If you plan on investing in real estate, at some point along the way, you’ll need to sell property. In most markets, the most efficient way to sell is by using the services of a licensed agent.
We talk a lot in our Property Apprenticeship course about the importance of forming a strong team. Your goal should be to empower others to do the things that you don’t have the time or skill to do with excellence.
The job of your real estate agent is to attract and influence potential buyers. Through marketing and advertising campaigns, they work with their pre-existing database of interested buyers, as well as focus advertising toward your target in the general public.
Most investors are unable to accomplish this task as efficiently and effectively as an agent.
Of course you could try to save money by trying to market and advertise the property yourself, but whether you have the time and the skill to do it well is another question. Many investors who have tried to save a few thousand dollars in commissions have given it right back, due to a lower sales price or higher holding costs because of delays in finding a buyer.
Once you’re ready to add an agent to your team, it would be wise to interview several different agencies before making your final decision. You should visit their office first to form an opinion of the level of service they offer. If they pass your first test, then invite them to your property to have a look. Ask them to get back to you with a sales proposal before making your final decision.
Here are four of the most important questions to ask an agent during the interview process:
1. What Fees And Commissions Will You Charge For Selling My Investment Property?
Fees and commissions are standard practice in the business. Because the seller pays the commission, the agent, at least in theory, represents the interests of the seller.
The typical sales commission ranges from 2 to 3 percent, plus the goods and services tax (GST) on the sales price of your property. In addition, an agent will ask you to pay the marketing expenses, which can add up to several thousand dollars. But the commission structure is always negotiable.
Not long ago, I was chatting with an investor who negotiated a tiered commission structure with his agent. The agent valued his property at $430,000 but he wanted $450,000 for the property. His agent quoted him a 3 percent commission. Instead, he negotiated to pay 3 percent for a sales price over $440,000, but only 2 percent for any price below that.
Agents make money by gaining listings, so it’s important to remember that the agent needs you more than you need them. There are always other agents who will be happy to represent you.
2. How Many Buyers Do You Currently Have In Your Database Who Are Looking For New Dwellings?
Every agent will tell you that they have buyers looking for properties like yours. To be sure that it’s not just a sales pitch to attract your business, ask them for an exact number from their database. A good agent is always networking; not only looking for vendors to list properties with them, but also nurturing relationships with potential buyers.
3. How Many Similar Properties Have You Sold In The Last Six Months?
How your agent answers this question will give you an idea of the size of their agency, the volume of sales they are facilitating, what kind of market currently exists for your property, and if they are well-suited to reach your target market.
Size, big or small, does not always equate to quality. What you want is an agent with solid systems in place and sufficient exposure in the area, while not being so big that they lose that personal touch.
This question relates to how well your property fits within the target market that the agency attracts. If you’re selling a property toward the more exclusive end of the price range, you want an agent who has a track record selling high end properties, and vice versa.
Ask the agent for addresses and sale prices of similar properties they’ve sold. This should be part of their sales proposal. This information will also help you determine how active your particular target market has been. You’ll also get a picture of the sales price that you can realistically achieve.
4. What Do You Think I Should Do To Get A Higher Price For My Property?
A good agent will know exactly what it is about your property that will attract or repel your target market. You want to look for team members whose experience and expertise you can leverage. An agent with fresh ideas can not only enhance your sales price, they can also help you sell your property faster.
Buyers are attracted by appearance and influenced by atmosphere when they visit your home. You shouldn’t need to spend thousands of dollars doing renovations to make your home attractive. If your agent suggests costly enhancements to the property, be sure that the payoff is worth the investment. Sometimes it can be more cost effective to simply lower your asking price.
While choosing the right agent is crucial to gaining top dollar for your property in the shortest possible time, interviewing agents is only scratching the surface of the sales process.
In Steve McKnight’s Property Apprenticeship course, we offer an entire module of seven sessions covering the nuances of evaluating and selling investment properties. The topics include:
- Assessing Your Investment’s Value
- Selling Versus Refinancing
- Working With Real Estate Agents
- Sales Methods
- Advertising And Marketing
- Timing And Legal Preparation
- Accounting And Taxation Consequences Of Selling
With the right agent, you can get top dollar for your property. Not only that, a good agent can help make the process simpler and faster, too. Make sure to take your time when choosing an agent, and ask all the right questions first.