To realtor up or not...

[#-3]

Originally Posted by Realtor 1

Then they missed out on a opportunity to write off real estate commissions

Not if they were staying in Calgary.

[Travis Munroe]

Originally Posted by GP_Matt

That link makes it look like you are the realtor who wrote the listing.
Tell me it isn't so.

haha, no... already walking a fine line posting it without any reason beyond the obvious so "sheltered" the listing under my site.

[squiggs96]

Originally Posted by krazycanuck

I would suggest that you actually have more leveraging power without a realtor to negotiate the price on a new home. Most builders will pay 3.5% of the first $100,000 and 1.5% on the remaining amount to a realtor. That's almost $10,000 on a $500,000 home. That money either comes from the profit of the home, or in some cases part of the sales person's commission. While the rule is they won't markup the home if you use a realtor, they also will factor in that they are probably losing $7,000 to $10,000 in their profit margins, and will be less likely to want to lose anymore by negotiating down in price.

As a person who works for a real estate developer, I can tell you this is about as far from the truth as possible. First off, very, very few developers will pay based on the commission structure you mentioned. Most just pay a flat fee per unit sold, and then there are bonuses if you sell more units, to multiple buyers. Why would they pay huge commissions when they are the ones the develop and pay for the marketing campaign, sales centre, display suites, etc.? The realtors just have to heard the cattle in.

That said, it would be very unlikely that you could negotiate the price any lower without using a realtor. We budget a certain percentage of sales to have a commission paid out. It really doesn't matter to us if you brought in a realtor or not, as statistics will allow it to trend back to the expected amount. You may be able to negotiate a lower price, but that would be based on market conditions, rather than using a realtor. A realtor could get you a better deal, especially if they have history with the developer.

[Travis Munroe]

Originally Posted by squiggs96

As a person who works for a real estate developer, I can tell you this is about as far from the truth as possible. First off, very, very few developers will pay based on the commission structure you mentioned. Most just pay a flat fee per unit sold, and then there are bonuses if you sell more units, to multiple buyers. Why would they pay huge commissions when they are the ones the develop and pay for the marketing campaign, sales centre, display suites, etc.? The realtors just have to heard the cattle in.

That said, it would be very unlikely that you could negotiate the price any lower without using a realtor. We budget a certain percentage of sales to have a commission paid out. It really doesn't matter to us if you brought in a realtor or not, as statistics will allow it to trend back to the expected amount. You may be able to negotiate a lower price, but that would be based on market conditions, rather than using a realtor. A realtor could get you a better deal, especially if they have history with the developer.

Thank you for also clarifying this as I tried in my post. Very misleading to anyone who is reading his post and leaves believing what it claims.

[ken0042]

Having recently been through the process of finding a realtor, I can tell you that there indeed are a fair number of sub-standard realtors around. As mentioned before, I went with Travis, and you can find my review of him here. (The tl;dr version- Travis saved me more than he cost; however that involved me following his instructions and judgement.)

Some of the other realtors I dealt with had some red flags right away. Some were obvious signs of desperation such as wanting us to sign an exclusive purchase agreement within seconds of meeting them. (For 6 months.) Some were less obvious like "I don't use text messaging, and I really don't like email."

If you are looking at a realtor, and a friend tells you "This guy/gal is good"- ask them what made them "good." I had one friend refer me a "good" realtor when I bought my old house, and it only took me one meeting to see that he didn't want to do a lot of leg work. Turns out what made him "good" was that he would often go out for beer.

I would also argue against putting the value into a "per hour" basis. First of all, some realtors put more money into marketing your house. Secondly I would rather have my house sold fast and without issues than to have my realtor "earn his money" by spending weeks or months selling my house.

[#-3]

I have not been trying to argue that Realtors do not provide an effective service, and I think that the second Realtor I worked with was vary good.

All of that being said even having a good, experienced, smart, and hard working Realtor.

I personally did not find the experience of working with a Realtor vary helpful when purchasing. As somebody who likes to be more involved when I am spending 5x my annual income, I felt at times he just got in my way or that he thought I was stepping on his toes.

