How to pick a realtor

labs1

There are people who spend more time finding the perfect Lululemon yoga pants than buying or selling a house. While I fully appreciate the importance of a chiselled butt (you’d know if you saw me), there’s no excuse for real estate ignorance. Not when houses costs what they do, and it’s so easy to learn.

I’m not talking here strategic about strategic knowledge. Regular readers of this pathetic blog will know some of my usual guidelines. Like, never buy real estate with anyone you haven’t slept with, or the Rule of 90. The former is crafted to protect you from doing business with relatives (unless you have an exciting family), while the latter exists to ensure too much of your net worth is not chunked into a single asset.

Beyond that, there’s so much more to the process of acquiring or dumping real estate. Here are a few points worth remembering about using agents.

First, you always do better with one. This applies equally to buying and selling. If you’re shopping for a house in a certain area, hook up with a well-connected, recommended agent who can pull listings for you, organize tours, dig up comparables and sales data you won’t see otherwise, advise you on writing an offer, present it for you, and negotiate on your behalf. After acceptance, the agent will help deal with conditions, liaise with the vendors, deliver docs to your lawyer and tackle any problems prior to closing. Never use the vendor’s agent, thinking you’ll get a better price or it’s less trouble. This is a big deal. You need your own representation.

Ditto for selling. FSBOs are so trailer park. The only possible reason for trying to sell the house on your own is because you’re cheap. But cheap costs. An experienced agent who knows how to market can almost always find buyers willing to pay more, who are better qualified, or aren’t just coming by to check out stealing your 60-inch hi-def. The agent’s job is to make sure you’re protected with an offer that’s properly executed, locking in the buyer, and legally covered. Expect this person to spend money promoting the property, to sit through open houses, to arrange showings, create feature sheets or a site, network and advise you on how to maximize value through staging or rearranging. But if you want to be cheap, and self-sell, be prepared for fewer nibbles and low-ball offers.

If you engage an agent to represent you as a buyer, the vendor usually pays the cost. When you sell, you pay. But remember, all commissions are negotiable. Some agents will tell you the rate’s set by law. Punt them. It’s not true. Yes, there are some broad guidelines that real estate associations encourage – like 7% on the first $100,000 and 2.5% on the rest in BC, or a flat 6% in Ontario – but the final deal is worked out mano-a-mano. If you have a hot house in a demand area, then 4% might be reasonable. If it’s an OSB McMansion in the boonies, count on 6%.

Interview a few agents and have them evaluate your house. This should be free and without obligation. And don’t sign on with the one who gives you the highest number without solid neighbourhood comparables to back it up. Odds are the same guy will be telling you ten weeks later ‘market conditions have changed’ and you have to reduce. By then, the listing is stale, and all that new-virgin excitement has drained away.

Also negotiable is the length of time you decide to list with one agent. You’ll be pressured for a six-month commitment, but 90 days is perfectly acceptable. In fact, a shorter listing should motivate the agent to devote more time and energy into marketing the place. Be aware that anyone introduced to your home during the listing period (whether the agent did it or not) triggers commission to that agent even if an offer and sale happen after it expires. Check the contract for the relevant period of time.

And if you’re a buyer arranging for an agent, you might be encouraged to sign a BRA – buyer representation agreement. Don’t. This will obligate you to pay a commission to that agent even if you buy a house he or she had nothing to do with showing you. You’ll have to pay commission if you decide to buy a FSBO house. You’ll pay the agent even if you buy a house after the BRA expires (the holdover period). And you can be sued for commission even if you ‘become aware of a property of interest’ that your agent does not show you, which you later purchase. No BRA, no way.

Realtors get a lot of flak on this blog. Lots of them deserve it. The bar for entering the profession is absurdly low, and regulation way too thin. Realtors and developers routinely make claims and guarantees that would put financial advisors out of business. Tons of houses are sold without proper disclosure, to people who are vulnerable, naive and gullible. There is usually no ongoing relationship between agents and their clients, and vast numbers of recent buyers will come to understand nobody was looking out for their interests.

Having said that, an ethical agent should be a key part of any buy-sell decision. If you act on your own, your client is a fool.

158 comments ↓

#1 vangrrl on 07.12.13 at 6:36 pm

Awesome pics!
Btw, I vote black lab!! (ok, biased…:)

#2 yvr2zrj on 07.12.13 at 6:48 pm

first . . really? I think I’ve been out tooooo late tonight . .

Greetings from the promised land . . . .

#3 visorman30 on 07.12.13 at 6:52 pm

Some very practical information, what a way to start the weekend!

#4 Smoking Man on 07.12.13 at 6:52 pm

Disappointed garth, no poodles…

Best bread in the world.. But then again they are to smart to become a realtor

#5 alex on 07.12.13 at 6:58 pm

good post! i hate all my realtor friends.

#6 Finally on 07.12.13 at 7:00 pm

My realtor was a childhood friend, I had to fire him after 6 months listing with him because he couldn’t sell my place. I hired a tall blonde realtor and she sold it after 3 months. I hope she gave the buyer a happy ending.

#7 Robbie on 07.12.13 at 7:02 pm

Well said, Garth. A good Realtor is invaluable if you are buying or selling and certainly you should avoid using the Seller’s Realtor..he or she can’t represent you as well as your own Realtor. I have seen a number of FSBO and checked out their history…in every case they were way over-priced and had usually been listed unsuccessfully before being listed by the owner. Your Realtor can give you all kinds of useful info. Be wary of hiring a very busy Realtor (you will see their names on the bus benches, billboards, etc.) as once you list then an assistant is likely the only person you will talk to after that. Commissions in BC are usually 6% on 1st $100K and 3% on balance…but are negotiable. Definitely look at the “comparable” solds (not the asking prices) that the Realtors provide in their interviews, as that will give you a good idea of what a home like yours is selling for. And by all means, avoid listing too high…I’ve seen so many Sellers who want to try a high price at first just in case a sucker bites…but then their home languishes on the market, goes through price reductions that “follow the market down” and then eventually it sells for less than if it had been well-priced in the first place. And yes, I am a Realtor!

#8 Donald Trump on 07.12.13 at 7:09 pm

Can’t think of a punch line..its Friday…..1111111rrzzzsstt!

#9 CalgaryDave on 07.12.13 at 7:13 pm

Thanks Garth for this great info!
Much appreciated. This stuff might be easy for you, but not for us pathetic fools…

#10 Rainclouds on 07.12.13 at 7:29 pm

I presume this is a primer for when we are greenlighted to vultch ………here in van i am thinking a couple of years before the rot has metastisized

Regarding comps : if mcmullan @ viewpoint and some of the others are successful in cracking the cartels public information stranglehold we may have zillow like resources to glean much current and historical data enabling far better decision making ..then again ……

#11 TurnerNation on 07.12.13 at 7:35 pm

Attn. new blog dogs. The following usernames are still available; reserve yours today.

R/E BEARorist

Mullettude

Dr. Wane

slob’s real estate log

Fancy Coloured Kias

Sticky Figures

Garth said Gold

Ingot we Trust

REITa MacNeil

Chancellor Rebalancer

Stephen who?

Burn your BRAs

Reserved:
Blog Dog Poloz

#12 Van guy on 07.12.13 at 7:37 pm

Garth,

You dislike realtors, why are you pumping them now? Creating bidding wars drives up the price of a property and creates horniness.

#13 Spiltbongwater on 07.12.13 at 7:42 pm

Is ethical Realtor an oxymoron? There might be a few around, but good luck finding them, easier to find a needle in a haystack. Realtors work for the best interests of the sale. Vendor and buyer are somewhere below. They couldn’t care less who pays the small difference when both parties are close on price and a few grand apart. Oh right, they are working for the clients best interest.

#14 T.O. & GTA bidding wars debunked July 05 -GTA all in red ..TO SFH barely holding the line -very low sales!! on 07.12.13 at 7:56 pm

http://recharts.blogspot.ca/2013/07/to-gta-condos-blinding-wars-july-12.html

http://recharts.blogspot.ca/2013/07/gta-sfh-blinding-wars-july-12-average.html

http://recharts.blogspot.ca/2013/07/to-sfh-blinding-wars-july-12-average.html

#15 July 12, 2013 .Toronto,Markham,Richmond Hill,Vaughan,Aurora HOUSE&TOWNHOUSE . Days on market Price changed. on 07.12.13 at 7:58 pm

Toronto,Markham,Richmond Hill,Vaughan,Aurora HOUSE&TOWNHOUSE . Days on market Price changed.

https://docs.google.com/spreadsheet/ccc?key=0Aqhw60W3Hw6zdHZuZ0I4NzdsUnp6N3RyX3B5Q3dOSVE&usp=sharing

#16 Not Baffled by BS on 07.12.13 at 7:59 pm

Looking at the standard example BRA and Offer to purchased put on the TREB site, I noticed that the BRA has a clause which would guarantee a commission to the Realtor. On the Offer to purchase, there is no such requirement.

1) If no BRA is used, am I to assume that the buyer’s realtor goes to the seller’s realtor to negotiate their commission? It appear to be quite separate from the transaction.

2) Do a lot of buyers balk at a pre-determined commission? The potential of the buyer having to pay a commission beyond the price of the home is idiotic.

