Like many real estate brokers in this business of selling and buying homes for many years, I often times meet buyers and sellers who have not been involved in a real estate transaction for many years. These clients sometimes hold some outdated beliefs and some often very incorrect views about what real estate brokers do and how we work to help buyers buy and sellers sell.
While many look at real estate brokers poorly (and there may be a good reason for that for some), sometimes the poor image we have to the public is because of widely accepted (but incorrect) myths about what we do and how we do it. I thought I’d take this opportunity to dispel some of the widely held myths about how real estate brokers work as a profession.
While the average real estate broker’s commission payable might have been 7% back in the 1980s, when houses were considered very expensive at $100,000, today we see more and more commissions for brokers have been coming down considerably both because home prices are selling much higher but also because of increased competition both among brokers and with other services. The fact is that the average commission these days in closer to 5% in the Montreal market. Some brokers will charge higher, some may charge lower, depending on the services offered and the requirements of the seller.
Some brokers may charge more and net the seller even more than the savings on using a low-service low-commission broker.
Another common myth is that there is no choice among real estate brokers that they are all charging the same commission. This is also false, there are many brokers with different commission structures based on the work, marketing and time required to sell a home. Some will charge very little and do very little. Some brokers may charge more and net the seller even more than the savings on using a low-service low-commission broker. These commissions are negotiable in most cases and sellers can look at different options based on the service they need and their decision on how best to maximize their return on investment and the timelines they require to sell the home.
Like with a doctor or lawyer, yes, there are medical facts available online and legal information as well. You can diagnose your illness online but how accurate will it be? We go to a doctor who meets with us, asks us many questions and provides their experience and knowledge to guide us on steps to take to get back to health. The same thing with lawyers, yes there is legal information online, but when we are serious and need a legal solution, we consult with a lawyer. We generally trust what a professional working for us has to say over what a website article says.
Good real estate brokers will work with you in much the same way, consulting with their clients to understand their needs and requirements and work with them to a positive outcome. Also good experienced brokers can walk though a home with a buyer and point out many factors about a home that could be easily overlooked by an inexperienced buyer. Our clients trust us with this important decision and we bring our knowledge and experience to the table to ensure the whole purchase or sale process happens to your satisfaction.
One thing a lot of my clients remark when I tell them that I work for an independent family-owned agency is that they see a lot of signs from “agency X” around town and fewer of our signs. While this is normal since “agency X” may have hundreds of brokers, however when you look at the individual brokers performance at “agency X” there may be an equal number of them who sell very few homes each year. Because they work for the same banner, their company signs are seen more often.
There are top performing brokers at big companies and at small ones. There are experienced brokers and new brokers at all agencies. The number of brokers a company has under their banner, has very little impact on how successful the individual broker you hire to sell your home is. Remember it will be the broker who is working for you; the company they work for has very little impact on their success in selling yours. What the individual broker actually does to sell your home and their track record will have a much bigger impact on how well you home sells.
Your home is usually the largest investment you will make in your lifetime and whenever an exchange of large sums of money are involved, problems can happen. When they do happen, it usually involves lawyers and courts which are expensive, time consuming and very stressful. The fact of the matter is that a small percentage of sellers decide to put a sign up in front of their home and attract a buyer driving by, and some will pay a website company hundreds of dollars (up to thousands of dollars) to post some photos and a description on their website (whether it sells or not), and some people do manage to sell their home while avoiding legal problems. In Canada according to the Canadian Real Estate Association (CREA), about 20% of home owners do sell themselves without a real estate broker. And a vast majority sell with a broker. Here’s why:
Most homeowners work, or have family commitments and do not have the time to market the home correctly and most are not always available for visits. For most busy home owners, their time is valuable and they aren’t looking for a 2nd job trying to sell their home. In addition a real estate broker has access to a network of trained professionals from inspectors, surveyors, notaries, mortgage brokers and specialized trades, and sometimes having that network and the experience of how to handle any of the many situations or problems that can come up, can save a deal which an individual homeowner might lose.
Most knowledgeable buyers who know the seller is not paying for a broker will not want to pay the extra commission that the seller is saving either.
Finally a lot of buyers scouring for-sale-by-owner websites are looking for deals. The idea that the owner does not have a broker working on his behalf is attractive to those looking to scoop up a deal. Most knowledgeable buyers who know the seller is not paying for a broker will not want to pay the extra commission that the seller is saving either.
The frustration level I find from former for-sale-by-owners on the lack of serious buyers for their home and the time wasted is very high. Remember, most good brokers who work with buyers will pre-qualify them to ensure they can purchase when the right home is found. So your home will be seen by more qualified buyers who are ready to purchase then by curious dreamers or bargain hunters.
I sell many homes that were listed for sale by owner and did not sell. The vast majority of my clients net more money in less time than they would have gotten had they continued to sell by themselves after all their costs are calculated. Having a network of buyers and other brokers who we collaborate with in the area, also helps brokers to sell homes quicker than individuals.
Finally hiring a broker (who is only paid if the home sells to your satisfaction at a price you accept), is a huge protection against further legal troubles that can happen in a real estate transaction. Brokers are trained in the laws, the legal forms used in a transaction and good ones have the experience and knowledge of how to ensure this important transaction takes place as smoothly and stress-free as possible. Brokers also offer liability insurance and other financial protections for their clients.
It’s unfortunate that real estate brokers do have a poor reputation among some of the general public; sometimes a single bad experience with a broker causes people to paint the entire profession with the same brush. The fact is that those brokers who last in this business and that are successful year after year, are the ones who provide outstanding service to their clients and are referred again and again to friends and family. It is a super-competitive industry and it doesn’t take much for a broker to ruin their reputation. Those brokers who are in it for a quick buck are the ones who are out of business very quickly, and a lot of brokers leave the business because of this.
The fact is that those brokers who last in this business and that are successful year after year, are the ones who provide outstanding service to their clients and are referred again and again to friends and family.
My goal as a real estate broker is to provide you with outstanding service that exceeds your expectations, and ensure your home is sold to your satisfaction, for the most money, with the least hassle. I know that my satisfied clients will refer me to their friends and family, which helps me grow my business. A majority of my business is done by referral so it is also to my advantage to ensure my clients are very happy at the end of the sale or purchase process. Most good brokers who are in the business for the long-term think this way as well.
Always speak with more than one broker when considering the sale of your home and ask for references from previous clients.
I hope some of the myths about real estate brokers were addressed. If you had a bad experience with a broker or have tried to sell on your own without success, considering hiring the right real estate broker for the job, interview several and do your homework before taking this important decision. If anything is still unclear, I invite you to contact me with any questions.
An earlier version of this article I wrote appeared in the Montreal Times newspaper.
I'm Andrew Mitchell, Chartered Real Estate Broker and Owner of Vistacor Realty Group. I help buyers, sellers and investors in the West Island, Montreal and Vaudreuil-Soulanges areas buy and sell homes. My goal is to provide you with useful, straight-forward insights and relevant real estate market updates. Contact me with any questions. Follow me on twitter here.