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Posted on: 12-07-09 23:04:03
… trying to offer me 1% cash back ...... and are somehow assuming that I would do a buyer's agreement with them........... I have to clear their misconception that I want the full 2.5% ............ and wish to go directly..........
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The question remains, how to make sure I am not getting only 'my' money back. For a normal pricing of 300 K or so; few thousands up or down is common during negotiations. Each home being unique has its own price.
Once the negotiators knows the ground, they are standing on; will start the deal from there. They will most likely add up for all such factors beforehand.
-Ben
Ben/Fido
I agree with you that no one can proclaim (at least in real estate) that ONLY they can do something for you. All Realtors can assist you sell and buy where only the value added services (paid home inspection, home staging, lawyer fee reimbursements etc. to name a few) can differentiate one salesperson from another.
As to your saving "entire 2.5%" remark, it can play both ways.
1. Private Sale
In my short real estate career, I have yet to see concrete proof that "Private Sale" properties are a better value than the ones listed by a real estate salesperson. Private sellers almost always price their properties higher than what a salesperson would recommend. A unrepresented Buyer can end up paying more for the property than the market value which will null any savings realized by not using a salesperson.
2. Listed Properties
Furthermore, I have yet to see a listing salesperson knock off the entire 2.5% just because a Buyer is not represented by a salesperson. The Seller and the listing salesperson are just as aware of the 2.5% savings as the unrepresented Buyer therefore 2.5% is usually split amongst the Seller and the Buyer. The unrepresented Buyer may still end up paying more than the market value since the listing salesperson protects the interests of the Seller and will negotiate the best price for the Seller. In this case, if the Buyer ends up paying even 3k-5k more than market price, the commission savings become null.
3. Buyer Agreements
Buyer agreements are used to ensure that the prospective Buyer is serious about purchasing a home. The agreement gives the salesperson greater confidence in working with a client knowing that the Buyer is not just a speculator. I showed 37 homes in Milton/Mississauga to my very first prospective Buyer (in July/Aug 2005) only to be told “I plan to buy the house once I sell my property back home…next year.” Time is of value (and essence) for everyone and both parties should respect each other’s time commitment.
However, the agreement cannot force a Buyer to purchase a home since circumstances can change. For example, the Buyer:
- may not qualify for a mortgage
- may lose their job
- sudden financial hardship may come up
- accepts a job offer in another city
Buyer agreements can be terminated at any time with mutual consent from both parties, which should be a non-issue.
It is an open market place therefore competition is great for all parties involved. Commission amounts and any incentives should be discussed but with mutual respect for both parties involved. FSOB is a great tool for Sellers and Buyers to potentially save on commission but a qualified listing salesperson can save Seller time (and possibly marketing fees) by educating the Seller to list the property at market value while the Buyers salesperson should ensure that his client does not overpay for a property. Real estate salespersons are here to help but we must do more to earn the trust of the clients we serve.
As Lou Schizas says “Happy Capitalism”
http://www.happycapitalism.com
I believe there are a lot of dimensions which would determine sale of a property viz economy , need of seller vs need of buyer , liking from the buyer for a property . These points are besides the neighborhood , quality of the property , age etc .
In the end , if a buyer is discerning enough , he does not need an agent . Offer an amount which you feel comfortable and make it explicit that you are not using an Agent .
If this is the best offer the seller has and he wishes to sell then .... you have already saved your 2.5% commission .
If the seller has better offers / is not ready for the price you have quoted , having an Agent would not have helped things .............
Bottom line ... w/o asking for it , take the 2.5% consideration while offering ....... if you would have offered 280K on a property offer 270K ......... The seller will acknowledge that you do not have an Agent ....... its implicit .....
Only thing which can change the equation is - if by practice a seller offers full 5% commission to his Agent and then the Agent deals with the buyer's Agent and offers 2.5% ............ in which case the seller's Agent would be hesitant in sharing the amount and would wish to gobble up full 5% ...
Agent Raj - maybe you can clarify how it works ? Does the seller give 2.5% each to buyer's as well as seller's Agents or does he give full 5% to the seller's agent ?
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Fido.
Quote:
Originally posted by Fido
I believe there are a lot of dimensions which would determine sale of a property viz economy , need of seller vs need of buyer , liking from the buyer for a property . These points are besides the neighborhood , quality of the property , age etc .
In the end , if a buyer is discerning enough , he does not need an agent . Offer an amount which you feel comfortable and make it explicit that you are not using an Agent .
If this is the best offer the seller has and he wishes to sell then .... you have already saved your 2.5% commission .