#17 Serge on 07.12.13 at 8:00 pm

July 12, 2013 .Toronto,Markham,Richmond Hill,Vaughan,Aurora HOUSE&TOWNHOUSE . Days on market with Price track.Ordered by collected by address,colected date

https://docs.google.com/spreadsheet/ccc?key=0Aqhw60W3Hw6zdHZuZ0I4NzdsUnp6N3RyX3B5Q3dOSVE&usp=sharing

#18 island boy on 07.12.13 at 8:04 pm

Garth,
All this talk about sleeping with buyers of real estate and relatives does not sit well here in the Ozarks.
It’s every coon dog for himself here.
Please be considerate to all.

#19 White Rock Mom on 07.12.13 at 8:07 pm

Does anyone know if there is a Canadian equivalent to Zillow?

#20 Old Man on 07.12.13 at 8:15 pm

The biggest mistake I ever made in my life was listing a property with a cutie, as she came unto to me for a the fees, and like a fool thought there was something else for me. The women in this room will smile, and want them to do so, as the lady in question hooped me for a listing, and someone else sold it all, and what can I say as learned a lesson in life.

#21 AK on 07.12.13 at 8:19 pm

“First, you always do better with one. This applies equally to buying and selling. If you’re shopping for a house in a certain area, hook up with a well-connected, recommended agent who can pull listings for you, organize tours, dig up comparables and sales data you won’t see otherwise, advise you on writing an offer, present it for you, and negotiate on your behalf. ”
——————————————————————–
Yeah. I believe that you just described Mikey to a tee. I would definitely hire Mikey, if and when I decide to sell my place.

#22 @15 -Use Google fusion tables to map the prorerties on 07.12.13 at 8:21 pm

@15 Nice post. Use Google fusiontables to map the properties ! You are just a step away from that.
It is not clear what are the price changes in your table.

#23 Randy on 07.12.13 at 8:32 pm

chiselled butt ??? that’s nothin….I got a six pack a$$…

#24 Squatter on 07.12.13 at 8:37 pm

The Meth Lab with a neck tie and bingo!
You get the typical realtor!

#25 Victor V on 07.12.13 at 8:41 pm

PRICE DROP #4 – 87 Summerhill Avenue – SUMMERHILL

http://themashcanada.blogspot.ca/2013/07/price-drop-4-87-summerhill-avenue.html

Huh.

So, this 3 bedroom, 3 bathroom row house on a 15.67 x 85 foot lot with no parking didn’t sell when it was first listed in October for $1,995,000.

Which was a SHOCKER…..

So, the price was dropped to $1,949,000 a couple of months later.

As I mentioned, they did a LOT of work and they did a good job. This is just NOT a $2 million house!

In the meantime, this larger 4 bedroom, 5 bathroom semi at 66 Summerhill Avenue with a good sized yard, a family room, and parking sold for $1,965,000.

There was no WAY this place (have you seen the yard?) was going to sell for higher, or even close to that house.

The price was dropped again in April to $1,874,000.

Still….no luck and the price was dropped again in May to $1,775,000.

It is now back on the market….

At $1,725,000.

#26 AisA on 07.12.13 at 8:47 pm

*”Realtors get a lot of flak on this blog. Lots of them deserve it. The bar for entering the profession is absurdly low, and regulation way too thin. Realtors and developers routinely make claims and guarantees that would put financial advisors out of business. Tons of houses are sold without proper disclosure, to people who are vulnerable, naive and gullible. There is usually no ongoing relationship between agents and their clients, and vast numbers of recent buyers will come to understand nobody was looking out for their interests.”

(* Insert profession of choice) Regarding any in North America, do forgive me for having journeyed the earth a tad. Surgeons, Welders, Smiths of all sorts, Mechanics, bloody anything to do with Law.

It’s the wild wild north up in here.

#27 retired Boomer - WI on 07.12.13 at 8:47 pm

Great post as usual.

I want a Realtor that has been around the block (in the game a few years, and sold / closed a lot of sales). They work hard to earn their coin. That goes for the sell as well as they buy side.

I use an “interview” approach as I invite 4 or 5 over to my place (sale), or drop by an office to inquire of a property I’m interested in (buy side). As with financial advisers, my “failure rate” has been high at over 80%.

Over time, I have bought / sold only 7 properties so I don’t know everything. I can say, all the buyers agent’s i used (4) were wonderful. In the early days did not use a buyer’s agent, but all those agents did a good job as well.

How many can ever say they had “no complaints” when buying, or selling? Maybe I am just lucky.

#28 TurnerNation on 07.12.13 at 8:55 pm

79 retired WI Boomer on 07.10.13 at 11:35 pm

I watched that PBS documentary in parts after it was posted here.
Few things made little sense: family lost their home in 2011 with what, 96k owning? Bought 23 years earlier.
Would have cost nothing back then? Did they HELOC it along the way?
The dad seems shiftless. Sat on couch too often. His eyes changed, to a point where I asked myself “Is he on something?”?

The ‘black’ family. She worked for realtor and said she gave up too much $ to them. He became foreman yet slaved away for a trades co. for $9/hr.
SM’s solution was in my mind: steal the customer list! In the end they did. 10 years too late though, as their health was failing.

Also, they seemed to be driving late model cars?Big gas guzzling Chev Malibu. Maybe low lease rates, or maybe an excess. And certainly not underfed; smoking, too. Working poor but not dirt poor.

What can I say, my immigrant parents came here with nothing and made it. No one helped them up.

#29 Marty Mcfly on 07.12.13 at 9:01 pm

#14 love your posts keep it up!

Garth you still prefer an agent if your in a hot area where the sales are happening in a few weeks? I don’t what to pay an agent 30k for 2 weeks work.

#30 Donald Trump on 07.12.13 at 9:02 pm

#4 Smoking Man on 07.12.13 at 6:52 pm

Disappointed garth, no poodles…

Best bread in the world.. But then again they are to smart to become a realtor
=====================================

OK..we get it

…..you want b-a-a–a-a-h-h-h-h-h-h

#31 retiredbumboomer on 07.12.13 at 9:05 pm

Can I strike out part of the contract I do not like such as other people seeing a property while it is listed without the agent as this is going too far imho. and get the agent to initial it. Can I ask they they have a minimum of advertising, and that if fewer than 25 people see the property in two months I can cancel the contract. If is sold in less than 30 days the commission is reduced by 30%. These are all reasonable requests. We need a consumer advocacy group to give us balanced rights.

#32 Win on 07.12.13 at 9:05 pm

Been through the wringer in Abbotsford, BC

8 yr old townhouse (great management and great area, schools, amenities, freeway access to Vancouver, etc.)

The one per center – who couldn’t close (in 6 months) and the main stream ones who mislead me about their abilities (I turfed them before the 120 days were up because of misrepresentation)

Finally settled on a guy who had the numbers and the plan.

His guaranty? Sold in 36 days or he will sell it for free.

The result 22 days and only 2.5% discount ($9K on $357K) -The competition? A townhouse across the lane.

The prices in Abby are still dropping.

It’s great if you want to live in your townhouse until the six men carry you out.

Caveat emptor!

#33 Old Man on 07.12.13 at 9:06 pm

HAPPY BIRTHDAY SMOKING MAN

#34 Win on 07.12.13 at 9:07 pm

Got an associate working on the Canadian Zillow.
Let’s talk.

#35 Goldy Goldbug on 07.12.13 at 9:10 pm

Finally Garth, you are using this forum to see both sides of reality. Everyone has an opinion on a topic and rather than condemning them for their view you can use your knowledge and expertise to give your advice and be constructive in helping that person make a decision. Kudos.

#36 Mikey the Realtor on 07.12.13 at 9:24 pm

#21 AK on 07.12.13 at 8:19 pm

Yeah. I believe that you just described Mikey to a tee. I would definitely hire Mikey, if and when I decide to sell my place.

___————————–

Thanks AK, however I would still need your parents to sing off on it since it’s legally theirs, renting the basement doesn’t qualify you as the owner, unfortunately.

#37 Stompie79 on 07.12.13 at 9:26 pm

The information is great but how do you “hook up with a well-connected, recommended agent”? When nobody you know has had a Realtor which provides anything like the service Garth recommends.

In 2007 we bought in Calgary and became Greater Fools in 2010 when we sold due to a job loss and relocation for work. Thankfully we didn’t have to write a cheque to get out but it was close, losing everything we’d put in. We’ve been renting since (started reading Garth in 2009) and just scored ourselves a great new rental.

A good Realtor might have given us enough information that I probably would have put the brakes on things but at that point and place if your Realtor had a pulse that was all that was required due to the desperate atmosphere. Once again nobody I knew had the level of service that Garth is talking about.

I agree their must be (statistically speaking at a very minimum) great professionals out there but still have no idea how we would, in a few years, find them.

#38 Sideline Sitter on 07.12.13 at 9:29 pm

My brother is a broker… my father was a broker… my grandfather was a broker. There are GREAT ones out there (obviously, I have a little bias), and let me give you an example.

Sometimes it can take a year to buy a house in Toronto with my brother because he openly tells clients “DO NOT buy this house” or “This is WAY too expensive” and sometimes people are put off by that (but, they end up paying for it in the end).

