A Seller’s perspective…
The short answer to this question is “most likely”. I am definitely not implying all real-estate agents are dishonest or unscrupulous. Most of them are ethical, dedicated to their clients and passionate about their profession.
However, all realtors have one thing in common: they’re salespeople paid on commission.
No sale, no money! This little fact will definitely push a lot of realtors towards the edge of deception when dealing with clients.
Let’s try to debunk a few myths and read between the lines.
1- Telling you a price you want to hear, or overpricing your home
This is called “buying a listing” and has been around for ages.
It is extremely common for homeowners to assume that their house is worth more than it is. You are not constantly watching the market and regularly pricing and selling homes, so you are unlikely to have a clear understanding of what your home is worth right now. Data is also not always easy to find.
After your home has been sitting on the market for some time, your agent will then turnaround and tell you to lower the price. They still get their commission and exposure, while you miss out on selling your home for the right price from the beginning.
2- Selling for “top dollars” or at “over-asking”
This statement is incredibly vague and is actually misleading. A realtor wants to sell fast and for minimum efforts. They will never really bust their ass off to get you more money.
Want to know why? Because even a substantial increase in sale price will not yield them a higher commission.
Let’s assume you list your place at $245 000.00. Your agent charges you a commission of 7% on the the first $100K and 2.25% on the remaining balance. This is pretty common in British-Columbia.
If you sell at that exact price, the total commission, excluding GST, will be $ 10 625.00.
Now, let’s pretend it’s a sellers’market, and you sell your place for $ 250K. The total commission, excluding GST, will be $ 10 750.00, i.e. $125.00 more.
Same goes if you sell your house for $240K. You will loose $5K but your realtor will only miss out on $124.00. Negligible for them!
3- It’s a red hot market!
This doesn’t mean anything either.
The real-estate market is geographical, seasonal and has sub-markets.
What is “red hot” exactly? Detached housing? If you’re selling a condo, it’s not going to help you.
4- Your home will sell with an open house
An open house benefits the realtor more than the seller. It’s free exposure and they can offer their services to anyone walking in the door.
It takes more than an open house to sell a property.
5- Charging a “standard” commission
There is no such thing as a “standard commission”. Commissions are negotiable. In BC, it’s custom for agents to charge 7%/2.25%, but it is not set in stone.
If your agent wants to charge you more, ask why. Ask what extra you’re getting for an increased commission. Keep in mind your agent will incur some costs when selling your property on your behalf, but do they justify a higher commission?
If your agent is a “low cost realtor”, have a clear understanding of what they will do….and will not do.
6- This is a “standard” listing agreement
Not exactly true. A listing agreement is a contract. As with any contract, terms can be negotiated. The BC Real-Estate Association has a widely used template, but nothing says you must use it. You could have a lawyer draft an agreement.
7- You can get out of the listing agreement at any time, and at no cost
That is not exactly true either. A listing agreement is a legally binding contract. In order to break the contract, your realtor needs to agree. If there is an accepted offer on your property, you will probably need to pay the agreed commission…and then some. You’ll probably need a lawyer too.
Your realtor may also ask for their commission if a buyer is “ready, willing and able to pay the listing price and agrees to the other terms of the contract”, even if you decline the offer.
In order to be able to breach the listing agreement at any time, and at no cost, have it in written in the agreement. A verbal promise is not worth anything.
8- Other white lies
It’s fairly common for realtors to embellish their resume, accomplishments and abilities. Unless you can actually verify the facts, I would suggest you take these with a grain of salt.
Instead, give the agent a couple of months to sell your property. That’s plenty of time for them to prove themselves to you.