Ask Agents 22 Questions

Do you have a niche? Do you focus on a part of town, or type of property?

If are looking for a somewhat typical for the area, single family residence, and you are open to all parts of town, then it is likely most Top Producing Agents that also represent a good number of Buyers can help you with your search. If, however, your options are limited to a specific part of town, or even a particular neighborhood or development, then an agent that is known as the neighborhood/development expert may be your best choice. This type of focus can also be critical if you are looking for a lakefront home, a home in a golf course or country club community and even if you are looking for a condominium or a townhouse. An Agent that understands these unique and specific types of developments can be critical!

Note, if you have a specific neighborhood or development in mind then many Buyers think working with an Agent who literally lives in the neighborhood or development is the best option. While it is true agents who live in the development will have great knowledge about the development, these agent's also have a vested interest in the area and the sales prices. So, unfortunately these agents may not be able to be as objective as the next most prolific agent for this specific area who though will have similar expertise!

How do you help your Buyers be even more successful in a seller’s market?

This question could have a lot of different answers depending on the local market. While we will share a couple of examples the initial response is what is most revealing. Very experienced and great Buyer's Agents will likely say this is a great question AND they will have at least a couple of examples they will share. Keep in mind that getting access to the Agent’s multiple strategies will likely require you to commit to working with the agent.

As an example, Mitch tries to keep from 3:00 PM on each weekday so that active Buyers have a better chance to get in to see the new listings within a few hours of going live.

Mitch encourages Buyers to make use of Escalation Clauses as part of most multiple offer scenarios. The Escalation Clause Addendum allows the Buyer to increase the offer to the seller based only on the best offer the seller receives from another Buyer. The escalation Clause includes both a cap which is the most the buyer is willing pay for the property, along with an escalation amount that is the increase over the other best offer. As a simple example if a place is listed for $325,000, your initial offer might be $327,000 with an escalation amount of $2000 and a cap of $338,000. If the best other offer was $329,500 and did not include an escalation clause then your offer would automatically become $331,500. if the other offer also included an escalation clause with an escalation amount of $1,000 and a cap of $336,500 then your offer would cap out at $338,500. This is a simple example and the determination of the starting offer amount; the escalation amount and the cap are all based on critical strategies.

Typically, how many places per year, fall out of contract, and for what reasons?

This is a bit of a trick question. The issue is not how many transactions fail to close but why they fail to close! The most typical 3 reasons a deal will die in today's market include The Inspection, The Appraisal and The inspection (And No this is NOT the same reason twice!)

The key point with all three of these issues is the deal dying should NOT be a real surprise for the Seller if the Listing Agent has truly done their job of educating you as the Seller.

A great and experienced Agent should be able to spot and share red flags about a property that could indicate issues with an inspection. While your Agent is not likely an expert inspector, nor a structural engineer, and you will always want to have appropriate qualified inspectors evaluate the property, great agents can typically spot rot for example which could mean more substantial damage may be hidden forcing more costly repairs. Similarly, visible settling cracks or unlevel floors could potentially indicate structural issues that may not have been properly stabilized. Properties that have had a lot of cosmetic updates, that are not done well will concern Buyers since if the most obvious repairs were poorly done, they will expect the repairs that the Buyer cannot see to be even worse! Little issues with rot for example will prompt Buyers and their agent’s and inspector’s to be even more diligent in looking for other areas with rot or damage. Great Listing Agents will encourage the Seller to repair or disclose known and suspected defects.

In a Seller's market, Appraisals can come in too low and often will kill a deal. This is why it is very important to know which lenders are “good” or bad since quality local mortgage lenders, will make use of a smaller extremely well qualified panel of appraisers’ vs a regional, national, or online lender who will more often than not use an Appraisal Management company where the appraisers are paid less and have less local expertise. The 2nd problem with Appraisals is more about the listing Agent versus the Appraiser. In this scenario the problem is the Appraisal is accurate, and the issue is the poor quality of the comparative Market Analysis (CMA) by the Listing Agent, or the lack of any CMA even being completed before a list price was established! A great Listing Agent should be able to reasonably predict that a place will not Appraise or have the data at least to show an Appraiser and Buyer’s Agent where or how a “Low Appraisal” was flawed. As part of that conversation the Listing agent should have already set proper expectations with you, as the Seller, about any potential issues with the Appraisal and the Sales price.

