Finding A Buyer’s Agent, Part 2: Screening, Trial and Error, Signing a Contract, Offer Acceptance

This my second post on our experience in Finding A Buyer’s Agent. In Part 1, we tried our best to figure out what we wanted from an agent. Again, we are first-timers and are not real estate gurus. This is a long post, but it definitely shows a real story of how we found our agent – and how she helped us find our house!

Screening Tips

Given the hundreds if not thousands of real estate agents in our area, it was going to be a daunting task to find the “perfect” agent. We had to filter them down somehow. After reading up at a couple of books and websites about how to select a buyer’s agent, here’s what we were told:

  • Ask trusted friends for recommendations. Ask about the reputation of both the agent and the brokerage house he/she works for.
  • Ask potential agents for testimonials and references. A long list of references is good, but it’s unlikely you’ll hear from the unsatisfied folks.
  • Check the local real estate board if your agent has any complaints against them. This is pretty unlikely in my experience, they aren’t exactly regulated that closely.

Our First Experience

First, we asked our friends and family for experiences. One of our family members actually used to be an agent, but she retired a while ago. Another family friend volunteered to be our agent, so we decided to try him out. It didn’t work out as he seemed to only want to show us certain houses in certain areas, and wasn’t very responsive to our specific requests. I guess we weren’t the ideal “let’s see 3 houses you recommend and we’ll just buy one of them” couple. Not wanting to mix friendship and business anymore, we decided to find our own agents from then on.

Interviewing Agents

After browsing some newspaper ads, I decided to visit HomeGain.com and used their free “Find a Realtor” feature to compare some agents. You provide your information like neighborhood, price range, etc. and then a bunch of agents try to create a custom “proposal” for you. However, it’s all done online through their interface, and none of your contact info is shared without your permission. I liked the idea of not keeping my name and phone number private. You also get client testimonials and their experience level. Here is a sample (click for full size):

altext

Most of the proposals sounded the same… “I know all about your neighborhood, let me help you etc. etc.” We picked our favorite five, and asked them the same interview questions online:

  1. How long have they been doing this full-time? We didn’t want any part-timers, or newer agents. Sorry new agents!
  2. What neighborhoods do they specialize? I wanted an answer that was independent of where we were looking. I suggested that we might be looking in a different neighborhood than I had chosen on the form. If they replied “all of them!” then that got negative points.
  3. How many houses did they buy or sell within the last year? Can we get some references? (Not just HomeGain clients.) Obviously we wanted someone who was active, but we didn’t want the busiest person either.
  4. Were you willing to negotiate a commission rebate? I told them that we had MLS access, would be low-maintenance, etc. Besides the money savings, I also just wanted to see their attitude.

The answers we got were pretty standard. Nobody really stood out. But all of them were violently against a commission rebate. One said they had never heard of such a thing (ha!), and another even said it was illegal (true in some states, but not mine!). Another said I was stealing food off their table or something. If you’re going to lie to me, I’m not going to give you my business. Because guess what? HomeGain charges real estate agents to be part of this bidding service. So essentially they are already discounting their commission for extra business.

Considering A Discount Real Estate Broker

I was kind of annoyed at this point, so I considered using an indirect service like Redfin or BuySideRealty, but I decided that I really did want a personal agent. So I decided to go through HungryAgents again since with them you get a “real” agent. I had tried them a few months before on a whim, but never actually followed through with choosing an agent.

The process is similar to HomeGain. The service is free for the buyer, and the agent pays HungryAgents if they close a deal. You put in your basic info, and the agents come back with their years of experience and their rebate percentage. We sent out interview questions again, and decided to try our favorite responder out. We planned to simply see a few homes we were already interested in, and see if we hit it off.

