What IS an agent worth?

It’s a good question. There are many levels of service and fee structures to choose from, so let’s consider the nuts and bolts of what you’re getting to help you decide what an agent is worth to you.

Basically, you’re paying for 3 things. Your agent’s time, services and expertise.

1. Your agent’s time.
Some agents work part-time, maintaining other jobs or going to school. Others are semi-retired. When you consider your agent’s time, it’s not just the time spent with you which is important. Continuing education, business development, and market research are key to staying on top of changes affecting real estate matters.
All things being equal, the less an agent charges, the more clients they will need to work with for the same income. Your share of the agent diminishes, impacting your level of service. Real estate revolves around time, and managing it effectively. The more clients an agent takes on, the more diluted individual service becomes. Unless an agent has systematized and created a team, they will not be able to provide adequate service when doing volume sales.Imagine selling a property through an agent with more listings than they can effectively manage. How does this impact you? Ineffective marketing? Poor communication? Misunderstandings and missing details? What could this COST you? In my experience, it will cost you time on market and a lower selling price, not to mention emotional cost.Now imagine you’re a buyer looking for a specific type of house in a certain neighbourhood. Your chosen agent is overworked, reactive, and perhaps has many other clients to call for the same home? Will you get the call when your dream property hits the hotsheets? When you discover the home you want, will your agent be available to help you? Will they have time to answer your questions and provide adequate guidance?Another aspect of time is hours worked, or hours of availability. Agents aren’t paid an hourly wage, we are rewarded for our effectiveness. We often work overtime, weekends and evenings. The motivation comes from many sources, but financial compensation is a large contributing factor. Taking away the carrot means lowered likelihood of an agent with their nose to the grindstone.

2. Your agent’s services
A well organized agent who has a business plan and a system of marketing properties and servicing buyers, will be more effective for his/her clients. This type of organization takes time and money. Also, what you are paying for, ultimately, is the effectiveness of the agent, measured by the successful end result of a sale for you. While some disorganized agents may charge more, provide services of limited effect, and be wasteful of time, other agents may charge less and, due to organization, be able to provide service at an outstanding level. Whether it comes out of your pocket in real estate fees, or through paying too much, or selling for too little due to lost time on market, or missed opportunities – the cumulative effect of poor service will cost you. Look carefully at how your agent manages their services, as it is ultimately your money they are spending. When comparing agents, compare by service. “Full Service” means little. Find out what “Full Service” really means by asking deeper questions.We are also, as some might say, gatekeepers of the MLS. MLS is a magical listing tool which allows buyers and sellers to promote and search for properties. What’s great about the MLS is that there are many rules Realtors follow to ensure that the information placed on it is accurate and current. It is a very complex system, and due to its reliability it can be used to help with pricing of comparable properties. There is a high cost in maintaining its integrity.

3. Your agent’s expertise
Street smarts, continuing education, real estate experience, life experience. An innate knowledge of the process. How much is this worth? When you hire an agent who knows their stuff, you save far more than their fee. It’s important to know when immediately offering “Full Price” for a property is actually a good deal, or when negotiating $50,000 off an asking price still results in paying too much. A good agent will see beyond obstacles and find ways of working towards your ultimate goal, keeping your needs first and foremost in the equation.  Your trust and relationship, ability to communicate effectively, is also a key factor in how you feel about the process.

So, what’s an agent worth?

What value would you put on your time and money if your job description included the following…?
  • Being on call, working long, odd hours with a high expectation of immediate response and service.
  • Bearing ALL costs of marketing, promoting and showing properties up front, possibly for months and for $1000’s of dollars, regardless of whether a sale ensues.
  • High fiduciary duty to clients who are making huge financial decisions and are often in a resulting highly stressed state, resulting in a constant risk of lawsuit.
  • Expectation of a wide degree of knowledge and skill set, ranging from construction, negotiation, counseling, networking, marketing, modern technology, local information, bylaws, law and contract law.
Agents will sometimes lower their fees, and proportionally lower their service.   However, the whole point of an agent is to put your interests first, and promote your property in all ways to help it stick out from the crowd.There are changes happening in the industry around fees and costs, including agents offering money back to buyers, and agents offering to merely “post” listings on MLS without offering other services.The market always dictates value.   Different real estate agencies, and the individual agents within them, will have their own business models and standards of service.  You can compare agents by price, and you often get what you pay for.  You can compare agents based on services offered, and see who provides the best value based on the three criteria above.  Just remember, know what you are buying, and the value you are getting from your agent, by asking questions and getting clear communication about service expectations. 
Saving money can cost you, and spending money may save you, but you cannot know without doing your homework.  

Hopefully this will help you ask the right questions.