The last issue with Inspection is not that defects may exist! It is that just like an appraisal that is too low, in an aggressive Seller's market, most Sellers don’t feel the need to make repairs is necessary. However, if the Buyer offers top dollar to get a house under contract, many will then use an inspection as a second opportunity to negotiate the price down since the other Buyers have since moved on. While many Sellers may reject requests, and just take their chance with the next set of multiple offers and the next Buyer, Indiana law requires you as the Seller to disclose previously identified defects found in all prior inspections that you have not properly addressed. Even the act of having to disclose that the last deal died because of the inspection will negatively impact the sales price and Days On Market for the next accepted offer. This negative impact gets even greater with more disclosures of more defects. Not only because of the defects but because the Seller does not appear serious or motivated and while the disclosed defect may not bother the Buyer, another previously missed greater defect could, and the Seller has already sent the message that the Buyer will be wasting time and dollars with this Seller.

Mitch understands that truly the worst case is placing a property under contract, having it not appraise and/or not make it out of inspection after you, as the Seller have lost valuable initial Days On Market. And to be even worse, many Sellers will make plans on the closing of their next home once the current one is under contract. A delay on your current sale may cost you more on the next purchase or even kill the deal entirely!

Second, when you as the Seller are looking for your Agent’s perspective on what repairs or improvements you should make before listing, staging, and pricing your home, the only thing worse than being told “it’s your decision,” is being told what the Agent thinks you want to hear! Ideally you want an agent who is comparable to Mitch with similar experience, expertise, and the track record needed to tell Sellers what they need to know, so that they can make the best-informed decision.

Is your commission typically paid by the Sellers or the Buyers?

Most Buyer's Agent get paid a commission based on the sales price of the property. While commissions are considered a Seller's expense, since the sales price typically includes the commission, the Buyer is paying the commissions as part of the purchase price of the property.

The amount of commission typically varies based on the sales price of the property and is determined in Indiana by the Seller & the Seller's Listing Agent. Historically, a property listed for sale in the greater Indy area at $300,000 or less would pay a total commission of 7% that would be shared equally (3.5% & 3.5%) between the Seller's Agent's Brokerage and The Buyer's Agent's Brokerage. Depending on each Agent's contract with their Brokerage each Agent would then be paid a portion of, in this example, the 3.5% commission. Again historically, places that sold for over $300,000 typically paid a total commission of 6% shared equally at 3% & 3%. Plus, properties that historically sold for substantially more than $300,000, like $800,000 or more, would pay a total commission that was even less than the 6% like 5.8%. However, typically this would still be split equally between the Listing Agent's Brokerage & the Buyer's Agent's Brokerage. While this 7%, and 6% or less, has historically been typical, each Listing Agent Brokerage and Seller ultimately decide what the total commission will be, and the Listing agent typically suggests what the split with the Buyer’s Agent will be. NOTE: A Buyer's Agent's has a fiduciary responsibility to show you as the Buyer, any home you want to see regardless of what the commission is.

Understand that more often than not any comparable sales used by an Appraiser to set value for a home, also included commissions for the Listing and Buyer's Agents and their brokerages. So, if a Seller is trying to base their List and Sales price on these comparable sales, without also paying comparable commissions this would create an additional "unrealistic" net gain for the seller.

In seller's Markets, where demand for places can generate multiple offers, some Seller's may negotiate with their Listing Agent to pay a lower commission percentage. Still, if a seller is justifying their sales price based on comparable sales and then also wanting to pay less in commission than was reflected in the comparable sales, then that seller is effectively asking Buyers to pay "too much" for their property. Additionally, in these same Seller markets, the Listing Agents may also decide not to share the total commission equally. This would mean that the Listing Agent and their Brokerage are keeping a larger portion of the total commission for themselves.

Similarly, each Buyer's Agent together with their brokerage, determine what their minimum acceptable commission will be to represent you as a Buyer. As an example, Mitch and his brokerage typically expect commissions to be 3.5% for properties that sell below $300,000 and 3% or less for places that sell for $300,000 or more. Again, every Buyer's Agent, together with their brokerage, determine how any gap between what was expected and what is being offered is addressed.