Signing A Exclusive Buyer’s Agent Contract

The first weekend went well and we liked her, so we decided to sign a 30-day exclusive contract with her. This meant we couldn’t switch agents for 30 days, but it also meant that our 50% rebate (1.5% of sales price) was in writing. People had warned us not to sign a contract with a buyer’s agent because then they have less incentive to work hard for you. Well, if that was the case then we’d drop her after 30 days. But we didn’t have to. She was actually very experienced and is now her own Principal broker, which means she doesn’t have to split her commission with Century21 or RE/MAX or whomever. I feel like this is why she can afford to give a rebate – out of the usual 3% most of the time the office gets 1-2% and the actual agent only gets 1%. Or I guess when times are slower she offers her services “on sale”. But we never felt like second-class clients, and she was always very responsive.

Summary and Offer Acceptance

Screening by price may not seem like the best idea, but in this case it helped us narrow down the field drastically. If we ended up getting horrible service, then we could always go back to full-price agents. But things have worked out great. We actually toured less than 10 homes in person with our agent over the last 4-5 months, and made bids on a total of four homes, the last of which was accepted.

We found the final house on MLS, called her to contact the listing agent, got the lockbox number, saw the house hours later, and called in the offer the very same day (first day on market). She never even saw the house until after we were in escrow! But she fulfilled all our expectations, as I don’t know if we would have been able to get in there that fast with RedFin or BuySide since you have schedule visits ahead of time online. I think this has turned out to be a good arrangment for all parties involved.

Comments

  1. Quick question. Is there a general website that shows all MLS listings for all of the US or when you refer to the MLS listings are you referring to a real estate agent’s website in your area that you are searching through?

    I would love to have access to a site that shows all current listings that I can sort through.

  2. Yea, how did you get access to MLS? The one in my area must have been designed in 1995, but the realtor side has all kinds of “secret” notes and information. I would looove that. How did you get that?

  3. I have used http://www.mlsonline.com
    I’m not sure if it has EVERY single listing, but it’s free.

  4. HomeGain charges real estate agents to be part of this bidding service. So essentially they are already discounting their commission for extra business

    …very likely why you didn’t get anywhere when attempting to negotiate a rebate. HomeGain takes 30% of an agent’s earnings from a deal which doesn’t leave much to rebate to you.

  5. When I was house hunting I used http://www.ziprealty.com which lists homes in MLS. It is free and the new homes notification was grat.

  6. Thanks for sharing your experience on selecting the right agent. I am kind of wondering what criteria you have used to select your home. Would you also please share some of the good books you have read on this subject?

    Thanks.

  7. http://www.mlsonline.com is not good. they email you the house list.

  8. I have found that the best MLS sites are very local, and are often very basic in design. If I were to tell you mine it would basically reveal my neighborhood. You’re basically looking for an agent that is trying to share their MLS access (to attract clients, most of the time) and probably hired someone on the cheap to make it publicly viewable. I don’t know if you can get all the private notes, but you can get listings that are fresh and updated the same day. It might be hard to find such a site outside a big metro area.

  9. I currently retain a buyer’s agent to look for a house. He agrees to refund 2/3 of the rebate to me. Most of the time, I just use RedFin or the publicly available MSL to browse, and when I see something interesting, I will get the agent to email me the full MLS listing.

    I visit the house during the open house. So my agent does not have to drive me around, which saves him time and effort.

  10. I was also doing the Open house viewing as a means of viewing the property. Recently a property that I was interested in came on the MLS and an Open House was scheduled…but someone placed an offer on the property prior to the Open House and the Open House was subsequently canceled.

    So in this instance – having an agent to show the house would have been key.

  11. Once you’ve found a house, I don’t really see the point in being picky about a buyer’s agent. All you’re doing is splitting the 6% or so pie between 2 agents. If you’re doing it to get a “buyer’s rebate” from an agent then to me that’s kind of unethical as the cost of the agent is on the seller and not the buyer.

    With that being said, I picked a friend of a friend as a buyer’s agent.

  12. Beantown – I definitely think it helps to have the ability to get fast access. I have heard of backlash against sites like Redfin as well, so I am glad to have my own agent. Most houses that are listed at a good price are usually gone within a week in my experience.

    Robert – I disagree on the unethical factor. You found the house already, so you just pick a random person to earn 3%?!? ($15,000 or more in my area). Just because of tradition? That sounds crazy to me. The 3% comes from your purchase price. The seller could care less. More supporting discussion on rebates here.

