I think the major problem in the real estate market right now is that it is impossible to do an "apples to apples" comparison between any two agents.  Most people believe that choosing a real estate agent is a function of the following.

1)      The commission you wind up paying (4%-7%)

2)      How knowledgeable you are about the real estate process and what you are looking for

The problem is it is far from that simple.  Let's consider the difference between a "top" agent and a "poor" agent.

1)      A top agent will get you a better price for your home (whether selling or buying) due to their negotiation skills.  A poor agent will not do this.  Even worse, if your agent is poor and the agent on the other side of the bargaining table is a top agent, you will be taken to the cleaners.

2)      For sellers, a top agent will sell the home quicker

3)      Top agents will often help you make a decision not to buy or not to sell, because they recognize the prospects for future business and referrals.

4)      Top agents depend on referrals, while poor agents depend on advertising because repeat customers are rare.

5)      Top agents are much better at closing the deal.  You would be surprised how many deals fall through at the last moment.

6)      Top agents think of all the extras - getting more money for you from inspections, getting home warranties paid by the seller, getting money towards closing, etc.

7)      As much as you may think you know about real estate, if you come up against a top agent on the other side of the table you will lose.

Generally, for buyers or sellers the maximum you will save from a discount agent is 2% (4% vs. 6% for sellers, 1% vs. 3% for buyers).  A top agent can and will easily exceed that 2% in terms of extra savings to you.

The key problem though, is it is almost impossible to tell the difference between a "top" agent and a "poor" agent for a consumer.  Every agent, of course, will identify themselves as a top agent but this is true for very few agents.  The following are statistical characteristics of a top agent.

-          A fair number of recent transactions.  Too many transactions == no service for you, too few transactions for an experienced agent is a warning sign.

-          No, or extremely few, cancelled, expired, or failed to sell listings

-          Average sales price for listing is close to or higher than the listing price

-          Average sales price for buyers' agency is a deal less than sales price

-          Average days on the market for sold homes is low

-          Majority of customers are referrals/repeat business

Of these statistics, not a single one is available to consumers.  All except for the last ones are available on the MLS.  There are, of course, other considerations besides these that should be taken into account for a real estate agent - such as whether they specialize in the type of property you want to buy (new construction, waterfront, vacant land, etc).

Equally confusing is that it is not true to say that "all 3% agents are top agents" and it is not true to say that "all 1% agents are poor agents".  Certainly, a higher percentage of top agents are 3% agents (since they're at the top of their game, why would they take less pay?) but there are good agents who only charge 1%.

Therefore my advice for someone who is looking for a real estate agent to sell or buy is to do the following.

-          Select several agents you want to talk to.  Use the following criteria to select them.

o   Ignore the commission they charge for now

o   Ask for referrals from others

o   Look who sells (not just lists) homes in the target neighborhood

o   Visit sites like www.activerain.com and find agents that appeal to you

o   Select 3-5 agents

-          Interview each agent.  Ask them the following.

o   Ask them for their statistics for the above.  You may want to do this via e-mail so they can look it up.  Ask them only for the last 6 months - which in today's market is the only thing that matters.

o   Ask them for their plan on how they intend to sell a house or find one for you

o   Take special note of how attentive they are to you and the quality of their answers

I hope this helps good luck.