How to compare and choose a real estate agent

1. Create a list and do background checks

Your list should include agents you’ve worked with before, who’ve been recommended by family and friends or have offices in your area. We suggest starting with at least three agents.

The Real Estate Authority keeps a public register of agents, where you can check their licences and find out if any have had a complaint upheld in the past three years. Run your list through this database.

2. Request property appraisals

Next, arrange property appraisals or valuations from your shortlisted real estate agents – the more you get, the better informed you’ll be. These appraisals are based on the home’s basic details such as the number of bedrooms, potentially its rating valuation, plus recent sales data in your area (which the agent can cherry-pick).

Contrast midpoints, and if there’s an outlier (either much lower or higher than the others), ask the agent to explain.

A property appraisal also allows you to meet agents and assess how comfortable you feel with them. During these chats, ask each about their three most recent sales – particularly how the purchase price aligned with the initial appraisal.

Property appraisals are typically a range, with a low- and high-end dollar figure. Although the upper figure is naturally alluring – forget it. Instead, work out the midpoint between these two amounts, using our planner.

Contrast midpoints, and if there’s an outlier (either much lower or higher than the others), ask the agent to explain. Overblown estimates can indicate you’re being baited into signing. The risk is that eventual offers won’t line up with these inflated expectations, though by that stage you may be pressured into accepting.

3. Check commission fees

There are three ways agents charge commission:

• Set percentage. The agent takes the same cut on every dollar of your home’s purchase price.
• Tiered percentages. Typically, agents take a higher cut on the lower tier. For example, Barfoot & Thompson charges 3.95% on the first $300,000 of the purchase price and 2% on every dollar above that, for residential homes. You can negotiate. To incentivise agents, we recommend a lower percentage on the base, with a higher one kicking in when the sales price approaches your target.
• Upfront fee. Some agencies, such as Arizto, charge a fixed fee, whereas Tall Poppy outlines a maximum fee (which can increase with the estimated sales price of your home) before you sign with it.

Using the appraisal midpoint, calculate each agent’s estimated fee. Let them know you’re talking with other agencies and ask if they’ll negotiate their commission fee to beat the best offer you have.

When we mystery-shopped real estate agents in 2018, we found agencies charging $10,000 more than others to sell the same house.

4. Add in extra fees

Sellers are also on the hook for most, if not all, of the costs to market (and stage) a property. Some agents might recommend spending a few hundred dollars on marketing; others a few thousand.

Agents may assure you their proposed marketing spend will pay for itself, but overspending on traditional advertising – such as newspapers when so many buyers are online – can leave a dent in the cash you’ll walk away with.

On top of commission, some agencies charge a base fee – so check which other charges (including auctioneers’ costs) apply.

5. Calculate and compare

For each agent, add up the estimated commission and other costs and subtract this from the midpoint of their appraisal. This will give a rough financial comparison.

Before you sign an agency agreement, ask what happens if you switch agents once it expires.

However, the agent with the lowest fees may not be the best value. Weigh costs against the agent’s experience, client recommendations and your compatibility – someone who goes the extra mile can be worth additional moolah.

Once you’ve chosen a finalist (or at least semi-finalists), discuss the sale method, from deadline sale to negotiation or tender. The agent will offer advice, but the decision is yours.

Before you sign an agency agreement, ask what happens if you switch agents once it expires. Some contracts have a clause that could see you paying two lots of commission, so give these a wide berth.

6. Stand your ground

Once you’ve signed, the agency will start arranging photographs, advertising, open homes and presenting you with offers.

It’s your choice whether to inform the agent of your minimum sales price or not. Under the law, they must present you every offer a buyer makes. It can be easier to reject a low-ball offer when the agent knows you require a set amount (taking agency fees and moving costs into account).

If no appropriate offers come through, the agent will re-run advertising and open homes, with a new deadline or tender date.

It’s normal for a house to be re-advertised, so don’t panic if it takes two or three goes to get an offer that meets expectations. No matter what price the agent gets in negotiations, you can’t be compelled to sell – so stick to your guns at least until the initial agency agreement expires. It’s at this point you may want to consider a pricier marketing campaign or a professional home-staging service.

If an offer’s pretty close to what you’re after, ask the agent to cut their commission. To nail the sale, they may agree.