why do I need a realtor to BUY?

[Bagor]

Originally Posted by Winsor_Pilates

Do you feel you got full potential value for your home?
Very few sales (about 2%) happen through open houses, so you're fortunate it worked out so well for you.
Generally, cleaning the house and having open houses isn't enough to sell most homes at maximum potential value.

Is it possible that having a good agent, who would have marketed and exposed your home to more potential buyers might have gotten you a higher sale price?

Yeah, I'm more than happy what we sold for. But I would say that! Seriously though ... yes.

And I've heard this 2% for open houses figure before which begs a couple of questions. Is this 2% based on an offer at the actual open house that leads to a deal or return viewings that then lead to an offer. And secondly is this data is true and so low .... why bother? Is there an actual official statistical report to back up these statements?

All I'm saying is the cleaning etc from my experience was the biggest PITA of the process.

As to the 2nd part of your question .... sure it'd possible but using comparables before and after .... no. i.e. The net money that enters my pocket when all expenses are paid.

Which leads onto another question. Say I'm selling for 400k with agents at 1.5% and you contact me looking for my listing. If I say sure provided there is something written into the contract that you MUST sell for at least 415k to earn your commission (therefore I get the same coin in my pocket) would you have this clause written into your contract?

i.e. Are realtors prepared to back up their claims in the form of flexible contracts or are they rigid? Also is the 6 months a rigid pre-requisite for a contract.

If a realtor is claiming that they can sell my house for x dollars in 2 months max can I turn around and say .... fine, I'll sign up with you for 2 months?

[bizaro86]

Originally Posted by Bagor

i.e. Are realtors prepared to back up their claims in the form of flexible contracts or are they rigid? Also is the 6 months a rigid pre-requisite for a contract.

If a realtor is claiming that they can sell my house for x dollars in 2 months max can I turn around and say .... fine, I'll sign up with you for 2 months?

Different realtor's have different requirements on that. When I sold my house, we signed for 3 months, but one guy we tried wanted 6. We didn't go with him for different reasons, but it definitely varied, and is certainly negotiable. I bet more realtor's would be willing to cut the duration than the fee....

[Sliver]

Originally Posted by 4X4

Re: lower commissions

When a realtor doesn't show a property because the selling commission is too low, it's not about "punishing" the seller as much as it is a big F U to the list agent. And rightfully so, IMO. A smart seller should be making sure the selling commission is at least close to the going rate, and if it isn't, the seller should be questioning their listing realtor as to why he or she is not offering it.

Remember that the selling agent is the one that is more or less in control of the buyer's money, so if that agent is not motivated to sell your property, how will it ever sell? Dual agency?

There is no such thing as a unique property when it comes to regular residential real estate, at least, not in Calgary where all the houses were built in waves that almost all conform to similar codes and styles. Maybe in places like Mount Royal or Eagle Ridge there are "unique" homes, but you're never going to see a We List sign in there, or any of the bargain realty companies either.

For the record, I happen to think that the current industry norm of 7/3 is a bit high, but that's beside the point. If you are serious about buying or selling, use an agent that is serious as well. And any serious agent is not going to go around doing the same job as the next guy for half the price. If he is, you should probably wonder why. And if it bothers you that realtors make a nice chunk of change per deal, then go get your license and try doing it yourself.

Sorry for my a-holishness here. I come from a family of realtors and land developers. I've been in and around this industry since before I could walk. There's a lot of money to be made in real estate, but if you think it's easy, you're a fool. You might as well be doing all your mechanical work, and replacing your furnace, and writing your wills, and farming your own food as well. I'm not saying it's rocket science, I'm saying it's a full time job with no guarantee at the end of the month that you're going to get a cheque.

That's not beside the point; it is the point. If you think it's too high why not negotiate it down? If your home is worth double other average homes/condos, the commission based on a percentage of the value you've worked to earn starts to seem criminal.

It's not like a realtor has to work more to sell a $700,000 home versus a $250,000 condo. It's not unreasonable to negotiate a commission that doesn't have you paying $25,000 (commission on the $700k place) for the same amount of work the realtor would've been happy being paid $11,500 for (commission on the $250,000 condo). I don't understand what would entitle a third party to an extra $14,000 of my money, but if you do by all means pay full commission.

[4X4]

Originally Posted by Sliver

That's not beside the point; it is the point. If you think it's too high why not negotiate it down? If your home is worth double other average homes/condos, the commission based on a percentage of the value you've worked to earn starts to seem criminal.

It's not like a realtor has to work more to sell a $700,000 home versus a $250,000 condo. It's not unreasonable to negotiate a commission that doesn't have you paying $25,000 (commission on the $700k place) for the same amount of work the realtor would've been happy being paid $11,500 for (commission on the $250,000 condo). I don't understand what would entitle a third party to an extra $14,000 of my money, but if you do by all means pay full commission.

