Things to Know Before Hiring a Real Estate Broker
By K. K.
, last updated September 29, 2011
Hiring a real estate broker can make the process of buying real estate much easier, but you should know what you're getting into before hiring a broker. With the modern age of technological advances, especially the Internet, home buyers and home sellers many times have nearly all the same access to information pertaining to properties that real estate brokers and real estate agents have in their databases. Although it is certainly possible to sell a home or buy a home without the assistance of real estate brokers and agents, most first-time home buyers and sellers should enlist the help of real estate brokers and agents to make sure real estate transactions are conducted properly and legally. However, before you sign a contract with a real estate broker or agent, there are several things to consider before entering an agreement with a real estate professional.
Brokers vs. Agents
The first thing property owners or sellers need to know is the difference between a real estate broker and a real estate agent. A real estate broker is a licensed real estate professional who helps people buy and sell property. A real estate agent is a licensed real estate professional who works under the direct supervision of a broker. When a real estate transaction is completed, brokers compensate agents by paying them a part of the transaction commission. Many times, home sellers and buyers use the services of an agent. If any problems or unusual circumstances arise, agents typically must consult with their brokers to find a suitable resolution.
Finding a Broker
Word-of-mouth advertising is a valuable marketing tool for real estate brokers. Ask family members, friends and business associates for recommendations in finding a good professional broker. You also can drive around neighborhoods and look for real estate signage. By looking at “For Sale” signs, you can get a good idea of real estate brokers who have experience in conducting transactions in a specific area.
Once you have the names of three or four real estate brokers, contact each one to set up a consultation. Possible red flags to watch for are whether brokers promptly return your calls and have information readily available when speaking with them on the phone. During the face-to-face consultations, you need to thoroughly interview each broker. You want to know how many real estate transactions they have completed within the last year, the types of properties that were bought and sold and the areas in which they were sold. The next main thing to find out is their commission rate. There are no laws or statutes that dictate real estate commissions; however, most real estate brokers will tell you the industry's standard and prevailing rate within the geographical area.
Traditional vs. Nontraditional Brokers
Full-service traditional real estate brokers provide a myriad of services, including home staging for sellers, marketing and advertising the property, assisting with setting up property inspections and arranging for contract closings. Nontraditional brokers also may provide many of these same services but are offered on an a-la-carte basis, meaning the broker can arrange for services, but the client pays extra for each service, such home preparation for selling. Keep in mind that full-service traditional brokers may charge a higher commission rate than nontraditional brokers, so don't pay for anything unless you really desire or need all the included services.