I had one friend, who was convinced he knew more than my brother after a paltry two months of obsessive searching online, thought he knew the price to bid. My brother insisted it was not the right price, and so they made a bet (my friend decided not to put an offer in) and guess who was WAY wrong, and who was right? My brother, the Broker, with 25 years of experience.

To this day my friend tells me “I should have bought that place” and hind-sight is always 20-20.

There are PLENTY of bad agents out there. I’ve heard some incredible stories of bad advice, and WAY over-bidding on houses. Find one with experience – almost anyone can be an agent for about 5 years, but those who have done it for 15+ years must know a thing or two.

#39 Smoking Man on 07.12.13 at 9:35 pm

Old man, you’re freaking me out.

How could you possibly know. Even on my face book and linkedin. I use fake birth day, identity theft precaution..

Anyway thanks, and how the F did you know….

Very Impressive…..

#40 Halifax Observer on 07.12.13 at 9:49 pm

“If you engage an agent to represent you as a buyer, the vendor usually pays the cost.”

Wrong. Buyers always help pay the cost. Who gives the seller the money to pay the realtor? Think about it. Let’s say I buy a TV from Future shop that costs $100 more at the store than it does on line. Following the sale the salesman receives a commission check from Future Shop. Did I pay the salesman, or did Future Shop?

“An experienced agent who knows how to market can almost always find buyers willing to pay more.”

I repeat. Agents should always be considered a cost to the buyer. The truth is, there is a premium to using realtors that both the buyer and the seller must be willing to pay. I am 100% in favor of using realtors. But the whole idea that including realtors in transactions does not cost the buyer is bologna. Houses cost more because the RE industry is involved in the equation.

#41 Nemesis on 07.12.13 at 9:50 pm

“A GoodAgent is always worth the ‘slice’.” – Nemesis

Imagery, Verbiage… or RE. LAX or YVR…

YVR RE? I vote for ‘SeñorCabellero’… albeit, ‘MataHari’ is, like, WayHotter.

#42 retired Boomer - WI on 07.12.13 at 9:57 pm

#28 TurnerNation

Yes, agreed. Smoking, drug use, kids who failed at even high School….

Both families appeared to “Put on Airs” i.e. pretending to be MORE than they were. Never good.

The family who lost their home to bank owing 96K. When bought back in early 90’s probably was a 40-60K property in NW Milwaukee area. Yup, either reified or cash out HELOC, maybe both. Remember, the US had a time when very unscrupulous lenders agents were going around offering families in dire straits extremely low mortgage rates of like 1-2% initially, that blew up to 12-14% within a couple of years!! That crap was totally nuts. Lending as much as 130% of the home value, as well. Is it any winder stupid people (who don’t READ their contracts) got screwed?

Yes, the country made some bad choices in policies, individuals made some bad ones, too.

Strange, most immigrant families I know thrived despite it all. Most younger (boomers, white) had an expectation, that never got fulfilled by them, or anybody else.

My take: too bad. I was in that shit-pile myself. I had to make a physical move, and a job change. Shit happens.
You play the best hand you can with the cards as they were dealt. No regreets, not a lot of sympathy either, but indeed some.

Still, one needs to live within their means. If its little -live low. It’s never forever. (It just feels like it is at the time)

#43 Ann on 07.12.13 at 10:06 pm

re- retiredbumboomer on 07.12.13 at 9:05 pm
Can I strike out part of the contract I do not like such as other people seeing a property while it is listed without the agent as this is going too far imho. and get the agent to initial it. Can I ask they they have a minimum of advertising, and that if fewer than 25 people see the property in two months I can cancel the contract. If is sold in less than 30 days the commission is reduced by 30%. These are all reasonable requests. We need a consumer advocacy group to give us balanced rights
——————————————————————–
Did you read your post?? Who would work for you. There should be a clause that says you pay evan is it dos’nt sell for the pain in the AZZZ

#44 Ahead of the Curve on 07.12.13 at 10:12 pm

First, happy Bday to Smoking Man.

Second, ethical realtors?? Really?? While there are indeed a few, the majority are poorly educated, part-time, and only have the eye on the commission.

While your advice is great if in fact you need a realtor, you fail to mention the incredible conflict of interest position they find themselves in, between representing the clients best interests and making the commission.

There are approximately 34,000 realtors, and 6,000 deals last month?? Figure out how many deals they do per year, and you will quickly realize how aggressive they can be when negotiating for you!

If I could add on one piece of advice, is to make sure the agent you choose has been in business for at least 3 years, is full time, and has documented experience in the neighbourhood you plan to buy/sell in.

Good luck. Have a fantastic day!

#45 Grooby on 07.12.13 at 10:13 pm

There are definitely good realtors out there. It’s a matter of having some filtering criteria. I’ve used the following to some success:

1. The Realtor must be in the industry for more than 15 years, so that they haven’t simply been around for the run-up.

2. If it’s a lady, their skill is inversely proportional to their attractiveness. Don’t be suckered in by Missy Bunnies, especially on the buy side.

#46 Paully on 07.12.13 at 10:37 pm

I know that you don’t like the BRA, but without it, your buyer’s agent is legally working for the Vendor of any property that you want to purchase. That means that your buyer’s agent is required to disclose anything and everything that you have discussed with him/her to the Vendor during the negotiation. That is not in the buyer’s best interest. The BRA obligates your buyer’s agent to work for you and only you.

#47 Nemesis on 07.12.13 at 10:37 pm

Egads!

http://youtu.be/k4SLSlSmW74

Yes. ForYou, SM.

#48 Miss Bunnies on 07.12.13 at 10:40 pm

I once solved the crime on an episode of Columbo

#49 CrowdedElevatorfartz on 07.12.13 at 10:52 pm

@#39 Smoking Man
How did Old Man know it was your birthday?

The cigarette companies told him………..

Happy Birthday ya crazy fart

#50 Smoking Man on 07.12.13 at 10:54 pm

Was a hell of a day, my 3 sons said dad, be a at train station at 1 we are taking you golfing. Leave you wallet at home….

Wtf, that made the scam alarm bells of, what does they want.

So excited that for once I wasn’t paying I get on the wrong train, on my way to Oshawa… Got of at Danforth doubled back 1/2 hour late.

First hole par , 2nd double boggy, 3rd birdy, 4th boggy x 10

5th to 19 don’t remember, bit fuzzy….

I got kids, brought them up smoking man, 2 out of 3

Still time for him. To honest and hard working to ever make real loot

Was a good day……

#51 Old Man on 07.12.13 at 11:06 pm

I see all those dog pictures and for me that is a man’s best friend, as with women have had too many problems in my life. One day this gal was having her birthday, and was going for dinner with her girlfriend, so like a fool said take her out to my private club on me, as can make a phone call and all will be paid for, as she was a good buddy.

She said great, as you are such a good guy. So figured about $100.00 that would be charged to my account, for a nice dinner. Well the bill came to $400.00 as the two gals ordered the best of everything with a bottle of the best wine, and got smashed with the works. Need I say more, as never again.

#52 father on 07.12.13 at 11:07 pm

you have whisperer on your post today

#53 AK on 07.12.13 at 11:23 pm

How to Get Multiple Offers on Your Home

#54 How to pick a realtor — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 07.12.13 at 11:57 pm

[...] via How to pick a realtor — Greater Fool – Authored by Garth Turner – The Troubled Future of Real …. [...]

#55 MachoManRandySavage on 07.12.13 at 11:58 pm

#39 Smoking Man on 07.12.13 at 9:35 pm
Old man, you’re freaking me out.

How could you possibly know. Even on my face book and linkedin. I use fake birth day, identity theft precaution..

Anyway thanks, and how the F did you know….

Old Man knew it was your bday because he IS THE MACHINE!

Oooooh Yeahhh!

#56 Derek R on 07.13.13 at 12:19 am

#40 Halifax Observer on 07.12.13 at 9:49 pm wrote:
“If you engage an agent to represent you as a buyer, the vendor usually pays the cost.”

Wrong. Buyers always help pay the cost. Who gives the seller the money to pay the realtor? Think about it.

Okay, if you insist. Let’s take three scenarios: no agents, vendor agent only, vendor and buyer agents. In each scenario we’ll assume a 3-bedroom house in a neighborhood where comparables are around $400,000 and three offers: low ball at $300K, medium at $390K and high at $410K. We’ll assume a 5% fee for the agents. And that all other transfer fees are identical in the three scenarios so that we can ignore them. Let’s see what pans out.

Scenario 1 – no agents. Vendor accepts $410K offer. Result: buyer down $410K; vendor up $410K.

Scenario 2 – vendor agent only. Vendor accepts $410K offer. Result: buyer down $410K; vendor up $489.5K; vendor agent up $20.5K

Scenario 3 – vendor and buyer agents. Vendor accepts $410K offer. Result: buyer down $410K; vendor up $489.5K; vendor agent up $10.25K; buyer agent up $10.25K.

Hmmm, the buyer paid the market price for the house, no matter whether agents were involved or not. But the vendor got less of that price when agents came into the picture. So it sure looks like the vendor is paying for the agents at the end of the day even if the money did come from the buyer originally.

#57 Derek R on 07.13.13 at 12:25 am

Okay, it should have been $389.5 for the vendor rather than $489.5 in scenarios 2 and 3 in my comment above. But the conclusion is the same.

