Are you gearing up to buy or sell a home? If so, you probably have questions about working with an agent. Unfortunately, many people are hesitant to ask them—either because they think they should already know the answers, or because they’re worried about being rude.
The truth is, your agent should always be more than willing to provide clarification. That said, I know many prospective buyers and sellers want to know what to expect before they take the first step. That’s why I’ve decided to provide answers to a few frequently asked questions.
Here are five faqs about working with an agent…
1) What’s the difference between a REALTOR® and a real estate agent?
Sales representatives and brokers must belong to their local real estate boards, which (among other benefits) provides them with access to the multiple listing service (MLS). This system allows them to share listings, which is important when they’re helping buyers and sellers. Of course, similarities like these don’t mean that all types of real estate professionals are the same!
Agents are sales representatives who serve buyers and sellers in real estate transactions. They’re duty-bound to act in the best interests of their clients—while remaining fair and honest in their dealings. To hold this position, a professional must complete the required courses and exams through the Real Estate Council of Ontario (RECO).
REALTORS® must meet the added criteria of being a member of the Canadian Real Estate Association (RECO). As members, they’re required to complete additional training on an ongoing basis—and adhere to a strict Code of Ethics.
Lastly, a broker (like me) is an agent or REALTOR® who undergoes an additional set of courses through RECO. There are a few benefits for the professional who goes this route (the biggest being the ability to manage and own a brokerage, whereas agents and REALTORS® must work for an existing one).
What does it all mean for you? The truth is, you can trust in a real estate professional who has a great track record and strong selling skillset—no matter which of the titles above they hold!
2) Do I have to sell my home with an agent?
The short answer is no. There’s no rule that says you can’t sell your home on your own, and some sellers do so with relative success. The real question is, should you? While it may be tempting to avoid having to pay commission, you may want to think carefully before selling your home without representation.
Consider this. A qualified agent brings a wealth of skills and expertise to a sale—and that can have a very real impact on your results. Take pricing. Set your price too low, and you won’t get the return you deserve. Too high, and you’ll risk turning off qualified buyers (which could leave your home languishing on the market). Then there’s pricing for—and negotiating—multiple offers, which is a skill unto itself. Unfortunately, it’s nearly impossible to settle on the right sum without recent local sales data and a pricing strategy based on experience.
Then there’s staging and marketing, which is usually covered within an agent’s fees. The specifics can include (but aren’t limited to) direct mail, social-media advertising, exposure on relevant websites (we’re not just talking realtor.ca), professional floor plans, a pre-list home inspection, professional photography and video…I could go on. The cost is typically thousands of dollars, and most sellers aren’t about to take these steps on their own.
From strategic pricing to confident and informed negotiations, a skilled agent will make sure you get things right at every step. That’s important, because missteps can lead to subpar results (or, in some cases, a lack of interest from buyers).
Lastly, it’s worth noting that sellers who start the process without an agent often wind up changing their minds—which can lead to sunk costs. Word to the wise: think carefully about whether you have the time, energy, and skillset to do the job before diving in.
3) What is a listing agreement? What about a buyer’s representation agreement?
If you’re selling your home with an agent, they’ll ask you to sign a listing agreement. This document gives their brokerage permission to sell and market your home for sale. By signing it, they’re putting their duty to act in your best interest in writing—and you’re agreeing to work with them exclusively.
Along with basic information such as your asking price and the commission rate you’ll pay, your agreement may contain a holdover clause. It states that if your contract expires and you subsequently sell your home to a buyer who your agent introduced you to, you may still owe them commission. This is only the case if the sale occurs during the holdover period (a negotiable timeframe set out in the listing agreement). It’s important to note that if you list with another brokerage, the holdover period doesn’t apply.
If you’re a home hunter, the agent you decide to work with will ask you to sign a buyer’s representation agreement. This document lays out your relationship to the brokerage you’re working with, and it may contain a holdover clause. If you don’t sign one, your agent will still be obligated to act fairly and honestly throughout your transaction. That said, their specific duties to you will differ—and it’s important to be aware of that fact.
It’s also worth noting that most agents allow for a grace period when it comes to the buyer’s representation agreement. That said, a true professional will always submit it to be signed at some point. A skilled agent’s time is valuable —and their greatest loyalty will be to the buyers who are committed to working with them.
If you’re confused by the wording or any of the details within an agreement you’re asked to sign, make sure you ask questions! Real estate can be complicated, and a trustworthy agent will want to make sure you’re fully informed.
4) How much commission can I expect to pay an agent?
Typically, agents charge around 5 per cent of a home’s sale price in commission. Of course, that number can vary from one professional to the next—so make sure you ask for the breakdown upfront.
It’s important to note that only the seller in a transaction pays commission, which is then split between the two agents involved (usually it’s 2.5 per cent each way).
Keep in mind that you’ll only pay for a successful result (the sale of your home). In this respect, real estate agents differ from service providers such as lawyers, who will charge you no matter what happens. The truth is, we’re on the job for you everyday, right up until your money is in the bank or the keys are in your hand. In the meantime, obstacles are bound to arise—and we’re there to make sure you overcome them.
5) Can I change agents partway through the process?
Sometimes buyers and sellers are reluctant to sign an agreement because they’re worried things won’t go well. It’s understandable—nobody wants to be locked into a contract when they’re not satisfied with the service they’re receiving.
There are some steps you can take in this situation. First, you can discuss the issue with your agent and see if they’re willing to break your contract. If it’s not a good fit, you may be able to work things out between the two of you.
Alternatively, you can talk to management. Switching to another agent within the same brokerage can mean keeping your existing agreement intact—and that can lead to a smoother transition. If you think it’s worthwhile, making a complaint with RECO is another option—or you can simply let your agreement expire (and relist if you’re a seller).
Of course, your best bet is to carefully vet potential agents before committing to one. That may mean conducting interviews, or simply finding a professional with an impressive track record and asking them for a trial run. In the latter case, you’ll get a sense of what working with a particular agent is really like.
I have one final point to make. Buying or selling a home can represent a very positive life change—but the process is rarely as exciting as reality TV makes it look! What really matters is that you find a professional you can trust. By understanding the steps involved and doing some due diligence, you can help ensure a smooth and productive working relationship.
Are you thinking of buying or selling a home in the near future? Get in touch to learn more about the process—and how I can help!