Creating the Marketing and Sales Team

Working with Real Estate Agents

There are two ways you will probably work with real estate agents. The first is by contracting with one to market and sell your homes. This agent is generally called the “listing agent.” The role of the listing real estate agent in your plan and on your team is a very special one, because they will handle most of the “sales” part of the marketing and sales process as well as some of the marketing.

Each agent works for a “broker” in a real estate brokerage or agency. The broker is the CEO of his or her agency, and usually also lists and sells property. The broker receives a percentage of every real estate sales commissions their real estate agents earns. The contract you have will be with the broker.

Definitions at a Glance

  • Real Estate Agent: Someone who is licensed by the state to sell real estate
  • Real Estate Brokerage or Agency: The firm represented by your agent
  • Broker: An owner of a real estate agency
  • Listing of Selling Agent: The real estate agent a seller contracts with to sell their property
  • Buyers Agent: The real estate agent that represents the homebuyer.
  • REALTOR®: A real estate agent or broker who holds an active membership in a local real estate board that is affiliated with the National Association of REALTORS®.
  • Realtist: A member of the National Association of Real Estate Brokers (NAREB), the largest and oldest minority trade association in America, or any of its local chapters.
  • Multiple Listing Service:  A database of properties listed for sale by Realtors.

The second way you may work with real estate agents is by working with agents who are representing buyers interested in your homes. They are called “buyers’ agents” when they are playing that role. (In most states, legal requirements allow one agent to play both roles.) When a home is sold, the commission is usually split between the listing agent and the buyer’s agent. If the listing agent also brought the buyer to the deal, the whole commission goes to them.

Mission-Directed Real Estate Brokerage

Some nonprofits have formed their own mission-directed real estate brokerages to provide customized services to buyers, develop specialized skills in selling a particular type of housing or neighborhood, and develop a source of fee revenue. Examples include Community Realty in Albany, CHW Realty in San Diego, Homeownership Realty in Miami, and Homewise in Santa Fe.

This is a strategy that can take years to break even, but can also provide important benefits to nonprofit housing developers, buyers and neighborhoods. For more information on mission-directed real estate brokerage, click here.

The Role of a REALTOR®

Most, but not all, real estate agents are also REALTORS®.  A REALTOR® is a real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of REALTORS®.

In addition to providing members with business tools, real estate market data, and educational opportunities, the National Association of REALTORS® also operates the Multiple Listing Service (MLS), a database of properties listed for sale by REALTORS®.  Only REALTORS® have full access to the MLS.  Approximately 75 percent of homes in the U.S. are sold through the MLS, and it is also a primary source for data on real estate market trends such as the average and median number of days current or past properties have been listed (“days-on-market”; available for sale but not yet sold), the average and median difference between listing price and sale price, and much more.

Because the MLS is such an important marketing tool, consider contracting with a REALTOR® to list and sell your homes.

Some developers choose to handle the marketing and sale of their homes without the help of an outside real estate agent, usually to save the cost of commissions. In a strong market where affordable housing is very scarce and where you have a large pipeline of potential buyers, this may work. (This is also an approach to consider if you have an in-house brokerage; see above.) In most situations, however, it is important to use an active, licensed REALTOR® who is experienced with affordable housing programs, for the following reasons:

  • Tap a New Pipeline of Buyers: A REALTOR® will have a list of hard-to-place buyers they are already working with.
  • Access the MLS: People who are in the market for a home purchase typically search the MLS online for properties. If you don’t list there, target buyers may not see your properties.
  • Build Stronger “Comps:” Listing property on the MLS can also help build stronger comparable sales for future homes. The appraised value of each home for sale is based on similar homes that have sold nearby in the recent past – these are called comparables, or comps. Appraisers find them on the MLS. If the only homes that have sold recently are in poor quality or were sold when the market was depressed, that will lower the appraised value of your home. But once you sell one or more homes, those sales can be used as comps for additional homes you develop. Each sale of a high quality home can pull the market up, potentially giving you a higher price for subsequent home sales.
  • Manage Workloads: The sheer volume of work involved in marketing and selling homes can quickly overwhelm a small nonprofit or government staff. Someone needs to identify potential buyers for your homes, show the homes on evenings and weekends when people commonly want to see them, help possible buyers get pre-qualified and ultimately secure financing, stage the properties, and visit them regularly to pick up trash and check for vandalism or other problems.
  • Tap Expertise and Learn New Techniques: A good REALTOR® will have years of experience with buyers and with effective sales and marketing techniques that could take your staff a long time to learn on their own. They will also bring valuable market research to the team.

Finding the Right Real Estate Agent

There are several ways to find a real estate agent (or REALTOR®) who is a good match for your organization, your buyers and your homes:

  • Issue an RFP or RFQ: Solicit qualifications and bids from real estate agents/REALTORS® in your community by issuing a Request for Proposals (RFP) or Request for Qualifications (RFQ) that details your requirements. View samples of RFPs for real estate services issued by the City of Flint, MichiganMcHenry County, Illinois, and the Northwest Georgia Regional Commission.
  • Look to Your Competitors: Find out which real estate agents your competitors are using and solicit bids from them. For example, one local government developer knew that a for-profit, mom-and-pop developer was also buying, rehabbing and selling foreclosed properties in the same target neighborhoods. The local government attended an open house held by the for-profit developer’s real estate agent and saw that she did a marvelous job of staging the house and recruiting potential buyers – so the local government hired her!
  • Get Referrals: Contact your local government, other nonprofit housing agencies and the Board of REALTORS® to learn which REALTORS® do a lot of business with affordable housing programs. Local chapters of the National Association of Real Estate Brokers (NAREB) and the National Association of Hispanic Real Estate Professionals (NAHREP) may also be good sources for referrals. Most communities have real estate agents who like working with low- to moderate-income buyers, and make a good living at it. Tapping experienced local professionals can save you a lot of time.
  • Look Around the Neighborhood: Drive around the neighborhoods in which you are developing homes to see which brokers and agents are listing property there (look for their signs). You can also look at neighborhoods that are similar in price and housing type. The agents you identify by looking around may be especially good at marketing these neighborhoods and the properties for sale in them.

HUD’s Guide to Marketing and Selling NSP Homes advises organizations negotiating a broker agreement to interview candidates to determine their: experience and success in selling real estate, knowledge of the community(ies) in which your homes are located and commitment to working with low- to moderate- and middle- income buyers. 

When you interview real estate agents, ask how many days and hours they will be on-site selling homes, how many open houses they will hold and how often, and what kind/how much advertising they will pay for in anticipation of earning a fee. The agent should agree to provide weekly or monthly reports on the number of inquiries, showings, open houses, ads placed, etc. The terms you agree on should be reflected in a detailed scope of work attached to the broker contract.