If the seller has better offers / is not ready for the price you have quoted , having an Agent would not have helped things .............
Bottom line ... w/o asking for it , take the 2.5% consideration while offering ....... if you would have offered 280K on a property offer 270K ......... The seller will acknowledge that you do not have an Agent ....... its implicit .....
Only thing which can change the equation is - if by practice a seller offers full 5% commission to his Agent and then the Agent deals with the buyer's Agent and offers 2.5% ............ in which case the seller's Agent would be hesitant in sharing the amount and would wish to gobble up full 5% ...
Agent Raj - maybe you can clarify how it works ? Does the seller give 2.5% each to buyer's as well as seller's Agents or does he give full 5% to the seller's agent ?
Fido,
As you will note, I do not disagree with your point on possible commission savings. I just offered a different viewpoint.
In general, the private listings are listed higher than listings through a salesperson since a salesperson can provide comparable sales data to arrive at the true market value of a property as opposed to the subjective value that a Seller has in the mind. Therefore, if the property is listed privately at 290K and your offer is accepted at 270K, that would be great commission savings for both Seller/Buyer unless similar properties are selling for even 265K. In that case, the Seller still saves the commission whereas the Buyer commission savings become null. Further, the Buyer has had to complete the paperwork himself or paid a lawyer to do the paperwork. Therefore the logic that: No Salesperson = No Commission = Great Deal is untrue in most circumstances.
I would like to answer your commission query in two parts:
Clients are much more versed in real estate and the salespersons compete fiercely for their business. Negotiations between both parties can lead to commission rates below 5%. Furthermore, there can be additional savings if you sell and buy through the same salesperson. Therefore, 5% as a standard commission rate does not always apply.
The second part is whether a listing salesperson “would wish to gobble up full 5%”. In my experience, this is not the general practice. The listing salesperson’s goal is to list, market, and sell the home quickly at the highest possible price. When an unrepresented Buyer contacts the listing salesperson directly, the salesperson sees a great opportunity to sell the home since Seller and the Buyer both are aware of the 2.5% commission savings. Then the listing salesperson’s must negotiate the 2.5% savings between the Buyer and the Seller along with the actual sale price. The Buyer and the Seller almost never get the entire 2.5% but usually end up splitting it. Therefore based on the total 5% commission, the split might look like:
Salesperson – 2.5%
Buyer – 1.25%
Seller – 1.25%
These are only my views and may not reflect the views of others.
Quote:
Originally posted by Agent Raj
Quote:
Originally posted by Rajeev Narula
Did you know that INDUCEMENTS in any form offered by any REALTOR are prohibited by law & contrary to RECO code of Ethics. If someone is willing to ignore these to get business, what else would this person be willing to do that may not be ethical or lawful? Food for thought!
Rajeev,
I am with Century 21 Green in Mississauga. I do not believe that INDUCEMENT is the correct/appropriate term. If you charge 5% commission but the client will only sign at 4.5%, it cannot be assumed that you are inducing the client with a lower rate. In an open market, negotiations are key part of the Selling/Buying process beginning with the commission rate.
Raj Bajwa
Salesperson
Century 21 Green Realty Inc., Brokerage
Office: 905.565.9595
I still stand by my post.
INDUCEMENTS are illegal. However, you must differentiate between Negotiated Commissions and INDUCEMENTS. If you choose to charge less commission, it is your prerogative and Competition Act allows you full freedom to do that. That is not an inducement as it is your "contract". However, if you say you will offer LCD TV or Home Depot gift Vouchers or 1% cash back etc. etc., that is Inducement. If you still choose to offer these and make it a part of your Buyer Agency Contract, it is then again a contract and not inducement. But as you follow the post, some people don't want to sign any contracts...therefore whatever you have verbally agreed is an inducement since all contracts pertaining to Real Estate Sale, Purchase or Lease have to be in writing.
Hope you now understand the difference between the two.
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Rajeev Narula, Broker, REALTOR®
ACE TEAM REALTY INC., Brokerage
10 Kingsbridge Garden Circle, Suite 704
(Opp Square One - HWY10/403)
Mississauga, ON L5R 3K6
Bus: 1-888-355-3155 Ext. 300
Fax: 1-888-443-3155
Email:
Web: http://www.RAJEEV.ca" rel="nofollow">LINK
Quote:
Originally posted by amit kalia
Uninformed buyers are a risk not only to themselves but also to the sellers' realtors and other stakeholders in any real estate transaction. Many are bound to make mistakes, for sure. Many realtors out there refuse to double end their own listings, they are concerned about conflict of interest when working for their seller clients.
