Tips for Selecting a Competent Real Estate Agent
Alejandro Szita is a licensed California real estate broker with a long career as a loan officer and real estate agent prior to opening his own mortgage brokerage in 2018
Today I would like to take a moment to talk about selecting a good real estate agent.
It has been my experience throughout the years that people find it difficult to know whom they can trust with the sale or purchase of a home (or other real estate property), and how to determine if a real estate professional has the necessary skills to do a good job.
The history of real estate transactions and representation
Real estate transactions have been happening throughout history. Recording these transactions is another matter. The oldest known recorded real estate transaction dates from about 3,000 BC and comes from the Sumerian civilization in current-day Iraq. In Western Europe, the earliest recorded transaction dates from 1239. In the US, the earliest recorded real estate transactions date from the early 1600s in the colony of Jamestown, Virginia.
Before the advent of real estate agents, real estate transactions in the US were conducted by lawyers. Lawyers had to draft the legal agreements and help negotiate the price of the property, among other duties. Some US states and many foreign countries still require a lawyer to be part of the real estate transaction process.
Using a lawyer for every detail of a transaction was an expensive affair. In many US states, over the course of time different parts of the lawyer’s functions were taken over by title companies (for researching the validity of the seller’s claim to ownership of the property prior to the sale), escrow companies (for holding legal documents and funds in trust for both parties while the transaction closes), and real estate agents/brokers (for negotiating on behalf of their client, preparing and handling purchase agreements and other representation of the client as part of the transaction).
The real estate broker or agent as a buyer or seller’s legal representative
Real estate licensing for agents and brokers began in the early 20th century, with many sources quoting California as the first state to enact a real estate licensing law in 1917 and establishing the California Department of Real Estate (CA DRE).
As part of obtaining a real estate license in California today, prospective real estate agents have to study about 1500 pages of written material, which includes over 500 pages of California real estate law and regulations. These regulations outline the agent’s duties toward their clients, including acting in the client’s best interest (within the scope of law and the client’s express wishes), maintaining confidentiality and disclosing information that becomes known to them by investigation or observation, and assisting the client in performing due diligence (finding out information about the property) prior to a purchase.
In a sense, real estate brokers and their agents have taken over the performance of these duties from lawyers, and just like lawyers, they can be sued if they fail to properly performing their duties, leading the client to suffer damage or loss. Similar to lawyers, real estate brokers and their agents usually carry Errors & Omissions insurance, which helps them cover losses in case they make errors and are successfully sued by clients. Even if they are not covered by insurance, brokers and agents are still liable for these losses when successfully sued by clients.
Hiring a real estate agent or broker therefore comes with a built-in understanding that certain duties will be adequately performed for you, and if they are not adequately performed you have the option to legal recourse.
Relationship between agent and broker
Unlike what many people think, a real estate agent is not called an “agent” because he is YOUR agent. He is actually an agent of the broker. Technically, it is the broker who has the above responsibilities to you, and with whom you engage in a representation relationship. The agent acts on behalf of the broker in performing these duties for the client. The broker is supposed to supervise the appropriate and competent discharge of duties by his agents. Brokers are essentially experienced agents who have obtained a special license from the state, allowing them to open their own brokerage and have agents working under them. They bear the ultimate responsibility for the conduct of agents in their employ.
How to select a good real estate agent
A good real estate agent needs to have a number of qualities. I recommend looking for someone who:
understands the legal aspects of the type of transaction you are looking to do
has the skills to properly price the property you are looking to buy (or sell)
has good communication skills, including answering their phone right away
has good negotiating skills
has good control of people
stays calm in stressful situations (every transaction will get stressful at some point or another)
puts your interest and their long-term relationship with you ahead of their own interest (including their commission)
Real estate agents specialize in geographical areas and also in types of property. As a mortgage broker who used to be a real estate agent, I deal with real estate agents on mortgage transactions every day and the really good ones definitely jump out at me. I keep my own personal little record of excellent agents in each area we do business.
If you need recommendations, feel free to ask.
