THINGS TO CONSIDER WHEN SELECTING A LISTING AGENT

By Michael Repka, Esq.

Choosing the right real estate agent to list your home is a big decision. Clients are often asked to enter into a long-term contract for the sale of their single largest asset with few specifics and no guarantees. Make no mistake, the “standard” listing contracts used by most agents in Silicon Valley are written from the point of view of the agent, not the sellers. In many states, sellers are protected by attorneys that require significant modifications to the contracts drafted by the real estate industry. However, in this area, few clients benefit from the protections that come from an attorney’s review and modification of listing contracts. That said, there are some key ways that homeowners can protect themselves when committing to work with a particular agent.

Background, Experience and Statistics

Experience matters. There are many moving parts to a listing, and it takes experience to anticipate issues and opportunities. An experienced agent will know how to prepare and market your property in a savvy manner, getting the best possible price. Plus, agents that handle a large number of listings each year often receive priority pricing and service from contractors and other professionals, resulting in a savings for the client.

All Realtors® have ready access to statistics and data and should be able to provide prospective sellers with their personal statistics such as:

• Number of homes sold in the area (ask for an MLS printout for the past 5 years)

• Average price per square foot

• Average days on the market

• Average price above or below the initial list price

House Preparation

The ability to see a home’s potential and make costeffective improvements is another benefit of listing with an experienced agent. With time and cost constraints in mind, an agent with a strong team and quality connections can give your property an advantage over listing with a less experienced agent. Asking for before and after pictures of homes that the agent has listed can help demonstrate an agent’s work firsthand.

Will They Double-End?

Under California law, the same individual agent is permitted to represent both the buyer and the seller on the same real estate transaction; in real estate parlance this is called “double-ending.” Similarly, listing agents can take large “referral fees” from agents submitting offers, which can impair their objectivity. Both of these situations can lead to conflicts of interest and the potential for significant financial damages to the client. Real estate attorneys are all too familiar with situations where double-ending listing agents violated their fiduciary duty to a client, either tempted by the lure of a double commission or an inability to anticipate complications. Although theoretically possible and certainly legal, it is difficult to imagine how an agent can zealously advocate for both clients while protecting confidential information. Thus, asking about an agent’s policy on double-ending is important and will enable the parties to enter the listing with their eyes wide open.

I recall one panel in which a manager from another real estate office proudly touted his office’s policy, which was that the listing agent must stop advising their client and switch to the buyer’s side as soon as they know one of their buyers is going to submit an offer. Under this system, the manager then steps in to review the offers with the sellers and advise them on how to proceed. While some sellers may feel abandoned by their agent and object to being advised by someone that doesn’t know the property, competing properties, or the seller’s situation, others may be willing to accept this solution because they like their agent and want them to get twice the commission.

At DeLeon Realty, we make sure the same individual agent is never advising both the buyer and seller on the same transaction. Also, the listing agent never receives any additional compensation based on which offer gets accepted. Furthermore, we have a company-wide policy that we don't take commission from both sides of any transaction. Since inception of this program, we have waived over $16 million in commission because we believe that double-ending often results in an unjustifiable conflict of interest.

Marketing

Most agents say that they “invest heavily” in marketing their listings, but what does that mean? An experienced agent should be willing and able to give a detailed plan, including:

• How many and what size ads will the agent run (and in which papers) to promote the property? Ads may seem expensive, but they are an effective tool in drumming up additional interest in the property. Generally, agents cover 100% of these costs, so some agents shy away.

• What will the brochures look like? Professionally printed in full color? Two pages? Four pages? 28 pages?

• Which photographer will they use?

• Will the agent advertise the property on TV?

Television commercials are very powerful way to reach potential buyers that are not actively searching the MLS.

• Will there be a professional video tour (versus a photo-only virtual tour) and which videographer or production company will be utilized? Ask for samples.

• What will the property website look like?

• What is included in the agent’s online marketing campaign?

• What does the agent offer at open houses to increase attendance?

While these are only some of the potential marketing techniques, agents that are willing to answer these types of questions with specificity tend to invest more time and money in promoting their properties. Simply put, agents that give non-committal answers are less likely to get quality results.

Length of Listing Contract

Savvy sellers may want to avoid signing long-term listing contracts because some agents are less aggressive if they know that they have the seller locked in for an extended period of time. A shorter contract period, however, can serve as a motivating factor for the agent. In most circumstances, a properly prepared and marketed home in this area should sell within 45 days, so a healthy listing agreement term should be 45 or 60 days— the shorter the better for sellers. After all, if the sellers are truly satisfied with their agent’s performance and feel that they have lived up to all of their promises, the client can always extend the listing term. An agent with a shorter contract will have additional incentive to perform well to generate a sale or, at a minimum, earn that extension. It should be noted that DeLeon Realty listing agreements are only 39 days long and begin on the day the property comes on the MLS.

As with selecting a buyer’s agent, it is wise for the selling client to interview several agents before making a choice. Providing each agent with the same questions will enable the potential seller to better compare and contrast the agents in a neutral fashion. Don’t accept scripted or canned answers. This up-front time may seem like a hassle, but the dividends will more than pay off in money, time, and peace of mind.