Choosing the wrong real estate agent can be a very costly mistake. There are two main criteria that most people use when picking an agent – and using these criteria alone is exactly how not to choose a real estate agent.
In the real estate business, there’s a phenomenon known as buying a listing. A real estate agent can buy a listing by giving the seller an inflated number for the the home value. Sometimes this is just an honest mistake – an agent might not have done his homework, or hasn’t taken into account a number of factors which weigh against the home in terms of its market price. Other times, an agent will deliberately mislead the homeowner and say that they can get a price for the home which just isn’t supported by the market data whatsoever.
Whether the value is inflated on purpose or by accident, you don’t want to choose an agent simply because of the price they say they can get for your home. There is no doubt that some agents will be able to ultimately get a higher price than others, but red flags should go up when an agent promises you an over-the-top sales price.
The second main criteria that people use to pick an agent is how much commission they charge. It’s understandable that homeowners would look at the commission – it’s an easy number to calculate, whereas it’s much more difficult to calculate all the ways an agent actually earns that commission. But beware an agent who offers a low commission. They are broadcasting to you that their services are worth less than most other agents – and they’re probably right.
The best agents are paid commensurately. If you save 1% on the commission, but that agent brings you in a sales price that’s 2-3% lower than another agent – how much money have you saved? That’s why it’s important not to pick your agent solely based on how much commission they charge.