As mentioned in an earlier post (How To Choose a Broker, Part 1) you first need to talk to friends, check your mailbox for broker mailings and go to some open houses.
Let me add one more item to that list: be sure to check out websites.
Remember, to paraphrase the rental car ads, you're not just hiring a broker, you're hiring a company.
The website should be attractive and easy to navigate. And the company should have national and international affiliations so that your property is seen by national and international buyers.
Once you've done all that, you should have an idea of which three brokers (or more if you don't fall in love with any of these) you want to invite to look at your property, give you a price, and answer some questions.
Here are the questions:
What do you think it's worth? Beware the broker who takes a quick look around and says, "I can get you X million dollars for this."
Ask him for very specific reasons why he thinks it’s worth that.
Avoid anyone who gives you what we call "a blur" on the subject, changing the subject quickly to his or her immense experience and knowledge.
Don’t be led down the garden path by the broker who gives you the highest price. There are brokers who swear they can get a given over-market price, and then will ask you to drop it if the first open house doesn't produce an offer.
Accurate pricing is crucial (see Pricing 101: Why you have to get it right the first time. and Pricing 102: How to get it right the first time.).
Personally, I never throw out a price at my first meeting with a seller. After I've seen the property I do my homework and then come back with a price and a marketing plan. Which brings us to...
How are you going to market this property? The broker should provide a written plan explaining in detail every step he plans to take in marketing your property—advertising, open houses, mailings, everything.
Does it need staging? You need an honest answer here.
If the broker says it looks fabulous when you know it doesn't, be prepared for him to change his mind once an exclusive agreement is signed.
If it does need staging, who pays for what part of it? What about a floor plan? Photography? How much photography? Professional, or does the broker do it himself?
How well do you know the neighborhood? Although it may be helpful, it's not necessary for a broker to specialize in your neighborhood.
But it is necessary for him to learn everything he can about it.
Recently I had an exclusive on a beautiful Park Slope brownstone. New to the neighborhood, I went to every single open house in every Park Slope brownstone on the market. I made appointments to preview those that didn't have open houses. I made friends with the brokers.
I learned the market inside out.
I brought a fresh eye to the project, which resulted in getting a price higher than anybody thought was possible. Even after the house was sold, brokers were telling me the price was too high. But we got it.
Who else will I be dealing with? There are mega-brokers out there with hot and cold running partners, assistants, masseuses, you name it.
One person shows the property; somebody else schedules appointments; yet another person handles negotiation and someone altogether different deals with board packages.
The person you originally hired? You never see him again. He's off pitching other exclusives.
There must be benefits in this arrangement for someone, but I don't see how it's the seller. One advantage of the exclusive agreement is that you only deal with the person you hire, not a lot of others, and especially not a lot of inexperienced apprentices.
Make sure you get all the expertise you're paying for. And speaking of paying...
What's your commission? It's legal to ask for a reduction in the typical 6% commission. If your property is priced in the multi-millions (or you've worked with the broker a number of times), it’s not unreasonable to suggest 5%.
But remember, you get what you pay for. Can the broker afford to give you the same time and the same marketing at a lower commission?
Don't forget that the commission is going to be sliced at least four different ways--between the seller's firm and the buyer's firm, and then between the firms and their brokers.
It's important to make sure the outside brokers have a strong incentive to show your property.
And beware. The broker who is quick to reduce a commission just to get a listing is obviously not a good negotiator.
How many other exclusives do you have? This is a veiled way of asking how much time the broker will have to devote to yours. There are only so many hours in a week. If a broker has a dozen or more exclusives, how many of those hours are you going to get?
Once you've asked these questions, along with any others you happen to think of, there's one to ask yourself.
Which broker could you most tolerate being stuck in an elevator with?
Of course, you will probably never be in that particular situation with your broker. But being in the throes of a tough deal with someone can feel very much like being stuck in an elevator. It’s best to be stuck with someone you like.
Any questions? Call me at 917-991-9549, or e-mail email@example.com
NEXT: If you're buying.