February 2008

Choosing a Good Real Estate Agent

Whether buying or selling, choosing the right real estate agent is one of the most important decisions you will make during the conveyancing process. In an industry which has seen a doubling of agent numbers over the last five years, the initial choice can seem a broad and daunting one. So what are some of the key factors to consider in the search for a reliable and trustworthy agent on whom you can rely?

Knowledge & Experience

The real estate industry has a notoriously high workforce turnover and, consequently, many sales agents operating today will be relatively new to the business. In a transaction which is likely to be one of the biggest of your life, it is advisable to seek out those with experience and knowledge. Those agents that have been active in your geographic area for a long time, for example, will have a greater knowledge of the nuances of the local market.

As well as knowledge and experience of the location, your agent should have an extensive knowledge of the real estate business itself. This may sound obvious but many agents do not.

“Most people have the perception that an agent doesn’t do much other than take people’s details, place an advert in the newspaper and then sit back and wait for the offers, and their commission, to come in. A good agent does much more than that,” says Pamela O’Brien, broker at international agency Century 21 in Port of Spain.

“She should have knowledge and experience of the entire process so that she can guide and advise people throughout. For example, we have a lot of first-time buyers coming to us who know little more than the fact that they want to buy a house. Our agents will advise on the whole process such as getting pre-qualified for financing so that they know what price range they are working within. From a selling perspective, again an agent should be able to inform the vendor of the entire process, what she is going to do to sell their house; what happens when a buyer comes in; the whole process.”

An agent should be happy to sit down and explain the conveyancing process and requirements and the state of the market in your area. If she does not have the time, or the knowledge, to do this adequately then it is advisable to look for someone who does.

Qualifications and Affiliations

There is currently no legislation governing the real estate industry in Trinidad & Tobago, even though AREA has been pushing for this for a number of years. Whilst the industry remains subject to no direct legal restraint it means that anyone can establish a real estate agency without the need for qualifications or accreditation. This being the case, it is very much within the consumer’s interests to seek out those who are qualified and/or affiliated to organisations such as AREA.

“This is a good way to filter out some disreputable agencies,” says Calvin Benjamin of Benjamin Enterprises Ltd, in San Fernando. “Being a member of AREA requires a certain level of professionalism and quality of service because the organisation has its own rules and regulations to adhere to. Some agencies do not want to become members because they have no desire to have any kind of structure or accountability imposed upon them. Often their brokers will not have the requisite level of knowledge. They are very glib talkers but when it comes to the crunch, that’s when they will let you down because they are not in a position to give the customer everything he needs. With members of AREA, you know what you are getting, an agency that will give high levels of service to their customers.”

Pamela O’Brien, who has been a broker for seven years, says people should always verify the authenticity of touted credentials. “Roytec offers a course, in association with AREA, entitled Principles of Real Estate Sales. What you find is that a lot of people sign up for this course, take the literature and then don’t attend the classes. They go off to open their own business with no experience whatsoever, no idea of what is happening in the industry; they just read the books and figure that’s enough. They will however, still use the course as a qualification on their business cards so it is always important to check people’s credentials. A telephone call to the appropriate body will soon reveal whether or not they are qualified. This deceitful behaviour is not restricted to qualifications. We have also had people using the name AREA and Century 21 on their business cards, when they are not connected in any way whatsoever. They simply want to use the name. So, again, it’s best to check.”

Referrals/recommendations

One of the best ways to differentiate between agents is on personal recommendations and referrals. You will almost certainly know someone who has bought or sold a house recently; ask them about their experience and whether they would recommend their broker.

“You work hard for the buyer or seller so that he will have no hesitation in recommending you to other people,” says Calvin Benjamin, who has spent 20 years in real estate, having established his agency in 1988. “This is how a lot of our business is generated, through referrals. In fact we ask people who have dealt with us, if they are happy with our service, to tell others about us. If you are recommended by another person you are halfway to another sale because that trust aspect is already there. Referrals and recommendations give a good firsthand sense of the reliability and performance of an agent. It’s much better than just flicking through the Yellow Pages, which is how a lot of people pick an agent.”

