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Why do we need real estate agents?
- Thread starter Admiral Beez
- Start date
lenaitch
Senior Member
I suppose the clip is right that you don't need an agent - until you do. In a hot market, if you have the time and are willing to do do the legwork, probably not. In a slower market, it's a lot tougher. One area people struggle with would be valuations. You can search around for 'comps' to price your house but a lot of people have difficulty separating what they want from what they can get. I'm not defending the industry; there are a lot of snakes out there, but unless you fashion yourself as 'the great negotiator', a really good one can work for you.
We sold our last place through one. We weren't thrilled with his communication skills but when it came down to a very tight time crunch, he did come through.
Now, the people who think they don't need a lawyer are leaving themselves exposed. Something about a fool for a client.
Admiral Beez
Superstar
A realtor doesn’t negotiate a better price on your behalf, and since the more you pay the more they make, is not incentivized to do so.
Realtors are not on the same level as lawyers. Actually when buying or selling real estate, all you need is a lawyer. It’s the lawyer who will protect you from liabilities and from missing something in the deal, such as survey and property line issues.
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lenaitch
Senior Member
I was not equating the two, merely mentioning the two main players in most real estate transactions.
I don't follow you logic. The better the price they negotiate, the more commission they make. Of course, the more their commission, they less the seller gets, but that's the price of the service.
. Whether or not an agent can negotiate a better price depends on the players and circumstances. If you can commit the time and expense to listing, showing and negotiate a sale, go nuts. I suggest most people either cannot or don't want to.
afransen
Senior Member
They certainly are paid too much, and given the large number of them compared to deal flow, not very productive.
lenaitch
Senior Member
It's a fair argument that the commission rate might be out of whack but, for many people, they are a necessary evil. The beauty of commissioned sales is your income is linking to your productivity.
I'm not fan of the industry, but during our last transaction, our agent laid out what costs came out of his share (which is usually half of the seller's agent's share). That included photographer/videographer, MLS listing cost and per-listing insurance cost (which I recall was several thousand dollars per listing). I imagine different brokerages have different arrangements with their agents.
lead82
Senior Member
I think the regulations are too in favour for realtors. Their pricing model needs to change to be more like lawyers - they should charge by the service provided and not a percentage of the sale price. It is not much more to sell a $1.5M house as a $2M. Why should the realtors get more? This is especially true for buying agents which get 2.5% for just showing people properties and negotiating. That’s a lot of money for very little service.
lenaitch
Senior Member
Then you would pay even if your house did not sell
As a seller, if the rate was $X/hr. to negotiate a sale, they could be incentivized to take a long time and not to get the best deal.
afransen
Senior Member
Buyer's agents being paid more the higher the purchase price is incentivizing them to act against their client's interest. And getting paid 2.5% for buying a property is egregious and out of step with real estate markets elsewhere. 5% of the purchase price on a $1m home is $50k. $25k for the selling agent is quite a lot.
And these transaction costs matter. Illiquidity in the housing market has lots of knock on effects like aging homeowners refusing to downside out of too-large homes in a housing crisis with declining birth rates. Canada has a lot of oligopolies that need to be dismantled and this one is high on the list.