The Best Barrie Real Estate Agents
When the price of homes are surging and an average home can cost $650,000, excitement can lead to indifference about what agents charge. But that’s a mistake under any circumstance. Homeowners who understand how the realty business works, which this little primer will attempt to explain, will be far better off.
1. Don’t hire a friend
The easiest mistake is hiring an agent simply because you know him or her – it’s a friend, a second cousin or just an acquaintance. You might not even want to hire that person, but it’s awkward to say no, or to negotiate.
Recently an acquaintance of mine who wanted to sell his house hired his childhood friend because he pressed him for the listing. The agent sold the house in two days, which my friend first thought was great. When he discovered it sold fast because it was listed under the current market price, he had misgivenings. He paid over $25,000 for this “service.”
2. Quick sales benefit the agent
You have to be aware of the agent’s incentives, and how they will most likely differ from yours. Real Estate Agents understandably want to sell as many homes as they can and as quickly as possible. The selling price, which is your main concern, is not so important to them.
When I sold my house a few years ago I hired the agent who’d sold the neighboring house across the street in a bidding war, figuring he must be a top agent. Unfortunately this was not the case. My listing price of my home also triggered a bidding war, which made me very optimistic about realizing a good profit. One at a time, three agents brought their clients into the house to table an offer while the others waited in their cars. The offers jumped up in price and we blew past the asking price. One bidder dropped out, and one of the remaining two came in to make his fourth bid of the evening. My genius agent – “let me do all the talking” he said before the auction started – accepted it. Stunned, I asked him for a word in the kitchen, and told him we should get a counter-bid.
“It’s a good offer,” he said. “We should not be Greedy.”
A recent article detailing the commissions of Realtor’s pointed out, that extra $12,000 added only $310.00 in commission on a 6-per-cent commission, which he would get half of. He’d already made thousands: What was an extra $160.00, especially when it was Friday night and he was eager to get home? It might have been almost $12,000 extra for me, but it was nothing to him.
3. Myth: You get what you pay for
Most people think commission rates are high but accept them anyway. There are full-service discount realtors who charge less and offer the same service. Why hasn’t this caught on faster?
Some homeowners are convinced by the industry that “you get what you pay for.” That’s what traditional agents always say. But it’s clearly not true. Are agents working twice as hard today as they were 10 or 15 years ago? Obviously not, yet commissions have doubled in that time along with home prices. Rates very by province but assuming a 5-per-cent commission, the cost of selling an average-priced house in Toronto is $25,000 today compared, with half that a decade or so ago.
You should always negotiate the commission. Before you even let an agent in your door, ask them what they charge. You can also structure the commission as an incentive. For example: 2 per cent of they sell your house for the asking price, double or even triple it if they exceed asking price by 10 per cent.
4. How the Real Estate industry operates
Before answering the 1 per cent or 3 per cent question above, you have to understand how the industry works. Agents who work for big-name firms have to charge a lot because they’re charged big fees, as much as $2,000 a month. It’s not that agents are greedy; it’s that big firms are charging them for every service they use.
Avoid agents with big overheads; they’re more likely to be desperate to generate a quick commission to pay their bills, even if it’s at your expense.
You also don’t want your agent making too little. If he charges too little and needs 20 listings at a time to make a decent living, you won’t get good service. Most people are good enough at math to understand that an agent charging 1 per cent will save you money compared with an agent charging twice as much, assuming they both sell your house for the same amount.
Probably not. He or she is more likely to miss that prospective buyer who loves your home and wants it badly.
An agent charging 2 per cent who works only a little harder can get you a lot more money. If he sells your $500,000 home for only 5 per cent more, he’ll put an extra $19,500 in your pocket after commission. (Interestingly, there’s a realty company in British Columbia that charges homeowners a 1-per-cent commission but the minimum dollar amount is $6,900, so clearly 1 per cent isn’t enough.)
In other words, the cheapest agent is not necessarily the best, neither is the most expensive one. When you get quotes for a kitchen renovation, you usually don’t choose the highest, or the lowest. Picking an agent is no different. Price is important, but there are other factors involved.
Caveat Emptor – Buyer Beware