SOME REASONS TO USE A REALTOR®
The proliferation of services that help home buyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate sales person is really necessary. While doing the work yourself can save you the real estate commissions many real estate sales persons command, for many, doing it yourself may not be the way to go – and could end up being more costly than the commission in the long run. Buying or selling a home is a major financial and emotional undertaking.
1. Better Access/More Convenience
A real estate sales person’s full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other sales persons. Both the buyer’s and seller’s sales person work full time as real estate sales person’s and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate sales person will track down homes that meet your criteria, get in touch with sellers’ sales persons and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you’re shopping for homes that are for sale by owner.
Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on, if you tend to be busy or don’t respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.
2. Negotiating Is Tricky Business
Many people don’t like the idea of doing a real estate deal through a real estate sales person and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is possibly true – assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn’t always an easy relationship.
What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with a real estate sales person, you can express your contempt for the current owner’s decorating skills and rant about how much it’ll cost you to upgrade the home without insulting the owner. For all you know, the owner’s late mother may have lovingly chosen the décor. Your real estate sales person can convey your concerns to the sellers’ sales person. Acting as a messenger, the sales person may be in a better position to negotiate a discount without ruffling the homeowner’s feathers.
A real estate sales person can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer’s offer for any reason – including just because they hate his or her guts. A real estate sales person can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a real estate sales person who will represent their interests without turning off potential buyers who want to niggle about the price.
3. Contracts Can Be Hard To Handle
If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren’t met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale – and you aren’t approved for the mortgage – you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.
An experienced real estate sales person deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you’re buying or selling your home.
4. Real Estate Sales Persons Can’t Lie
Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate sales person under an agency agreement, (i.e. a conventional, full-service commission agreement in which the sales person agrees to represent you), your sales person will be bound by common law (in most provinces) to a fiduciary relationship. In other words, the sales person is bound by law to act in their clients’ best interest, not his or her own.
In addition, most REALTORS® rely on referrals and repeat business to build the kind of clientele base they’ll need to survive in the business. This means that doing what’s best for their clients should be as important to them as any individual sale.
Finally, if you do find that your sales person has gotten away with lying to you, you will have more avenues for recourse, such as through your sales person’s broker, professional association (such as the Real Estate Council Of Ontario) or possibly even in court if you can prove that your sales person has failed to uphold his fiduciary duties.
When a buyer and seller work together directly, they can and should seek legal counsel, but because each is expected to act in his or her best interest, there isn’t much you can do if you find out later that you’ve been duped about multiple offers or the home’s condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent’s commissions by the time the transaction is complete.
5. Not Everyone Can Save Money
Many people eschew using a real estate sales person to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of a real estate sales person. This means that the seller gets the keep the percentage of the home’s sale price that might otherwise be paid to the real estate sales person.
However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having a real estate sales person involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can’t both save the commission.
The Bottom Line
While there are certainly people who are qualified to sell their own homes, taking a quick look at the long list of frequently asked questions on most “for sale by owner” websites suggests the process isn’t as simple as many people assume. And when you get into a difficult situation, it can really pay to have a professional on your side.