Commissions

 

In any discussion regarding the sale of a house the matter of real estate commissions arise. The “commission” could be considered a professional fee such as would be paid to a lawyer, an accountant or other professional advisor, albeit with one important distinction: real estate fees are only paid on a contingency basis which means the successful and satisfactory conclusion of the sales transaction. To put it simply: no sale, no charge.

How are fees distributed?

In many cases there are four parties involved in the sale of a house. There is the seller’s agent and the buyer’s agent and each agent must be affiliated with a brokerage, in my case, Sutton Group.  Each party must be paid.

When are fees paid?

All fees are held in trust until the successful closing of the transaction. The buyer has taken possession, owns the property, and is free to move in. Only then are fees released to the entitled parties. This is usually long after the agents’ service has been rendered. Typically, a house might list a few weeks after the  initial meeting between seller and agent, and the house might sell after, say, 30 days on the market and close sixty days after that. To illustrate, the initial meeting could take place in January, the house lists in February, sells in March and closes in May. Only then would the agent be compensated.

What if the house doesn’t sell or a sale falls through?

In that event, and it happens but rarely, no fees are paid and the agent is out-of-pocket for time and money invested in marketing the house. Sales can fail if conditions are not met, such as financing falling through or other events beyond anyone’s control. The seller or buyer may be entitled to retain a deposit or pursue other compensation but the agent will not be entitled to a fee.

Are commissions negotiable?

Yes, fees could be reduced all the way to zero if the seller wants to do it all themselves: research the marketplace, market the property, show the property themselves, negotiate the offer, but the savings could be illusionary. A savvy buyer would expect to pay less and a buyer’s agent would probably not show the property without compensation and so on.  There is also the security aspect of the transaction, not just in terms of having total strangers coming through the home but the seller not knowing the prospective buyer’s ability to close the transaction.

I will discuss the various aspects of selling and buying a home in upcoming weeks but in the meantime, if you have any questions please email me at ckidd@trebnet.com or call 416-505-7513.

Listing Your Home

 

Coming to the decision to sell your home is fraught with questions about, for example, where to start, how do I get the house in shape, what are the costs involved, and where will I live. The decision is very difficult . And, when you have made the decision, a host of other questions arise about the right people to hire, perhaps a contractor to present the house in its best possible light, a realtor and a lawyer, to name a few. The good news is that people do it every day so you have to believe that there are systems in place and all will be well.

When you reach the point of listing your home your goals will be to achieve top dollar with the most favourable terms in a reasonable time frame and to accomplish a smooth transition. The job of the realtor is to ascertain a fair market value, attract qualified buyers, and highlight the merits of your home to coincide with the buyer’s wants and needs.

I have been selling homes for the past twenty five years or more and it seems to me that there are two major factors that will cause a property to sell: exposure to the marketplace and the asking price of the home. In this internet age, it is vital to draw on all the resources the internet can provide to expose the home to potential buyers.  In pricing the home it is important to satisfy three important people: you (the seller), the buyer, and the often forgotten appraiser. If the appraiser does not approve, the buyer does not get the mortgage.

I will discuss the various aspects of selling and buying a home in upcoming weeks but in the meantime, if you have any questions please email me at ckidd@trebnet.com or call 416-505-7513.

Two questions asked of every realtor

Two questions asked of every Realtor:
1. What will happen to house prices?
2. What is my home worth?

1. House prices will fluctuate.
J.P. (John Pierpont) Morgan (1837 –1913) was an American financier, banker and art collector who dominated corporate finance and industrial consolidation during his time. Whenever he was asked what would happen in the Stock Market, Morgan would respond “It will fluctuate.”
And so will the Toronto home market: It will fluctuate.
However, there are no indicators of any dramatic swings in single-home prices as we have seen in the past. There has been a recent steady rise in Toronto prices and the market remains strong for quality single-family homes in desirable neighbourhoods. There have been concerns expressed about the condominium market that may be reaching saturation with some developers postponing projects.

2. Your house is worth what someone will pay you for it.
Real estate is the freest of free markets: there are no price regulations, no Suggested Selling Prices.
Your home is worth exactly what a buyer will pay.
A realtor can provide an educated estimate by analyzing recent sales of similar houses to yours and in comparable neighbourhoods and by evaluating the individual qualities and features of your property.
In the end, it will depend on one buyer’s desire to own your home. We have seen recent bidding wars with multiple offers far above the asking price; we have also seen over-priced offerings that have languished on the market with no serious offers before a significant price reduction or withdrawal.
The usual upswing in Spring activity was late this year, perhaps due to unseasonably bad weather but activity picked up in May.  Overall, market seems stable, a good supply of properties is on offer, serious buyers are shopping  and a single-family home offered at a realistic price will attract reasonable offers.

If you would like some thoughts and ideas about listing your home, do give me a call.

Carmel Kidd

Phone: 416-505-7513