Elsewhere on the site, I have shared what I discovered about the differences between a real estate agent and a real estate broker. There are important questions to ask both types of professional before you work with them, so I decided to pull together two lists. One will be questions to ask your real estate agent, but first, here are the questions to ask your real estate broker.
What questions should you ask your real estate broker? Ask your real estate broker some or all of the questions below. This will establish their level of experience, precisely what you can and can’t expect from the broker and how they treat their real estate agents. This last point is essential because happy, well-compensated staff are likely to do a better job for you.
Don’t be afraid to ask your potential real estate broker plenty of probing questions. This is, after all, a significant financial investment you are about to make. Asking for answers is not rude. It is safeguarding your time and money. Here I’ll give you the questions to ask and tell you why it is important to ask them. Don’t skip this process. You’ll thank me in the long run.
Who Are These Questions For?
Not all of these questions will be relevant for all real estate brokers. If you are thinking of working with a “one-man-show” brokerage, you can skip all of these questions entirely and instead ask those in the article about what to ask your real estate agent. The questions in this post are about establishing the background of the brokerage, the brokers, and the staff and are more applicable to larger offices where the real estate agents do most of the customer interaction while the broker(s) deal mostly with the business and management side of things.
29 Questions To Ask Your Real Estate Broker
The questions to ask your real estate broker can be broken down into three main areas. First is asking about the brokerage itself and a few questions about the history of the broker to whom you are speaking. Second, are the questions about what the brokerage will do for you. Third, are the questions about how the brokerage works with its agents.
Before we start, I want to share with you the Real Estate Broker Questionnaire. Its purpose is to help you determine which broker is right for you, as well as help you weed out the good brokers from the bad brokers.
Now, let’s look at how to establish the experience and management practices of the real estate broker and the brokerage itself.
How Long Has This Brokerage Been In Operation?
Like many of the questions in this article, the answer to this should not be viewed in isolation. A brokerage that has been around for thirty years is not necessarily better than a brokerage that has only been open for three months.
The new brokerage could be staffed by inexperienced newbies or dynamic, seasoned professionals who will go all out to help you in any way they can. Meanwhile, the older brokerage could be a bastion of reliability and integrity, or it could be plodding along, doing nothing much at all and just hanging on by the skin of its teeth.
How Long Have You Been A Broker?
In the same way, as the previous question was not a stand-alone, neither is this one. It will, however, start to give you a little bit of a flavor of the kind of business you are dealing with. That broker who has been at it since forever may be counting down the days to retirement or could be out of the loop about modern legislation, standards, and practices. Meanwhile, that fresh-faced broker in their first business suit might not have the chops to stand they ground for you when negotiations get dicey.
Why Did You Become A Broker?
The fundamental difference between real estate agents and real estate brokers is that brokers are more senior, have undertaken a more in-depth version of real estate education, and can supervise real estate agents. Real estate agents, meanwhile, must work under the official supervision of a broker, even if that agent works independently and the monitoring is not at all hands on.
Understanding why the person you are speaking with took the extra step up to become a broker will give you insight into their general motivation. Did they want to be their own boss and build a prosperous company of their own? Or maybe they didn’t like having to report back to someone else?
A broker who wanted to build their own successful brokerage may be more likely to ensure you have a positive experience with them. On the other hand, someone who just wanted to be independent may not.
Is The Brokerage An Independent Operation Or Is It A Franchise?
The answer to this one tells you how much autonomy with which the broker you are speaking with can act.
If there is an issue will you be passed further up a chain or does the buck stop with this broker? How much flexibility does the broker have in operational matters? Can you negotiate specific terms or are all corporate contracts ones which cannot be altered?
Does The Brokerage Own Affiliated Businesses?
There is a piece of legislation which governs how and when brokers and agents can work with and interact with other companies and professionals. The Real Estate Settlement Procedures Act, or RESPA as it has become known, states that all mortgage brokers and lenders must tell borrowers about the true nature and cost of their real estate settlement process.