When selling a house, I found working with a Realtor vary helpful. But when I compare the cost to other professional services like lawyers or accountants, they are vary vary vary expensive. And with far smaller barriers to get into that industry, it just doesn't make sense.

All of that being said. I try to be fair to the individuals, by acknowledging that they are not all making $800,000/year for a job that is vary demanding, but not extremely challenging. They are in an industry with systemic problems that they probably struggle with too.

[bizaro86]

Originally Posted by ken0042

I would also argue against putting the value into a "per hour" basis. First of all, some realtors put more money into marketing your house. Secondly I would rather have my house sold fast and without issues than to have my realtor "earn his money" by spending weeks or months selling my house.

Yeah, I had a realtor sell a place for $10k more than my very educated opinion of what it was worth (based on sales in the same complex) in 1 day without an mls listing. I paid the full commission, and she probably put in 2-5 hours of work, so the hourly rate would be well into the four figures.

But I received huge value that well outweighed the cost of the service.

Rule of thumb: Price is what you pay, value is what you get.

[ruddstud]

We used Sellerdirect and LOVED them, contact me for the owners number for a smoking deal...

Originally Posted by Dan02

If you aren't happy with the price your realtor charged there are other options, rhino realty, sellerdirect, welist etc.

[Winsor_Pilates]

Originally Posted by krazycanuck

I would suggest that you actually have more leveraging power without a realtor to negotiate the price on a new home. Most builders will pay 3.5% of the first $100,000 and 1.5% on the remaining amount to a realtor. That's almost $10,000 on a $500,000 home. That money either comes from the profit of the home, or in some cases part of the sales person's commission. While the rule is they won't markup the home if you use a realtor, they also will factor in that they are probably losing $7,000 to $10,000 in their profit margins, and will be less likely to want to lose anymore by negotiating down in price.

Amazing how this differs in market to market; product to product.
I deal extensively with new condo presales in Vancouver, and this couldn't be further from the truth.

All developers budget separately for Realtor commissions as they know about 80-90% of their sales will include a buyers agent.

They also know how important that relationship is; so they not only cooperate with agents, they actually give us extra incentives and early access for our buyers when new developments open.

I just recently got a buyer $40,000 off a new condo, in a development where the average buyer would come in and only get $15,000.
Strictly due to my relationship with that developer and the repeat business I bring them. Well worth the commission they offer me to ensure a continuous stream of buyers to their various communities.

Having said all that, I could see smaller joe shmo Calgary builders thinking differently. Some of them have a hard time thinking big picture and understanding that strong relationships with Realtors will bring them many buyers for years to come; hot or cold markets.

[ernie]

I've sold a grand total of 1 house and bought 2....not in Calgary nor any other particularly hot markets.

The first house we bought (and then sold) we used the same realtor as she did an awesome job finding us that home in the first place. She took our desires, price range and turned it into realty in one weekend. She did her homework and only sent us listings she thought we'd like. We weren't wading through a bunch of crap.

When we put the house on the market to move to the states the market was somewhat depressed where we were. A few houses in the area were sitting on the market for a long time. The first thing she did was bring in a stager to look over the house (a her cost). We followed the advice of the stager to a "T" which did involve re-painting a couple of rooms and putting some stuff in storage. A weekends worth of work for us. The house sold in under a week and above market price at the time because we had a few parties making offers. One of our neighbours took note, switched realtors, staged the house and once it was staged sold it within a few weeks for asking price. It had been on the market for nearly a year before that. Realtors can bring a lot to the table but it does have to be the right realtor.

Our realtors down here were another story. Just terrible. They did a reasonable job of finding a house we liked in the area we wanted. In fact we found 2. We put in offers on both. Had the return offer come back a little bit higher on the second choice but the offer on the first choice was rejected and the owners didn't budge on price. Our realtors got together with that realtor and it came out that they were underwater on the mortgage and weren't moving. We also found out he was a local news anchor that received a job offer from his hometown station (a larger market in Florida). We said fine and said we'll just persure the other house. We knew what we offered (30k or so below asking) was only a bit lower than what the market was dictating. The choice 1 owners immediately dropped the price but only a mere 5k.

