Hire A Realtor!

Last month I wrote a post called “Fire Your Realtor; Fire Your Client,” and it is entirely coincidental that I found myself writing this post today.

This isn’t meant to be a public service announcement, but rather a question: why not have a Realtor working for you?

I was making my way through the Vintages section of the Queen’s Quay LCBO on Sunday night, trying to find true gems for under $20 (I highly recommend Catena Malbec for a mere $19.95), and as I mulled about, I was speaking on my cell phone with a colleague of mine who is new(er) to the business and who is working with some off-beat characters.

Depending on where you have a listing, and depending on what price that listing is, you may get some very astute, savvy members of the general public calling you, or you may get some utter beginners.

It is the latter segment that my colleague was dealing with, and I was beyond feeling her frustration as she told me of her woes – I was actually frustrated myself!

Let me work through a metaphor here, to put her problem into perspective.

Let’s say you take your car in for service as you need new brake pads.  You leave the car overnight, and the next day you take your rental car back to Enterprise, and you jump in your own car with new brakes.

You immediately drive to another garage, and have them change the oil while you wait for two hours.

The next day, you take your car to a third garage and have them replace the transmission while you take the TTC to and from work every day for three days.  At the end of the week, you pick up the car, say “Thank You,” and then go to a fourth garage and have them detail your car inside and out.

Does this make any sense at all?

Would you all agree that it would be much easier to just have one garage do all the work?

I think you know where I’m going with this, so let’s move ahead.

My colleague received a call from a potential buyer who was interested in one of our company’s listings, and she asked him, “So are you working with a Realtor?”  He said he wasn’t, and she agreed to take him to see the property.  As luck would have it, his wife’s family announced that evening that they were coming into serious money, and it changed their plans entirely.  The man called my colleague back the next day to explain, and to apologize in that he had to cancel their showing.

My colleague congratulated him on his new-found wealth, and said the cancelled showing was no issue; she’d have done the same thing!  But then he chuckled and said, “Yeah I just feel so bad because I have appointments with five other Realtors today and I have to cancel on all of them as well!”

That was what frustrated my colleague, and it frustrated me for a different reason.

My colleague was frustrated because she was losing a potential buyer and because all the while he was spinning his wheels with a half-dozen other agents.

But I was frustrated because it just goes to show that much of the general public don’t use Realtors to their advantage.  They’re either scared of doing so, or they don’t know how.

I had drinks on Friday night with a young couple who were starting their real estate search as well, and they bemoaned the way most Realtors don’t call or email them back when they inquire about active listings.  I was somewhat surprised to find that they were emailing and calling twenty Realtors for twenty different properties, and calling brokerages to ask about their listings.

The approach was somewhat scattered, in my mind.  These were two young adults, very smart, incredibly successful, and yet they weren’t putting a Realtor to work for themselves.

And that’s really what I’m getting at here – put a Realtor to work for you!

I’m not trying to turn this into 101 reasons to hire me, but rather I question why more people don’t work with Realtors right from the get-go.

I know some people hate our entire industry, but I’ll never be able to satisfy them.  And show me one industry where everybody is liked, the satisfaction rate is 100%, and where there are no bad seeds.  Hey – I’m the first to admit that we could do without HALF of the 32,000 Realtors we have in the GTA, but that doesn’t mean that John & Kate McBuyer should do all the legwork themselves when looking for a condo!

I use a travel agent because I’m not in the travel business.  I know nothing about it, and I don’t have access to a system or a database with thousands of packages, flights, hotels, and the like.  My travel agent, who gets compensated by the airlines and NOT via my pocket (even if she did – it would be worth the $50), does all the legwork, and answers all my questions in due time.  I’ll say, “Susan, I”m thinking of going some place hot over Christmas and I’m wondering what the best deals are.”  She’ll email me back that evening with prices for five different resorts on five different islands in the Caribbean.

Could I accomplish that all myself by browsing Internet sites that are likely full of hidden fees like the much-maligned Expedia.ca?

And if I could, would I want to?

What’s very unique about the real estate industry in Toronto (which differs from that of, say, New York), is that buyers do not pay a commission.  Realtors working with buyers are compensated by the listing brokerage, via the seller.

So I ask again: why would any buyer do all the legwork themselves instead of having a Realtor do it for them, for free?

The young couple I had drinks with on Friday night were enthralled in a lengthy conversation about real estate.  We talked shop over multiple bottles of wine, they asked questions they always wanted to ask, got answers that desperately sought, and were excited by the prospect of me pulling out my laptop and going on TorontoMLS!