For Mitch with his Buyers, only New Construction and foreclosed/bank owned home sales, typically require a minimum commission because of the amount of extra time required with both types of transactions. With these sales, the minimum BAC is at least a 3% BAC for places that sell for $300,000 or more, or 3.5% BAC for places that sell for less than $300,000. To help clarify why these two types of sales have a minimum BAC let’s talk about new construction sales. Builders do not typically have (and are not required by law to have) a licensed real estate agent representing the builder. This means the builder does not even have the limited responsibilities or ethical obligations that REALTOR's must follow! Since builders would prefer that Buyers NOT have a REALTOR negotiating to get the best deal or remaining involved throughout the process during interior and exterior selections, to protect the Buyer's interest, one of the easiest ways Builders can discourage real estate agents from being involved is to reduce the amount of Buyer's Agent Commissions. Additionally, be aware that if you contact a builder (walk into a model or email, text or call a builder) directly without your agent then many, if not most, builders will refuse to pay your agent any Buyer's Agent Commission whatsoever.

For all other places Mitch, in his Buyer's Agent Agreement, will typically accept the BAC being offered by the seller. The only exception is if the Listing Agent negotiated a typical or lower total commission with the seller, say 6% vs 7% for a home listed at $275,000 and then the Listing Agent does not share the commission equally with the Buyer's Agent. For example, instead of accepting 1/2 of the 6% that the Seller is paying in total, the listing agent keeps their typical 3.5% and then offers BAC of only 2.5%. In this scenario, if the BAC is lower than Mitch would expect, Mitch reaches out to the listing agent typically even before the showing. Mitch asks the listing Agent if, in this example, the total commission is twice the 2.5% BAC or if the total commission is greater than 5% meaning that Listing Agent is keeping more than 1/2 of the total commission. While there are no guarantees the listing agent will be truthful, it would be unethical for the Listing Agent to lie about the total commission. If for whatever reason the Listing Agent agreed to a lower total commission and is splitting the commission equally or even paying a BAC that is higher than the Listing commission, they will easily share that. If that is the case then Mitch will waive any gap, and the buyer is not obligated to pay more than the seller is already offering even though it might be less than Mitch's typical BAC. This is the case 95% of the time.

In the instances though where the BAC is not equal to or greater than the listing Agent commission, then often the Sellers likely did not even realize there is a difference. Regardless though, Mitch will include as part of any offer that we ask the Seller to pay the BAC per your Exclusive Buyer's Agent Agreement. So, the only time you would have to cover any gap is if the Seller refused, and you wanted to still buy the place.

As an extra step to minimize the risk to you that you will need to cover any gap, Mitch will, in multiple offer scenarios, wave up to 1% of any gap to both help increase your odds of getting the property that you want and to minimize the likelihood you will have to cover any gap in the BAC!

How Long Have You Been Using Exclusive Buyer Agent Agreement And Must All Clients Sign One

As of July 1, 2024 Indiana and most states along with the National Association Of REALTORS require all Buyers, working with a Buyer's Agent, to sign a Buyer's Agent Agreement. Keep in mind that Buyer's Agents only get paid for their time if the Agent is successful in helping you close on a place. So, it is understandable that most agents will only commit to helping a buyer, if they know the buyer is working only with them, as the buyer's Agent, vs multiple Buyer Agents. Note: Buyers can still attend open houses... Just understand that these agents are only representing the Seller and the Seller's interests when you are not under contract with a Buyer's Agent.

Beyond the reasons a Buyer's Agent feels the need to know you are working only with them, working with a single Buyer's Agent can and most often will save you, as the Buyer, substantial time and money! Feel free to ask your Buyer's Agent the reasons why working with only one Buyer's Agent is in your best interest. As a real-world example, be sure to ask Mitch about the Buyers who showed up repeatedly at Mitch's Open houses for almost a year before finally deciding to work with only Mitch. These Buyers for months had avoided working with just one agent and the Buyers had even given up on finding a place in their preferred location thinking that what they wanted did not exist within their budget. Yet, on the first time out with Mitch a few days later, after looking at the 1st 5-6 places, Mitch was able to suggest that they look at one more place on their way home. Mitch showed the Buyers a new listing that was their perfect home, in their preferred location and within budget! And, with Mitch's help, the buyers put their dream home under contract literally within less than 7 hours after first looking at places with Mitch. These Buyers, like most of Mitch's clients, went on to become long term clients calling on Mitch repeatedly for their future real estate needs.