Now I'm sure you're wondering where the bad realtor part comes in....

Well here it is: "We really think you should bring your price up and meet them AT LEAST half way because they are underwater and need some help".

My response was: "That's not my problem. And I can't even feel bad for them because he is willingly leaving his job and the area. He wasn't laid off. If he didn't take into account selling his house for below what he owes that's on him."

They shook their heads a gave me a "tsk tsk, but they aren't going to move off the price". I said we'll find out in less than 24 hours after you tell them we will be moving on if that's the case. Either they contact you or they don't. They again repeated how they weren't going to move and if we really wanted the house we should meet them half way and help them out of their jam.

Less than 6 hours later they came back and countered at ~5k higher than what we offered, which was in line with the market. At the time I couldn't believe our realtors would recommend paying more for the house just because the seller was underwater.

At the closing the seller came with his cheque to the broker to balance the books (things aren't handled by lawyers here just brokers) and much to our surprise he said he was prepared to basically accept our offer. He thought that was what the market said it was worth. His realtor had essentially convinced them that they were wrong. He was extremely annoyed they disclosed they were underwater of course (he did not know that was done).

So the just because was really a just because we wanted a bigger commission.


So after going off on that unintentional tangent....

Realtors can be very helpful and more than worth it. But you need to find the right one.

[Winsor_Pilates]

Originally Posted by #-3

I have not been trying to argue that Realtors do not provide an effective service, and I think that the second Realtor I worked with was vary good.

All of that being said even having a good, experienced, smart, and hard working Realtor.

I personally did not find the experience of working with a Realtor vary helpful when purchasing. As somebody who likes to be more involved when I am spending 5x my annual income, I felt at times he just got in my way or that he thought I was stepping on his toes.

When selling a house, I found working with a Realtor vary helpful. But when I compare the cost to other professional services like lawyers or accountants, they are vary vary vary expensive. And with far smaller barriers to get into that industry, it just doesn't make sense.

All of that being said. I try to be fair to the individuals, by acknowledging that they are not all making $800,000/year for a job that is vary demanding, but not extremely challenging. They are in an industry with systemic problems that they probably struggle with too.

As a Realtor, I actually appreciate the topics you've brought up in this thread. It's more of an industry thing, so it's good to hear feedback from buyers/sellers about the industry set up.

The industry is set up to be based on results, and not time. That seems to be where your objection is.
It seems you're suggesting a model based on hours and payment for time would be better?

A couple issues I see there though:

1) Your transaction likely happened fast, so you're coming up with a $400/hr amount.
If your transaction took a long time, would you be willing to pay more for the service?
As a buyer what if you spend 6-8 months looking for places with your Realtor and then decided not to buy at all; this happens a lot.
Would you be willing to pay that agent an hourly rate for the time spend over this 6 months?

2) If I sold home X for $650,000 in 2 days vs selling home X for $600,000 in 6 months.
Would you be willing to pay me a higher commission for the $600,000 sale because it took more of my time?

[DoubleF]

Realtors are an odd batch. Similar to cafes, you'll find stuff ranging from great, diamonds in the rough to "how the hell are they still around"? You have to do your research on them.

I was showed two units of a building downtown a few years back. Several months later, the foundation of the building was found to be... messed up. Made the news and everything because it had to be evacuated or something. Most of the research this individual did consisted on price range and local amenities. My mortgage broker had more info relating to the building than the realtor (and this was stuff I realized I could partially look up online for free after a few places).

2 realtors I know indirectly actively give clients kickbacks. 1 of the 2 actually uses that term "kickback". The other at least uses some grey area accounting mumbo jumbo to explain it.

Part time realtor I knew had 6 other companies to manage. I have no idea why he went into real estate. He was doing pretty well in the other companies. He wasn't even doing it to benefit the other companies either.

