Finding the Right Buyer's Agent: The Top Four Questions to Ask
Over the years, I have seen real estate agents come and go. Indeed, the real estate industry is notorious for its high turnover rate. Therefore, when you're looking for an agent to help you buy your beachfront property, it's important to to find one who really knows what they're doing, rather than one whose name you simply got from a notepad with his picture on it. In this section, I'll guide you through the process of selecting the right agent to take care of your beachfront property search.
It continually amazes me how buyers will often spend more time selecting an interior decorator than the agent who will handle one of the biggest investments of their lives. Regardless of whether it's a two-bedroom condominium on Las Tunas beach or a $20 million home on Carbon Beach, too many buyers fail to commit the time to find an agent who will represent them.
At this point, you need to know the difference between an agent who has a solid reputation in the community and one who is well known because of their marketing skills. A good self-promoter knows how to create name recognition for themselves. They may have slick marketing materials, such as print ads and a Web Site, and they may even be well known throughout the city. This doesn't necessarily mean that they're an experienced agent. In addition, you must get along well with your agent. But this is just the beginning. You must keep in mind that just because you have good rapport with an agent this does not mean that they will act aggressively when you need a tough negotiator.
In addition, many buyers continue to work with an agent because they have been doing so for years. Certainly, if your agent has been satisfactory over many years, they are probably good at what they do. But remember to always keep your options open.
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Here are four questions you should ask when selecting an agent to represent you in your purchase:
1. What kinds of listings has the agent helped their clients purchase?
This question has to do with an agent's negotiation skills. Their ability to quickly respond to events as they come up--and in real estate, circumstances can change within minutes--is what will get you the home you want. Throughout the transaction, your agent will be negotiating on your behalf about not only price but also contingencies and the escrow period. Therefore, you want to make sure that regardless of how easy or difficult your home purchase is, your agent will be able to handle situations that arise. Here is where their years of experience become particularly important.
2. Does the agent specialize in the type of property that you're looking for?
If you're interested in buying a parcel of land, you want to work with someone who specializes in buying and selling land. For example, an agent who is an expert at buying land will know about the permit process, the stages of land approval, the various geological tests, the percolation tests for septic systems, and more. If you're looking to buy in Bel Air, you want an agent who specializes in that area. The same goes for beachfront property.
Imagine that you're considering purchasing a home that lists for $1 million. You decide to work with an agent whom you've known for years. They are highly experienced and have bought and sold many homes for you. Unfortunately, they have a limited knowledge of Malibu's beachfront. Despite this, you are confident that because of their professional experience, they can easily handle this purchase.
Based on their non-Malibu comparables, they suggest that you offer $975,000 or $25,000 off the list price. You think that saving $25,000 off the list price. You think that saving $25,000 is a sound idea, and you authorize them to move ahead. Afterwards, another buyer submits an offer as well. The deal now has multiple offers (or multiples), and the competition begins.
Or instead, you decide to work with an agent who specializes in Malibu beachfront property. The agent finds you the same $1 million listing. You see the home and you want to buy it. The agent does their research and tells you that the price is a steal--based on their comparables, ones that only they have, the last home in the area sold for $1.2 million. The seller's $1 million listing price indicates that the owner wants to either sell quickly, or they simply don't have access to comparables that your agent does. Your agent suggests that you offer full price. At first, you are hesitant, but then your agent shows you the comparables. In addition, they warn you that anything below $1 million may take the sale into multiples. You agree to offer at full price. The seller accepts your offer; you save $200,000 and avoid multiples.
An experienced agent will be able to distinguish between a listing price and the quantifiable value of the home. In the example described above, the $1 million house was undervalued. The buyer's agent who specialized in Malibu's beachfront had access to comparables that indicated that the house could have sold for $1.2 million. Another way to state this is that the agent knew the difference between the subjective and objective prices and negotiated accordingly.
A subjective price is the amount for which the owner has agreed to sell the property. For example, the agent will tell her client, "Your home would sell for $5 million based on comparables." The seller may agree, but like many investors, the owner wants to see if he can sell it for more. Therefore, the price that he eventually lists may not be an accurate amount tat the home is really worth. On the other hand, the quantifiable value, or objective price of the home, considers comparables, location, square footage, layout, and age in deciding how much the home is worth.
In other instances, buyers will often meet with a seller's agent and realize that the other agent knows more about than the person they are working with. [...]
3. How extensive are their comparables?
Along Malibu's beachfront, comparables are an experienced agent's best-kept secret. If your agent does not specialize in Malibu's coastal property, you may be missing out on critical information. After all, you want to know that the list price accurately represents the market value of the house, and comparables are the best way to determine this.
Through comparables, your agent will know whether the price of a home truly reflects the amount for which similar homes in the area have sold. An agent who has extensive comparables can tell you whether the sellers are offering the listing at a reasonasble price. For example, many sellers will test the market by offering a home way above the comparables. Your agent will only know this if they have access to all the comparables, including ones that are not made available to the public. This is critical information when you are drafting an offer.
4. Has the agent been involved in any lawsuits?
Make sure your agent and their broker have not been involved in legal battles for matters that could put your purchase at risk. Ask the agent. If you aren't satisfied with their answer, ask others in the real estate profession. In Malibu, information about lawsuits spreads quickly.
