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Real Estate FAQ
1. What types of real estate agent service are there?
2. How much does it usually cost to sell a home?
3. What is the hidden cost of buying a home?
4. Who can use this site?
5. How does this site work?
6. Wouldn't a lawyer be better for a simple transaction?
7. Do I find my own agent?
8. How much can I save?
9. How many houses does the average real estate agent sell?
10. What is a most referred real estate agent?
11. How many buyers are there?
12. What percentage of home buyers use the internet?
13. What is the difference between using a Realtor and selling FSBO?
14. What is the general public opinion of real estate agents?
15. What are the ordinary questions to ask a real estate agent?
16. How much more do real estate agents sell their own houses for?
1. Types of real estate agent service?
Real Estate Agent Services - Valuation
Agents will usually value your home for free. It is
advisable to get two or three valuations, and it gives you a chance to meet face to face with agents
to discuss commissions and different levels of service.
Real Estate Agent Services - Full Service
Agents operating as full service listing agents
will market your home in a variety of different media, such as the internet,
newspapers and mail shots, and may even put it on a tour exclusively for agents or do an
open home. They will act as the contact point for all interested parties and
carry out all the showings. They will present any offers made to you and help
you make a counter offer or accept. They will help with removal of subjects
and coordination with your lawyer(s). If the buyer requires a home inspection,
the agent will come to your home and wait there while the inspection is
done, which could last 3 or 4 hours. They will communicate regularly with you
on the progress.
On the buying side, an agent will promptly take you to see
as many homes as you need to see to make your decision, help you write an offer,
negotiate with the seller's agent and coordinate with your lawyer and home
inspector.
Real Estate Agent Services - Transaction Only
This is for when a buyer and seller have met and
one or both prefer that a real estate agent rather than a lawyer manage the transaction. Transaction Only means that the agent will provide the seller,
the buyer or both, suitable legal documents for writing up a Contract for Sale
and Purchase, and provide the necessary professional advice to ensure that all
forms are correctly completed. This will include a disclosure statement, removal of subjects and
possibly coordination with the home inspector and/or lawyer(s). If you have
not decided on a price, or you do not want to negotiate yourself, a real estate agent
providing Transaction Only services would do this for you additionally.
Offering Transaction Only services does not prevent such agents
from offering full services. Transaction Only services exclude advertising and marketing your home, and as a result will cost about 90% less than full services. Bear in mind that an agent will only do business if covered by Errors and Omissions insurance, and the fee you pay will need to cover this. About two-thirds of real estate agents surveyed offer the
Transaction Only
choice. Sometimes an agent offering this option is known as a FSBO-friendly
agent, or FSBO-Friendly Realtor. (FSBO: 'fizzbo', For Sale By Owner.)
Real Estate Agent Services - MLS® Flat Fee
The MLS Flat Fee service is when a real estate agent
places an advertisement of a home for sale on the MLS listing system
without doing any additional marketing. The MLS Flat Fee service is
a lower cost alternative to the full service that most agents offer, but
still expensive compared to other types of internet advertising. Many agents across
North America are offering the MLS Flat Fee service, as
an aid to those people who wish
to sell "For Sale By Owner". Depending on the agent, you may still need to
commit commission to a buyer's agent or cooperating agent.
Real Estate Agent Services - Buyer-Broker
To ensure your agent is working for you as a buyer. A relatively uncommon type of service, but growing in popularity. Often, both agents act for and are paid by the seller, one as the listing agent and the other as the cooperating agent. Confusion arises because the cooperating agent works closely with the buyer and is often called a buyer's agent.
The Buyer-Broker service is when a buyer pays the agent, and usually results in lower commission being paid. It allows a buyer to receive
a portion of the commission initially allocated to a "cooperating agent". The
Buyer-Broker service is for buyers who want to be sure that the agent they are dealing with is working for them, and not the seller. The buyer decides how much the agent is to paid, which can either be a flat fee or a percentage of what the seller has already committed to. You may also want to set the fee as a percentage of the amount by which the asking price is reduced. You should have an exclusive contract with a single buyer-broker agent.
Real Estate Agent Services - MLS® Weekly
If paying a flat fee to list on the MLS is too much for you then it is possible
to pay a relatively small amout on a weekly basis until your house is sold.
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2. How much does it usually cost to sell a home?
As a seller you'll generally pay about $11000 to sell an
apartment and $27000 to sell a detached house.
Real Estate Agents' fees are generally based on a percentage rather
than a fixed fee. Most agents acting as cooperating agents expect to receive
3.255% of the first $100,000 of the final selling price, plus 1.1625% of any
amount over this. The amounts for agents acting as listing agents are 3.745%
and 1.3375% respectively. GST is added on top of these fees to give a total
which has to come from the proceeds of the sale.
| Home Price |
Buyer's Agent Fee |
HST |
Seller's Agent Fee |
HST |
Total Cost |
| 200,000 |
4,418 |
530 |
5,083 |
610 |
10,641 |
| 400,000 |
6,743 |
809 |
7,758 |
931 |
16,241 |
| 600,000 |
9,068 |
1,089 |
10,433 |
1,251 |
21,841 |
| 800,000 |
11,393 |
1,366 |
13,108 |
1,574 |
27,441 |
| 1,000,000 |
13,718 |
1,646 |
15,783 |
1,894 |
33,041 |
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3. What is the hidden cost of buying a home?