I don’t blame them for not hiring a Realtor because they just started their search.

But there are scores of buyers out there that think they’re somehow better off by browsing the antiquated www.mls.ca for listings instead of having a Realtor update them at the drop of a hat, and driving around on Saturday and Sunday going to open houses instead of having their Realtor book private showings when it’s convenient.

So at the risk of opening Pandora’s Box here – can anybody tell me about an experience they had where they felt better off searching on their own?

I’m sure I could think of a few common reasons.

Maybe some buyers are ready to “commit” to one Realtor, and they prefer to mull about on their own. 

Maybe some buyers don’t trust Realtors in general and don’t want to work with somebody until they absolutely have to.  That one, I can’t help you with!

Most Realtors don’t bite (I don’t…anymore), and although there are some annoyingly aggressive Realtors out there who literally put a pen in your hand at an open house and force you to write down everything but your social insurance number, I don’t think any buyer is going to accidentally find him or herself in a contract with an agent they don’t like.

I’ll tell ya – if my kitchen sink was broken, and I knew I could call somebody in to fix it for free, I’d certainly do that!  It wouldn’t make much sense for me to take time away from work, investigate the sink on my own, and try to dabble in a field in which I know very little about.

Doesn’t buying real estate work the same way?

As buyer’s don’t pay commission, they can use Realtors for free, and more!  Consider that a Realtor will drive you around in his or her car, and probably kiss your behind by showing up with coffee and a muffin.  What’s wrong with that?

Of course, some buyers know this and seek to exploit it.  We’ve all heard the same sob-story fifty times about a Realtor who shows a buyer twenty houses, and then that buyer purchases another property through a different Realtor.  Well here’s something you probably thought you’d never here me say – that situation is always the Realtor’s fault.  The Realtor didn’t earn the buyers trust, or their respect, or work hard enough for that buyer to fully commit him or herself to the Realtor.  And if that buyer happened to be a sociopath that planned to use ten Realtors all along and screw nine of them, then it’s the Realtor’s fault for not finding this out sooner.

Realtors are here to be used – so use them!  And if you use one and you don’t like him or her, then find a different one!

But why do all the legwork yourselves?

If there are any advantages, then please – let me know!

10 Comments

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  1. Krupo says:

    In a highly competitive market where the home inspection clause could sink you versus a lower unconditional offer, being able to inspect the hosue in detail, with the help of a trusted broker (thanks Dave), is another plus.

    Obviously not the same as getting Mike Holmes to rip a place apart, but with enough practice and assistance, it’s amazing how much you end up picking up on!

  2. Anthony says:

    My new neighbour bought their house from the listing agent. It was later found out that the house has a huge mold issue that costed them $20,000 to remedy. Did the listing agent protect them enough? The owner did a mold test and had the report but did not show it to the buyers who requested to see it before the deal went firm. Protocols were missed and they never saw the report. So now there is a legal battle. So you see, the listing agent loves to double end a deal and if they don’t represent the buyers fairly the amount of money that they might saved is not worth the headache.

    To add, when you jump around to look at houses with different listing agents, you are a complete stranger to them. Hence there is no loyalty. Because in the future this agent will realize you’re behaviour and most likely you’re going to do the same thing to him/her so they won’t care about your interest as a long time client. They’ll be more inclined to sell you out to complete a one time deal and be done with you. Whereas the buyer agent would probably want to have repeated business and referrals from you so they’ll do a better job.

    It’s short sighted thinking when you just think dollars and cents. Real estate agents are like doctors, accountants, financial advisors. You want to partner with one of the best in each of these industries and surround yourself with people you TRUST.

  3. Sully says:

    @Devore. You may think your getting a discount by not using a buyers agent but in fact you don’t even know if your getting a good deal or not. Do you get access to comparables or what recently has sold. Did the agent give you a 2% discount on an overpriced property making you feel like you got a deal? The agent is working for the sellers best interest your on your own.

    Would you fight a lawsuit using the same lawyer as your plaintiff? There is a big conflict of interest. Its the single largest investment one makes and you should have someone on your side!

  4. SM says:

    We’ve just started looking for a place – and of course we got a realtor! As you wrote, they are basically free. He gets listings before they go up on mls.ca and emails us almost every day. If we like it, we arrange a viewing. Sure, we still browse, and we’ve gone to see some places (with him or just popping in the open house) that we found on our own. But I agree with you – why wouldn’t someone take the free service? And for newbies like us, he tells us what to look for in houses/condos and sees things from a resale value perspective, which we don’t always think of… more advice is always good.