So, what is an Exclusive Buyer Agent Agreement ("EBAA"?) These are the Buyer's side of the real estate sales process. Sellers are required by law to have a written and signed Listing Contract that defines how and when a listing Brokerage will get paid. Most states now also require Buyers to have a similar contract with their Buyer's Agent as to how and when the Buyer's Agent will be paid.

While one of the reasons for an EBAA is to confirm the Buyer Agent's Expectations on compensation, keep in mind that virtually every listing already includes some compensation for the Buyer's Agent Commission ("BAC"). Again, it is possible though that the amount being offered by the Seller will not fully meet the Buyer Agent's expectations which means there could be a gap. For example, if the seller is offering 3% commission and the Buyer Agent's Brokerage is expecting 3.5% this would create a 0.5% gap in commission.

To confirm that you are only working with one agent, the Indiana Association of REALTORS' Exclusive Buyer Agent Agreement states that the "Buyer employs Broker for the purpose of exclusively assisting Buyer to locate property described below or other property acceptable to Buyer, and to negotiate terms and conditions acceptable to Buyer for purchase of property." The key word here is Exclusively, which means you are only working with one Buyer's Agent versus several Buyer Agents. If a Buyer is working with several Buyer's Agents, and more than one Buyer's Agent sends the Buyer the same property that the Buyer ends up buying, then this contract clarifies which agent is legally entitled to the Buyer's Agent Commission for that purchase.

This agreement typically has a termination date that covers a 6-to-8-month period. Many agents take the approach that once you start working with them as your agent, that you must continue working with them till either you purchase a place, or the agreement ends based on the termination date. Mitch gives his Buyers the ability to terminate the agreement for any reason with 14 days’ notice either by email or other similar written notice. Note that in Mitch's agreement, the termination ends the Buyer's obligation to Mitch on any properties seen after termination. However, the obligation though continues on places seen by the Buyer before the contract ended for 90-240 days depending on if the property is a resale vs new construction respectively.

Another recent change, that will likely prompted more use of Exclusive Buyer's Agent Agreements by Brokers, even before the law was changed is that Zillow became an actual real estate brokerage in most locations. So, now when you request any info from Zillow online, as you may have already noticed, Zillow notifies you that you have initiated a Buyer agency relationship with Zillow. This could mean if you don't have an Exclusive Buyer's Agent agreement in place with your Agent, that Zillow could make a claim to the Buyer's Agent Commission related to your purchase if you looked at the property online.

For Mitch with his Buyers, only New Construction and foreclosed/bank owned home sales, typically require a minimum commission because of the amount of extra time required with both types of transactions. With these sales, the minimum BAC is at least a 3% BAC for places that sell for $300,000 up to$600,000, or 3.5% BAC for places that sell for less than $300,000. For places that sell for above $600,000, Mitch's commission is typically 3% for the first $600,000 and then 1.7% for any amount above the first $600,000. So Mitch's Buyer Agent Commission decreases based on the total amount of the purchase price.

To help clarify why these two types of sales have a minimum BAC let’s talk about new construction sales. Builders do not typically have (and are not required by law to have) a licensed real estate agent representing the builder. This means the builder does not even have the limited responsibilities or ethical obligations that REALTOR's must follow! Since builders would prefer that Buyers NOT have a REALTOR negotiating to get the best deal or remaining involved throughout the process during interior and exterior selections, to protect the Buyer's interest, one of the easiest ways Builders can discourage real estate agents from being involved is to reduce the amount of Buyer's Agent Commissions. Additionally, be aware that if you contact a builder (walk into a model or email, text or call a builder) directly without your agent then many, if not most, builders will refuse to pay your agent any Buyer's Agent Commission whatsoever. .