#58 Ed01 on 07.13.13 at 12:42 am

After watching the PBS documentary, it shows Canadians have been a bit cocooned with free public health. One couple ran into the problems with a $30,000 bill for health expenses.
And been lucky that we haven’t seen a deflation in house values. Places in a lot of northern cities, after inflationary increases of through the 1990’s to 2008, are selling for the same as in 1985. Nobody is perfect or completely lucky.

#59 Tony on 07.13.13 at 12:46 am

Using a real estate agent is one of the main reasons people in Canada die broke. Only a total imbecile would buy or sell through an agent. If a house can’t sell itself it shouldn’t even be listed in the first place. Over in Europe real estate agents are lucky to get one percent on a sale and even that is far too high. Anyone paying 7 or 6 percent in Canada would be better off giving their money to charity.

#60 Ed01 on 07.13.13 at 12:47 am

As an example….

http://www.homesteadnet.com/SiteContent/PropertySearch.aspx?Special=XX&vidx=WyIlHLgwdeg=&t=S5ZWXmsSbrIYYGcnLRJukA==

#61 Notta Sheeple on 07.13.13 at 1:12 am

Never enlist the services of a buyer’s agent.

If you do, you will find your offers consistently being slightly outbid by clients of the listing agent, as the listing agent will do everything he can (i.e. the Code of Ethics is worth squat) to avoid sharing the commission with your buyer’s agent.

Happened to me a few times before I dumped my own buyer’s agent and began going straight to the listing agents. I even cornered a listing agent on the practice. His answer? “Every one does it.”

#62 debtified on 07.13.13 at 2:17 am

Happy Birthday, Smoking Man!

I hope you are finally on the money on Yellow. It would be a nice birthday gift. I am!

Thanks again for the public service, Garth. My family has a family friend who is a realtor and we all like her. I liked her even more when she told my sister to stop spending too much on her house.

#63 Dan7 on 07.13.13 at 2:20 am

Garth Whats your opinion on Jim Sinclair’s idea of the financial sector

#64 P. Winters on 07.13.13 at 3:21 am

>>The only possible reason for trying to sell the house on your own is because you’re cheap.

That’s because you lack imagination and find it hard to think outside the box. One reason might be that there is no real estate agent anywhere close to the place where you live, so you will have to do all the selling yourself anyway. Another reason might be that you don’t want to pay 5% or whatever to be ‘advised’ by the kind of people who you, yourself, show up to be crooks and incompetents.

#65 Deb on 07.13.13 at 6:48 am

There are three kinds of bras: the one with snaps and clips; the one used by many truck owners; and the buyer representation agreement. So be careful how you choose your words when you request that your agent remove her constricting BRA before negotiations can proceed.

#66 Kent on 07.13.13 at 7:33 am

If you got half a brain, sell your house yourself. When had agents assess our last house (2004), they all gave a price under $300k. We sold it ourselves for $383k. We plugged it on Craigslist, the local paper and had a website with pics and details. If your FSBO or using an agent, you still have to pay a lawyer. The lawyer was still under a grand doing it ourselves. But if your plan is to leave out such details as your asking price, where the house is located, size of property, give up…no one is going to waste their time with you. By in large, realtors are the biggest waste of money you’ll ever spend and are in the same league as used car salemen.

#67 Kent on 07.13.13 at 8:17 am

I’m a bit confused about the buyer representation agreement. It sounds like you’re saying that even when the agreement expires, you’ll still end up paying a commission on any house you buy there after. Do I have it right? I figured I’d be safe if its set for a very limited time or one particular house. No?

#68 Squatter on 07.13.13 at 8:21 am

No need for a realtor if you have business acumen.
When I buy, I only go to the listing agent or owner.
When I sell, I sell by myself.
I bought and sold 2 condos.
I bought both @ lowball prices and sold both @ full price.
I sold both condos within 2 weeks with proper advertising and without MLS listing.

#69 DJG on 07.13.13 at 9:15 am

I think one of the biggest issues with Toronto realtors right now is collusion between the buyer’s and seller’s agent. I have seen so many examples of the buyer’s agent pressuring their clients to come forward with a “strong offer” because of the “high level of interest” in the property, only to discover afterwards that there were no other offers, or perhaps just one offer. In some cases, this situation has resulted in “winning” offers $100k over asking when there were no other offers or one offer at just above asking. It could just be incompetence on the part of the buyer’s agent, but in at least some of these cases it’s simply a complete lack of ethics.

Lack of transparency in data is also a huge issue. Real estate boards have fought tooth and nail to prevent easy public access to data such as sold prices, days on the market, past sales history, and so on. The listing mentioned by another poster, above, 87 Summerhill, was last sold in 2010 for $660k. That information should be shown on the listing so that potential buyers can see the absolute insanity of the $2 million asking price just two years later.

#70 Craig on 07.13.13 at 9:26 am

Great pic and a totally unbiased blog.

See therapy does work.

Have a great weekend folks

#71 Craig on 07.13.13 at 9:44 am

#66 Kent on 07.13.13 at 7:33 am

Exactly what I said months ago.

I’ve worked to hard to save $24,000 only to hand it over to some sales person who lists my house with a few pics, sits around for an open house or two and BAM – gets paid $24K

That $24K, is at 4% commission for my house and some still have the nerve to ask for 5%

Ask yourself how long it takes you to actually save $24K. Not earn it, save it.

And you’re willing to hand that over to a REA for a few days work?

Not this camper

Get a good RE lawyer and do it yourself.

#72 Lifetime Renter on 07.13.13 at 9:47 am

Thanks Garth for adding yet another reason I am sooooo glad I never owned any place I’ve lived in. As if the prospect of unimaginable levels of debt, of responsibility for often ruinous maintenance expenses weren’t enough, I learn that one must walk a minefield in search of that rarity, an honest realtor, as part of the insomnia producing experience of selling the gawddamn thing. We have but the briefest time on this remarkable planet and to choose to spend so much of that time saddled with such burdens is beyond me. I think this as I prepare for a two month stay in Paris paid for from substantial savings I’ve accumulated as a result of not sinking everything into that money pit known as a house. Au revoir, mes amis.

#73 Halifax Observer on 07.13.13 at 9:50 am

#56 Derek R
Having bought and sold in each scenario you describe, it has been my experience that less realtors involved means less cost for both the seller and the buyer. Sellers usually have a “take home” price in mind that factors in the realtor commissions. For example, the sellers asking $410 in your example are hoping to end up with around $385k when all is said and done. I have purchased homes privately after listings have expired and saved a lot of money by having an idea what the seller’s happy “take home” price is. The truth is, market value is higher because realtors are factored in. FSBO sellers will often give a better deal if you can get this principle across. I have sold privately a few times and I usually list 3% below comparables to make the property attractive. In the end, costs can be reduced for both sides in a private transaction. FSBOs listing at comparable lose the only advantage they have. I see your point but anyone who has been around the block enough knows that realtors represent a cost to the buyer as well. You can usually get it for less if there are less agents involved. The “buyers don’t pay for agents” line has been created by the industry to get buyers to sign up. It’s a myth.

I repeat my previous point. Realtors cost both parties. Through experience though, I have come to believe that it is worth it to have at least one in on the transaction. There is a healthy amount of space that should exist between buyer and seller when dealing with such an emotional assett.

#74 Mark on 07.13.13 at 9:51 am

Sorry Garth, I’m in huge disagreement with you on this one. Realtors are parasites – a dying breed. Housing wouldn’t be nearly as inflated if people didn’t insist on adding 5% of their asking price every time they move in order to recoup their agent fees. If your house is priced right and you do a decent job of keeping it presentable, it will sell. There are dozens of FSBO sites, some even area-specific like grapevine.ca. Aside from bringing buyers and pricing your property correctly (which I’m arguing that the average half-competent person should be able to do themselves), please describe to me where the $20,000 worth of value lies, that a realtor will provide, to sell your $400k house. Get a lawyer, save yourself $19k, and don’t feel like you just bent over. The world would be a better place if realturds got real jobs.

What’s your real job? — Garth

#75 Robert on 07.13.13 at 10:14 am

#72 Renter,
I call bullsh*t on your trip to Paris.

#76 JimH on 07.13.13 at 10:38 am

#69 DJG
“Lack of transparency in data is also a huge issue. Real estate boards have fought tooth and nail to prevent easy public access to data such as sold prices, days on the market, past sales history, and so on.”
===================================
I think DJG hit the nail squarely on the head!

Just compare what is freely available for any United States MLS listing by going to http://www.zillow.com and searching by US City or zip code! (zip codes for cities can be found at https://tools.usps.com/go/ZipLookupAction!input.action?mode=2&refresh=true)

Its all there; price history, sales, listing dates, comparables, taxes, etc. etc.

Why don’t Canadians demand the same free and easy access to this kid of information that Americans have?

#77 JimH on 07.13.13 at 10:51 am

BTW, here’s a FSBO listing on Zillow in Renton, WA that illustrates that not all FSBO listings are created equal.

http://www.zillow.com/homedetails/10371-172nd-Ave-SE-Renton-WA-98059/48933178_zpid/

#78 Derek R on 07.13.13 at 10:55 am

#73 Halifax Observer on 07.13.13 at 9:50 am wrote:
I have sold privately a few times and I usually list 3% below comparables to make the property attractive. In the end, costs can be reduced for both sides in a private transaction. FSBOs listing at comparable lose the only advantage they have. I see your point but anyone who has been around the block enough knows that realtors represent a cost to the buyer as well.

