Posts Tagged real estate agents
Mortgage Bits: The Highest Bidder doesn’t always Win when Selling a Property
Posted by Top Home Loans in General Business, Real Estate on November 8th, 2009
When you hire a real estate agent, you hope that they will be working in your best interests. You hope that they will get you top dollar for your property, and make the sale easy and stress free. You would never expect your realtor to be under handed or do something that is less than ethical.
However, the fact is at the end of the day, the realtor has to look our for themselves, so what key factors will a realtor look for when selling your property?
Selling Speed: realtors love quick closes and no conditions on the mortgage. This means they get paid faster and with less hassle. If a realtor has an open house, and the offer falls though, then that means they will have to start from scratch. A realtor is willing to take a lower bid with less conditions over a higher bid for your property.
Commission Amounts: a realtor will make a certain amount of commission on the sale of the property. When there is both a buyer’s agent and a seller’s agent, the commission is shared between the two agents; however, when the agent is shared by both the buyer and the seller, then the real estate agent gets both commissions.
In most cases the realtor would take a lower bid to get a higher pay cheque. This is true in most professions, so it is true in the real estate world as well.
How can you protect your bottom line as a seller? Keep your house on the market longer, refuse more bids, etc. Have a target price for your property and don’t settle for anything less.
What strategies did you use when selling your house? Did you get more or less money than you expected?
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Mortgage Bits: What do Class Action Lawsuit, MLS, and Canadian Real Estate Agents have in common?
Posted by Top Home Loans in Mortgage Advice on November 4th, 2009
MLS has taken a hold on the canadian real estate market, and if your property is not on MLS, then it is not going to be sold. In the past, real estate agents sold houses; however, now houses are bought and sold through MLS marketing. MLS cuts deals with brokerages to allow only certain firms properties to appear on MLS. If you don’t have a deal with MLS, then you can’t post your properties on the site.
However, once a company has a monopoly on a market like MLS, then they can’t discriminate who can use the service and who cannot. The reason that they can’t cut off companies because they won’t pay the high subscription fees is because it will reduce the amount of competition and create high barriers of entry.
What does this mean to real estate agents? A more competitive market. With increased competition, this will generally cause a reduction in realtor fees. Will this be good or bad for the market? Will this cause the quality of realtors to decrease? What will be the long-lasting impacts of these changes?
How to Buy a House without a Buyer’s Real Estate Agent, Part 1: Myths
Posted by Top Home Loans in Economy, Property Management, Real Estate on May 2nd, 2009
Many people have come under the illusion that it is required that a buyer has a real estate agent in order to purchase a property; however, for most people that are not well versed on real estate and the real estate market, then this is true; although, if you have an extremely good understanding of the process, then you may want to consider making an offer without a buyer’s agent.
Myths about not using a Buyer’s Agent
Myth 1: Buyer’s Agents are Free for Home Buyer’s
The most common myth is that a buyer’s agent is free to use. This is not the case because the buyer’s agent is paid 2.5% from the sale of the property. The seller’s agent pays the buyer’s agent the 2.5%. With most properties in many areas reaching prices of $350,000 on average, this could mean an additional cost of close to $9,000.
Myth 2: Buyer’s Agents have the Your Best Interests in mind
In theory, a buyer’s real estate agent should work to get the best possible deal for the buyer; however, the way that the current compensation structure is setup, the buyer’s agent has no motivation to get the best possible deal for the buyer. Instead, the buyer’s agent has two objectives. These objectives are to get you to buy the most expensive house possible, and to get you to buy a house as quickly as possible.
Most people, when shopping for a property, would like to get the lowest possible price on the property; however, the buyer’s compensation is based on 2.5% of the price of the sale of the house. Why would any buyer’s agent want to negotiate a good price for you, if they know they will loose money?
The second major problem is for the buyer’s agent to close quickly. This means that the buyer’s agent wants to get the buyer to close on the first property that they see. If the buyer’s cannot decide on a property or if the buyer’s offers keep getting refused, then this will cause the buyer’s agent to do more and more work. The buyer’s agent does not make money unless a property is sold, so the buyer’s agent will try to convince the buyer to overbid or to close quickly on a property so that they can make there commission. The buyer’s agent will put undue pressure on the buyer to make a bad offer and close quickly.
Myth 3: Real Estate Agents are Better Negotiators than You
A buyer’s agent has no reason to be motivated to get you a better price; however, the buyer’s agent will want to get you the highest price possible for two reasons. The first reason is that they will make more commission on the sale of this property. Secondly, the property values of houses in the area will go up causing the price of future sales to go up as well.
Myth 4: Buyer’s Real Estate Agents have Better Access to More Properties
A buyer’s agent will actually provide you with less listings then if you were to search yourself. This is because buyer’s agents will specifically find properties that pay the most commission. They will bring you to properties that do not fit your criteria; however, the properties will fit the real estate agents criteria for making money. For example, they will not bring you to private sale properties or low commission properties; instead, they will find the highest priced, highest commissioned properties to bring you to.
By not having a buyer’s agent, it allows you to look at all properties, and it allows you to make an offer without pressure.