The Texas Real Estate License Act requires that you be advised that there are agency relationships that govern how a real estate salesperson may deal with you when purchasing, selling or leasing real property. Before you enter into a substantive discussion with Cherokee Real Estate Company, Inc., or any other brokerage, be sure you have an agreement with the broker as to what your relationship with him will be and even how it may change from time to time. You should not disclose any personal information or disposition to a broker until you have established your relationship with him. The broker will be happy to discuss and explain agency relationships with you.

How to Choose a Real Estate Agent

Whenever you become involved in a transaction whose subject matter you are not familiar with, it is of the utmost importance that you be dealing with individuals who are skilled in the subject matter and who realize and appreciate their obligation to you.  All the homes I ever bought were purchased before I got into the real estate business.  Now that I know real estate, I know that there are things I could have and should have done differently.

If you are listing a property for sale one of the most important aspects is getting an agent to give you realistic advice when it comes to pricing your property......even if he suspects you may not like his advice.  If your property is overpriced it may languish on the market.  In 1980, we bought a house in San Francisco, for $155,000.00.  After having lived there for two years it was determined that we were too far from family.  We decided to list the house for sale.  I came up with a price by adding the commission, capital improvements and all my closing costs on top of the $155,000.00, so that we could walk away with what we had invested in the property.  I came up with a price of $169,900.00.  The agent whom I engaged said, “Mr. McEwen, you’ve done an excellent job of pricing your home.”  Well, the agent was not being honest with me, the reason being that the real estate market, nationwide, had cratered......and he wanted the listing.  I did list the property with the agent, but nothing came of it, so I did not renew the listing.  I then invited another agent to come to look at the house.  When I asked her what she thought I should list it for, she turned around and started to walk away, perhaps thinking that I was going to attack her when she gave me the price.  Well, she did say in the $140s, and I got angry inside, so I did not list it w/ her.  In retrospect she was right and I was wrong.  Eventually, I had a real estate broker to find tenants for the property.  A few months into the lease, the tenant contacted me, wanting to buy the home.  Guess what we sold it for......$137,000.00.  Well, that was the reality of the market.  Interestingly the home sold two years ago for $1,250,000.00.  That’s San Francisco for you.

Let’s change the subject and talk about buying a home.  If you are looking for a home in a market that you are not familiar with.......and that could be the very market you live in, you need to engage an agent who is willing to represent your best interests in terms of what to offer and any other strategies that should be used during your search.  Even though Texas law allows an agent who has a listing you want to see to work with you, you are better off engaging an agent who works with another brokerage, because that agent only needs to look out for your interest and not the seller’s; he/she has a fiduciary obligation to only you.  If the agent representing you is doing his/her job, he will do a proper market research and suggest an appropriate price to offer.  An appropriate price is essentially based on market circumstances.  In a hot market, homes will be more likely to sell for full price or even more.  If a property has multiple prospects it will often sell for more than list price.  If you tell an agent what you would like to offer and the agent thinks your offer is not high enough, he/she should tell you.  If he/she thinks your offering too much he/she should also tell you.  Example: In 1998, a buyer client had an interest in a shuttered retail store, in Jacksonville.  It had been on the market for a few years and was priced at $250,000.00 at the time my client was looking at it.  He told me he was going to offer $210,000.00.  My reaction: “Greg, it’s been on the market for a long time.  Let’s offer $190,000.00.”  Guess what he got it for. $210,000.00.  He probably would not have gotten it for that price if he’d offered the $210,000.00.  My advice cost me $600.00 in commission earnings, but my obligation was to him and not to me.

It is also important that your buyer’s agent advise you regarding the various kinds of due diligence that are necessary to assist in making a purchase decision.  If you are obtaining financing the agent should review with you the various kinds of financing options available to you and what the pros and cons of different lenders are.  For example, local lenders typically have lower closing costs than out- of-area lenders and mortgage brokers; however out-of-area lenders will typically have lower interest rates.  A competent agent will be able to review the pros and cons with you in detail.  Another aspect of the purchase process is making sure that you are intimately familiar with the condition of the property you want to buy.  Nowadays purchasers typically will have a home inspected in order to determine if there are significant repair issues that could significantly add to the cost of acquiring the home.  Many years ago, an agent had to practically beat me over the head to get me to have the furnace in a home we were buying inspected.  Good for him!  I had it inspected.  It was February and it had a cracked heat exchanger and was emitting carbon monoxide.  Could someone have died?  Of course!

The moral of the story is this: Make sure that you engage an agent who is straightforward with you when it comes to pricing a home you are selling or buying and who is not just trying to make a buck.  He or she should be able to show you recent sales that support the price that is being recommended.  Furthermore, make sure that the agent represents your best interests at all times and that he or she never devolves into just a go-between between you and a prospective purchaser or seller.  An agent’s job is to always do the best for you and not for him or herself.  I have just scratched the surface on this subject.  More in the future.

Mike McEwen is a real estate broker with 28 years in the business.