Fair enough, Observer. I can see that in that sort of one-to-one situation where the seller is focused on a quick sale rather than the highest price, it is possible to save a little money all round.

#79 Kent on 07.13.13 at 11:10 am

#46 Paully

Just treat the agent as if they’re the seller and all should be well. I won’t be signing any such agreement with an agent. Why should I pay a commission if they aren’t the one’s who finds me the house or do the leg work? BTW, people act in THEIR best interest regardless.

#80 Squatter on 07.13.13 at 11:30 am

Once I made an offer to buy a condo.
As it was out out town and quite far, the realtor faxed me the paperwork and indicated to me in an e-mail all the pages I had to sign.
Before signing, I quickly read the whole thing, and realized that she included her BRA and I was supposed to sign that page.
She had never talked to me about her being my exclusive agent.
It was clearly written in the BRA that whether I buy with her or any other realtor, she was entitled to her commission.
I decided not to make any offer at all.
What a crook she is!

#81 urban capital on 07.13.13 at 11:33 am

hey garth,

what do you think about david wex’s ideas @ urbancapital?

http://video.msn.com?vid=893f0c66-f31d-4823-b60c-5e7a130ec3ad&mkt=en-ca&src=CPSmall:shareBar:permalink:tag_recent&from=cp^customplayer_en-ca_money

“building starts are off the charts!”

#82 Craig on 07.13.13 at 11:44 am

The problem is prices have taken off in the last 10 years (more than doubling) and REA still charge a %, hence the problem.

They should charge a flat rate or a rate based on square footage.

It’s not any harder to sell a $600K house then it is to sell a $300K house, so why are we expected to pay double in commission?

That’s the issue.

#83 CrowdedElevatorfartz on 07.13.13 at 11:59 am

For anyone truely disgusted with the current level of subservience in the Harper Govt( and or your Provincial govt) please watch the CPAC ( canadian parliamentary access channel) at 6pm ET Sat. July 13. Or go online to see a truely eye opening documentary on how things REALLY get “done” on our “democracy”

Its called “Whipped”

http://partydiscipline.ca/2013/07/whipped-airs-this-week-on-cpac/

#84 Alex n calgary on 07.13.13 at 12:00 pm

craig at post 82 is right, they are making outrageous commisions on selling houses now. It is not reasonable to pay someone 20,000$+++ to sell your house. I appreciate that some decent realtors do some actual work, but it is not fairly compensated anymore. When houses start to take more of a dive, we’ll see the end of this high % based realty crap I hope forever.

#85 Craig on 07.13.13 at 12:12 pm

Garth, cool banner.

Is that blonde chick a real estate agent…she’s hot !

#86 MachoManRandySavage on 07.13.13 at 12:33 pm

#68 Squatter on 07.13.13 at 8:21 am

I sold both condos within 2 weeks with proper advertising and without MLS listing.

…………………………………………

What do you mean by “proper advertising”? Did you use a fsbo service, or did you post on kijiji and other free sites?

Also, I heard that lawyer fees are usually higher when selling on your own. Did you experience that?

Thanks!

#87 Mark on 07.13.13 at 12:37 pm

What’s your real job? — Garth

I can tell you what I don’t do. I’m not a suave dominatrix in a cheap suite, disguised as a realtor, who preys on house-horny property virgins. But don’t change the subject – I gave you a challenge. Show us how a realtor can provide $19k of value for at *most*, a few days of real work. For 90% of Canadians, that would be several months of full-time work. Their job is to work your emotions. Nothing more. You’re a businessman, Garth – how can this profession possibly make sense to you?

I’ll answer, after you tell us what a ‘real job’ is, based on your own occupation. And don’t fib. I’m watching. — Garth

#88 someone on 07.13.13 at 12:53 pm

This article says the USA is preparing for nuclear war with China. It looks like WWIII will be a Pacific Ocean nuclear war (not good for Vancouver).

From the Globe and Mail:

“Both the Pentagon and the People’s Liberation Army are arming for an all-out war and pursuing enormously expensive master strategies that assume that such a war will occur…

But the AirSea Battle plan has far more expensive and dangerous implications. “The imagined result of ASB is the ability to end a conflict with China in much the same way the United States ended WWII: The U.S. military defeats China and dictates the surrender terms.” This is a drastic change from Cold War approaches, where nuclear-scale conflict was carefully avoided.

The plan scares the heck out of many military figures. “AirSea Battle is demonizing China,” James Cartwright, the former vice-chairman of the U.S. Joint Chiefs of Staff, warned last year. “That’s not in anybody’s interest.” A Marine Corps assessment warned that the concept is “preposterously expensive to build in peace time” and, if used as intended, would “cause incalculable human and economic destruction,” in good part because it makes escalation to nuclear war far more likely.”

http://www.theglobeandmail.com/commentary/us-and-china-smile-for-cameras-prepare-for-war/article13196146/

#89 Blacksheep on 07.13.13 at 1:05 pm

Happy birthday Old man!

#90 AK on 07.13.13 at 1:17 pm

#72 Lifetime Renter on 07.13.13 at 9:47 am
“Thanks Garth for adding yet another reason I am sooooo glad I never owned any place I’ve lived in.”
——————————————————————–
Fact: Most lifetime renters have a networth of “0”.

I rent my principal residence. I have more than zero. — Garth

#91 Penny Henny on 07.13.13 at 1:22 pm

Smoking Man-First hole par , 2nd double boggy, 3rd birdy, 4th boggy x 10

5th to 19 don’t remember, bit fuzzy….
—————————————————–

sounds like Lakeview

re real estates agents- I think a business model could be made to hire an agent simply to present the bid and negotiate a deal, on a fee for services basis.
In this day and age with all MLS listings available for all to see most people can search out the home themselves thus saving paying the agent 2.5%. You can say that the seller is paying this fee and it’s not coming out of your pocket but at the end of the day the seller is going to be looking at what they can net out of the sale.
Full disclosure-
first house-used agent to purchase, used agent to sell but only paid 3.5% total commish (2.5% to the buyers agent and 1% to my agent because he was getting the 2.5% on the next purchase)
second house- used agent to purchase and sold house FSBO. It was a desirable neighbourhood and had the house sold to a builder in three days.
third house-found the house myself and had an agent present the deal and kick me back 1% of sale price, leaving him 1.5% to split with broker. When it’s time to sell this one I will use a FSBO website that also lists the home on MLS (MLS being the irreplaceable component here).

Penny Henny

#92 AK on 07.13.13 at 1:39 pm

The useless real estate agent .

#93 Mixed Bag on 07.13.13 at 2:01 pm

#39 Smoking Man on 07.12.13 at 9:35 pm

You posted about your birthday last year, or the year before.

#94 Calgary Boomer on 07.13.13 at 2:10 pm

I agree with Mark and others that realtors are not worth the huge commissions they charge. Those commissions made sense when house were $100k maybe, and there weren’t millions of realtors. Still, there are plenty of people who can’t be bothered or are incapable of doing the selling themselves and so realtors will always be needed.

But anyone else can easily sell themselves. And if you are in a crazy sellers market like Calgary, you just need a decent house and put it on a FSBO site. I would try it for a week without the MLS upgrade if you’re in a decent area but pay the extra $400 for the MLS through the FSBO broker and you’ll get all the same exposure as with a realtor. Most people scan the MLS and look at pics whether they use a realtor or not (ads in other publications and fancy brochures ain’t gonna sell your home!). Most people looking at my house that I sold called me first and came with a realtor. Only problem is that if you sell to a realtor, you must pay a (negotiable) commission but I think you have to specify that when you set up.

Make your non-realtor buyer feel good (and yourself) by suggesting a condition on the purchase contract that the deal is subject to lawyer review. After you figure out the price (knock on the doors of comparable sales you’ve been watching and ask!), it’s the lawyer who does all the important work, and all for under a grand plus disbursements and you do all this with a realtor or not. (and the fsbo provides all the paperwork with examples, it’s easy!). And make sure you have a recent real property report with a compliance stamp from the city as this may cause delays.

If you have any common sense and a free time in the evenings, you don’t need a realtor. But be prepared for the onslaught of calls from realtors wanting to represent you and scare you into thinking you can’t do it on your own and that you’ll have the wrong price. But chances are you will be sharing that commission with a buying realtor as people still think they need them. (and no, i’m not a lawyer or in the real estate business in any form whatsoever! Just trying to help out the bro’s)

#95 y&d on 07.13.13 at 2:35 pm

AND DO NOT USE A HOME INSPECTOR recommended by the agent.

They only will recommend inspectors that go easy on flaws, not ones that are going to point out every problem.

I found this out the hard way making an offer on a 30 year old house 2 years back – the inspector the realtor had me use ($350) didn’t note things that even I could tell were going to be problems.

I hired my dad’s contractor friend and ended up backing out of the deal after he found mold, aluminum/copper wiring mixed together, some dry rot and a crumbling chimney. Estimated $20-$30K to fix and seller would not move.

#96 Mark on 07.13.13 at 3:05 pm

But don’t change the subject – I gave you a challenge. Show us how a realtor can provide $19k of value for at *most*, a few days of real work. For 90% of Canadians, that would be several months of full-time work. Their job is to work your emotions. Nothing more. You’re a businessman, Garth – how can this profession possibly make sense to you?


