dealing with realtors

infinity

Inspired Forum Member
REIN Member
I am ready to call my realtor and get him to find me motivated sellers that he knows of. However, what is in it for him? Don`t realtors get paid based on the sale price of the house?

thanx all.

Jamie
 

markl

New Forum Member
Registered
Hi Jamie,

Realtors do get paid on the sale price of the home. But if you are going to give them transactions that they would never have had before then it may be worth it to them. Your other option depending on how good the deals they are bringing to you is to sweeten the pot for them that way they are more motivated and you ensure you get first crack at all the deals.

Regards,
 

CarlaJohnson

New Forum Member
Registered
Every seller is motivated to some extent. Sit down with your realtor and talk about your goals first. You need to know if this particular realtor is with you on this and can get help you get where you want to go. Every realtor has their own experience and expertise. Clarify your expectations and their approach before you jump in with both feet.
 

infinity

Inspired Forum Member
REIN Member
QUOTE (markl @ Dec 4 2009, 07:32 AM) Hi Jamie,

Realtors do get paid on the sale price of the home. But if you are going to give them transactions that they would never have had before then it may be worth it to them. Your other option depending on how good the deals they are bringing to you is to sweeten the pot for them that way they are more motivated and you ensure you get first crack at all the deals.

Regards,


Thanks Mark,
This may sound dumb, but if we go with no money down, where does the seller get the money to pay realtor fees?
 

infinity

Inspired Forum Member
REIN Member
QUOTE (markl @ Dec 4 2009, 07:32 AM) Hi Jamie,

Realtors do get paid on the sale price of the home. But if you are going to give them transactions that they would never have had before then it may be worth it to them. Your other option depending on how good the deals they are bringing to you is to sweeten the pot for them that way they are more motivated and you ensure you get first crack at all the deals.

Regards,
Thanks Carla.
 

gwasser

New Forum Member
Registered
QUOTE (infinity @ Dec 4 2009, 08:23 AM) Thanks Mark,
This may sound dumb, but if we go with no money down, where does the seller get the money to pay realtor fees?

I don`t think you have to worry about commissions, because if you have signed a Buyers-Brokerage agreement with your real estate member, he/she is in an `agency relationship` with you. Regardless of the commission level, according to his/her fiduciary duties, he/she/it has to act in your best interest which could override his/her/... own. The commissions for both the buyer`s and seller`s brokers is build into the sale price - so with no money down it is part of your mortgage. I know this is theory, but the agent is supposed to follow your instructions as long as they are legal. These are the rules in Alberta. I don`t know about other provinces.

Commissions are set by the seller`s or listing agent and his client. If these commissions are low, your agent may feel tempted not to push that deal too hard in the real world, he/she/it...is human after all. Commissions are negotiable but if the seller`s agent sets the buyer`s agent commission so low that your agent has to work for basically peanuts, guess what?
Besides it is not fair. Because your buyer`s realtor has to incur all kinds of expenses to be in the place he is and to build the expertise you require him/her to have. Should he do that for nearly free? I don`t think so...

To give you an idea what realtor`s expenses are:
1 membership fees for the real estate board and RECA
2 Desk and administration fees with brokerage
3 marketing (he pays for everything from business cards, websites to advertising in the community rag)
4 extra car insurance
5 computer equipment, signage, office assistants, phone, cell,.....
6 gas money for driving you around to show (on average 12 properties) plus the coffee money to keep you lubricated
7 his time
8 liability and legal fees

So, I guess you pay for what you get. Lately, buyers, are encouraged to `top off` the realtor commission to his/her normal rate(s) out of the buyer`s own pocket to ensure the buyer`s agent is fairly compensated. This is done in writing on the buyer-brokerage agreement. Just, like with mortgages, realtor`s rules for playing in the sandbox constantly change as well.

Realtor`s are not often in a position to learn about `buyers motivation`. Why? Well if the realtor is the seller`s realtor, fiduciary duties force him to keep such information confidential. So how is the buyer`s realtor to find out? He may be lucky and run into `loose lips`, but if those lips are from a realtor at his own brokerage he is in a `dual agency` relationship and can not legally reveal it. Only, when the loose lipper is a member of another brokerage firm, then he is obliged to reveal it.

