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Thursday, March 15, 2012
Real Estate Commissions-"Getting the Most Bang for Your Bungalow"
WHAT'S THE REAL COST OF SELLING?
I've always been surprised at how homeowners choose their real estate agent as for almost everyone, our homes are usually our single largest financial asset. This decision should be made just like any other major decision that affects our long term financial position but often isn't.
Fabrice Taylor who frequently writes about investments in Report on Business recently made a couple of recommendations in her article in the Globe & Mail:
- "Make your agent earn your business whether you know him or not" This related to the hiring of an agent just because the person is your friend but it's true regardless of whether you know the realtor or not. Interview realtors and find out just how much they understand the market in your area. I see a lot of realtors from outside the West Side listing homes or representing Buyers attracted by the lure of the values on the West Side. It's important that your realtor know the area and recent sales & listings & how they compare to your home.
- "A quick sale benefits the agent" It's true that some realtors who carry a lot of listings just want to move them rather than holding out for the very best price, which may take a little longer. Their business model is based on turns. Again, in interviewing realtors, you will get a feeling for who is prepared to provide you with not only their time but also a professional marketing program that will attract the most potential Buyers to your home.
- "You Get What You Pay For" She used this term as it applies to increases in values in homes but it's also used to compare the low commission agencies to the full service ones. Vancouver realtors actually charge the lowest commissions in the country but there are still companies who will do it for less. Again, find out what you receive for your money and if they have sold similar properties of similar value. Discount brokers often fall under "a quick sale benefits the agent' statement as their business model is based on volume in order to be successful. Conversely there are agents who also charge way above the average commission to support extensive marketing & promotion programs.
- "How the Realty Industry Operates" She suggests that realtors who work for big name firms have to charge a lot to support the large fees charged by the brokerage. The truth is that a successful agent actually makes more money at a company like RE/MAX because most of the fees are fixed so the more business is done, the more goes to the bottom line. In many other companies there is a % split which isn't paid unless a sale is made but then it is a much larger %. More accurately she suggests that when an agent charges too little, are they giving you the time that you need from them. Her tip-"Price is important but there are other factors involved."
If after doing your due diligence you find more than 1 realtor right for the job, it's becomes more a question of fit. This is a very personal intense relationship so who makes you feel most comfortable?
Click HERE for the full Globe and Mail article.