  5. Devore says:

    It is a fallacy that buyer’s agent works for free (from the buyer’s perspective). The buyer pays for both agents, because the buyer brings the money to the table. You could say that it is the seller who takes the hit and pays both agents, or you could say the price is inflated by the agents fees. I favour the second one. Costs are ALWAYS passed on to the customer, whether it’s taxes, permits, project management, regulatory compliance, materials, labour, inspections, you name it, for the seller to make money they need to recoup their costs. The more costs are piled onto them, the higher the price. Real estate is no different, even if different terms are used and the deal is structured differently than, say, buying some bedsheets at Sears.

    Thus, if you cut one agent out, and do the buying yourself (which for most people is not very difficult), you can negotiate a further 2% price reduction, because both the seller’s agent and the seller still end up with the same amount of money in their pockets. The 2% is huge, because it lowers the threshold to avoiding CMHC insurance, and you don’t amortize the agent’s commission over 30 years.

    Is an agent worth 2% of the purchase price? For most people, probably yes. A house is a large purchase, someone looking out for your interests is probably a good idea. For a non-insignificant minority, a lawyer/notary (who gets paid a flat fee) will do more work than their agent would.

    @PuckGuy: the BRA is a blight on the industry. If an agent cannot retain their client based on the service they provide, locking them into a term contract isn’t helping the reputation. Anyone who reads before they sign, are invariably left wondering why they are signing it, with only the agent’s promise to release them from the contract if they ask nicely (unless the termination clauses have seen a recent update).

  6. JH says:

    I don’t really get the “I prefer to look around myself” feedback – there’s nothing stopping you from doing that while a Realtor is working to find properties at the same time. If you could walk into a store and browse around the entire store while a professional puts together a selection of items based on criteria you specified, and without limiting your choice, why wouldn’t you choose that?

  7. PuckGuy says:

    1. Like George above, I prefer to do the leg work myself rather than contact my agent and say “can you ask the sellers agent how many square feet this unit is”. However when it comes to viewing or buying I will definately bring and agent along.

    2. My biggest reason is that as soon as I do involve an agent he/she pulls out a form that I am asked to sign that says that I am committed to buying with him/her for 6 months. Like I said to my girlfriend……I don’t commit.

    3. Lastly I am confused about the legality of who is committed and how it is enforced. I have heard that if I want to walk into a condo sales centre and sign their guestbook, I am somehow asking them to represent me. How that holds up in court is beyond me. Better to give a false name.

  8. Scott says:

    I agree with your post that working with a realtor is the best approach. That said, you should also interview or try out different realtors before settling on one. Some work harder than others and produce better results. My personal experience: I had a realtor who I was using to find a downtown condo. While I received numerous daily listings and visited many of the properties that he sent to me, I wound up bidding on 2 properties that I found myself through attending open houses. If I hadn’t noticed these units for sale, I would never have known about them and would have lost out on the unit that I finally purchased. I’m not saying that hitting the pavement yourself produces better results, but that you definitely need to screen agents first and find one whose performance you can be satisfied with.

  9. jeff316 says:

    If you have very specific needs/wants, sometimes doing the legwork yourself can be much easier. It allows you to be more surgical in your search.

    You don’t waste time looking at places/areas you aren’t interested in. You don’t give thought to a bunch of factors that don’t matter to you. You don’t have to filter through a bunch of advice that doesn’t apply to you.

    One of the best pieces of advice we got from our agent was to think not in terms of neighbourhoods but in terms of micro-pockets. Groupings of streets. If you’re doing that and you only have a few pockets of interest, the areas and listing numbers are small and you don’t really need an agent to much for you on the front end.

    I really enjoyed working with our real estate agent. I’d pick him again in a sec. But in his professional capacity some of his advice/suggestions/etc didn’t suit our very particullar criteria. We sifted through many listings we weren’t interested in. Spent three or four weekends touring areas we didn’t have an interest in before our search began (and didn’t after visiting them either). Not because he pressured us – not at all, just doing his job – but because as a professional we respected his advice and figured we should at least give it some consideration.

    In the end we told him we’d sit back and call him when we wanted to pounce on something, stuck to our guns about our needs and yes we found what we wanted where we wanted it.

  10. George says:

    It’s fun to search for things on my own. When I enter a store, I prefer to browse for things rather than ask for assistance. There is a sense of fun and satisfaction from finding things on my own. I only wish the online property listings infrastructure was better suited for this, but that might step on a few too many toes.

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