This includes things such as a brokerage renting a desk to a loan officer for the purpose of pre-approving or prequalifying prospective buyers, or mortgage lenders sponsoring the refreshments at an open house.
When asking about any affiliated businesses you also need to establish the cost to you if you choose to use these businesses and whether or not an element of the property transaction is dependant on your using affiliated firms.
Now we have established some background about the brokerage and the broker to whom you are speaking we can get into some nitty-gritty about the property transaction itself.
What Are the Top Three Things That Separate You From Your Competition?
Whether or not the answers to this question are things that cast the brokerage in a positive light is somewhat subjective. What sounds impressive to me will not always be the same thing that knocks your socks off. For this reason, there is no “right” answer.
Instead, look at the real estate brokers answers through a filter of “What does that mean for me?” In fact, you can even ask this as a follow-up question. Once your real estate broker has reeled off that list of shiny, sparkly things that make them better than the rest, follow up with “How does that make a positive impact on my experience with your brokerage?” If they can’t answer, or those standout items they listed don’t really do much for you, then keep probing for something that will make a difference to you.
How Much Do You Charge?
A simple enough question which is usually answered with a simple answer.
Do not take the quoted cost at face value. Follow up by asking what exactly is included in this cost? What will you be getting for your money and are there any additional costs that may crop up later in the process for which you would be responsible? Will the broker pay for staging, take their own photographs, or subsidize landscaping?
Ultimately you want to walk away from the meeting knowing that the services of this brokerage firm will cost you X amount (usually a percentage of the final sale price) and that for this price we will be receiving X, Y, and Z. This information will enable you to make more accurate comparisons between brokerages.
Is This Negotiable?
Many people are too afraid of causing offense or are either embarrassed at the thought of trying to haggle. But I’ll let you in on a secret.
In real estate, the rate is always negotiable.
Even the largest brokerages, who tend to rely on their size to stick with a 6% commission rate, will negotiate. Maybe you will not get a reduction in commission, but they may offer to pay closing costs, home inspection or appraisal fees or even your moving expenses. These incentives can sometimes be worth more than a reduction in the commission rate so consider them carefully. Although also be aware of any catches such as “we only work with this removal firm.”
What kind of guarantees do you give?
View anyone who gives a guarantee that they will sell your home in X number of days or can guarantee a specific price with suspicion. Unless it is an exceptionally hot, seller’s market and your house price has been pitched low, nobody can ensure a quick, super profitable sale. Also be wary of guarantees such as “We’ll work hard for you,” or “Our Brokerage will bend over backward to sell your house.” These kind of comments are pretty meaningless.
If you are offered a meaningful guarantee of some kind ask how it will be measured and what type of resource you will have if the brokerage fails to meet their promises.
What Is Your Average Sale-Price-To-List-Price Ratio?
This ratio is the amount a property finally sold for against the last list price. It is then expressed as a percentage. For example:
Final Sale Price = $289K Last List Price = $300K Sale-to-List Ratio = 96.3%
This was calculated by: $289,000 / $300,000 = 0.963 Then 0.963 x 100 = 96.3%.
As a seller, your ideal sale-to-list ratio would be somewhere in the region of 102% to 105%. This would indicate that the brokerage was listing the properties on their books at a realistic level. Then the properties were finally sold for a touch over the asking price. Any higher than this and it could be that the broker is consistently pitching houses at less than you can expect to sell them for.
How Will You Help Me Find Other Professionals?
While you don’t want to find yourself in a situation where you feel coerced into using affiliated professionals during your property transaction, you also want to be sure your broker has a positive working relationship with local professionals.
This goes for both those you can choose, such as a home inspector and those you cannot, such as an appraiser. This is because, although you cannot pick an appraiser, you can ask questions about the one that is due to visit your home and ensure they are the best person for the job. In this case, you want a broker who is going to go the extra mile and knows the questions you should ask an appraiser.