As you can see there are many angles to your expectation that your realtor will ferret out the seller`s motivation. Normal information on the listing papers and MLS are much better indicators. And... your realtor can help you how interpret that.

Finally, this is how I work with my realtor (and in January, how I would like to work with my clients). As part of your realtor`s services he can get you more complete MLS info than you can from the web. He also, can alert you of upcoming listings before they appear on-line and give you a bit of a head start. The realtor can forward this information by e-mail and he can do so automatically. This way, you get the info the minute your realtor gets it.

So, you can browse the net`s MLS system open to the public and select properties you like in your target area, price range and other criteria. You provide your realtor with your selection criteria as well and he will e-mail you from his database(s) MLSX. Now you select 3 or 4 properties that you like to see and let your agent know. He will set up the showings. Afterwards, you can decide to make an offer, refine your criteria or wait for the next batch of properties and start over. As an example of additional services, you can ask your realtor to supply, both when buying or selling a property is the CMA - comparative market analysis.

This is the most effective way you can work with a realtor. A realtor provides you a lot more services and protection than you may be aware of. I suggest you discuss these services in depth with your potential realtor so you know what you get for your money or for your seller`s money.

Hope this helps,
 

JimWhitelaw

Inspired Forum Member
Registered
QUOTE (infinity @ Dec 4 2009, 08:23 AM) This may sound dumb, but if we go with no money down, where does the seller get the money to pay realtor fees?If you`re using 100% seller financing or an AFS w/ no down payment, then someone is going to have to pay out of pocket for the commission fees. Either you or the seller.
 

infinity

Inspired Forum Member
REIN Member
QUOTE (gwasser @ Dec 4 2009, 10:49 AM) I don`t think you have to worry about commissions, because if you have signed a Buyers-Brokerage agreement with your real estate member, he/she is in an `agency relationship` with you. Regardless of the commission level, according to his/her fiduciary duties, he/she/it has to act in your best interest which could override his/her/... own. The commissions for both the buyer`s and seller`s brokers is build into the sale price - so with no money down it is part of your mortgage. I know this is theory, but the agent is supposed to follow your instructions as long as they are legal. These are the rules in Alberta. I don`t know about other provinces.

Commissions are set by the seller`s or listing agent and his client. If these commissions are low, your agent may feel tempted not to push that deal too hard in the real world, he/she/it...is human after all. Commissions are negotiable but if the seller`s agent sets the buyer`s agent commission so low that your agent has to work for basically peanuts, guess what?
Besides it is not fair. Because your buyer`s realtor has to incur all kinds of expenses to be in the place he is and to build the expertise you require him/her to have. Should he do that for nearly free? I don`t think so...

To give you an idea what realtor`s expenses are:
1 membership fees for the real estate board and RECA
2 Desk and administration fees with brokerage
3 marketing (he pays for everything from business cards, websites to advertising in the community rag)
4 extra car insurance
5 computer equipment, signage, office assistants, phone, cell,.....
6 gas money for driving you around to show (on average 12 properties) plus the coffee money to keep you lubricated
7 his time
8 liability and legal fees

So, I guess you pay for what you get. Lately, buyers, are encouraged to `top off` the realtor commission to his/her normal rate(s) out of the buyer`s own pocket to ensure the buyer`s agent is fairly compensated. This is done in writing on the buyer-brokerage agreement. Just, like with mortgages, realtor`s rules for playing in the sandbox constantly change as well.

Realtor`s are not often in a position to learn about `buyers motivation`. Why? Well if the realtor is the seller`s realtor, fiduciary duties force him to keep such information confidential. So how is the buyer`s realtor to find out? He may be lucky and run into `loose lips`, but if those lips are from a realtor at his own brokerage he is in a `dual agency` relationship and can not legally reveal it. Only, when the loose lipper is a member of another brokerage firm, then he is obliged to reveal it.