As a matter of fact, a realtor does have to work more to sell the higher end home. There are much, much fewer buyers for a $700,000 home than there are for a $250,000 condo, as well as fewer direct comparables.
I'm not trying to convince you that it's $14,000 more work, but it sure as shiz is more work.

Anyway, as far as actual commission rates go, I think it should be a little more like 7/2 or perhaps even 7/1. But I know that once you get close to a mil, commission rates will often change to a flat percentage rate, and it's always a flat percentage for commercial real estate.

[Slava]

Add to the fact that as the buying price increases most buyers are looking for more specific things as well. If you are in the market for a million dollar home today you have different expectations of that property than a person looking to spend half that. If things aren't exactly what you're looking for as a high end buyer there is no deal, whereas most buyers spending average figures will be alright with repainting or remodeling. ( a generalization to be sure, but more often the case I would say)

[Winsor_Pilates]

Originally Posted by Bagor

Yeah, I'm more than happy what we sold for. But I would say that! Seriously though ... yes.

And I've heard this 2% for open houses figure before which begs a couple of questions. Is this 2% based on an offer at the actual open house that leads to a deal or return viewings that then lead to an offer. And secondly is this data is true and so low .... why bother? Is there an actual official statistical report to back up these statements?

To be honest, I don't know if it's exactly 2% but it's very low. The reason people bother with open houses:
-Sellers still expect them and think it's part of your job as the Realtor
-Realtors will try to pick up new business through them if the people coming in aren't already working with an agent

Which leads onto another question. Say I'm selling for 400k with agents at 1.5% and you contact me looking for my listing. If I say sure provided there is something written into the contract that you MUST sell for at least 415k to earn your commission (therefore I get the same coin in my pocket) would you have this clause written into your contract?

i.e. Are realtors prepared to back up their claims in the form of flexible contracts or are they rigid? Also is the 6 months a rigid pre-requisite for a contract.

If a realtor is claiming that they can sell my house for x dollars in 2 months max can I turn around and say .... fine, I'll sign up with you for 2 months?

Yes, Realtors can be flexible and set up different tailor made arrangements. In your example, I would have to see if 415K is reasonable before making my decision.
If the house is only going to be sellable at 400K, I would likely respectfully decline the listing. It's not part of my "claims" that I will sell your home for 15K over what it's worth, and that's not what my listing presentation or values as a Realtor are based on.
This is just me personally though, as there are lots of agents out there who seem to take any listing at any price.
I would caution you to ask why they are willing to take on a listing they likely won't sell; and is a desperate agent really your best bet to hire?
If you're main 2 criteria for choosing an agent become: who says they'll sell if for the most & who says they'll take the lowest commission, you're not likely hiring very good Realtors.

As for 6 months, there's no restriction but 2 months is the minimum for a listing to be put on MLS.
Depending on the market and realistic timelines needed in it, the term of the listing contract is usually adjusted. I know in the slow market Calgary had last year, many agents I talked to would not take on listings at under 3 months.

[Travis Munroe]

Rules prohibit from saying commission will be X amount if sold for this and you will get x amount as a bonus if you sell for more.
As for the open house situation, I do not know where the stats are from but personally don't believe them. You have no way to tell if someone came through your open house as a resident of the community who then tells a friend or family member about it. They then check it out on the internet, book a showing and all of a sudden you have an offer that started from the open house but there would be no way to find out.
As winsor said, too many agents will take any listing despite the sellers asking price. More times than not this place sits on the market for 3 months and then they go with another agent who prices the property properly and it sells after a month.

[DementedReality]

Originally Posted by 4X4

Re: ... I'm saying it's a full time job with no guarantee at the end of the month that you're going to get a cheque.

for the record, i dont disagree here. this is why i prefaced my comments with "with all due respect ... "

i make my living in a similar model, i am not suggesting its easy. was looking for and received discussion on the value i receive as a buyer.

i like the point that it really is the listing agents fault as they are the ones who counsel the sellers on where to set the rate for the buying realtor.

[Mad Mel]

Originally Posted by DementedReality

again and with all due respect to the hard working professionals in the industry, the system is gamed to make it difficult to work without a realtor.

for example, as a seller i have to pay a buying commision, even if the buyer doesnt bring one, it just means the seller gets both ends of it.

can you image if your client tried to negotiate this with their selling agent, the answer would be a blank look and a "thats not how it works".

as for knowing of common problems in a building or other industry inside information, why cant i pay a realtor a consulting fee to advise me once i have found my property?

in the process i am going through to buy a property, i just feel that i could do a much better job of negotiating instead of playing the telephone game where i tell my realtor, she tells the other parties realtor and then they reply through their realtor to my realtor and back and forth we go.

its a stupid system really. i should be able to at least negotiate directly with the other realtor, but that would be "frowned" upon in the real estate system of business.

