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How fair is the deal when a real estate broker charges you a fee of 5%? Some brokers charges even more - 6%. Canada's population is growing, more housing in demand, people are being keen on investment in Real Estate market, movement in buying and selling continues to grow and the price of house continues to increase. Let's see who the Real Estate brokers are and what they do.
Real estate brokers give you all kind of selling speech, their techniques, their so called findings from intensive research and finally price for their achievement which they may barely achieve. Interesting huh! Then the question is how or why a lot of these brokers say that he is number 1 in the market? To find out the truth from this illusion we will have to think a little deeper.
Say I am a broker. I can get many listings simply through my great presentation skills. All I am concerned about is quantity of listings. Now the question is, do I really need to sell all of them? NO. There is a well-acclaimed saying, "If the price is right, House sells themselves". The more listings I can get the more are the probability of selling more houses. But if you take the total number of houses I listed and divide it by total number of sale, then that becomes the real Selling Rate and you will find that the rate would be the worst than the worst salesman ever. Of course, if you take a total count of my sale in my region I will be the top, because I got the most listing of all. Do I need to work hard to sell my listing? NO. All I do is setup occasional bulk advertisement at a nominal cost for my listings; then sit back and watch. Then what is my job as a real estate broker: my job as a broker is to run around the whole day to get new listing, develop material to attract more sellers (NOT buyers). Simple theory, more listing I can get, the more income I will have.
The biggest mistake a seller makes is to get attracted by a lot of listings of a broker. But the truth is, all the broker is doing is publicizing their names through listing ads to attract more sellers than buyers. A lot of these brokers do not even have time to do Open House. In turn, some of them try to convince with their theory that "I don't believe in Open House, my listing in MLS and paper advertisements are more than enough to draw buyers' attention". After that if you still don't have enough traffic, they will say "Market is a little slow now; it's just this time of year". If after a few months, still the house is not sold, they will console, "It's not just your house, everywhere it is slow now but will pick up very soon". Towards the end of contract if the house is still sitting in the market, they will say, "I have invested a lot of money to sell your house, a lot of ads", then in a convincing and bold tone, "I believe this is the right time for the market to speed up, I would need a few more months, I would need you to sign up for the extension, we must sell the house"...."I exactly understand how you feel...but don't worry". Even after the extension if the house is still in the market, "Sorry, I have done so many things for your house. In last 9 months we had not less than 30 shows. I received some feedback from some buyers, that your house is small. Someone said they need 4 rooms and you have 3 rooms. One of the buyers said they need the basement finished, but yours is a new house with unfinished basement....".....so on and so forth. And who knows how many times you would have to be forced indirectly to drop the price.
Now you do your math, 30/9=3 visits per month. Out of them, a lot are usually visit exchange with other brokers. Ask yourself, who decided on the price? In most cases it's the broker. Then why the broker provides you with all those reasons above? But you think that the broker has set the price according to the structure of the house. Alas, that's not always the case. As a top broker often I would set a price that you as a seller would like the best, so that I can get the listing from you.
Most often than not buyers run into tight timeline especially when they already bought another house thinking those 9 months is more than enough. It would have been true if the broker truthfully and honestly puts all his efforts into it. But if as a broker I have to be number 1 I can't do that. In real world, when I am a broker, your worries do not worry me.
Now the million dollar question is, are all the real estate brokers this nature. I would say lots of them. But there may be still some true businessman out there whom I haven’t met yet, probably because they all talk pretty much the same way. My recommendation to you would be to very carefully take your decision, especially when you running with a timeline. If you do have to hire an agent don’t ever believe an agent when he says, “6 months! That is more than enough time”. You will have to be on top every day, very week. Take report from the agent. Never sign up for a long time. Let the agent give you in writing that the agent must release the contract on demand of the seller.