Have you been wondering how real estate agents charge when you hire them to sell home? Let us break it down for you.
Selling a home is a big decision:
The biggest chunk of your home’s sale price is likely to be the real estate agent s commission that you will pay as the seller. Selling it will take a lot of physical commitment and time.
Before you put your property on the housing markets, there is a lot that is expected of you in order to be able to get the best sale value. If you are a first-time seller, you will realize that there is a lot more to home selling than what meets the eye.
The big costs involve cleaning up the property and prepping it for staging, paying up all the taxes due, applying for insurances, getting paperwork ready, approaching an attorney to get the papers in order, and finally appointing a real estate agent who will shoulder some of your responsibilities.
Is it a pre-requisite to hiring agents?
Sale by owner is not rare. A lot of home sellers here in Canada elect to do the selling on their own. You may have seen boards in the front yard announcing the same. Is it a good choice? To answer this, let us explore the advantages of hiring an estate agent to sell your house.
– Putting the right value to the property is a sine qua non. Your home means everything to you, and because of this emotional attachment to it, you will never get the right price to set on your home. An agent, on the other hand, who has hands-on knowledge of the housing markets as well as up-to-date knowledge, will arrive at the most scientific valuation of your home. Any wrong analysis of your home can result in undervalued sales resulting in a loss of a hefty sum of money or overpricing your home due to which the property will stay on the block for a very long time.
– An agent helps you list your home at all the right places. There is nothing as good as a good old word of mouth when it comes to home sales. An agent will be the right person to tell you where to list your home and make sure that it is garnering all the special attention it deserves.
– Prepping the house for the staging and open house is also part of the agent’s repertoire. An agent can walk the owner through the house and explain all the improvements that need to be undertaken. An agent can also help in preparing the house to stage it to the buyers. He will get a good photographer to click great photos of the room in the best lights. Using fantastic quality pictures on the listing is a sure way to get a lot of attention from buyers.
– Prospective buyers are at ease when an agent is involved. They are more comfortable to close the deal with a listing agent than the homeowner trying to sell it independently. Buyers are known to have reservations when they want to voice their concerns about the house to the owner. In such cases, an agent acts like a professional middleman whom they can trust and of whom they can be more confident about sharing their opinions and negotiating rates.
– Experienced agents are indeed an expert at negotiations. Hiring a capable listing agent may entail you commission rates but think of how he can benefit you by helping you get the best value for your home in Canada. He will have a discerning eye for the best offers from potential buyers and will provide you invaluable assistance.
– An agent does most of the work, leaving you with only the significant chores in selling your home. Selling a home is stressful for both the buyer and the seller. There is so much paperwork to do as much as things that can go wrong. If you are doing everything, it is bound to mount a lot of stress on you.
– Agents are well connected in the industry. Not hiring an agent can save money, but procrastination in solving problems that may arise one after another can leave a bad taste in your mouth besides leaving a bad impression on the buyers. An agent has a wide array of contacts from contractors to attorneys whom he can deploy to solve the problem even as it arises or, in some cases, take all the precautionary steps that roadblocks do not occur in the selling in the first place.
We are not saying that selling your home is an impossibility if you are going ahead sans an agent. We are saying that the benefits that you will accrue from hiring an agent will help you save more money in the long run. The commission of the agents can be absorbed in the closing costs of the deal. When you consider the total costs of selling, there are other costs involved too.
Is there a flat fee for real estate agents?
The answer is a flat no! According to the Canadian Real Estate Association (CREA), an agent’s commission depends on lots of factors. These are the region where the home is situated, the nature of services requested, and the home’s asking price.
The commission rate in Canada is so diverse that you may even find a real estate agent ready to work for a flat fee. Of course, this varies in different provinces inside Canada. In some of the regions, brokers will charge on the basis of a slab value. There is so much disparity in commission rates within the different regions because there are no regulations by the real estate board that is applicable pan Canada.
The commission rates vary according to nature of services:
An agent’s job can be either limited to listing the property in the best of places to arranging a meeting between buyer and seller. This sort of a traditional brokerage job will definitely be lesser than an agent who is hired for an end to end service.
An end to end service will include advising the seller on the improvements to be made to get it prepped for staging it. The agent will also hire a quality photographer, who will take professional quality photographs of the ready home and include them in the listing.
The agent may also be required to accompany the seller in open houses and be an active participant in the negotiation cycles if the seller is happy with any offer he received.
The types of commission rates found in Canada:
- There is a fixed percentage where there is an agreement on a fixed rate of commission that is usually charged as a percentage of the home’s sale value.
- Split Percentage involves commission that gets reduced with the increase in the sale price. It could also mean that the broker/agent charges a certain percentage on an initial sale amount and a reduced percentage on the remaining sale value.
- Flat Fee is when the agent is paid an amount that may not be calculated on the property’s sale value. The seller is bound to pay the fixed sum irrespective of the value of the sales.
4. Service-based Variable fee is when the real estate brokerages vary according to services availed by the seller.
5. Hybrid Fee Rate is when there is a combination of one or more types of commission rates.
6. One Percent Commission is charged by agents who will only charge one percent of the home’s sale value. It is not a very popular type of agency, and many sellers do not prefer to hire them because their service repertoire is very limited.
Conclusion:
The commission you pay to your real estate agents must include their brokerage fees and various other costs, including listing, staging, and transfer tax. In some regions, you may also need to pay the buyer’s agent. There is no stigma attached to negotiate your agent’s commission and fees. In case you are of the mind to save the money by selling the home on your own, but hiring an agent is definitely worth the money spent and services availed. This would also save you from heaps of physical, mental and financial agony..