Out of interest, that's how it works here. When I bought my home, the only realtor involved was the seller's realtor, who gets paid by the seller to represent his/her interests (usually about 2.5% commission, for the record). If I wanted to, I could have paid a buyer's agent to assist me, but I was comfortable with what I wanted, where I wanted it, and the market values. It's not hard to look for what you want these days, and even actual sale prices are available.

[bizaro86]

Originally Posted by Realtor 1

Rules prohibit from saying commission will be X amount if sold for this and you will get x amount as a bonus if you sell for more.
As for the open house situation, I do not know where the stats are from but personally don't believe them. You have no way to tell if someone came through your open house as a resident of the community who then tells a friend or family member about it. They then check it out on the internet, book a showing and all of a sudden you have an offer that started from the open house but there would be no way to find out.
As winsor said, too many agents will take any listing despite the sellers asking price. More times than not this place sits on the market for 3 months and then they go with another agent who prices the property properly and it sells after a month.

Sure. But the rules don't prohibit a commission structure of 3% on the first 250k and 35% of everything over 250k...

A commission structure like that would provide a stronger incentive for realtors to get the last 10k out of a listing, because the commission would materially change. In the current system, the realtor gets half of 3% of the last 10k, which equates to $150. Any rational realtor would want to sell for a slightly lower price and take the guaranteed thousands in commission, versus holding out for slightly more money that doesn't affect their income substantially.

Academic research also bears this out. A study at the University of Chicago showed that realtor's listing their own homes got slightly more money, and kept their homes on the market ~10 days longer than homes they listed for clients.

http://citeseerx.ist.psu.edu/viewdoc...=rep1&type=pdf

[bizaro86]

Originally Posted by Winsor_Pilates

I know in the slow market Calgary had last year, many agents I talked to would not take on listings at under 3 months.

3 months is pretty reasonable. If you're hiring someone, it's only fair to give them a chance to actually do their job. One of the agent's I interviewed when selling said he only took listings with a year's agreement. I wish he would have mentioned that on the phone, since he left (at my request) as soon as he said it wasn't negotiable, and it would have saved us both some time.

[Travis Munroe]

Bizaro, I guess a structure like that would work. I was more so avoiding the whole you get me 300-320 I pay you 5k commission and you get me 320 or more and I give you 10k commission. It is now a major conflict of interest as the agent may try talking the seller out of a 318k offer for his own benefit. The whole model of CREB/RECA is avoiding any conflicts of interest.

[SeoulFire]

I think a good portion of this comes down to a monumental (and widespread) lack of trust for the industry as a whole. Personally, I trust realtors as much as I trust anybody in a 100% commission driven position - which is not at all.

[Sliver]

Originally Posted by 4X4

As a matter of fact, a realtor does have to work more to sell the higher end home. There are much, much fewer buyers for a $700,000 home than there are for a $250,000 condo, as well as fewer direct comparables.
I'm not trying to convince you that it's $14,000 more work, but it sure as shiz is more work.

I don't think there's any more work in selling a more expensive home from the realtor's perspective. For one, the paperwork would be exactly the same (it's not like you fill out different forms after houses hit $700k or a million). I suppose it could sit on the market longer, but that doesn't equate to any work for the realtor.

Originally Posted by 4X4

Anyway, as far as actual commission rates go, I think it should be a little more like 7/2 or perhaps even 7/1. But I know that once you get close to a mil, commission rates will often change to a flat percentage rate, and it's always a flat percentage for commercial real estate.

Sounds reasonable.

[Travis Munroe]

I understand the 0% trust for "Realtors" but do believe that you can have 100% trust in a specific "Realtor".

[ken0042]

Originally Posted by Sliver

I suppose it could sit on the market longer, but that doesn't equate to any work for the realtor.

Wouldn't a longer time on the market mean more newspaper ads, more showings and more open houses?

[SeoulFire]

Originally Posted by Realtor 1

I understand the 0% trust for "Realtors" but do believe that you can have 100% trust in a specific "Realtor".

I get that but when you are 0 for 3 it has become difficult to assume that the next one will be better.

[Travis Munroe]

Buying or Selling?

[Sliver]

Originally Posted by ken0042

Wouldn't a longer time on the market mean more newspaper ads, more showings and more open houses?

If you're my realtor selling my house, how do more showings take any of your time? The realtor with an interested buyer calls you to schedule a time and you call me to confirm the time. That takes maybe 10 minutes to field the call and advise me of the time.

I doubt people with super expensive houses would want an open house so I think you can remove that as a possibility.

As far as advertising, I don't think it's fair to add that as a cost of selling a house. Look at ads for homes by realtors - they are advertising themselves to garner more business under the guise of advertising homes. Homes are bought and sold on MLS - not through print ads.

[bizaro86]

Originally Posted by Realtor 1

I understand the 0% trust for "Realtors" but do believe that you can have 100% trust in a specific "Realtor".

This is very true, as with many things (especially with a relatively low barrier to entry) there are some bad apples. There are also some great ones.