Let’s face it, everyone wants to “save” a buck but does it always make sense in real estate to choose your agent based on their paycheck?  Let’s explore that idea…

In my experience there are three different types of real estate agents when it comes to selling your home.  I call them the Okay, The Better and The Best.

The Okay:

These are the “companies” that are really just cash investors.  The ones that will buy your home whether it’s ugly or not and claim you can “pick your closing date”.
On the surface, it seems like a swell idea.  They buy the home for “market” value (and they determine what market value is) and you pick your closing day.  No commissions paid.  They just charge “transaction” fees that usually exceed the maximum amount you’d pay if you sold the traditional way.  Typical real estate fees are 6% in AZ…you are probably looking at 1% or so (depending on price range but for the most part) in seller closing costs (all sellers pay seller closing costs…even if you don’t pay real estate commissions or unless the buyer covers them for you).  In my experience, these fees that are charged to the seller exceed 7%…sometimes by quite a bit.

Another thing to keep in mind is the inspection period.  This is an opportunity for them to renegotiate…yeah, after you are packed and ready to move on to wherever it was you were planning to go.  Perfect timing for you to be totally motivated to just agree to whatever because it’s easier.  So, they pay you less for your house than what you can get on the open market, probably beat you up in the inspection period AND they charge more than a traditional real estate agent charges.  Hmmmmmm…. ?

The Better: 

These are usually your “flat listers”.  This is the company that you pay X amount of dollars to (usually a few hundred) and they list your home on the MLS and put a sign in your yard but that’s it.  The marketing, the showings, the negotiations and basically all the details are left up to you AND you still pay the “co-broke” to the buyers agent (in AZ 3% is the norm).

The downside of going this route:
A. It’s not that much different than selling by owner. You are still unrepresented by an expert in the field (which could spell danger even after the sale is final).
B. There’s no opportunity to tap into a well established marketing plan.  Seasoned and high producing agents build huge networks that take years to build and hours and hours per week to maintain.  Since demand plays a huge part in getting the most money out of your home and in your pocket, this could be a HUGE but hidden mistake.  We THINK because we are paying less we are doing better when, in all actuality, having little to no experience and zero network may impact demand enough that you could actually be giving up tens of thousands to save a few bucks.
C. There’s no safety precaution.  Unfortunately home sellers can be a target for criminals.  Without experience and proper safety protocols in place, you could be opening your home up to criminals and everything that comes with it without even knowing it.  For sale by owners beware.  You are a target for those that are less than ethical and perhaps those looking to take advantage and, in some cases, even rob you.  Why would criminals target a for sale by owner?  Why not?!  They are sitting ducks ready to open their home to any stranger that “shows interest”.  There are usually no safety precautions taken whatsoever.
D. Negotiations and adhering to the contract appropriately could also be quite the hurdle.  Real Estate negotiations are not just about numbers but also about terms and managing all of the personalities that are a party to the transaction as well as third party affiliates.  Without experience being proactive may prove to be very difficult and you’re likely to be forced to be reactive instead.  Selling a home isn’t the least stressful life event for anyone, it’s much more difficult when you are also putting out unexpected fires along the way.  You are also missing out on tapping the referral network of an established real estate agent.  The relationships that are formed over years and years of doing business with reputable companies that are necessary to the transaction could make or break any sale.  The timeframes of the contract are pretty tight and performing within them could be a challenge without the proper relationships in place.

The Best:

These are your traditional real estate agents (and preferably Brokers) that are well established in the area, have a provable track record and have years of experience.  These are not your first year in the business rookies and might not even be your nephew that has a day job but also a real estate license.  These are the tried and true professionals, the producers, the real business owners.  They have systems in place for everything, use technology to its fullest and work in an ethical manner that supports their longevity in the industry.  Most importantly, they have the track record, the review and online presence to prove it.
They have been in business long enough to have established marketing networks, a network of professionals for referral and an acute knowledge of the process.  They can rattle off the provisions of the ADRE purchase and the listing contract off the top of their head.  They know the market.  They have predictions based on fact and logic.  They have enough experience to proactively advise from the transaction start to finish.
How can you tell if you are dealing with a true professional…ie: The Best?  Google is your friend here, people!  Google them!  If they don’t produce enough content or activity to AT LEAST fill the entire first page of Google then ask for testimonials (or find them yourself online).  Ask for proof of previous sales in the area.   Ask for their marketing plan.  Ask to meet their assistant and transaction coordinator (if not their team) and question it if they don’t have one.  These are the signs of a true professional.

What’s the upside of going this route:
A. Without a doubt, because they will act within their fiduciary duty, you will get the most money that you can for perhaps the largest sale of your life.
B. The process will be as smooth as possible.  Experience, connections to a large network and systems ARE everything.  A professional will rely on experience to be proactive and to handle any otherwise unexpected circumstances with grace and “like they have done this once or twice before”.
C. You can expect thorough and frequent communication.  A professional understands the importance of information, statistics and feedback.

Sometimes “the Best” is a “the Better” in disguise.  You can spot these quickly because they’ll be quick to negotiate down on their commission sometimes even before you meet them.  Ever see the “4.5 listing fee” ads?  If they don’t feel they provide enough value to support their fees, then this conversation will be an easy win for any seller.  Seller beware.  If you win this conversation you might reconsider hiring this person as this is a direct reflection of their negotiation skills.  What’s going to happen when your money is on the line if they give up their own so easily?