By Mark David
When you hire a Realtor, you’re benefiting from the wealth of knowledge he or she has when it comes to buying and selling homes. Many may argue that a Realtor’s job is never done – they are constantly keeping up-to-date on new studies and keeping abreast of trends, statistics and selling techniques.
Real estate in Canada is governed by the Canadian Real Estate Association (CREA) and within that there are provincial governing bodies; further to that there are individual boards. All of these governing bodies have rules, regulations and codes of ethics that Realtors must adhere to. Realtors are responsible for constantly upgrading their knowledge and skills in order to maintain their status within their respective boards.
In addition to the educational component, Realtors are not nine-to-five employees – in fact, their devotion and commitment to selling houses reaches far beyond the ‘For Sale’ sign.
“Often sellers don’t realize the time commitment, and more importantly, the ability that comes with selling a property,” says Anna Michaelidis, sales representative and certified staging professional with Toronto’s Royal LePage Urban Realty. “Hiring the services of a professional Realtor means having someone, with the right skills and tools available seven days a week for as many hours as required. Proper pricing, preparing your home, showing and qualifying prospective buyers, negotiating price and terms as well as dealing with inspections, appraisals, financing and legal issues are only some of the key factors in executing the sale of a property in a legal fashion.”
Furthermore, Realtors also earn their commission by providing a number of services that a FSBO (For Sale By Owner) company doesn’t include – and that a lot of home sellers might not even think of.
“At Priscilla and Company Re/Max Vernon, we have a professional photographer who produces slide shows and videos, we have a qualified gentleman who accurately measures each home and draws floor plans for each home, we maintain our own personal websites complete with pictures, floor plans and specifications,” says Priscilla Sookarow, Priscilla and Company at Re/Max Vernon. “We have team of technicians working to keep our website front and centre. We participate in numerous other websites to ensure maximum global coverage, we advertise regularly in the local paper, MLS publications and various other media. We do a lot of research, visiting city and regional district offices to obtain maps, verify zoning and address building and environmental issues. Basically we strive to have the answer for any question a prudent buyer might have when they are viewing one of our listings.”
Top-producing Realtors also work niche markets, such as high-end homes, certain neighborhoods and investment properties – something you won’t find with FSBO companies.
“As such, their familiarity with their market places gives them exponentially more information about market values and connections to buyers than sell-your-own companies,” says Mike Milovick, sales representative for Prudential Grand Valley Realty. “I know, in my market place, no other seller has been involved in over 400 successful negotiations and has personally seen more than 4,000-plus properties I have been through. This experience is what a seasoned Realtor brings to the table.”
And, according to the statistics, all of this experience and hard work pays off – at least for the home seller.
According to Lind, the median home price for sellers who used an agent was $211,000 versus $153,000 for a home sold directly by an owner.
Getting a pro
The reason home sellers hire professional Realtors is much the same reason why we go to the dentist for a root canal or a mechanic to fix our transmissions – some jobs are just best left to the pros.
“How often have you heard the expression, ‘a man who represents himself in court has a fool for a lawyer,’” says Michaelidis. “Being represented by a professional makes all the difference.”
Realtors undergo extensive training and mandatory continuous education. They adhere to a strict code of ethics and standards of business practice. Realtors are monitored and protected under legislation from all levels of government because the buying and selling of property is a strict legal transaction; and when not done within the boundaries of the law, carries strict ramifications.
“Very few sellers would be acquainted with the appropriate laws or logistics of carrying out this execution properly – even with the assistance of a lawyer,” says Michaelidis. “Speaking of which, without a Realtor to ensure that all the elements are properly covered, a lawyer could easily overlook aspects of a deal, which may include peculiar details. This has been known to happen.”
FSBO sellers may think they’re scoring a deal by selling their home privately since FSBO companies advertise packages from $129 to $729. However, some FSBO sellers may not take into consideration the other expenses they’ll occur such as hiring a lawyer to prepare and review offers as well as hiring home stagers – a vital component to effectively selling a home.
