Finding and Choosing a Realtor

Before you begin a search for a Realtor, as with any real estate agent, it's important to understand the concept of representation. If you're looking to sell your home, you may want to work exclusively with a seller's agent. If you're buying a home, you'll want a buyer's agent. When you sign a contract with either of these agents, they are legally bound to look out for your best interests.

If you're a homebuyer, try to avoid working directly with the seller's Realtor. If you mention to the seller's agent that you can go as high as $200,000, then the Realtor is obligated to pass that information on to the seller, which could hurt you in negotiations. If you're the seller, it's not a good idea to work directly with a buyer's agent because anything you mention about the price and condition of the home will be shared with the homebuyer. You need to hire someone who represents you -- and only you -- in this transaction.

When looking for a Realtor, the best place to start is by asking your friends and neighbors for referrals. Another place to go is the Find a Realtor search engine on the National Association of Realtors (NAR) Web site. By working with a Realtor rather than a non-member agent, you have an extra layer of assurance that your agent will be ethical and professional throughout the process.

Meet with several Realtors before choosing one to work with. If you're a buyer, tell them what you're looking for in a home and ask for some suggestions. This will help you determine how well the agent knows different neighborhoods and different home prices. If you're a seller, ask the Realtor how many homes he or she has sold in the past year, and the typical ratio of list-price-to-sales-price. In other words, does the Realtor regularly sell homes for prices above or below the initial asking price? Get an idea how much time the agent is going to be able to devote to selling your home or finding you a new one.

When you're selling a home, it's customary to sign an exclusive agreement with a seller's agent. If you're not happy with the way the Realtor is representing you, you can terminate the contract at any time and find another agent. If you're a homebuyer, it's not necessary to sign an exclusive agreement with a buyer's agent, but some agents will ask you to do so.

The last thing to understand about Realtors is how they make money. We'll tackle that one in the next section.