I’ll answer, after you tell us what a ‘real job’ is, based on your own occupation. And don’t fib. I’m watching. — Garth

Come on now, Garth, I’m not attacking you, I’m attacking a profession I have no respect for. Is this how you debated when you were in Cabinet? Flipping the challenge back to the originator in order to avoid the question at hand? No wonder you got under Harper’s skin. :D

#97 TurnerNation on 07.13.13 at 3:07 pm

I see this weblog is now featuring real-life pictures of blog dogs at the top of this page. (Not the dogs.)

Secret webcam photos. — Garth

#98 TurnerNation on 07.13.13 at 3:15 pm

(In earlier post, that car is actually an Impala (even larger!), though, on this bike blog I wouldn’t expect this to stand out.

Ps. Smoking man the Duke/Devon is holding another patio event July 23rd pm.

#99 craig on 07.13.13 at 3:32 pm

Mission Impossible: Asking 6 women to, not only make up their minds but to all come to the same conclusion.

#100 Ret on 07.13.13 at 3:33 pm

I wonder how many listings would disappear from MLS if they charged even $200 a month to actively list a home vs. the 1% listing fee paid at the close of the sale?

Too many sellers are just fishing for some sucker to pay an outrageous amount. People can list a home for months on end at an unrealistic price and it costs them nothing to do so. Realtors then use these pie in the sky “prices” as “comparables” to push buyers into overpaying.

#101 Canuck Abroad on 07.13.13 at 3:45 pm

I don’t really understand the whole agent working for the buyer idea. How do you hire one? You walk into a real agent’s office and say you want to hire someone to help you buy? Really? So how do you choose one? And if you refuse to sign a BRA, will they even agree to take you on? How are they paid, absent a BRA? If you have a naturally low opinion of the entire profession, can they really add value? Why not do your own research of the area, then hire your own surveyor and your own lawyer. Just not convinced of the value, Garth.

#102 PoltawaDiva on 07.13.13 at 3:55 pm

Have done it both ways. In a market where prices are volatile (moving quickly up or down, as in Vancouver 1980) buyers do not trust your assessed price and trust a “professional”. In this scenario,we used an agent and got more than we were asking “by owner”.

Fast forward to Toronto. Last year we sold our condo/coop. Because this is a unique type of ownership, the buyers are very specific. Having lived there for over 20 years, we knew what kind of buyer we would attract. We only put up a notice on the building bulletin board – no other advertising. An agent that was living in the building only three years offered to sell our unit because she had buyers. We offered her (and other agents who said they had buyers) an exclusive 48 hour listing. The buyers she had did not fit the profile, and did not buy. We sold the unit ourselves$15000 over her suggested listing price, This put the extra $15000 plus her commission into our pockets.

I can see an agent being useful if the property is “problematic”. In this case it is the agent’s job to make sure an accepted offer is ironclad.

#103 espressobob on 07.13.13 at 4:36 pm

#96 Mark

Salespeople rarely provide any value in the products they pump. It’s all about the commission! And as far as their credentials go, Its more about ‘fast talking, slick tongued bags of hot air’ that can’t deliver!

Whether its RE, washer or dryer, or TV sets, well you get the idea.

#104 Ahead of the Curve on 07.13.13 at 4:37 pm

Garth, I have to go with the comments here on this one. Ultimately it’s a question of value for money. The average SFH in Toronto is about $550k. If the commission is 5% than you are paying $27,500 +HST, totalling $31,075 in the sale of your home.

Your lawyer for the same transaction charges $600 + disbursments, totalling about $1,100.

While realtors perform a service, I wish the industry would move away from the ridiculously high percentage fees it charges.

#105 Donald Trump on 07.13.13 at 5:12 pm

Vancouver Mayor’s house has sold for asking –

http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/07/mayors-house-has-sold-for-asking.html

====================================

Not sounding too conspiratorial…but gut feel is this sale was rigged.

#106 Mt pleasant on 07.13.13 at 5:39 pm

Yes I am in favor of a good realtor.
When I interviewed a couple of realtors to sell my house near naniamo one wanted me to do a bunch of work to it before he would list it then he wanted me to ask 15k less than I sold it for.
I listed with island coast reality I dident have to do any work to the place sold in one day and go 15k more than the first guy wanted to list it for.
I find it hard to find a good realtor or a place who rates them.
Here in the west side of Vancouver I see for sale by owner signs I laugh and think there not serious about selling. Or can’t afford the commission.

#107 Do ethical agents exist? on 07.13.13 at 5:45 pm

“an ethical agent should be a key part of any buy-sell decision”

Very important point! The first property I ever sold I used the #1 Re/Max agent in the area. Had recommendations up the kazoo. Expensive way to learn the true meaning of the term “dual agency”. He misrepresented what the term meant and, without disclosing to us, had a CMHC-limited buyer waiting in the wings. He priced our property just below what his other client could maximally afford. He put suspect terminology on the mls listing to dissuade buyers saying it was his duty to disclose. In spite of multiple bidding wars at the same time on neighbouring houses that were in a worse show states than ours (one was a rental packed with junk and smelled) he claimed only two interested parties. Funny how one party went AWOL and it wasn’t our realtor’s other client. Still no disclosure that the buyer’s were clients at the signing and no offer to reduce the commission. The agent’s demeanour changed as the formalities of signing progressed. Quite Jekyll and Hyde like. I should have been more suspicious but with us flying out of the city in a few weeks for good we were relieved that we had a buyer. We conservatively estimated that we lost about $40-50,000 but the Realtor was happy that he scored both halves of the commission. He was shitting himself when our lawyer brought up the issue. I learned that he was #1 in that region for Re/Max but not for some of his clients.

I’ve never trusted Realtors since then but I’ve used them to get access to the mls.

Live and learn!

#108 eddy on 07.13.13 at 5:52 pm

The assessed ‘value’ of a house, from a bank appraiser, or some government appointed private corporation like MPAC in Ontario has 5% built into the value. That’s the average commission and they do not deduct it from the sale price. And in Ontario if you don’t agree with MPAC you can pay them a fee to appeal the assessment. I call it corporate fascism, approved by our politicians.

#109 Lifetime Renter on 07.13.13 at 5:56 pm

Robert #75 – Re calling me on my trip to Paris. Was there with my late wife 10 years ago for our 25th wedding anniversary. Now retired I’ve learned how to travel alone and will be in Paris, renting an apartment, all of September and October. My wife and I travelled extensively all of the years we were together, far more than anyone I know of my generation with a similar family income. And we were still able to put money aside. There is no way we could have done that had we purchased a house and that is why we decided not to.
The point is that, as the first line of today’s blog suggests, the decision to buy a house should be done with the utmost seriousness. Part of that is understanding the trade offs that come with debt and ownership responsibilities. If owning a house is the first priority, so be it. But surely we can all agree that at present our society creates an insane number of difficulties and dangers, more than I could handle, for those who feel they must own their shelter.

#110 harboursnug on 07.13.13 at 6:05 pm

#140 harboursnug on 07.12.13 at 5:47 pm

How are people doing it?

2 ways;

1 – 2 incomes

2 – VERY low interest rates.

20 years ago you were probably paying 10% or more. Today it’s 2.8% (or was)

Huge difference in monthly payments = affordability.

……………………………………………………………………..

That’s exactly it, interest rates in my era were 8 to 10% and as high as 19% Young people now are paying under 4% and can take on triple the amount of debt.

Hope interest rates don’t climb back to historical averages or a lot of people today are reallly hooped.

Hec my father who’s 90 years old paid a 6% interest rate 60 years ago

#111 espressobob on 07.13.13 at 6:17 pm

#96 AK

Dude I respect your comments! I’m a renter for many years and would never change a thing. All the cash flow that gets socked away in the investing accounts, well that just never gets old, except for myself! Two sides for every story.

#112 Freedom First on 07.13.13 at 6:18 pm

Just my humble personal experience, and not to take away from Garth’s excellent advice. Most RE virgins know little.

I’ve only bought RE when it has dropped minimal 30-40%. Then I low ball with an offer I think will get it, knowing the prices, without insulting anyone. Always been accepted. Found out after, the people had to sell.

When I sell, prices have moved up considerably, and, being easy to sell with lots of buyers, I put out a sign “For sale by owner” with my ph.#. I screen all calls and avoid the lowballers. They are always out there in every market. Takes no time at all, and a realtor will contact me. I never am under pressure to sell, and the realtor sees what I paid for the property, and knows what I will get. The realtor knows his commission is going to be reduced before we get there. A good realtor, during the interview process, will reveal themselves to me, and I will give them 1-3 months to sell it, nothing more. A crappy realtor will reveal themselves quickly in numerous ways, and be out the door fast early in the interview. I am always kind and pleasant, but business like during the interview. Another thing, the good realtors respect people, the crappy ones treat everyone like an idiot. Hoped this helped someone, it is just my experience, and I would never buy or sell RE without becoming financially educated on anything beforehand. Freedom First.