As you can see there are many angles to your expectation that your realtor will ferret out the seller`s motivation. Normal information on the listing papers and MLS are much better indicators. And... your realtor can help you how interpret that.

Finally, this is how I work with my realtor (and in January, how I would like to work with my clients). As part of your realtor`s services he can get you more complete MLS info than you can from the web. He also, can alert you of upcoming listings before they appear on-line and give you a bit of a head start. The realtor can forward this information by e-mail and he can do so automatically. This way, you get the info the minute your realtor gets it.

So, you can browse the net`s MLS system open to the public and select properties you like in your target area, price range and other criteria. You provide your realtor with your selection criteria as well and he will e-mail you from his database(s) MLSX. Now you select 3 or 4 properties that you like to see and let your agent know. He will set up the showings. Afterwards, you can decide to make an offer, refine your criteria or wait for the next batch of properties and start over. As an example of additional services, you can ask your realtor to supply, both when buying or selling a property is the CMA - comparative market analysis.

This is the most effective way you can work with a realtor. A realtor provides you a lot more services and protection than you may be aware of. I suggest you discuss these services in depth with your potential realtor so you know what you get for your money or for your seller`s money.

Hope this helps,

thanks for the help.
 

jseib

New Forum Member
Registered
I`m willing to bet there are a lot of PO`d realtors out there between Ron Legrand`s course and WIA churning out seminar grads who want to pay realtors chump change...

I recently got a call off a completely renovated house I had listed for $168,000 in Brantford, the "buyer" left a message saying to only call him back if I was willing to sell the home for under $100,000 that way I wouldn`t waste his time... My first reaction was to actually get PO`d then I had to chuckle as I realized he was probably just another seminar grad..
 

gwasser

New Forum Member
Registered
QUOTE (jseib @ Dec 7 2009, 06:42 PM) I`m willing to bet there are a lot of PO`d realtors out there between Ron Legrand`s course and WIA churning out seminar grads who want to pay realtors chump change...

I recently got a call off a completely renovated house I had listed for $168,000 in Brantford, the "buyer" left a message saying to only call him back if I was willing to sell the home for under $100,000 that way I wouldn`t waste his time... My first reaction was to actually get PO`d then I had to chuckle as I realized he was probably just another seminar grad..

You are forgetting that only a very small group of sellers `qualify` for Ron LeGrand`s approach. On top of that, you have to do a lot of work to get a worthwhile response on you`re yellow notes and you have no recourse when you buy a subpar house. Add to that, that your `profit` is usually not a lot more than the realty commission; no I don`t think realtors worry a lot about RonLeGrand.

Now put against the yellow-paper and buying without protection, the power of MLS, time savings plus many other services provided by realtors and I think you get what you pay for. Not all realtors are REIN oriented and so not all will understand your needs as an investor, but when you look on this forum you see a lot of realtors willing to help you find properties that match your criteria. And guess what, most of the time, the seller is paying these commissions.

It is also statistically shown that most `for-sale-by-owner" properties end up at the realtor because these sellers just don`t have the same marketing resources and tend to ask too high a price. Finally, to top it all off, if you do buy from a for-sale-by-owner or via a RonLeGRand deal, how do you figure out that you truly buy below market value? That takes a lot of `savvy` and expertise in your target market, if you know what I mean.

So, when I add it all up, I wouldn`t count using a realtor out yet.
 

neill

Airdrie, AB
REIN Member
QUOTE (jseib @ Dec 7 2009, 06:42 PM) I`m willing to bet there are a lot of PO`d realtors out there between Ron Legrand`s course and WIA churning out seminar grads who want to pay realtors chump change...

I recently got a call off a completely renovated house I had listed for $168,000 in Brantford, the "buyer" left a message saying to only call him back if I was willing to sell the home for under $100,000 that way I wouldn`t waste his time... My first reaction was to actually get PO`d then I had to chuckle as I realized he was probably just another seminar grad..

Not a RLG attendee then, IMO - I really got the sense that approaching the seller to see what they would sell it for (vs. the low-ball offer) helped to reduce the PO`d part..... whacking suspects instead of trying to make them into prospects.
 
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