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If your favorite loved one needed brain surgery, how would you select the surgeon? What characteristics would be important?
Income property brokerage is not brain surgery. Brokers* only help people make smart choices about money, not life and death choices. Still, the decisions about service providers are important.
Recently twenty five of the best brokers in the county were asked, if you had to select the best agent in a market 3,000 miles away, what would you look for? Read, then save this article. You’ll learn how the best would locate and recognize a great broker. No agent is perfect, but you do not need perfection. You should aim to receive excellent service.
This article shows six of the most important criteria in selecting a great agent. It also suggests four other notions which are often mentioned in listing presentations but are actually not important.
The key qualities of the best professional include:
1. proven ability to deliver the desired results,
2. a broker who tells you the truth, regardless of how it will effect the commission or the transaction,
3. someone you can trust,
4. a history of negotiating effectively,
5. ability to deliver a team, not a lone range, and
6. technical excellence.
First and most important, you need someone who has history of successful performance in the specialty you need. Every one of the top brokers listed a variation of this idea. You would not go to a knee surgeon if you had a brain tumor. Residential brokers and leasing brokers have different skills and networks than income property brokers.
Ask the broker how many transactions he has closed. Anyone can have a marketing plan. Your questions should focus on the results. What percentage of his listings close? How does that compare with the local average? Where is the documentation?
Second, your broker should tell you the truth. We all desperately want our hopes to be true. Frequently our fantasies are wrong. A great agent will gently, but effectively, provide enough facts for you to make an intelligent choice. Most listing agents take listings that are so overpriced that they never receive even one offer. A great broker will tell you the truth, as he understands it, before the listing. An incompetent agent will accept a ridiculous listing, and hope that the client faces reality before the listing expires. Learn what percentage of his listings close. If he fails most of the time, do you want him working for you?
Third, can you trust the person? If someone gives you great advice but there is no trust and rapport then you may not act on the advice. If you cannot trust the agent, then find someone you can trust. Easier said that done, right?
Ask for references. Other than the agent, who else says he is good? Take the time to call them. Most of the best agents accented the reputation for integrity. You need more than a firm handshake, a sincere grin, and a fine brochure. If the market place does not trust your agent, they won’t believe what you say through him. You do not want to gamble your family fortune on a con artist.
Fourth, you need someone who has a proven history of closing complicated transactions. Perhaps you will be lucky and your transaction will be easy. Maybe the perfect buyer will appear with all cash and will fall in love with your property. More likely there will be some problem with finding the buyer who understands the value or the potential, or an unexpected surprise will appear at the inspection, or books and records which show lower income than is projected for the future or an appraisal that is too low, or a buyer who is hesitant to commit or an agent representing the buyer who does not do his job. When the problems arise, an experienced agent can overcome the obstacles. In the Olympics, it is the difficult maneuvers which separate the good from the great.
A pastor told me that bridges are not built over smooth level meadows. Bridges are built over roaring rivers and wide canyons. When your deal looks like it may fall off the cliff, you need an agent who can build the bridge. The ideal broker deals well with conflict, and has a proven history of successful negotiation. Face it; the buyer wants the lowest price, and least down payment without committing anything. The seller wants the highest price with full commitment from the buyer immediately. Brokers get paid to understand the issues, provide a framework for workable solutions and ensure that the transaction closes.
Learn the biggest problem that the agent solved and how he solved it. You need someone who won’t settle for failure with a good excuse and instead delivers a good result. Talk to escrow agents, lenders, title agents CPAs or attorneys who have seen the broker work. Obtain the names of three different people who have seen the agent deliver great results. If he agent cannot produce three unbiased, knowledgeable professionals who can rave about him, can you afford to gamble your family fortune with him?
Fifth, team work pays. In the movies there is the fantasy that the single hero can save the day. In real life great things are done by people working together. The brain surgeon does not do all the jobs. There are nurses, an anesthesiologist, and other surgical assistants. In our complicated world people recognize teams deliver better results than just one person. Complexity and intensity make it harder for a single agent to routinely deliver superior results. Who works on your deal when the single agent takes vacation or gets sick?
Sixth, your broker should be an expert. In order to judge technical expertise, learn your potential agent’s background. How long has he been in the field? Does he have a business or law degree? Does he have an advanced degree which relates to your need? Has he taught classes related to your need? Does the agent have any designations, awards or recognitions for superior performance? Is he an expert witness?
True professionals invest in their career and can document progressive levels of achievement, sustained superior performance. If the candidate has been in the field for more than five years, but cannot show special recognition, designations or achievements, then seriously consider whether that is the best person to be your only representative to the world.
Four Illusions or Distractions, Ideas which do NOT Matter
The first part of the article identified the six important considerations in selecting an agent to represent you. The following section discusses four common ideas which are nonsense. I confess I have made some of these claims.
Items which are immaterial to the seller include: size of the firm, some other association with the agent which he thinks should cause you to give him your business, youthful enthusiasm is more important than experience, and reduced fees.
First, consider size of the firm. Generally the quality of results are more influenced by the agent selected than the number of people in the company.
“Our firm is the biggest. We have: closed the highest dollar amount/ most transactions/ have the most agents/ most locations.” Even if that is true, it may not matter much. The brokerage which does the most transactions in the county does not have twenty percent of the total market. Most of the agents in most of the firms either sell houses or lease business space. Those functions are important, but have little to do with the sale of income property.
“We are tied in with a national / regional network.” That is grand if your property appeals to a national range of buyers. However, in San Diego County 90% of the apartment parcels are 16 units or less. Few buyers will come from Boston or Dallas to buy eight units. The biggest network in the country is not a brokerage firm, but individuals recognized for their excellence by their professional designation.
Author: Terry Moore, CCIM