Brian,
I am just posted this on
www.hgrei.com last week:
When to use a REALTOR? It`s a question that many ask themselves when looking to buy or sell a house. Recent changes forced on the Multiple Listing Service by the Competition Bureau of Canada have brought a spot light back onto the industry. There is a sentiment in the general populous that realtors bring little value to the transaction of a home. Many will say "They got paid HOW much?" for simply listing a home. "I could have done that" is often the next statement. Companies like PropertyGuys.com and WeList have been making significant inroads into the Canmore market and you can see why. For under $1500 you can have your home listed on MLS, professional photos taken and have access to the contracts to facilitate a sale but what you wont get is any expertise in two key components: negotiation or marketing. It is estimated that between 15 and 25% of transactions happen without a realtor.
Being in the investment real estate industry you may be surprised to learn that I still use a realtor on about 90% of my transactions! Unless you are an expert in the local market, have a significant amount of time to invest in making a transaction happen and lastly have the expertise to make a sale proceed without major hiccups then you should to use a realtor. And not just any realtor but a great realtor. According to Jessica Stoner from Re/max Alpine a "great agent is someone that you can build a long lasting relationship with and can accommodate your specific needs." I would agree. Every seller and buyer is different and a great agent will understand and compliment those needs. A great realtor will also know when they are not the best agent for your situation and refer you to someone that is!
Like anything else the 80/20 rule applies. The top 20% of agents make 80% of the money. So often you are either doing really well as an agent or you are starving. The top agents are making a very respectable living earning $100,000/year or more but many agents are having to take second jobs to make ends meet. This is a very competitive market right now and the top agents are working hard to stay on top. On an average Canmore home sale price of $600,000 the commissions will be roughly $22,000 and spit in two for the sellers and buyers agent. Not a small chunk of change.
With current market conditions the reality is that many agents are getting creative in their fee structures. The old adage that it was 7% on the first $100,000 and 3% on the balance has definitely changed. Fees are up for negotiation! Like everything I think you get what you pay for. However, I also believe that the creative seller can come up with structures that benefit both the seller and the agent. True performance based structures such as a flat fee for a sale of X amount and a large commission for anything above X helps both the seller and the agent. Lets be honest half of 3% doesn`t really motivate a listing agent but half of $50,000 sure does! Find a scenario that works for both of you! Keep in mind that if you have a property that is going to be very hard to sell you may be paying more in fees than you used to as some agents are asking for a large upfront non-refundable fee and then a commission above that and rightfully so. If an agent tells you that fee structures are not negotiable find another agent.
When don`t I use a Realtor? The reality is that most For Sale By Owners (FSBO) are out to lunch on their listing price and expectations. Most haven`t come to the reality of today`s market and are still asking peak pricing. They want top dollar and don`t want to pay any fees. These aren`t motivated sellers. They are just trolling to see if they can find someone to help them hit pay dirt. Having said that, FSBOs can often be an outstanding place for finding motivated sellers. As a buyer, I can talk directly to the seller and find out what their true motivations are and help them out as best as I can. This is nearly impossible with agents involved. FSBOs can also be a great place for using advanced "creative" real estate strategies such as Rent-To-Owns or Agreements For Sale. Many people bought their homes at the peak of the market and have little equity to pay a realtor so they are forced onto the FSBO market thus creative strategies like this can be a great option for them. I would use a heavy dose of caution here as it can also be a way to get into an ugly legal battle but if you know what you are doing then all the power to you!
When selling a home I almost always use a realtor simply for the negotiating edge. A great realtor will help keep the emotions to a minimum and insulate you from what can be a stressful transaction. A top agent will help you get market value in a timely maner for your home, facilitate the negotiations, and provide expertise that most common folk don`t have. I am a big proponent of using experts. You don`t cut my own hair just because you can so what makes you think that you can sell a home more effectively than a pro?
In closing, there are times when real estate agents are not worth their commissions but for most people they still make sense for the majority of transactions. If you have the time and expertise go ahead and save yourself a few dollars but keep in mind what it might cost you.
I would love to hear your thoughts! Are realtors paid too much? When are you using them? How did you find a great realtor? Have you listed your house on a FSBO site?
