Can we just cut to the chase and get to the point. All to often I hear, “well I thought all real estate agents were the same, how was I supposed to know?” Well I am here to tell you that they are not all the same and hopefully help you to choose an agent wisely.
First of all, I want to expose the myth of Real Estate school. In the state of AZ, in order to obtain a real estate license, you must complete 90 hours of class room time. This can be done in a 2 week crash course, 6 weeks or 1 year. These classes are to prepare the licensee on subjects like Fair Housing, State Laws, Water Rights, types of Loans, and basic real estate vocabulary. Truth is, you don’t learn anything about real estate transactions, you haven’t even seen a purchase contract. Once you have completed your required courses, you are required to pass the state and federal exams. It is at this time, the licensee will need to complete a 6 hour purchase contract class. Then you can “Activate” your license and start selling real estate!
So where does an agent learn how to write a purchase contract, complete a market analysis, perform searches on the MLS, negotiate contracts., etc.? There the rubber meets the road and things you need to know before you hire your next real estate agent. But first I must explain something that many people aren’t aware of, as an agent, you pay your company to work for them!! Sounds crazy right? True story, we are independent contractors, that pay our Brokerage to work as a part of their company. How much money depends on what they provide to the agent and their clients. These fees can be deducted from the commissions at a rate of 15-50% or monthly payments as little as $20-50 per month or as much as $1150 per month. Typically brokerages that have small monthly rates, don’t have a lot of training programs or an onsite Broker for training and mentoring.
So what if the agent can only afford to work at low cost broker that doesn’t offer training? Then it is up to the agent to find education or mentoring on their own. They can go to the local Board of Realtors, perhaps join a team, or obtain a Graduate of REALTOR® Institute (GRI). This is a 90 hour course schedule specifically geared towards the real estate transaction. Then there is the more popular form of education, just wing it! Trial and Error! Fake it till you make it! Unfortunately we see this a lot. And unfortunately there is a 90-95% failure rate within the first 2 years for real estate agents in the Phoenix Metropolitan area.
Now you probably have a vision in your head of a brand new agent, after all we began the discussion with real estate school right? Something else you should also know, the time a licensee has had a license does not mean they have experience. We see agents all the time that have been licensed 15-20 years and only sold 4 homes during that time. There are no guidelines for part time versus full time agents. Once you obtain your license, you just have to complete 24 hours of renewal classes every two years, subjects are similar to real estate agenda and pay your dues. Its the same wether you sold 100 homes that year or zero its just 24 hours every two years.
Something else to expose here, is the difference between Broker and licensee. In AZ, there are two kinds of Brokers, Designated and Associate, what’s the difference? There can only be one, Designated Broker per Brokerage, any other agent that has obtained a Brokers license are considered Associate Brokers. These are licensees that have had a real estate license for at least 2 years and took a 90 hour Broker course, similar to the real estate licensee agenda, but more intense. Note, I did not say that these licensee’s were required to have completed a real estate transaction, there is no requirement, not even one, in order to obtain a Broker license in AZ. In fact, many states do not recognize a Broker in this manner, AZ is one of a handful where the Broker is responsible for over seeing the paperwork, contracts and keeping the agents up to date on current changes in laws effecting the industry.
So how do you choose a good agent to work with? Ask the right questions. Don’t be afraid to ask them where the get their training from? Are they being mentored? Are they on a team? Do they have a Broker that is available immediately should a situation arise? Are they familiar with the area you are wanting to live in? How many homes have they sold/listed in the area in the last 6 months? What type of on-going training does their Brokerage offer them? Are there any benefits to you such as advertising or technology for you, as a client to work with their Brokerage? If you choose to no longer work together, what is their Brokerage cancelation policy? Is it in writing? Side note, when you sign employment agreements with an agent, you will be employing the Broker and not that agent.
At the end of the day, buying or selling a home is one of the biggest decision of your life, you need to know that your investments are protected with an experienced and knowledgeable agent by your side.
Want more information on this subject? See our blog post entitled Buying a Home in AZ, what is your Agent’s role as your REALTOR® —