by Mark LeLievre
I have to be upfront and tell you that I used to be a REALTOR®. I had my licence in Nova Scotia for a little more than a year, and even though it was a slow start, I did pretty good considering that I was still holding down a day job as well as managing a rental property on the side.
The main reason I left the business is that I bought a second income property that began to take up the majority of my free time. Something had to give, and I had to choose between the steady income from my day job, or the uncertain income from my part-time job as a REALTOR® (by law in Manitoba being a REALTOR® is a full-time occupation). I regrettably chose to give up the latter.
Even though my career selling real estate was short, I feel I can give you an insider’s opinion on the best way to work with a REALTOR® when selling your property. I honestly believe that you need to list your property on the Multiple Listing Service® (MLS®) in order to properly expose your property to the buying public. Currently, the only way to get on the MLS® is to list with a REALTOR®.
The main reason that people choose to sell their property by themselves is to save money on commissions. Most people don’t realize that the commission paid by the seller is often split four or more ways between the listing and selling agents and their respective brokerages. That’s why the commission is often thousands of dollars. A common misconception is that all sellers pay the same six per cent commission, but the reality is that the commission is always negotiable. It doesn’t even have to be a fixed percentage of the selling price. The higher the listing price, the lower the commission percentage can be negotiated.
It may seem at first glance that you will save thousands of dollars selling your property yourself, but properties for sale by owner (FSBOs) typically sell for 10 to 15 per cent lower than comparable properties listed on the MLS® with a REALTOR®. There are advertising sites that claim they will save you thousands by giving you the materials to sell your property yourself, but 80 to 85 per cent of listings on those sites eventually end up listing with a REALTOR®.
Why do you think those companies have taken the Canadian Real Estate Association (CREA) to the Competition Bureau? Because they know the value of listing on the MLS®.
So what are the benefits of using a REALTOR®?
Access to MLS® — Having your property listed on the MLS® not only exposes it to a much larger market than any other method, but it also gives you, via your REALTOR®, access to the statistical data that the MLS provides, such as recent sales activity.
Using the MLS®, your REALTOR® can give you the information you need to determine a realistic asking price for your property. Listing your property too high means you will often discourage potential buyers who would have paid the price you are actually willing to accept, but listing your property too low means you will miss out on potential profit.
They do the legwork — Your REALTOR® will spend a lot of time driving between their office and the property to get the listing, create the listing cut, take pictures, host open houses and showing the property. Many homeowners don’t realize that there’s preparation required for each of these sales tasks and the hours can add up quickly. You wouldn’t work for free, so why should your REALTOR®?
They facilitate the deal and worry about the fine print — A property transaction shouldn’t be an emotional event, but it often is. A REALTOR® brings a cool head to the table, and can help bring both sides closer to the middle while a deal is being negotiated to help iron out wrinkles that arise while conditions are being met. Even if you can view the transaction as strictly business, the buyer might not, which is when it’s beneficial to have a REALTOR® representing you.
WinnipegREALTORS® uses standard contracts documents that make it easier to conduct a real estate transaction. You can’t use these forms if you’re not a licensed REALTOR®.
If you choose to sell your property, then you choose to either facilitate a complex legal transaction yourself (would you remove your own appendix?), or you choose to hire a lawyer to wade through the agreement of purchase and sale, as well as any conditions that accompany it. Just an FYI, lawyers don’t work for free either.
They can help you prepare your property for sale — Rarely would a potential buyer make an offer without taking a look at comparable properties. Your REALTOR® will know which properties in the area are most comparable to yours, and will be able to offer suggestions on how to make your property more attractive to potential buyers. This knowledge and experience can either translate into a quicker sale, a higher price, or both.
How to choose a REALTOR® — By now, hopefully I’ve at least convinced you to consider using a REALTOR® to sell your property. Now I’d like to talk about how you go about choosing one.
The first thing I would do is try to approach someone who recently sold a property similar to mine and ask them who the listing agent was and who the selling agent was. (The listing agent represents the seller, and the selling agent represents the buyer). Any REALTOR® whose name came up a few times would definitely be a potential.
Next I’d call the brokerages in the area and ask for the broker (agents take turns answering the phone in order to get a share of opportunities). I would describe my property to the broker, and ask them to recommend one of their agents to me and give me their credentials. Then I would trim down that list to three or four potentials REALTORS®, and interview each one by bringing them to the property and asking them how they would sell the property, what I should do to prepare it for sale, at what price should I list it, and how much they expect to be compensated for it.
Other questions to ask them are what the average time on the market is for comparable properties and what the Listing-to-sales ratio is (listing price ÷ sale price). They should bring a list of comparables (or “comps”) to back up their valuation.
How they answer those questions should give you an indication of who will do the best job, but it’s also important that you’re comfortable working with them. I wouldn’t sign a listing agreement until after I had a few days to consider each pitch, and then I would contact the REALTOR® I wanted to work with and begin negotiating the listing terms, such as the commission and length of the agreement.
Ongoing relationship — Now that you have a REALTOR® and your property is listed on the MLS®, you need to make sure that your REALTOR® is checking in with you regularly. Once a week may be too often if it’s a slow time of year, but you should hear from them no longer than every two weeks, even if it’s just to tell you that there’s no news.
Feel free to fire your agent if they don’t seem to be doing their job. If your house isn’t seeing any potential buyers, then it had better be a market-wide phenomenon, and not just your property. If it is just your property, then your listing price is probably too high based on its location and its condition.
Your REALTOR® is your connection to the real estate market. A good REALTOR® will keep you up to date on changes in the marketplace, such as the sale of a comparable property or a change in its price or even the opening or closing of a new business in the area.
They get paid the commissions they do because they have the knowledge and experience to conduct a real estate transaction quickly and efficiently. It’s not only in their interest to get you the best deal they can, but it’s also their fiduciary (legal) duty.