I put a sign “For sale by owner” out front with my ph.#. Rarely show i

#113 Stickler on 07.13.13 at 6:41 pm

@ #90 AK on 07.13.13 at 1:17 pm

#72 Lifetime Renter on 07.13.13 at 9:47 am
“Thanks Garth for adding yet another reason I am sooooo glad I never owned any place I’ve lived in.”
——————————————————————–
Fact: Most lifetime renters have a networth of “0″.

————————————-
–> you have never been outside your neighborhood then. I know lots of well to do people that rent.

In fact thats is probably why they are well to do…they know when its better to buy then rent.

Ask yourself this:
– are you better off if you rent your lexus for $250/month for 3 years, or if you buy it for $68,000?

If your answer was lease….then you just figured it out.

Now keep in mind sometimes the calculation would show owning is better.

The point is smart people do the calculation.

#114 TnT on 07.13.13 at 7:01 pm

Like any profession, there’s good and bad representatives. Right now due to the boom there’s just a flood of Real Estate agents and this has weaken the talent pool.

Same things happen in all other professions, e.g. Tech Stock boom created a flood of crappy programmers. Once the works dries up, only the good survive.
Fortunately we had a local, seasoned real estate agent who kept me calm during the process. Used this agent to buy my first house and after a renovation the ROI was insane (crazy market), so I put it up for sale and the stress was crazy. So many times I thought I would have thrown in the towel during negotiations e.g. I had vermiculite in the attic and the buyer wanted to test it for asbestos (rightly so) just before the closing date. Was stressful but deal was done.

I used the same agent on buying 2nd house. Renovated and listed with same agent again and this time requested a discount. I used this same agent 4 times (buying and selling) which made her about 40 K. Worth every penny.

Her insight on hot neighborhoods for this small town was instrumental on flipping these 2 homes. These costs are definitely offloaded to the buyer too which is a whole other topic.

Having a good real estate agent keeps the negotiations engaged until both parties are happy; it’s the only way they get paid.

I don’t think Real Estate agents are going anywhere either. They have created a Real Estate cartel and can add value to the process, just need to do your homework.

Renting now and have been shopping for a real estate agent in my new neighborhood for last 2 years. Can already see who’s going to be around and who’s not when this boom is over.

#115 Devore on 07.13.13 at 7:51 pm

#73 Halifax Observer

From a buyer’s perspective, Derek R is correct. The buyer just sees, and pays, the final price, all costs in, regardless of how the seller is fleeced afterwards by agents and taxes. How that price is chopped up is irrelevant.

But as you point out, this is where FSBO has a competitive advantage, as they can price below comparables, and still receive market price. In a hot market, they can price above comparables, and get even more money.

If you are willing to do all the work necessary to sell your house yourself, then you can POTENTIALLY come out ahead quite well. But if you just reduce your price by the agent’s commission, and receive the same amount of money as you would if you used an agent, then how are you ahead? Use an agent, and do almost no work, or don’t use an agent, and do everything yourself, with the financial outcome being roughly the same in both cases?

Again, there is that competitive advantage, in that a lower price will attract more buyers, thus POTENTIALLY getting you a sale quicker. Is that worth your time to do it yourself? Only the individual seller can answer that question for themselves.

As a buyer, the situation is different. Assuming a relatively typical purchase, the ONLY value a buyer agent brings is in his role as the monopoly MLS information gatekeeper. It is very difficult to get recent sale prices for a multitude of properties you are interested in.

A buyer agent (an experienced local one) can also help with “soft” information about a given area or property, if you are unfamiliar with the neighbourhood. As with a seller, only the buyer can decide whether he should use an agent or not. Doing it yourself can easily end up costing you more than the cost of the agent, if you don’t know what you are doing and start cutting corners.

#116 Devore on 07.13.13 at 8:46 pm

#100 Ret

Realtors then use these pie in the sky “prices” as “comparables” to push buyers into overpaying.

What kind of an idiot uses asking prices as comparables? Yes, lets use a list of things that HAVEN’T sold as our guide.

#117 West Vanner on 07.13.13 at 8:57 pm

I’d pick the black lab, always more reliable than something colored.
Garth – I have read (on another site) that you shouldn’t bother with ETF’s unless you have at least $50K to invest. Do you agree with that?
Seems to me that the management fees are quite low but maybe there is another catch like purchase fees?

#118 AK on 07.13.13 at 9:45 pm

#111 espressobob on 07.13.13 at 6:17 pm
“#90 AK

Dude I respect your comments! I’m a renter for many years and would never change a thing. All the cash flow that gets socked away in the investing accounts, well that just never gets old, except for myself! Two sides for every story.”
——————————————————————–

I said, “Most”, not “All”.

#119 Smoking Man on 07.13.13 at 10:13 pm

Not guilty, that’s BS.

O well good luck walking street Zimmerman.

#120 Smoking Man on 07.13.13 at 10:28 pm

Just imagine being a black kid in the land of the free, bumping into the white Hispanic with a Jewish name.

The potential celebrity status for making this right.

Zimmerman life expectancy I’m guessing 8 weeks.

#121 Donald Trump on 07.13.13 at 10:35 pm

#119 Smoking Man on 07.13.13 at 10:13 pm

Not guilty, that’s BS.

O well good luck walking street Zimmerman.
=====================================

Huh?

Did you follow the case, or are you spewing the usual S/M B.S. ?

#122 Grantmi on 07.13.13 at 11:22 pm

#119 Smoking Man on 07.13.13 at 10:13 pm

Not guilty, that’s BS.

O well good luck walking street Zimmerman.

What a racist comment!!! SM.. you’ve crossed the line!

#123 Smoking Man on 07.13.13 at 11:31 pm

DELETED

#124 Kilby on 07.13.13 at 11:48 pm

Van guy on 07.12.13 at 7:37 pm
Garth,

You dislike realtors, why are you pumping them now? Creating bidding wars drives up the price of a property and creates horniness.
++++++++++++++++++++++++++++++++++++
Not a great percentage of realtors are involved in bidding wars, just the ones we read about in the MSM. Like any occupation there are bad and good. Watching FSBOs and 1% realty listings not sell is a fair argument for a GOOD realtor.

#125 Kilby on 07.13.13 at 11:58 pm

#44 Ahead of the Curve on 07.12.13 at 10:12 pm

Second, ethical realtors?? Really?? While there are indeed a few, the majority are poorly educated, part-time, and only have the eye on the commission.

Obviously you don’t know the right realtors, all the ones in our small town were usually very successful in other business and chose real estate as they are there own boss, each realtor is an independent small business and success depends on word of mouth by clients, poor realtors do not do well and can’t afford to stay in the business.

#126 Vangrrl on 07.14.13 at 1:00 am

#109: Sounds like you and your wife had a wonderful life together. I love Paris! I hope to always be mobile and have the spirit of adventure. Have a great time there in Sept and Oct :)!

#127 T.O. Bubble Boy on 07.14.13 at 7:50 am

How to pick a realtor?

The one who survives the next 3-5 years and stays out of the unemployment line.

(and, someone willing to put in aggressively low bids)

#128 Realtor 102 on 07.14.13 at 8:31 am

I am a Realtor, read your blog since 2009. This is my first and only post. Would rather be a spectator and not a pathetic blog dog. True story ahead.

A couple years back I had a client looking to buy a townhome. I found a fsbo which was perfect for them. We wrote the offer and were in the subject period when certain life circumstances prevented the buyer from firming up the offer. They did not proceed to buy.

The fsbo was overpriced according to local comparables. Any zillow site or agent who did not know the local market would agree. However, I know the local market and am a bit of an expert in this type of home. It had a few key features I knew a buyer would pay extra for. So we listed it $20k over the fsbo asking price and got nearly full price in a couple weeks. He did not feel my commission.

After the deal went firm I was left with about 10 buyers who had inquired about the property. So, I went to another fsbo in the same complex and told him I could sell his place quickly and for more than he was asking. He took me up on that, so I listed it, and had all 10 buyers come through on 1 open house. We received multiple offers and sold that night for a stupid amount.

In all 3 cases my clients did better by engaging a local expert who worked in their best interests. The first buyer would have had their perfect home for under marker value, and the 2 fsbos ended up with more $ in their pocket and zero headaches as I handled everything for them.

So, that is how I sleep at night and how I justify my worth.

#129 willworkforpickles on 07.14.13 at 8:37 am

Greed has truly messed up the lives of the middle classes. Greed will adversely affect all…. rich and poor, in the not too distant future.

#130 Mike from Montreal on 07.14.13 at 9:13 am

Long story short.

I was looking at a triplex in Montreal.

I have no buyer’s agent

When I called the Realtor I got a call back from the brother which was part of the team.

He would have me visit the property and he would be my buyer’s agent.

I had to repeat at least three times that I didn’t need a buyer’s agent.

So the listing agent called me back and explained that if I wanted to see the house it was the only way I could make an offer. They worked as a team I was told…

So in this case, it’s not the buyer who pays, it’s the seller who gets screwed.

There’s no point filing a claim with the provincial RE agents association as the listing agent is part of the ethical committee.

Decent RE agents exist but are far and few in between and I think that they have to play the game if they don’t want to be thrown out of the business by the majority.

On the other side of things, this may be normal for Quebec no wonder there are so many corruptions scandals!

#131 Siva on 07.14.13 at 9:30 am

//If you act on your own, your client is a fool.// – from experience I can say you are absolutely right!!

