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Hiring a professional real estate agent when buying or selling a home can help you make smart decisions and avoid costly mistakes.
But not just any agent will fit the bill. Here's how to choose the right real estate agent for you.
Real estate agent basics
Before you start looking, it's helpful to know what to expect from an agent and some of the terminology you'll encounter.
What does a real estate agent do?
Real estate agents help people buy and sell homes. Agents educate their clients about current market conditions, guide them through each step of the process and make referrals to other professionals, such as home inspectors and real estate attorneys. Their particular titles depend on who they're representing in a real estate transaction.
In some cases, an agent can represent both sides in a single transaction, but it's best to have someone who's solely in your corner.
Realtor vs. real estate agent
Not every real estate agent is a Realtor. Realtors are licensed agents who are members of the National Association of Realtors. Members pledge to abide by the association's standards and code of ethics.
All real estate agents must be licensed in the states where they work and abide by national and state laws. Licensure requires agents to complete a certain amount of coursework and pass an exam. Check with your state's real estate commission website to find out if a particular agent is licensed.
» MORE: Tips for first-time home buyers
Difference between a real estate agent and a broker
A real estate broker has gone a step beyond the agent level with additional training to get a real estate broker license. Like agents, brokers must complete state-required coursework and pass an exam to get licensed. A broker can oversee other real estate agents, work under a managing broker or operate independently.
How to find and interview real estate agents
Ask friends and colleagues for referrals to find several prospective agents. Look up the agents' websites and online profiles, read about their specialties and experience, and check out customer reviews.
Choose at least three agents to interview and dig into specifics about how they would work with you.
What buyers and sellers should ask real estate agents
Here are the key things to find out, whether you're buying or selling a home.
Will the agent represent my interests?
You might assume any real estate agent you choose will represent only your interests. But in some cases, real estate agents aren't legally required to represent solely the buyer or the seller in a transaction. For example, a "dual agent" represents both the buyer and the seller in the same deal, and a "transactional agent" works with both sides, but has no fiduciary responsibility to either.
Understanding the nature of the agent's role when working with you is critical. Ask prospective agents if they will represent only your interests through the entire process, and request a written form that discloses the relationship, advises the Consumer Federation of America.
What experience and training does the agent have?
How long has the agent been working with clients, and what training or recognition does the agent have? Look for an agent with a good track record of serving clients like you.
Will the agent or assistants work with me?
Agents sometimes have assistants working for them on a team. Will you work more with the agent or with the assistants? An efficient team can serve your needs well, but make sure you'll have enough direct access to the agent.
How much will the agent be paid?
Usually, the seller pays the real estate commission, which the listing agent splits with the buyer's agent. A typical real estate commission is 5% to 6% of the sales price.
As the seller, you may be able to negotiate a lower rate, particularly for a high-priced property, according to the Consumer Federation of America. As the buyer, you can ask for a rebate of a portion of the buyer agent's commission.
Agents may not be willing to budge on the commission, but it's worth asking.
Were recent clients satisfied?
Request references and talk to clients who worked with the agent in the last year. Were they satisfied with the agent's work? What went smoothly, and what didn't go well? How did the agent deal with challenges? Conversations with recent clients will give clues as to whether the agent is a good fit for you.
Finding a real estate agent: Tips for buyers
Here are some things to think about when choosing an agent to help you buy a home.
What challenges will I face as a buyer in today's market? A good agent will set realistic expectations by explaining the availability of listed homes and the level of competition you'll face with other buyers.
How will you help me find listed homes in my price range? Ask for examples of how the agent has recently helped other buyers similar to you. This will give a sense of how well the agent will serve your needs.
How will you help me make competitive offers and negotiate with sellers? Look for an agent who will help you stay grounded within your budget and goals.
» MORE: How to find a buyer's agent
Finding a real estate agent: Tips for sellers
Here are some things to think about when choosing an agent to help you sell a home.
What are the comparable listings in my area? An agent should provide a comparative market analysis, showing homes similar to yours that were sold in the last six months.
What do you think my home is worth and why? An agent who recommends the highest price isn't always the best choice. Choose an agent who backs up the recommendation with market knowledge.
What should I do to improve my home? You may need to fix things up to sell your home, depending on the local real estate market. Listen for solid reasoning about what your home needs and the return on investment for making those improvements.
How will you market my home? Agents will likely suggest putting your home on the Multiple Listing Service and real estate websites, such as Zillow. Get details about other promotional tools the agent will use, such as photos, video tours and advertising. The level of marketing required to sell a home depends on the market. Less marketing may be required when there are more buyers than homes for sale.
» MORE: How to find a listing agent
How to choose a real estate agent
Compare agents' experience and approaches, as well as their ability to establish rapport. Is this someone you'll feel comfortable working with? Choose a competent agent with a working style that clicks with yours.
» MORE FOR CANADIAN READERS: Realtors, real estate agents and brokers: What's the difference?