Sell Hawaii Property

How Sellers’ Agents Earn Their Commission

By Julie Engelhardt

You’re interested in selling your investment in real estate. Whether a veteran investor or a first time seller, it is best to use a licensed and professional real estate agent for a variety of reasons. Agents hold a vast amount of knowledge that need be considered during the selling of property. Professional agents and reputable real estate brokerages will help you understand and weigh the many factors considerations in listing your property and in the final negotiation process. When selling property, there is more to consider than meets the eye. Agents understand the sales process and can help locate ideal prospective buyers for you. They help determine what bargaining chips you have and if there are any legal considerations in a transaction. They are experienced with mortgages, tax exchanges, and escrow proceeds and can prove invaluable during this crucial time period of a transaction.

First step is to shop around for a qualified real estate agent. Your agent will do much of the foot work, literally and behind the scenes, so an experience real estate agent can prove invaluable. They help you set the listing price by preparing a comparative market analysis. They make your listing agreement, market your property, show your property, and guide the transaction through escrow. Agents who work on commission only get paid when you sell your property.

A standard listing agreement is a document that binds you, the real estate agent and the brokerage to each other. It states that you will list your property exclusively with them for a certain time period. Most can be cancelled in writing before the expiration. The listing agreement also states the commission rate agreed upon. Sometimes this is negotiable. The listing agreement will also state your asking price.

Agents can help you decide for how much to list, but you should be the one to have the final say in the listing price! Make sure you receive a comparative market analysis for your property. Your agent should prepare this for you. Your real estate agent finds other properties similar to yours that are currently up for sale or which recently sold. They should also visit your house in person so they can see first hand the condition and any improvements you have made. They can make recommendations, but should leave the final say for those on the deed.

There are often other documents that are part of the listing agreement. You may be asked fill out a disclosure statement, required by law in some states, which lists any faults on the property. Fill this out honestly and to the best of your abilities to avoid any legal issues in the future. Some real estate agencies have duel agency agreements, which is a simple statement that their brokerage may represent the buyers as well. Most states require agents to disclose who they represent and act in this party’s best interest.

Now its time to find a buyer! How? By advertising! Working with licensed real estate agents and a large real estate firm is a huge advantage when it comes to marketing. They use their name recognition to market your property, usually for free. Your agent places ads in local newspapers and magazines. They advertise with direct mailings, usually to your neighbors. Real estate agents have publications with large circulations and will place ads for you. They also have a large network of friends, associates, and co-agents where they spread the news. Real estate agents are workaholics; all they do is talk about real estate! Many real estate agents use the Internet to market properties. Make sure your agent places your property on the Multiple Listing Service (MLS) in your area. This is a website that allows all agents to find your property and contact your agent if they have a buyer. You may consider approving any literature they produce about your property to make sure all your features are covered.

Not all buyers are the same. Your real estate agent match qualified candidates to your property. A qualified candidate is one that is pre-approved for a mortgage by a reputable mortgage institution. Your real estate agent shouldn’t waste your time (or theirs) by showing your property to people who are not qualified to buy. Buyer and seller’s agents contact each other to make and confirm appointments to see your house or lot. Your agent will attend on your behalf during a showing and point out the best features of your real estate. It’s best if you are not home. You don’t want to know their opinion of your decorating skills. A diligent agent will follow up on any showings to see how interested the buyer’s are and what, if any, hesitations there are.

You’ve found a buyer who has made an offer. Their agent will write up a contract (in the State of Hawaii it’s called a DROA – Deposit Received, Offer Accepted) to submit to you and your agent. The buyer will submit a deposit, a sum of money that goes towards the purchase price and adds weight to the seriousness of their offer. Your real estate agent will act as an intermediary between you and the buyer’s agent. You will never need to have contact with the buyers of the property. The DROA contract is legal binding and specifically states the purchase price, the funding, the terms of sale, including any conditional terms. If you accept the offer, sign the contract and your agent will open escrow on the property.

If you do not accept the terms or conditions of the offer, you can submit a counter offer. Maybe the offer was $2,000 low because of a leaky garbage disposal. You can counter to repair the disposal and request full price. This is where an experience agent can help tremendously. They can help you find ways to make a deal work for both sides. Once a deal is agreed upon, the contract is signed by both parties and your agent opens escrow.

Escrow companies hold monies and titles of properties until all issues have been settled and all funds have been disbursed. Escrows charge a fee for the handling of the transaction. This fee is called “closing costs.” Have your agent provide you with an estimated closing cost statement before you agree to list. Once this occurs, the escrow company transfers the title from the seller to the buyer. Usually it is a painless process that takes between 30 and 90 days. The process and timeline is outlined by the DROA. The timeline of a transaction is very important. Your agent will provide the escrow company with all necessary papers and fulfillments on a timely basis in order to stay within this contract and avoid any pitfalls.

Before closing and recording escrow, monies are exchanged and part of that money is the commission to your agent. Depending on the state and kind of property, commission rates vary widely. After reading this article, you will have a better understanding of all that is involved in the sale of a property and what your real estate agent does to earn his or her commission.