Interviews

Even if you have had a referral, it is not certain that you will enjoy the same rapport with the agent as did the referee. You are establishing a relationship in which trust is a key issue so meeting someone in person is essential. Interviews are therefore perhaps the best way of determining which agent is right for you.

“We always recommend people come in and talk face to face so they can get an idea of who they’re dealing with. Ask everything you want to know. A good agent will have nothing to hide and will give you all the information she has. Inquire about their techniques, what is the process of marketing your home, how would they go about it. Be prepared though, do some research of your own on the agency so that you come armed with your questions.”

Pamela O’Brien, who manages an office staff of four as well as 16 agents, agrees. “If you have a company and you’re hiring people, you don’t just talk to them on the phone, you invite them in for an interview; it’s the same thing. Meet them in person, only then will you know if you click or not.”

It is good to know also that once you have selected an agent you are free to work with that agent to view any property on the market, no matter who the main listing agent is. In other words, you can use one agent whom you trust to research the market for you and arrange all the viewings, even with third party agents – rather than make direct contact yourself with countless agents you do not know or who have not been recommended.

Customer Service and Commitment

Calvin Benjamin says another differentiating factor amongst agents is the levels of service they offer to the customer. “We also offer services such as getting taxes organised and water clearances sorted out, that sort of thing. I have an employee almost entirely devoted to those types of tasks,” he explains. “As long as the customer provides the base information we will sort out the rest and we don’t charge for that service. You save the customer that run-around, inconvenience and time, in what can already be a stressful process.”

As well as customer service it is important to establish how committed your agent is to you and your needs. How accessible are they, do they have voicemail, email or a pager, so that you can reach them if you need to talk to them urgently?

Integrity and Professionalism

Real estate is an industry where reputation and trustworthiness are vitally important. If you hear of an agency being involved in any underhand dealings then it is best to rule them out of your thinking.
“We’ve had to let customers go because we’ve been asked to do things that we’re not prepared to do,” says Calvin Benjamin. “If you have to go under the counter to get business then that’s not the sort of business we want or need. I’m proud to say that we don’t have to look over our shoulders. You have to remain principled, ethical and above board, that’s how you will get those referrals in this business.”

Your agent should have a good track record and a professional manner. If you get a sense of caginess in any of his answers then you probably don’t want to be dealing with him. Remember, there is no reason a good agent should not give open and honest answers to all of your questions.

One very important point when it comes to integrity and professionalism is to ensure that your chosen agent knows how to handle deposits and has a client or escrow account specifically to hold your deposit in the event that he or she is nominated to act as Stakeholder for your transaction.

Fees

With the cost of living ever increasing, it is tempting to let your choice of agent be swayed by the commission rates they charge. However, this could often prove a mistake. “Some agents will undercut others just to get your business, but they will rarely provide the same service, so you get what you pay for in the end,” warns Calvin Benjamin. “If one agent is charging 5% and John Harry down the road is charging 3% or less, you have to start asking what you are getting for your money. Is this person going to be prepared to stand by you and make every effort to get you the best possible deal? Often he will just be looking for a quick sale because it is a lower commission percentage he is working to.”

You need an agent who will see you through to the actual conveyance and is not afraid to work for their commission. AREA has a recommended scale of fees.

Conclusion

The search for a good agent can seem a potentially fraught one, but following a few simple guidelines can tip the odds back in your favour. Ensure geographic and industry knowledge; ask for qualifications and affiliations and then verify their authenticity; get referrals and recommendations; do your own research and interviews, checking levels of customer service and professionalism; and don’t be swayed by temptingly low commission rates. Doing the groundwork upfront can save you a significant headache later, and remember, buying a property is not like choosing a new pair of shoes. The sum involved is infinitely greater, and so is the potential risk.