Working with one's own Realtor is the best way to go. It is the consumers' choice to select one based on trust, knowledge, referral, word of mouth, ethinicity, specialization, neighbourhood expertise, commission, brokerage (discount or full service) and many other reasons.
Thanks,
I definitely agree with you here Amit. I just sold a listing yesterday in C13 where I had a full price offer from another agent and a walk-in at my Open House who too wanted to put and unconditional offer for full price through me. I declined to represent the person even though I would have benefited the most in the process.
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Rajeev Narula, Broker, REALTOR®
ACE TEAM REALTY INC., Brokerage
10 Kingsbridge Garden Circle, Suite 704
(Opp Square One - HWY10/403)
Mississauga, ON L5R 3K6
Bus: 1-888-355-3155 Ext. 300
Fax: 1-888-443-3155
Email:
Web: http://www.RAJEEV.ca" rel="nofollow">LINK
Quote:
Originally posted by Agent Raj
Quote:
Originally posted by Fido
I believe there are a lot of dimensions which would determine sale of a property viz economy , need of seller vs need of buyer , liking from the buyer for a property . These points are besides the neighborhood , quality of the property , age etc .
In the end , if a buyer is discerning enough , he does not need an agent . Offer an amount which you feel comfortable and make it explicit that you are not using an Agent .
If this is the best offer the seller has and he wishes to sell then .... you have already saved your 2.5% commission .
If the seller has better offers / is not ready for the price you have quoted , having an Agent would not have helped things .............
Bottom line ... w/o asking for it , take the 2.5% consideration while offering ....... if you would have offered 280K on a property offer 270K ......... The seller will acknowledge that you do not have an Agent ....... its implicit .....
Only thing which can change the equation is - if by practice a seller offers full 5% commission to his Agent and then the Agent deals with the buyer's Agent and offers 2.5% ............ in which case the seller's Agent would be hesitant in sharing the amount and would wish to gobble up full 5% ...
Agent Raj - maybe you can clarify how it works ? Does the seller give 2.5% each to buyer's as well as seller's Agents or does he give full 5% to the seller's agent ?
Fido,
As you will note, I do not disagree with your point on possible commission savings. I just offered a different viewpoint.
In general, the private listings are listed higher than listings through a salesperson since a salesperson can provide comparable sales data to arrive at the true market value of a property as opposed to the subjective value that a Seller has in the mind. Therefore, if the property is listed privately at 290K and your offer is accepted at 270K, that would be great commission savings for both Seller/Buyer unless similar properties are selling for even 265K. In that case, the Seller still saves the commission whereas the Buyer commission savings become null. Further, the Buyer has had to complete the paperwork himself or paid a lawyer to do the paperwork. Therefore the logic that: No Salesperson = No Commission = Great Deal is untrue in most circumstances.
I would like to answer your commission query in two parts:
Clients are much more versed in real estate and the salespersons compete fiercely for their business. Negotiations between both parties can lead to commission rates below 5%. Furthermore, there can be additional savings if you sell and buy through the same salesperson. Therefore, 5% as a standard commission rate does not always apply.
The second part is whether a listing salesperson “would wish to gobble up full 5%”. In my experience, this is not the general practice. The listing salesperson’s goal is to list, market, and sell the home quickly at the highest possible price. When an unrepresented Buyer contacts the listing salesperson directly, the salesperson sees a great opportunity to sell the home since Seller and the Buyer both are aware of the 2.5% commission savings. Then the listing salesperson’s must negotiate the 2.5% savings between the Buyer and the Seller along with the actual sale price. The Buyer and the Seller almost never get the entire 2.5% but usually end up splitting it. Therefore based on the total 5% commission, the split might look like:
Salesperson – 2.5%
Buyer – 1.25%
Seller – 1.25%
These are only my views and may not reflect the views of others.
Thanks Agent Raj ,
You have answered my question quite satisfactorily .
The best part is that buyers and for that reason sellers also are not prohibited to do the transactions themselves ............ so those who do not wish to go with Agents are free to do so .
300 * 2.5 or 7.5K is a big discount if one can get by removing a middle man .
I think home is a big investment and one must not rely on the realtor alone ... we have countless cases of unhappy experience with realtors including the original post .
A person must gather good knowledge and learning about home buying before embarking and if one does so , one can not only satisfactorily purchase his / her house but can save a couple of thousands by not using a realtor ............... or at least get a cash back if you are using one .........
Either way a realtor can not and should not be a substitute for your own knowledge , analysis and satisfaction of buying a good house at a reasonable price .
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Fido.
