(Updated February 2020)
With 60,000+ agents in the GTA, everybody knows somebody who works in real estate. I read somewhere that the average person knows seven real estate agents (but can only name 2 of them, LOL).
Buying or selling a home is a big decision, and it’s important to do your homework and ask the right questions. We put together some articles to help:
- 10 Questions to Ask When Hiring a Buyer’s Agent
- 15 Important Questions to Ask When Hiring a Listing Agent
But what if your friend is a real estate agent? Should you hire them?
There can be some real advantages to working with a friend when buying or selling a home:
- They already know you and what you like.
- You already know them and can trust them; you know they’ll have your best interests at heart.
- You know exactly what you’re getting: the good, the bad and the ugly. You know how much experience they really have; you know if they’re ethical or not; you know how they are when they’re stressed, and you know how well they communicate.
These are all important criteria when choosing a real estate agent…but they aren’t the whole story. If you’re debating hiring a friend or relative to help you buy or sell, here are some important questions to ask yourself.
Are you OK with your agent friend knowing your personal financial situation?
Whether you’re buying or selling, a lot of financial information might be shared with your real estate agent. Your salary, credit rating, how much mortgage you qualify for and amount of debt and equity you have in your house may all come up for discussion. How comfortable are you with them knowing that?
This is the biggie. Toronto is a HUGE city with over 130 neighbourhoods…plus the burbs. Helping a client buy a property requires a very different set of skills than helping someone sell. We have condos, houses, lofts and co-ops, each requiring very specific expertise. We’ve got resale homes, brand new homes, and pre-construction homes…an expert in one is rarely an expert in the other. Your particular circumstances might also best be served by someone who is familiar with the life event that you’re going through (marriage, divorce, new baby, retirement, etc) or the type of buyer or seller you are (first-time buyer, investor, move-up buyer, downsizer, etc.). Agents cannot be all things to all people, and working with someone who has experience working with people like you will go a long way to making sure you don’t make a mistake.
Can you fire them? Can you sue them?
One of the most challenging things about hiring your friend to be your real estate agent is that if things don’t work out, you can’t fire or sue them without damaging the friendship. I never hire anyone I wouldn’t be comfortable firing or suing.
Will the friendship be damaged if the sale or purchase doesn’t go well?
I often hear people say that they have to hire their friend because they’re worried that their friendship would be damaged if they don’t. Right there? That’s the reason not to hire them. If your friendship hinges on you hiring your friend to buy or sell a house, imagine how that friendship will be harmed if things go south?
What about a commission discount?
It might seem like a big advantage if your friend is offering you a discount on commission…but what are you giving up in exchange? Are they going to skimp on marketing costs? Prioritize higher-paying clients in front of you? Cheaper is rarely better.
Are expectations clear?
When REALTORS work with their friends, there are often unspoken expectations that can lead to trouble. Agents may assume that their friends already know what their job entails, but they rarely do. Friends might want special treatment and extra services, which is OK – as long as everybody understands what’s expected. When you mix friendship and business, outlining all of the expectations on both sides is critical.
I get it. Your friend just got their real estate license, and they’re struggling to find clients. They desperately don’t want to go back to their old job, and you’d love to give them a chance. But do you really want the sale of your largest financial asset to be a training camp for your friend? That’s super risky. We see the repercussions of the newbie agent all the time…and it can cost the Seller tens of thousands of dollars. If you really want to support your newly licensed friend, why not just give them $10,000? No? Then don’t trust them to sell your home and assume you’ll get top dollar for it either.
In the hundreds of homes I’ve sold, some of my best – and some of my worst – experiences have been working with friends. Here’s my advice:
- Make the decision carefully: The only thing scarier than mixing friendship and business is making that decision on a whim. Over cocktails. Without talking to your spouse about it.
- Don’t make promises you can’t keep: If you’ve been telling your agent friend for years that you’re going to be selling with them when the time comes to upgrade your home, don’t be surprised if their feelings are hurt if you don’t hire them. It’s better to set expectations low (“I never work with friends”) and make that decision at a later date.
- Be upfront and honest: If you decide not to hire your friend, be honest and direct about your decision. If you don’t want to harm the friendship, don’t let them first find out your home is for sale by seeing it on the MLS…take them out for a coffee and explain to them the reasons for your choice. If you think they really are a good agent, then offer to recommend them to friends (they’ll appreciate that). Real friends will respect your decision and not make you feel guilty about it. And so will any agent you’d want to do business with.
- It’s easier to buy with an agent friend than sell: Selling is WAY more stressful than buying, so if you want to try working with your friend, focus on buying with them vs. selling.
Still have questions? Don’t be afraid to get in touch!