As Patricia O’Brien explains, “You have to feel comfortable with your agent; it’s a relationship you’re entering into. Trust is very important, so do your homework, meet with as many as you can and have confidence in your feelings.”

What is Gazumping?

Gazumping, a term that strikes fear into the hearts of homebuyers across the globe but one, given a suitably speedy resolution of formalities by agents, which should not trouble property purchasers in Trinidad & Tobago unduly.

What is Gazumping?

Gazumping occurs when a buyer has made a verbal agreement with the seller of a house to purchase that property at a given price. However, in the intervening period between the verbal agreement being made and a sales agreement being signed (the point at which the offer’s acceptance becomes legally binding) the seller receives a higher offer from another would-be purchaser and accepts that instead. The original buyer, who thought he had a deal, has been gazumped.

Gazumping raises ethical questions for the seller of whether he, having given his word to the initial buyer to sell, should honour that word. On the other hand, this is not a popularity contest for the seller and he would have gone to market justly seeking the best deal for his property.

Dawn Glaisher, at Seajade Investments, in Tobago, says in her experience buyers should not put a lot of faith in a verbal agreement.

“People don’t feel they’ve made a commitment until the agreement is signed. A verbal offer and acceptance is not seen as a binding commitment by the seller and should not be by the buyer either. Generally the view is that the right is reserved to sell to a higher bidder. The vendor is often fielding multiple offers. As a buyer, you know you’re competing and it’s in your interests to get everything tied up as quickly as possible.”

Mitigating the Problem

The issue of gazumping, and the mitigation of it, often comes down to the length of time lost between the acceptance of the verbal offer and the signing of the sales agreement. The more this danger area can be reduced the less time is available for other offers to be put forward.

It is a particular problem in England where this hiatus period can last for anything up to 10-12 weeks. Fortunately, the conveyancing system is different in Trinidad & Tobago. Even so, there are measures which can be implemented to decrease this threat still further, as Vice President of AREA Patricia Lazzari explains.

“To speed up the process AREA-registered agents have a standard sales agreement which we have had drawn up by our attorneys. We can download this directly from our system. On average it’s signed within one-to-two days of the verbal offer being accepted. But the process of offer being made, sales agreement drawn up and 10% deposit being secured on behalf of the vendor by the agent, can actually be processed within the same day.”

“The only way the deal can be broken after that is if the vendor’s title is bad or if the purchaser fails to complete by the completion date, in which case the deposit will be forfeited.”

Potential Hazards

Problems can arise when the vendor wishes their own attorney to draw up a sales agreement. Ordinarily this will mean the time period between offer acceptance and contract signing is extended which, as we have seen, is the starting point for possible trouble.

Mrs Lazzari says there is another course of action open to the buyer if a delay of this nature is anticipated.

“If you foresee that the sale agreement will take some time to prepare or simply want peace of mind you should get a written Letter of Offer signed by both the buyer and seller. Signed by both parties, agreeing to the terms, it’s as good as a sales agreement.”

Unscrupulous Agents

Issues may arise when there are a number of agents charged with selling the property, as is normally the case in Trinidad & Tobago. “If there are three or four agents selling a property you could get another agent coming in with a higher offer after one has already been accepted,” says Mrs Lazarri.

“Unfortunately there are some unscrupulous agents who, even though a seller may call and tell them they’ve accepted an offer, might say ‘Have you signed a sales agreement yet because, if not, I could still get you a higher price. A lot of this then comes down to the character of the seller. Let’s face it though, if someone tells him he can get an extra $TT 10,000 for his property, and nothing is signed, it’s going to be tempting.”

Advice

Although gazumping is not a big problem in Trinidad & Tobago it is nevertheless still a very real possibility. It is often a greater possibility when dealing with desirable, high-end properties which are more likely to instigate a bidding contest.

The advice is, when making your offer, to be prepared to progress with everything as swiftly as possible. The more time that is available after your offer has been accepted the more opportunity there is for another offer to be made,” adds Mrs Lazarri. There really is no way around it, just get your sales agreement signed quickly.”