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,