Usually, when there are two agents involved, it is simply the amount of commission paid
to the cooperating agent. Together with other fees, the amount is deducted from the sum
paid for the house before the balance is passed on to the seller. So, as a buyer, although you don't
usually pay your agent directly, your money ultimately goes to him.
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4. Who can use this site?
Anyone can browse this site for information. You may need
to register to view all information. Real Estate Agents or Realtors may upload their contact information and breakdown of services they provide.
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5. How does this site work?
Home sellers and buyers may see the names of real estate agents who
have provided a breakdown of their real estate services.
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6. Wouldn't a lawyer be better for managing a simple transaction?
No. A real estate agent has much more specialized knowledge and experience when it comes to managing
real estate transactions, and is also more likely to know what to do regarding
mortgages and home inspections. A real estate agents is more convenient, being out on the road more,
and is more likely to come out to your house than a lawyer.
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7. Do I find my own real estate agent?
Yes. It is possible to find agents advertised on this
site, and it is advisable to speak to two or three before deciding which one to
use.
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8. How can I save commission?
You can shop around, because there is some variation in
fees, and there are differences in levels of service. You can also try
negotiating, and may find that a more expensive real estate agents will reduce fees by
$2000, for example, to win your business. By doing the easy tasks a real estate agents
normally does you may save about 90% off the usual commission. For example,
you can do your own advertising, show people your home yourself, and host the
home inspector. This will save the real estate agent's expense of marketing and reduce demands
on his or her time. When you find a
buyer, an agent offering the
Transaction Only option can walk you through the contract of purchase and sale. The other option is For Sale By Owner.
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9. How many houses does the average real estate agent sell?
In the
Greater Vancouver area there are about 8000 real estate agents and about 36000 home sales per year. The
average agent will typically sell and buy 4 or 5 houses per year.
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10. What is a "most referred" Realtor?
This is a real estate agent to whom other agents refer their clients most often. For example, a
buyer is out of town and his local agent refers him to an agent working
in the area he is moving to. Agents pay each other for referrals.
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11. How many buyers are there?
There are many buyers already out there looking for houses. For example, in Greater Vancouver, about 3000
buyers will purchase homes each month, and most will be searching on
the internet. It is therefore vital that your home is advertised on the internet.
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12. What percentage of home buyers use the internet?
The percentage
of people reporting that they first learned of the home they purchased through
the internet has been rising exponentially over the last few years. With the
continuing increase in the usage of the internet, and the growing proportion of
the population with broadband access, the number of people searching for homes
on the internet is set to increase further. Surveys only a few years back typically showed that about
75% of buyers used the internet at some point in their search for homes. The best single way to advertise your home is
on the internet.
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13. What is the difference between using a Realtor and selling FSBO?
A recent in-depth statistical study of the relative merits of using a real estate agent or going the FSBO route has been published by Igal Hendel, Aviv Nevo and François Ortalo-Magné.
The study analyses thousands of home sales and provides detailed support for the following conclusions:
1. Realtors sell houses quicker than FSBO's
2. FSBO houses sell for more than those sold by Realtors
Further points of interest:
3. 22% of FSBO sellers switch to a Realtor
4. 0.2% of sellers switch from a Realtor to FSBO
The value of having a Realtor is in saving time, providing knowledge and generating a more intense market exposure. This is what you pay commission for.
For more information, see the report The Relative Performance of Real Estate Marketing
Platforms: MLS versus FSBOMadison.co. Note that the report applies to a specific real estate market.
The above facts are based on US information. What can be found in Canada is that FSBOs take longer to sell and normally less for what they are asking. When a market slows it is really hard for FSBOs to sell as they do not have the marketing advantage and network that realtors have access to - in particular the mls.ca system.
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14. What is the general public opinion of real estate agents?
The independent Honesty and Ethics surveys by Gallup give real estate agents a rating
of 13-17%. This is the percentage of respondents ranking the honesty and ethics of real estate agents
as high or very high. In other words, the public think there is one good agent
in every six or seven. Real estate agents do usually have a code of ethics to follow, but it
seems that the public generally expects higher standards. We want to improve on the rating by
facilitating the distribution of feedback and reviews.
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15. What are some ordinary questions to ask a real estate agent?
Which localities are you familiar with? It is
important that you choose an agent with knowledge of the location you are
interested in. If you are selling, knowledge of the location will help the
real estate agent give you a more accurate valuation. If you are buying, knowledge of the
location, its benefits and pitfalls will be useful in helping you make an
informed decision.
How long have you lived in the
area? Nothing beats living in an area when it comes to knowledge
about a location. You may need to know about schools, recreation facilities,
malls, crime levels, or something more obscure.
Exactly what services will you provide? There can be a considerable difference between
real estate agents, even those asking for the same level of commission. You want to know what you
will get for your money.
What discount do I get for more than one transaction? For example, you may be selling one house and buying
another. You may not want to work with an agent who you insists on maximum fees.
How much experience do you have? You need to be careful with this one, because a new
agent may put in a lot more effort to provide a good service than a seasoned agent
with plenty of other clients. back
16. How much more do real estate agents sell their own houses for?
A study which compared agents selling their own houses to agents selling other peoples' houses concluded that, on average, agents get 3% more for their own houses than for their clients' houses and take 10 days longer to sell (Freakonomics). When choosing an agent, try therefore to find out how close your agent gets to the asking price compared to other agents.
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