6 questions to ask your potential real estate agent - MoneySense

6 questions to ask your potential real estate agent

If you’re looking to buy or sell a home, there’s no shortage of representation. But the only way to tell if an agent is right for you is to ask some hard questions.

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If you’re looking to buy or sell a home, chances are you’ll want to work with a real estate agent—and there’s no shortage of ways to find one! Perhaps you know a family friend, have a newly licensed college buddy, or spotted a face on the side of a bus. Regardless of how you connected, though, the selection process for your broker or salesperson shouldn’t end there. 

It’s crucial, when making an investment as emotionally and financially fraught as a real estate transaction, to thoroughly vet your representation—but many people don’t, says Kelvin Kucey, deputy registrar of Regulatory Compliance at the Real Estate Council of Ontario. RECO is the provincial body that oversees certification and education, as well as agent compliance to the Real Estate and Business Brokers Act (REBBA), the industry’s professional code of ethics. 

The issue, he says, is that clients often don’t view picking an agent as a hiring process when “it absolutely has to be that. Whoever hires the first and only person they speak to?” he says. “Talk to people to get a referral, but once you have a referral, shake some hands.”

RECO advises meeting no fewer than three or four agents before making a selection, and that clients should adhere to the “three R’s”—referral, references and registration. Consumers can check out the latter via their provincial real estate council; most provinces offer an online database, such as RECO’s free agent directory, with details on whether the agent remains in good standing with their regulator, and whether they have any disciplinary history. Here are links to other provincial directories across the country:

Once clients have confirmed an agent’s formal credentials, it’s time to schedule a face-to-face—and that means asking some tough questions. Here’s what buyers and sellers should suss out before signing on any dotted lines.

1. “What do your former clients have to say?”

A stellar reputation is an agent’s bread and butter, and they shouldn’t hesitate to let you hear it directly from the horse’s mouth. “Someone who is confident and successful in the business will have no shortage of names and numbers for you,” says Brittany Kostov, sales director at Zoocasa. She adds that while most agents will stud their websites with five-star reviews, a personal phone call can provide additional context. Kucey agrees it’s good practice: “Certainly, a true registrant out there has no problem handing you references and saying, ‘Yes, call this person, call that person, and ask them very frank questions about what’s going on. The ultimate need is to find somebody who has the experience you need and suits both your neighbourhood that you’re looking in and suits the style in which you want to buy or sell your next property.”

Beware an agent who seems unwilling or unable to provide you with contact info for direct testimonials as that could indicate past problem transactions, or simply patchy experience. 

2. “What’s happening in my desired neighbourhood?”

Market conditions can vary widely across cities, and in competitive urban centres, such as the Toronto real estate market, agents need data-honed strategy with intimate knowledge of local metrics.

“If you’re asking the agent, ‘What’s happening in the market?’ and they can’t pinpoint whether it’s a buyers’ or sellers’ market, if they don’t know average days on market for the type of homes you’re looking at, if they don’t know the average list-to-sell price, those would definitely be some red flags,” says Kostov. “If you’re a full-time professional specialist in the area, you’d absolutely be able to get some context behind those numbers and know exactly what’s going on.”

3. “What can I expect in exchange for paying your full commission?”

Negotiating a real estate agent’s commission has become more commonplace as clients look to cut their transaction costs. This is especially prevalent among sellers, who pay their agent’s commission—usually between 3% and 7%—directly out of their proceeds, which is then typically split with the buyer’s agent.

However, the adage “you get what you pay for” rings especially true in real estate. A good agent will be upfront about what level of service you can expect to receive for a reduced price, or even be unafraid to refuse discounted business if they feel it’s not in the client’s best interest.

“I do believe that the agent that you want to be working with knows their value and will be able to not just tell you about it, but show you the proof,” says Kostov. “Such as, ‘This is what I’ve been able to provide for the clients that have honoured my full professional fee, and these are the results that I’m able to get for them.’”

She says the first elements to be cut with reduced commissions are typically staging and quality photography, which, in a hot sellers’ market, should come out of the agent’s pocket. “I don’t think you stand really a chance of getting top dollar for your property if those two pieces are not included,” she says.