#132 TnT on 07.14.13 at 9:42 am

#122 Grantmi

Smoking Man is all about enslavement – today it’s enslaving any race – if he was around 80 years ago it would be the Jewish race, 175 years ago it would be any non-white race.

This thread is over. — Garth

#133 jess on 07.14.13 at 9:53 am

maybe a machine will do the picking!

“quill”

http://narrativescience.com/
======
unregistered people running businesses in ontario ! taxhttp://www.thestar.com/news/2013/07/13/undocumented_workers_blurred.html

#134 Smoking Man on 07.14.13 at 10:04 am

DELETED

#135 craig on 07.14.13 at 10:22 am

Oxymoron – ethical realtors

#136 Calgary Boomer on 07.14.13 at 10:45 am

Realtor 102…read your own post, it’s a bit confusing. You found an FSBO for a buying client, who then didn’t buy it, but then you listed that FSBO? And you say it was overpriced (when looking at comparables), but you listed $20k over the supposedly overpriced original price of the FSBO? And sold it? Well then I guess the FSBO was not overpriced because he also knew the value of his “extras”. And maybe he was selling it lower to beat the market being sold by realtors.

But in any case, you didn’t make that first FSBO any money, just yourself. And the second one sold for “stupid amount”? Houses will sell for what they are worth. If those FSBO’s sold for their lower listing prices, they would end up with the same money and the buyers would also win. And so what about the buying agent? Did they not see that this was a stupid amount? For every “great deal” for the selling agent, there is a “stupid deal” for the buying agent and his client. But what does he care, he’s making more money.

The whole market place is artificially inflated to cover the real estate cartel and everybody pays in the end, but especially the buyer. In the age of the internet where the world can see your house, this is all completely unnecessary and eventually the whole real estate scam will come to an end. I can see a new form of agent/fsbo evolving or perhaps even an “evaluation agent” to determine the price, but not the old style agent. Just a matter of time before it gets accepted that paying an agent $20-30k is a “stupid amount”.Garth’s prediction of falling house prices may partly become true due to agents commissions being slashed.

#137 Victor V on 07.14.13 at 10:51 am

Here in Ontario there are roughly 35,000 Realtors. Of these, the majority of about 70% earn a paltry $40,000.

Another 20% of them earn zero. That’s right. ZERO.

It’s the remaining 10% that do what it takes to make the sale and end up with the bulk of the commissions in the business.

#138 Daisy Mae on 07.14.13 at 10:56 am

#115 Devore: “The buyer just sees, and pays, the final price, all costs in, regardless of how the seller is fleeced afterwards by agents and taxes. How that price is chopped up is irrelevant.”

**********************

Our homes are built on a parcel of land with a 99-year lease, prepaid by Lessor. Some lessees have monies owing on their 25-year leases, land only. Realtors play up this fact with their listings exclaiming: PREPAID LEASE!

To my way of thinking, it’s neither here nor there. Just a gimmick. The properties sell for x amount of dollars…and ‘how that price is chopped up is irrelevant’.

#139 Condo Chris on 07.14.13 at 11:00 am

Holy Shit Garth! I think I see snow out my window in the middle of July? Is that hell freezing over? Bravo

#140 VT on 07.14.13 at 11:01 am

#111 espressobob on 07.13.13 at 6:17 pm
#96 AK

Dude I respect your comments! I’m a renter for many years and would never change a thing. All the cash flow that gets socked away in the investing accounts, well that just never gets old, except for myself! Two sides for every story.

=====================

I owned for almost a decade. Enjoyed certain aspects of home ownership but sure was a money pit of a house.

I’ve been renting the past few years and seen my net worth increase substantially and far fewer headaches around home maintenance.

Nothing wrong with owning but I sleep better at night now with fixed expenses and much more freedom for wife/kids.

#141 craig on 07.14.13 at 11:09 am

Work hard, play hard. Enjoy Family, friends and the time you’re here.

The rest will take care of itself.

#142 Bargains everywhere on 07.14.13 at 11:30 am

Interesting commentary on housing from the Toronto Star, of all places. Susan Pigg sure didn’t write this one.

http://www.thestar.com/opinion/commentary/2013/07/14/canadian_housing_bubble_looks_ripe_for_popping.html

#143 Mister Obvious on 07.14.13 at 11:41 am

When I sold my Vancouver area home in 2010 I used the same agent who sold it to me 25 years earlier. He was still in business in the local area and by far the most experienced and knowledgeable person available.

We looked at tons of comparable recent sales and together arrived at an asking price that made sense to me and at which I would be perfectly happy to sell.

In fact, he did better. In one week, the house sold for more than asking by an amount almost exactly equal to the commission I paid. Thus, I pocketed the entire asking price.

The man was (and still is) a complete professional.
Efficient, honest, courteous, reliable and reachable.

No nonsense of any kind. What is not to like here?

#144 CrowdedElevatorfartz on 07.14.13 at 11:45 am

Oxymoron : Progressive Conservative
Democratic Elections
Justice for all
Voting for change

#145 Calgary Boomer on 07.14.13 at 12:17 pm

Garth, why do you remove my post? I don’t even get a “deleted”?

I removed nothing – your post is published. I was out riding. Keep your shorts on. — Garth

#146 Oliver on 07.14.13 at 12:21 pm

We are two days away from the 60 days forecast made by GTA realtor Ross Kay.

Teranet house price index is showing close to zero y/y in half of the major canadian cities.

I’ll give Ross another 30 days….

ref: http://www.greaterfool.ca/2013/05/29/a-downward-spiral/

#147 andrew woburn on 07.14.13 at 12:29 pm

The World according to Garth?:

From New York Times, Owning a Home Isn’t Always a Virtue – By ROBERT J. SHILLER

http://www.nytimes.com/2013/07/14/business/owning-a-home-isnt-always-a-virtue.html?hp&_r=0

also: Homeownership, the Key to Happiness?

http://www.nytimes.com/2013/07/14/realestate/homeownership-the-key-to-happiness.html?adxnnl=1&adxnnlx=1373817784-zgUtTuajAxfOYiyD/DQIBw

#148 Calgary Boomer on 07.14.13 at 12:36 pm

oh, i see

#149 Old Man on 07.14.13 at 1:20 pm

#144 Calgary Boomer – please take note that Mr. Turner never disclosed what he was riding today.

#150 Old Man on 07.14.13 at 1:39 pm

I have this buddy who is a bus driver who owns a Goldwing Trike with a trailer. He has $50,000 invested thus far with communication systems and the works, so will define what out riding means. He and his wife belong to a Canadian association for road runs, and they meet up by the hundreds, and head to USA to meet others for massive rallies involving thousands a couple of times a year ending in Nashville for example. This is called dedication for the love of biking.

Goldwing trike + trailer = mobile home. — Garth

#151 NotAGreaterFool on 07.14.13 at 1:42 pm

If you are a buyer & working with a RE agent (who has agreed to not have you sign a BRA) upon purchase, must you now sign the BRA?

No. — Garth

#152 Mark W on 07.14.13 at 2:16 pm

New mortgage rules having little effect on high-end real estate
Finance Minister Jim Flaherty’s tighter regulations don’t faze wealthy buyers

Read more: http://www.vancouversun.com/business/mortgages/mortgage+rules+having+little+effect+high+real+estate/8651985/story.html#ixzz2Z2rGWMmk

The market for homes over $3,000,000 is so small that nobody cares. What a dumb article. — Garth

#153 Old Man on 07.14.13 at 3:17 pm

Here is the problem with the Real Estate system in place, as if you attempt to sell a home without an agent to pay commissions for about 5 to 6%, the purchaser will discount the asking price knowing full well that your savings must come into their pocket. It becomes dog eat dog with a price negotiation, so more times than naught it is best to list with a agent.

#154 Old Man on 07.14.13 at 3:29 pm

#149 Old Man – the trailer in question is just an add on that hitches up behind the trike which would cost no more than $2500 for stuff to be put into it. They all stay on major road trips at the best hotels that money can buy, so no camping out for them in the least.

My point was, if you’re going to tool around in something with five wheels that weighs 2,500 pounds, how is this a bike? — Garth

#155 father on 07.14.13 at 3:38 pm

gone riding/keep your pants on lol

#156 Old Man on 07.14.13 at 5:11 pm

Well never get mad but get even in life, as went out early this morning in my new car, and who pulled up to me, as it was the dancing queen on her scooter who hooped me with my old car on the light for a race, and floored the grand am into overdrive, and gave me the finger as she raced by. A scooter has a huge pickup for the first 6 seconds.

She does this to all with a straight back wearing a helmet, and has a great pair of legs to race all at the light, and is a young woman from hell. So this was my time, as had my roadster with the top down, and pushed a button on the BMW into an automatic mode, so looked around for cops, and pointed to the light, and she gave me a node.

The light changed and off we went, and this time gave her the finger, and she was pissed off bigtime, as gave me the finger back, and don’t believe she likes me anymore, and have no idea why, as left her in the dust.

#157 Kent on 07.15.13 at 6:22 am

Let me try this question another way. Lets say my wife signed a BRA five years ago, it was limited to that house and for six months. Now, five years later, we decide to buy that house, will the agent then be able to come back to us for a commission?

No. — Garth

#158 Kent on 07.15.13 at 6:22 am

Sorry, left out a relevant part, the house is being leased then we decide to buy.