  13. HEllo Johnathan,

    Did you get a jumbo loan?. What rates are you getting for that?. Also is it better to put down as much as possible ?. What sources are you using for loans, online or in person recommendations only?.

    -Regards,
    Roger

  14. To me, the buyer’s agent was just a driver to me. She took us to different houses and opened each door for us, period.

  15. SavingEverything says:

    Yea, we want to know the details about your loan and rates and current credit score. Especially since as of January 1 2008, your net worth states that you still have $24,000 liabilities from credit card debt. Is it correct to assume that your debt:total credit lines is below 33%?

  16. When I bought my townhome in Northern VA, I used a company called Homezill which is run by a team of Remax agents. They gave me 2/3rds of the commission for doing the research on my own. The site is http://www.homezill.com. I found my home on their mls search and the agent I was working with drove me around and was very knowledgeable about the area.

  17. Jonathan, this is slightly off topic, but since you seem very knowledgeable on the financial stuff, it might be a good idea to start discussing the upcoming tax rebate (economic stimulus) plan. I would like to know the detail. How to get the rebate? What is the restriction? Is there a tax loophole? Thanks.

  18. I am so sick and tired of hearing real estate people saying “the seller pays the commission”. That’s just a illogical white lie. The money where the commission came from is mostly from the bank where the buyer get the loan from. So obvious it’s the buyer paying the commission.

  19. Jonathan,

    What do you mean the seller could care less? The price of the house is what you and the seller agree to. You as the buyer should really not be concerned with the commission being paid on the final purchase price because you don’t pay it. As the buy you’re paying for a house and the seller has to pay whatever commission rate he/she agreed to when listing the house.

    The way I see it, the purpose of the buyer’s agent is to help you find a house based on their knowledge of homes in a particular area and submit the official offer on your behalf. In your case you’ve already done that job so I really don’t see the point of you now bringing in a buyer’s agent except to make money back on the purchase which (in my opinion) is kind of unethical but if it’s legal who cares right.

    To sum up my point, why are you going with a buyer’s agent this late in the process? You’ve done all the work of a buyer’s agent to this point and all they would end up doing is sitting in on the closing (which they don’t even have to do) and collect a check and hand you a cut. Almost sounds like it should be illegal….but now that I think about it, my buyer’s agent did give me a $100 bill as a house warming gift which came in a nice card.

  20. I should read before I post. I see your agent did tour you around. I think the fact that this blog came after the one where you said you selected a house, I assumed you were saying you were looking for a buyer’s agent after the fact.

    But I still stand by the fact that it seems kind of odd to request a rebate from an agent when you aren’t the one that pays them. They get paid BECAUSE of you, but you pay the seller and the seller has to turn around and pay the agents. I mean it really boils down to this:

    You ask someone to drive you around and research homes that you may be interested in at no cost to you. They willingly do this knowing that they only get paid if you actually purchase a house in which the SELLER is willing to pay a commission to sell the house. Once they find you a home, their job is done and it still costs you nothing for them to provide that service to you because again, you’re paying the SELLER of the house, not the commission to the agents.

    Getting back upwards of 7.5K on the purchase of a house is nice, don’t get me wrong, good for you. It just seems wrong to me personally to ask someone to give me half of their revenue for providing a free service to me that could have potentially netting them nothing.

  21. Never mix friends and family with business…they really don’t mix because everyone always wants a deal, a discount, or the free handout.

  22. Jonathan,

    Congrats on your house purchase! And thanks for sharing your experience.

  23. Lion’s Share Realty is a Southern California buyer’s discount brokerage where we rebate today’s home buyer everything above 1 percent of the selling office commission. We feel strongly that old traditional pricing models with intelligent and very informed home buyers in our real estate industry are passé. Also, the NAR has taken the “you get what you pay for” position on the matter, which includes, lack of experience and less service. However, I find the pricing model and competent professional Realtor service still need to go hand and hand.

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