A Story To Illustrate The Point
A friend of mine was selling a beautiful waterfront property which they had inherited from a distant uncle. The house had been in the family for many years, and so none of them had a good fix on how much it should be marketed for, The broker gave what they considered a reasonable figure and the appraiser came in with a price almost 25% less.
The sale fell through when the buyer’s lender wouldn’t approve their loan. Several weeks later a second buyer vetoed the bank’s appraiser because they felt the appraiser was not sufficiently knowledgeable in the realm of specialist properties. A different, appraiser came in with a value over the asking price, and the sale went forward.
If my friend’s broker had checked out the qualifications of the appraiser, the first sale would have gone through, causing everyone a lot less stress.
Another Story To Illustrate The Point
You want to be sure that professionals are recommended for the right reasons. I know of one home inspector who moved his home and business across the country because where he lived, most of the property transactions went through a particular broker. This broker refused to work with the inspector because he would consistently and honestly report problems and potential problems he encountered during a home inspection. This scuppered some sales and the inspector was “blackballed.”
The broker recommended a different home inspector, not because the brokerage was receiving kickbacks or any direct benefit, but because they didn’t want buyers to see problems that scuppered the sale.
Now To Agents
In a smaller brokerage, the real estate broker may also act as your agent. These questions are more for a situation where you sign-up with a brokerage and then work with one of the staff real estate agents.
How Many Agents Work Here?
This will give you an idea of how easy, or otherwise, it is for the broker to manage the agents. Follow up questions can help discover if staff are happy there and tend to stay or if there is a high turnover of unhappy agents. You can ask:
- How long has the average agent been working here?
- What is your staff turn-over rate like?
- How many agents have less than two years of experience?
- Do many agents have more than ten years of experience?
How Do You Choose The New Agents Who Come And Work For You?
This information will tell you how stringent the vetting and employment practices of the brokerage are. Do they only interview newly qualified agents who apply to them on the off-chance? Do they advertise openings for experienced agents? Or do they “headhunt” agents with a proven track record?
What Forms Of Training And Continuing Education Do You Provide For Your Agents?
Ideally, you should hear about a combination of formal and informal training for all agents and a process to ensure that everyone at the brokerage maintains a particular standard. If the brokerage expects their agents to source their own training and do not assess the validity of that training, they cannot care a great deal about the standards of their agents.
Consequently, you might want to think twice about a broker who doesn’t want to have well trained, real estate agents who are up to date with all of the latest laws and trends working for them.
What Professional Designations Do Your Real Estate Agents Hold?
Again, you want to hear that it is important to the real estate broker that the agents under their professional umbrella are as well qualified as possible.
What Is The Legal Status Of Agents In The Brokerage?
Are the real estate agents on the team employees, contractors, or independent LLC’s? This is important to know because if something goes wrong before, during, or after your transaction, you need to know who, ultimately will be responsible. Not only that you should know who holds the insurance policies that may come into play if something goes badly wrong and legal action is taken by one of the parties.
How Do You Match Agents To Clients?
If you will be working with one of the real estate agents on the team, you should ask how the agent for you will be chosen. Will it just be the next person whose turn it is? Are senior or junior agents automatically allocated properties in certain price ranges? Does each real estate agent have a particular geographical area? Does the broker throw a pencil into the open plan office and whoever it hits gets the listing?
You need to know that there is some benefit to you in being paired with a particular agent.
Who Will Be My Contact?
There is little worse than interviewing professionals, signing up with them and then being handed off to someone else, who in turn hands you off to someone else, etc. Some real estate agents will be your direct line of contact, in other brokerages, the administrative staff will tale calls, check emails and pass messages. Ensure you have established who does what before you sign on the dotted line.
What Happens If I Am Unhappy With My Agent?
Sometimes the attraction of going with a large real estate broker os that if you don’t like your agent, or you are unhappy with their work, you can swap without all of the contractual issues you would have signing directly with an agent.
However. This is not always that straightforward, and it is important to establish what will happen should your relationship with your real estate agent break down.
About The Author
Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.
This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.