Other services that may be cut for discounted commissions include top-level marketing, such as holding an open house, advertising an offer night, and a social media strategy.

An agent looking to pocket the entire commission by representing both the buyer and seller can be another area of concern. Known as “double ending” or multiple representation, this occurs when a listing agent also agrees to represent an interested buyer, often guaranteeing them preferential terms throughout the transaction. This can put both the buyer and seller client at a disadvantage, without the negotiation leverage they’d have in the open marketplace with their own representation. While the practice is treated differently from province to province, it is largely prohibited in Ontario, unless the agent receives consent in writing from both the buyer and seller client, and can demonstrate they have performed their fiduciary duty in explaining the potential consequences and limitations of such an arrangement. Agents who fail to do so can be subject to a $50,000 under REBBA. Preferably, a listing agent who is approached by an interested buyer for the property should refer them to another agent at their brokerage for the sake of transparency.

4. “Will I be a client or a customer?”

Kucey adds that agents should also clearly explain the distinction between the two types of brokerage agreements: becoming a full client, or just a customer. Brokerage clients sign a Buyer’s or Sellers’ Representation Agreement, meaning they are bound to work exclusively with the brokerage on their transaction, or for a set period of time. In exchange, their agent and brokerage owe them a fiduciary duty, meaning they are ethically bound to act in their best interest.

For buyer clients, this includes providing as much information as possible about a desired property. For seller clients, this agreement requires their agent to present them with every written offer they receive for their property. Customers, on the other hand, have a looser relationship with the brokerage and can take a more a la carte approach; they may wish for buyer representation to contact them directly with offers, and handle their home’s marketing, staging and photography themselves. While the brokerage agrees to provide them with competent service, they are not ethically bound to their interests in the same way as a client.

Kucey points out that agents should explain the difference in these agreements in detail so prospective clients can take the approach that best suits them; an agent who appears to lean toward a customer relationship may be looking to spend less time and energy on the transaction. As well, they should explain in detail how their commission may change for fewer services rendered, and what kind of information they are entitled to share.

“What consumers really need to remember is, they are the ones driving the relationship, they are the ones in charge of how they wish to be classified,” he says. “It won’t be, ‘I’m going to call you a customer for the purposes of this transaction.’ That’s where the consumer should be quite rightly say, ‘Hold the brakes, I’m uncomfortable with this, I need a better explanation about what that means for my interests.’” 

5. “When will I hear from you?”

In a fast-moving market, being able to reach your agent quickly is vital—and communication needs to be a two-way street. It’s an expectation that Kostov sets up from the beginning with her clients, outlining how they can best reach her, and when she’ll be providing regular status reports and market feedback. She also lets them know how she’ll be spending her time representing their interests in the market.

“It’s important to set the expectation up front that any time you need to reach me, do give me a call, but know that I am actually prospecting for buyers for your home between the hours of nine and 12. That’s the time I’m either putting my feet to the pavement, and either door knocking in your area, or I’m calling clients I have in my own database to see if they have any interest in the area,” she says. 

6. “What do I need to do as a client to be successful?”

Gaining an edge in a competitive market takes a team approach, with clients ready to view, and potentially bid on, homes for sale at the drop of a hat. Kostov says it’s essential clients are prepared to make an offer, meaning their deposit is in order, they have sufficient cash on hand, and they’re emotionally ready to sign.

“I think the question they may be overlooking is: What do they have to be available to do at a moment’s notice in order to get the home?” she says. “All day long, I could be reaching out to you, but if you’re not receptive…you may feel overwhelmed, or you may miss out on those properties.”

Often, Kostov will take clients out on their lunch breaks to view properties in the hot Leslieville neighbourhood mere hours after they hit the market. “Agents need to know how they’re going to help their clients take that next step,” she says. “Because it’s a competitive market, what are they going to do to help their client get into their home at the right price? And if they don’t know, that’s a red flag.”

 

Penelope Graham is the managing editor at Zoocasa.com, a real estate website that provides advanced online search tools and data to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse real estate listings on the website or the free iOS app.

 

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