Another realtor I indirectly knew wasn't really ever in the city. Always traveling. Somehow though, this individual was able to get the right contacts to allow for private viewings etc to occur. I don't know if this was really legit, but it sure beat realtor #1 and the kick back realtors.

I have a buddy who is a full time realtor with another family member. Beyond that, his research is top knotch. It's also essentially hiring 2 realtors with only 1 point of contact. I'd use him if I ever needed a realtor. Nothing against the resident CP realtor, I just know the other guy better.

My last place, I bypassed the realtor because I knew the seller (honest guy, sold below market price and we split the potential savings of cost of realtor), went straight to the lawyer (knew the guy, decades of years doing real estate). I'd do it again if I knew someone and they were trust worthy to do a private sale, but someone else? I'd realtor up.

Just like anything important, research it. Not just the property, but realtor too.

[Travis Munroe]

Originally Posted by DoubleF

Realtors are an odd batch. Similar to cafes, you'll find stuff ranging from great, diamonds in the rough to "how the hell are they still around"? You have to do your research on them.

I was showed two units of a building downtown a few years back. Several months later, the foundation of the building was found to be... messed up. Made the news and everything because it had to be evacuated or something. Most of the research this individual did consisted on price range and local amenities. My mortgage broker had more info relating to the building than the realtor (and this was stuff I realized I could partially look up online for free after a few places).

2 realtors I know indirectly actively give clients kickbacks. 1 of the 2 actually uses that term "kickback". The other at least uses some grey area accounting mumbo jumbo to explain it.

Part time realtor I knew had 6 other companies to manage. I have no idea why he went into real estate. He was doing pretty well in the other companies. He wasn't even doing it to benefit the other companies either.

Another realtor I indirectly knew wasn't really ever in the city. Always traveling. Somehow though, this individual was able to get the right contacts to allow for private viewings etc to occur. I don't know if this was really legit, but it sure beat realtor #1 and the kick back realtors.

I have a buddy who is a full time realtor with another family member. Beyond that, his research is top knotch. It's also essentially hiring 2 realtors with only 1 point of contact. I'd use him if I ever needed a realtor. Nothing against the resident CP realtor, I just know the other guy better.

My last place, I bypassed the realtor because I knew the seller (honest guy, sold below market price and we split the potential savings of cost of realtor), went straight to the lawyer (knew the guy, decades of years doing real estate). I'd do it again if I knew someone and they were trust worthy to do a private sale, but someone else? I'd realtor up.

Just like anything important, research it. Not just the property, but realtor too.

Thank you

[Bring_Back_Shantz]

I really don't understand why people are so dead set against realtors being able to make a living. It think a part of it is that they don't understand what a realtor makes on a sale, and people tend to really inflate what the actual number is.

What I can say, is that a good realtor is definitely worth their comission.
Having just bought/sold, my realtor worked his butt off for me. The place I bought was listed by one of the discout brokerages, and I wound up paying about $50k less than I would have been comfortable with, and what the market seems to be at right now.
My realtor was willing to hustle to get my offer in before too many people could view it, and becasue of that I got the house I wanted for a lot less then I would have willingly spent.
So in that case my good realtor saved me $50k and found me the perfect house. The seller on the other hand saved a few grand on comission, but I'm pretty sure the math doesn't work as well for them.

[#-3]

Originally Posted by Winsor_Pilates

As a Realtor, I actually appreciate the topics you've brought up in this thread. It's more of an industry thing, so it's good to hear feedback from buyers/sellers about the industry set up.

The industry is set up to be based on results, and not time. That seems to be where your objection is.
It seems you're suggesting a model based on hours and payment for time would be better?

A couple issues I see there though:

1) Your transaction likely happened fast, so you're coming up with a $400/hr amount.
If your transaction took a long time, would you be willing to pay more for the service?
As a buyer what if you spend 6-8 months looking for places with your Realtor and then decided not to buy at all; this happens a lot.
Would you be willing to pay that agent an hourly rate for the time spend over this 6 months?

