Was the Commission Worth It?

ANONYMOUS

Looking to hear from some recent Seller's in Toronto's hotter neighbourhoods like Lawrence Park, Forest Hill, Allenby, Lytton Park, Deer Park, Chaplin Estates etc. How many days was your home on the market? How much did your Salesperson charge for commission for themselves? In % and in $$. Please do not include the amount paid to the Buyer's Agent which is usually 2.5%. What services did your Salesperson perform for you? Were you happy with what you paid vs. what services you got in return?

14

Canada / Resale Discussions

GRACECONDOS

Buzzer

51

4

I'll give you an interesting example from the Beach last month. Our @GraceHomes client had a great detached house, but it needed work.
A few days before we listed it, a renovator caught wind through neighbours and offered the seller $670k cash. After going through the full marketing plan for a week, we got the sellers $753k. Needless to say, the $83,000 spread more than covered our services.

ANONYMOUS

Ummm thank you for the example but I am looking to hear from Sellers themselves not their agents. I'm sure you feel your commission is justified but that opinion is just slightly biased.

ANDRE

NewBee

9

I will give you my perspective as a seller (3 times). The commission was worth it, and the last transaction specially was interesting. Long story short, all 3 times I was trying to determine the price of my property myself, and was always pricing it a bit below the market value.
Having said that, I DO believe that commissions in RE need to be negotiated to the level you feel comfortable. I dont personally think that 5% is a fair number and have never paid that much. Like any other professional service, you can get great results or mediocre performance, and the ideal situation should be when you get good value based on what was given to you.

ANONYMOUS

Andre - thanks for your answer. If you don't mind saying how much did you pay in commission (%)? You mentioned you were trying to determine the price of the property yourself. What information and data were you using to do this? Do you think had you listed and underpriced it yourself you might have gotten multiple offers and a bidding war which would have resulted in the same selling price you eventually got only without having to pay the commission? If so, what prevented you from doing it yourself?

AMAR PAL

Buzzer

98

7

Respect that this question is geared at sellers, so won't weight in; but curious why you're asking the commission offered to buyers agents to not be mentioned?

ANONYMOUS

Just because it's usually 2.5% for the Buyers Agent. I'm more interested in what types of commission people are paying their Listing Agent and whether or not they feel they are getting the value from them for the services they provide.

BRIAN PERSAUD

BabbleBee

274

12

I think the reason why most agents work exclusively with buyers is because its easier, they know they can take an offer listed with a solid agent who would work with a client to see the merits of the offer and do the behind the scenes work to ensure it closes.
I've dealt with a lot of FSBO's, they have no clue what to do when the going gets tough and negotiations are getting intense. This leads to two things, no deal..where they get emotional and just stop negotiating...or a poor deal. A good agent should protect their clients from this by being a good negotiator. I'd like to see a seller, who thinks they know what they are doing, get in the ring with a Brad Lamb, Ellie Davis or Sylvia Morris...they are more likely to get whipped.
I know what your saying, the market is good, lots of buyers, therefore offers are easier to deal with. Thinking this can lead you to a false sense of security if you are a seller. From experience, I know the power of the one liners in agreements of purchase and sale. Once signed, the seller is bound, the buyer has conditional periods or irrevocable periods and can get out of a contract.
If the market dropped and a buyer refuses to close, the seller has three choices, find another buyer at a lower price, or sue the buyer to close or do both. The courts would more likely side with the party who acted professionally

Even agents, who are supposedly trained, are bad at closings and review contracts...This is why errors and omissions insurance exists, it would save the seller from tremendous liability/

ANDRE

NewBee

9

Hi Brian. I paid 1% to the LA plus 2.5% to the CB.
The market (as we all know) is really funny sometimes as there is nothing to justify discrepancies in prices from one street to the next, so I had a property for sale 3 years ago (townhome) and thought I could get some $340k, as I had seen similar units selling in my street for about that, and right behind my street there were semis with the same sq footage selling for $320k to $340k... long story short, I contacted a realtor, who proposed listing it for $360k and 15 days later we had it sold for full price. Fast forward to last month, I had another house for sale and called the same realtor to evaluate it. Was told we could list for $640k although I was hoping to hear $680k to $690k. I decided to contact another realtor, who told me the house could sell for up to $760k. 3 days later, we had it sold for $772k.
All in all, I believe you should always interview 2-3 agents who are active in your area. Get their perceptions about your property and talk to the next. Once you feel comfortable with a realtor, negotiate the commission to your comfort level, and enjoy the process.