“Home staging is one of the many services I offer home sellers and it is very costly,” says Lind. “Also, if it’s not done properly, it will not have the lasting impression that you want a potential home buyer to have.”
According to Lind, lawyer fees can run from $250 to $2,000 (depending on the extent of the offer), which is on top of the fees involved to close the deal. Home staging can cost even more.
“I’ve had a home staging quote for $9,000 as the home needed substantial work and furniture to be rented,” says Lind. “The typical fee just for a staging consultation is around $250 and the hourly rate is anywhere from $50-$125 per hour.”
Security is also a big factor that a lot of FSBO sellers don’t necessarily think about.
When a FSBO sellers hosts their own open houses, they really have no way of knowing what people are coming into their home; whereas when using an agent, all appointments are booked with brokerages and logged so that they know who came through their home and at what time.
“Theft is a potential problem,” says Lind. “Valuables such as jewellery, DVDs, video games and video game controllers have been known to be stolen (in FSBO open houses).”
Is the grass greener in FSBO sales?
When considering selling a home privately, FSBO sellers also have to consider how they will be perceived by consumers.
One of the possible negatives that might rise from consumers is that many home buyers don’t want to deal with FSBO sellers.
“The consensus is that the sellers are ‘fishing,’” says Milovick. “They’re overpricing their homes, advertising that they are not paying a Realtor commission and that they are simply not serious in selling. Consumers are also reluctant to deal with private sellers because they feel that if the property is not properly listed with a brokerage, there must be something to hide.”
Not wanting to buy a home directly from a seller also applies if the seller is a Realtor him or herself.
“They often feel awkward about approaching the seller/listing agent directly,” says Eric Klimstra, sales representative for Prudential Grand Valley Realty. In fact, when Klimstra wanted to sell his own Cambridge, Ont. home he even hired a Realtor even though he was more than qualified to sell the home himself and could have saved paying the commission.
“I chose to hire the best team in town to sell my house,” says Klimstra. “They knew the market more intimately that I did (even though I lived there for four years) and I knew that they would act as professionals and take the emotion out of the pricing and negotiation.”
Buying and selling a house can be an emotional venture. Certainly, as an investor, you’ve already been taught not to bring emotion to the negotiating table. Realtors can help ensure you don’t.
“It is simply impossible for a seller to have an objective eye towards their own homes,” says Michaelidis.
“Buyers are typically more attracted to a neutral environment so that they can see it themselves with their own tastes, should they purchase the listing. Needless to say, Realtors are in a better position to assess the home for the ability for the design and décor to be attractive to the broadest range of potential interest.”
In addition, says Milovick, FSBO sellers have a harder time co-ordinating viewings and receiving information back, which has a detrimental effect on their sale.
“Anything that delays the buyer’s purchase decision, leads to more time on market,” says Milovick. “I have had buyers seriously consider private sales, but their interest has been diverted to other properties as the seller was too slow to get back to them.”
Realtors can make a good chunk of cash on a sale of a home, but what some home sellers may not realize is the money they put out upfront in order to do their job.
Professional Staging Consultation = $300 – $1,000
Interactive Virtual Tour = $100 – $300
Professionally Measured Floor Plans = $200
High Quality Wide-Angle Photographs = $100 – $300
Full Colour Glossy Feature Sheets = $200
Eye Catching Signs, Direction Arrows = $600
Catered Agents Open House = $150 – $300
Convenient Lockbox = $50
1-Day Ad in Local Paper = $250
The top questions to ask before choosing your Realtor:
Chad Bradley, sales representative with Coldwell Banker Terrequity Realty, Toronto, gives you the run-down on the questions to ask to ensure you pick the right Realtor.
How long have you been in the business?
What area(s) do you focus on?
What type of clients do you focus on? First time home buyers, investors?
What are your business standards? To return phone calls, e-mails, etc.
For sellers, do you have a proven marketing plan? Can I see it?
What sets you apart from other agents?
For investors, can you show me examples of what type of ROI your clients have experienced?
If I am not happy with your services do you offer any kind of guarantee?