2) If I sold home X for $650,000 in 2 days vs selling home X for $600,000 in 6 months.
Would you be willing to pay me a higher commission for the $600,000 sale because it took more of my time?

You know it's true, my house did sell fast. A hot market, a good agent, and me doing allot of work on preparing the house made that happen.

I was using the $/hour figure to quantify a point.

I think this is an industry that needs to stop saying "its a small percentage" And needs to start saying for the average person 10k, 20k what ever it is in that range is allot of F***in money.

Real Estate needs to Modernize, get leaner, and focus more on giving the customers value for less.

In the long run it will probably work out better for professionals like Travis, because it would push many weekend agents, or get rich quick agents out of the industry. I don't believe Realtors have a meaningful impact on the volume of property being sold, that is a personal choice made before people even seriously engage a realtor. So Naturally the work would fall back to true professionals.

[1stLand]

Selling a home is a very Stress Inducing / Life Altering Experience for Sellers & Buyers, and Their Realtors assume some of that stress.

I chose to become a Realtor because of the flexible hours, thinking I could play more and work less and make a lot of money.

The opposite happened. I work 7 days a week and almost every evening. I've walked off golf courses in the middle of a round because my clients needed me, missed my grandma's 90th birthday, got in 2 car accidents on the way to appointments (being rear ended) had relationships fall apart because of schedule etc.

I think part of the reason Realtors command high commission fees is having to be 'on call' at all hours of the day, every day.

Lawyers certainly do not work every day, or past 6 pm. There are exceptions, but I am speaking in general terms.

[morgin]

Originally Posted by 1stLand

Selling a home is a very Stress Inducing / Life Altering Experience for Sellers & Buyers, and Their Realtors assume some of that stress.

I chose to become a Realtor because of the flexible hours, thinking I could play more and work less and make a lot of money.

The opposite happened. I work 7 days a week and almost every evening. I've walked off golf courses in the middle of a round because my clients needed me, missed my grandma's 90th birthday, got in 2 car accidents on the way to appointments (being rear ended) had relationships fall apart because of schedule etc.

I think part of the reason Realtors command high commission fees is having to be 'on call' at all hours of the day, every day.

Lawyers certainly do not work every day, or past 6 pm. There are exceptions, but I am speaking in general terms.

nm.

[Makarov]

Originally Posted by 1stLand

Lawyers certainly do not work every day, or past 6 pm. There are exceptions, but I am speaking in general terms.

Ha ha ha ha...

[squiggs96]

Here's an article that came out on Friday: http://business.financialpost.com/20...bubble-agents/

So what’s going on? Much of it is an influx of speculative careers from would-be real estate agents who see a quick buck to be made because they know someone selling their house and they want to get the listing and the fat commission — up to 5% of the house price — that comes with it.
“You’ve got some nice person making $30,000 or $40,000 as a receptionist. This is the American dream. You do two deals and you make $50,000,” says Lawrence Dale, a long-time thorn in the side of both CREA and TREB having sued both.

[Calgary14]

Originally Posted by krazycanuck

I work with a builder, and one of the first posts is right. Once you've come in a sales centre on your own, you can't use a realtor for the purchase. In fact, if a realtor agrees to work on your behalf now, they are putting their own licence at risk as it is punishable by the real estate board.

I would suggest that you actually have more leveraging power without a realtor to negotiate the price on a new home. Most builders will pay 3.5% of the first $100,000 and 1.5% on the remaining amount to a realtor. That's almost $10,000 on a $500,000 home. That money either comes from the profit of the home, or in some cases part of the sales person's commission. While the rule is they won't markup the home if you use a realtor, they also will factor in that they are probably losing $7,000 to $10,000 in their profit margins, and will be less likely to want to lose anymore by negotiating down in price.

That's exactly what we did when we dealt directly with the builder. The builder even said they can negotiate a bit more because there isn't a commission to pay out. We made a lower offer knowing this and saved thousands. Not sure of the exact amount they would've paid as a commission though