For all other places Mitch, in his Buyer's Agent Agreement, will typically accept the BAC being offered by the seller. The only exception is if the Listing Agent negotiated a typical or lower total commission with the seller, say 6% vs 7% for a home listed at $275,000 and then the Listing Agent does not share the commission equally with the Buyer's Agent. For example, instead of accepting 1/2 of the 6% that the Seller is paying in total, the listing agent keeps their typical 3.5% and then offers BAC of only 2.5%. In this scenario, if the BAC is lower than Mitch would expect, Mitch reaches out to the listing agent typically even before the showing. Mitch asks the listing Agent if, in this example, the total commission is twice the 2.5% BAC or if the total commission is greater than 5% meaning that Listing Agent is keeping more than 1/2 of the total commission. While there are no guarantees the listing agent will be truthful, it would be unethical for the Listing Agent to lie about the total commission. If for whatever reason the Listing Agent agreed to a lower total commission and is splitting the commission equally or even paying a BAC that is higher than the Listing commission, they will easily share that. If that is the case then Mitch will waive any gap, and the buyer is not obligated to pay more than the seller is already offering even though it might be less than Mitch's typical BAC. This is the case 95% of the time.

In the instances though where the BAC is not equal to or greater than the listing Agent commission, then often the Sellers likely did not even realize there is a difference. Regardless though, Mitch will include as part of any offer that we ask the Seller to pay the BAC per your Exclusive Buyer's Agent Agreement. So, the only time you would have to cover any gap is if the Seller refused, and you wanted to still buy the place.

As an extra step to minimize the risk to you that you will need to cover any gap, Mitch will, in multiple offer scenarios, wave up to 1% of any gap to both help increase your odds of getting the property that you want and to minimize the likelihood you will have to cover any gap in the BAC!

Do Buyers complete a survey or questionnaire to help confirm what they are looking for in a new place?

A great agent will have tools like a questionnaire or survey for buyers to fill out to help the buyers focus on all of the Buyer's potential needs and desires. Then the agent will use this info to both create searches as well as start to set expectations as to how realistic the wish list and budget are..

Do you track the percentage of your annual business that’s from prior clients and referrals from prior clients?

Great Agents understand that the real value of a sale is more about how happy their clients are so that these clients refer others to the Agent down the road, versus focusing just on the commission from an individual sale.

These Agents understand that Buyer's will look back on the entire buying experience and things like the Agent's communication style, the Agent’s ability to listen and to NOT waste the Buyer’s time, along with the Agent's ability to educate the buyers all help the buyer become more comfortable and more confident with the Buyer's ultimate decision.

These “elated” Buyers tend to tell their friends, neighbors, work colleagues and frankly even the person they hear who is just talking about buying or selling in a coffee shop, about their Agent! This is the real test of how great an agent is!

Be very cautious If the agent cannot tell you, or they minimize how much of their annual business is generated by prior clients and their referrals! Also keep in mind that the industry wide average for referral business is only 45-50%. So, if the Agent's answer is less than 75%, the agent is not likely the best match for you even if they are a Top 20% Producing Agent it's likely due to a lot of marketing vs elated clients!

Do you have Local Lenders, Inspectors, and home contractors etc., that you typically refer your clients to?

Great Agents understand that regardless of if it is a buyer's first house, or it's been five years since they last purchased, or it's just the first house in a new area, that many buyers don't have established relationships with Lenders, inspectors, roofing, HVAC contractors, electricians and plumbers etc.

Mitch finds himself not only helping to get the home purchase closed, including connecting Buyers with great contractors but Mitch is also often recommending restaurants, vets, painters, interior decorators and much more, to his buyers!

Do you feel it is your job to raise any red flags or concerns about places you show?

You might presume the answer is an obvious yes! However, Mitch's experience is most agents are more interested in making a quick sale vs taking more time to look for the best place for the Buyer.

Mitch tells his clients that one of his biggest complaints against REALTORS, before he became one himself, was that he never heard all the reasons he should not have bought a place till he called the same agent, who sold him the house, and asked the agent to sell the place. At that point Mitch was told all the many reasons Buyers would have a problem with the property that the same agent had never previously shared.

Mitch's commitment to his Buyers is he does not ever want to be explaining why he cannot sell a place for you, that he also sold to you!