GABRIELLE JEANS

NewBee

1

This is also a great article on this topic: http://975fe15.activerain.com/post/2458906/now-you-ll-really-need-to-justify-your-commissions-

AL DAIMEE

NewBee

6

Andre,

I'm curious if you paid 1% to your listing agent because you have had previous dealings or if you negotiated to 1% from the usual 2.5%? Also, what area do you live in? These factors certainly influence commission rates, as there are different market rates by neighbourhood even within a city.

CARY CHAPNICK

Buzzer

116

12

I was in a 9 offer bidding war last night in the Upper Village (North Forest Hill). I was working with a buyer for this house. House was listed just under $900K and went $200K++ over ask. Our offer was competative i thought but i guess not. The listing agent for said property marketed it properly and she brought value to her clients in my opinion. The purchase price i thought was high but no one forced the buyers to offer what they did so days end it seems everybody won. Im sure once the neighbors catch wiff on the SOLD price we'll see some more inventory

ANONYMOUS

Cary. The Agent may have seemingly brought value but it's also possible the house was just underpriced and the market spoke for itself. Maybe it was listed too low and the Agent actually hurt the client. What was the listing Agents marketing plan other than MLS listing, feature sheets and an open house on the weekend which is pretty standard these days. I guess my question is what did the Listing Agent do that the Sellers couldn't have done themselves considering properties can now be listed on the MLS for a minimal fee and it really isn't that difficult to figure out the value of your house on your own. I dont know how much the listing Agent made on the deal but probably somewhere between 1-2.5% which is a good chunk of change for probably about a weeks worth of work. Would be great to hear from the Sellers in this deal. Even though they will probably be very happy because they have dollar signs in their eyes.
Also it doesnt sound like everyone won. If this was a new high for this type if house in that area then the other 8 buyers and all the other buyers wanting to buy in that area lost bigtime as the bar has now been raised.

TATIANA GOLOD

NewBee

2

I payed 1% to the seller and 2.5% to the buyer and I feel the commission wasn't worth it. When the house market is so hot it is absolutely impossible not to sell the house. As far as the correct price goes, you'll have to trust your agent wanting the best for you and being a professional, or you can do the market research your self, which is not that difficult to do anyway.

ANDRE

NewBee

9

The problem with evaluating the property value yourself is that it is really difficult to determine small details that will have huge impact on the price, such as demand/offer. In my case, the house sold for way more than I expected, and part of the reason the price was higher than expected was because of very limited supply in the area. My realtor told me that according to current (then) market conditions and limited supply, we could ask for an unreasonable price and still get it... then we sold for even more than the "unreasonable".
In hindsight, I believe that the property sells itself, no realtor gets it for more or less. The best realtor on the planet will NOT convince a buyer to pay more, just because he is really good at what he does. The BUYER is the person who determines the final price, while the SELLER determines the listing price, and will adjust that price according to marketing strategies, market situation, etc.
I feel that realtors will do a good job in general (in ANY industry there are good and bad apples) but the commission structure needs to be revisited. With property values so high these days and information so widely available, it does not make much sense (IMHO) to pay $80k in commission to sell your house. I guess a good number would be 1% for the LA and 1% for the buyer. The old 5% model today has an impact to people's perception of value that leaves them wondering if the realtor is making too much on "an easy to sell market".
On a side note, commission free companies will still struggle in the current market due to so many realtors still expecting 2.5%. That may change in the next few years, but for the time being I dont think they will attract a whole lot of business in the short term.
As usual, this is just my uninformed and humble opinion.

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