls when you’re with another client?
• Do you have staff/assistants who will respond when you’re unavailable?
• What is your response time policy during weekends/holidays?

And you should judge the agent’s communications with you prior to the hire as well. If an agent isn’t attentive before they even have your business, what are the odds they’re going to call you back when you’ve already signed the listing agreement?

2. They’ve got experience in your price point and property type.

The right agent with the right knowledge and experience can likely sell your property faster and for more money than the typical area agent. But what qualifies as the “right” experience?

Surprisingly, it’s not just about finding a Realtor® who’s sold a ton of houses.

It’s important to hire an agent experienced in selling within your properties specific price point, property type, and location. That agent will know what buyers are looking for in properties like yours, and how fast they are selling in your area. They’ll also know how best to show your property.

It sounds so simple, but there is no better indicator of an agent’s ability to sell your property than the fact that they’ve sold someone else’s just like yours in your area. So ask prospective agents for these relevant stats:

• How many properties have you sold in my price point within the past year?
• How many of those propeeties were in my neighborhood?
• How long were those properties on the market before they sold?

3. Their stats don’t lie.

Every agent who you interview is going to want the job of selling your property, so they’re going to highlight their most relevant sales — but don’t just take their word for it. It’s vital that you do your own research and check out their full stats history on sites like Reator.ca

You can check out a map of the agent’s transactions to see just how many homes they’ve sold in your specific area, and find all the data you need to see if their actual stats back up their claims. The main figures you need to look at are:

Average sale-to-list price ratio:
The sale-to-list price ratio tells you what percent of the asking price a property actually sells for. If it is listed at $250,000, and sells at $230,000, the sale-to-list ratio would be 92%. If a property sells over asking, the sale-to-list ratio will be over 100%. An agent’s average sale-to-list ratio indicates how accurate they are at pricing properties, and how much of a seller’s list price they’re likely able to deliver.

Days on market:
An agent’s average days on market reflects how long it typically takes for their listings to attract an offer. Days on market tracks the time between when a property is listed and when it goes under contact with a buyer (the time from contract to close is not included). Most sellers would prefer a faster sale, so if an agent’s days on market is lower than the average for the area, that’s a good sign of their performance.

Total number of transactions:
You can look at how many properties an agent has sold in the past year, and also throughout the course of their career, as a basic indicator of general experience in the field.

Transaction volume:
An agent’s transaction volume refers to the total dollar amount of properties they sell in the calendar year. While useful in gauging an agent’s overall success, this metric can be a bit misleading. A high transaction volume does not necessarily indicate a high number of total sales, or sales that would be relevant for your needs.

For example, let’s say that during your interview, your agent shares two success stories of properties sold in your price point. Then you check their stats online and the list-to-sell ratio looks great, and their transaction volume is off the charts — they sold $10 million last year!

Before you sign on the dotted line, take a closer look at those stats. Turns out that they’ve only had those two sales in your $1,250,000 neighborhood — their other sales are luxury properties going for $2,500,000 to $4 million.

That is one superstar agent…perfect for luxury homeowners. Your modest, midrange property sale is destined to be small-potatoes on the back burner for this agent. You need one who will treat your listing like a five-star, full course meal.

4. Their comparative market analysis (CMA) holds up to questioning.

Agents won’t just come to their interviews armed with their personal stats, they’ll bring a comparative market analysis (CMA) with them, too, and you need to go over that data with a fine tooth comb — because the CMA is the data your agent will use to set your list price.

A CMA is a compilation of comps (recently sold properties comparable in size and location) that’s analyzed to provide a value for your property that you’ll need to set the list price. That value is reached by looking at both the hard data (square footage, lot size, number of rooms, etc.) and more nuanced factors (upgrades, appliance age, curb appeal, lot positioning etc.).

It’s the art of putting a value on those intangibles that requires the expertise of an experienced agent. You can tell if your agent has what it takes by asking:

• How did you arrive at the suggested list price for my property?
• What are the differences between my property and the comps that impact its value?
• What features, upgrades, assets, and flaws did you consider when calculating my properties value?
• How does my neighborhood impact my properties value?

When I help my sellers set the right list price for their property, I look at the value much like a bank appraiser would — because in the end in most cases it’s not about how much a buyer is willing to pay, it’s about how much a bank will lend on the house.