Posted by
Marc Oram on Thu, May 03, 2012 @ 01:47 PM
This is an important question because it gives you an actual standard to compare similar agents before you make a decision on who you hire. There are agents that talk a great game and did sell a lot of properties during the real estate boom when all you had to do was put a sign in the ground and wait for all of the offers to roll in. Times have defiantly changed and you need to know before you hire an agent is how well the agent has adapted to the present buyers market where there are lots of properties for buyers to choose from. You want an agent with a proven track record with mutable sales of properties similar to yours before you hire them.
Depending on what type of property you are selling will depend on what the production of that agent should be. For example if you are selling a 10,000 sq ft warehouse you could see how many 10,000 sq ft warehouses sold in your market last year and ask the agent how many of those sales was he involved with. You should ask all of the agents you are interviewing these types of questions and they should be able to tell you how many similar properties to yours sold and at what average price per square foot and what the average time on market was.
You only want to hire an agent who is one of the best agents in your market place. They need to specialize in your product type and has a proven 12 month track record and be willing to provide you a list with the names and phone numbers of their past clients for you to contact.
Posted by
Marc Oram on Fri, Feb 24, 2012 @ 11:23 AM
Ah! The big question every seller wants to get to right away. It seems like such a simple question but seems so hard to get a straight answer. You want to know, however, the agent doesn’t want to just come out and tell you right away. It must be because they need more time to talk you into paying the commission, right? Nope! It’s really because they usually want to explain why they charge what they charge and there can be a lot of reasons for that.
The agent usually doesn’t want to give you a figure of let’s say 6% upfront for fear of you throwing them out and telling them that they are crazy! They want the chance to explain why they are charging you the 6% before you start thinking you should list your property with someone else at 3% and you thinking how much money you saved! Well you probably will save 3% on the commission but it might cost you a whole lot more than 3% to save that 3 % and that’s what that agent was trying to explain before you threw them out the door.
It isn’t important how much you pay in commission. What is really important is how much money you have after you’ve paid the commission and that the property actually sells. You see the great thing about straight commission is you only pay it if your broker gets you acceptable prices. If they can’t, then you don’t have to pay them anything.
Commissions in Florida, where I’ve been a licensed Broker for over 20 years and, as in most States, are completely negotiable and brokers are legally not allowed to discuss with other agents what they should or should not charge in fees. This law prevents brokers in a marketplace from monopolizing fees and preventing a fair market price where the commission fees are driven by supply and demand. In a “sellers market”, where there are very few properties for sale and many buyers, the value or commission rate would go down since it is relatively easier to find someone willing to buy your property and pay your price. In a “buyers market” the opposite is true. A buyer is much harder and much more expensive to find.
Let’s go back to the example that I gave where agent “A” charged a 6% commission and that agent “B” charged 3% but you made more money paying the higher commission to agent “A”. The most common scenario is that agent “A” offered to pay half of his commission (3%) to any licensed agent leveraging the exposure of your property to not only the local real estate market place but potentially the entire County if they work with a National firm or the entire world if they work with an international firm. The real key to getting your property sold for the most amount of money is very, very simple. You need to expose it to the most potential buyers who are looking for that buyer who is willing to pay the most money for it. In our example, agent B was able to sell the property but let’s take a look at that typical agent and how they might think about your property. They look good and sound good, they have a nice car and have been around for a while and you even recognize their sign around town. They tell you how they have sold a lot of similar properties and you sure don’t need to be paying out those kinds of fees that Broker A is charging and that he can charge you half of that. You say let’s get this property sold and sign up to his standard one year listing contract. A week or two later a sign shows up on the property and agent places the property in the local MLS and on the free versions of the most popular internet websites. He attends one or two Broker events and tells a few people that he has this nice listing but the owner is to cheap to pay a co-Broker but if you can get your Buyer to pay your professional fee then he will be happy to set up a showing appointment.
When an agent who is working for a buyer or as a buyers representative sees your property for sale in a “Buyers market” they don’t need to press their buyer to agree to pay them a commission to represent them when there are plenty of other properties out there with owners and agents that are more than happy to pay them a commission for bringing their buyer to them. That’s how the system works and why buck the system unless the property is unique or far below its market value? Brokers also figure that if a seller or an agent doesn’t want to cooperate with outside brokers they are probably going to be difficult to deal with anyhow and would rather work with someone who appreciates the value of their client in a “Buyers market.” Unfortunately, some agents that work with buyers that don’t cooperate when asked by their clients about Agent B’s property usually just dismiss it rather than try to explain the whole concept of agents that don’t cooperate with agents that work with buyers. I have found that some agents that work with buyers who don’t get exclusive rights to represent contracts signed by their buyers will avoid agents that don’t co-broker for fear that their buyer might jump ship and go directly to that agent.
Once the property has been on the market for several months and buyers see the For Sale sign still up they start to think that seller must want a lot of money for that property or there must be something wrong with it since it’s sure been for sale for a long time. There is a value curve that occurs when a property first enters the market and is automatically exposed to the greatest amount of potential buyers when marketed correctly. As the property is placed on the market, potential buyers that have been looking but have been unsuccessful in finding the right property now have a new property to view. There is a back log of buyers but once these buyers have seen all of the potential properties in the market place they must wait for new properties to enter the market place one at a time creating a highest demand for property during the first 30 days. The longer the property remains on the market the less likely it will be to bring its highest market value.
So the moral of the story is it doesn’t matter how much commission you pay. What matters is how much money you net. Make sure when you ask “How much commission are you going to charge me?” be sure to listen and ask them “What are you going to do for me to justify it?”
Next question “What steps will you take to sell my property?”
Posted by
Marc Oram on Tue, Jan 24, 2012 @ 02:23 PM
Last year 26% of the commercial real estate I listed and sold came from properties that another agent had been unable to sell. I think that all most all of these properties would have been sold by the first agent if the owner would have just hired the right agent the first time around. I’m really not saying that I’m the only agent that could have sold the property there are lots of good agents in every market but just like any other business there are 20% of the people that do 80% of the business. The old Pareto principal named after the Italian economist Vilfredo Pareto who discovered the 80-20 rule. So how can you make sure that you get someone from the top 20% group and not the bottom 80%? It’s easy, just ask the right questions up front when you interview an agent.
Having been licensed as a broker for over 20 years in Broward County Florida I would ask the following questions of a broker before hiring them to sell my commercial property.
Q. How long have you been in the real estate business for?
A. What I’m looking for here is someone who has been in the real estate business for at least more than 10 years. My concern is that someone with less than 10 years in the business may not really know how to sell real estate. For example if someone came into the business less than 10 years ago just as the market was heating up all you really had to be able to do was convince a friend, neighbor or family member to list their property with you and once it was on the market there was a long line of buyer and banker waiting for you to choose the lucky new owner, man oh man have times changed. Now you have to know how to really sell a property. You not only have to know how to sell a property you have to know how to market a property and when I say market a property I don’t mean putting a sign on it and sticking it in the computer. Marketing means you have to be proactive and go out there and find the buyer for that property not wait for the buyer to find you. I want to see a comprehensive detailed marketing plan that will show me your step by step plan to get me maximum exposure to the market place. The marketing plan should also have a timeline and should include co-brokering with outside agents.
Sneak Peek at Question 2
Q. What percentage are you going to charge me to sell/ lease my property?