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Real Estate is BACKWARDS!!

dogmelissa
August 3rd, 2005, 11:18 PM
Ok, I just found something out today that is just pure stupid.

When I buy a car, I pay for it. They happily take my money and laugh because the second the car is off their lot, it drops drastically in price. The salesman takes his 15% off the top and the rest goes to the dealership to disribute how they will.
When I buy groceries, I pay for it. They take my money and all the producers get their fair share of it, after the store takes their profit out.
When I buy pet supplies, I pay for it. The clerk who helps me might get a commission, but usually they just get their wage, and the money I give them pays suppliers, rent, electrical, etc.

When I buy a house, part of the agreement I make with the realtor is that I give them X amount of money. In Calgary, this is usually 7% of the first $100,000 of the listing price and 3.5% of the rest. For argument's sake, in my case, this would be around $8000.
My realtor is giving me a "deal" on fees. She is only charging me $4000. So that's good. HOWEVER, here's where it makes no sense.
When I put an offer in on another house, my realtor said she'd offer that listing agent $2000. That made sense to me; give them $2000 for listing the house that I want to buy. I'm paying for a service; for them to advertise the house. However, I was misled. I'm not paying the realtor that lists the house I want to buy. That $2000 actually goes to the realtor for the person who buys MY HOUSE. So I'm paying someone to buy something? Seriously, that is totally screwed up and backwards.
So you can probably understand why I'm ticked off today; because realtors have access to how much money they will get paid if their client buys a property by the realtor who listed the property, so they can choose to tell that person about it, choose not to show it to them, or they can accept the amount of money that's there and show potential buyers the property. I had a list of 7 properties that I wanted to see. On the day of the showings, there were 3 that were mysteriously taken off the market, and that I never got to see. Funny, though, how one of them is still listed on MLS.... and my realtor said that they'd decided NOT to sell it. Things that make you go hmmmmm.
So.. my house isn't selling, I've hardly had any showings, and now I know why. Because realtors aren't there to try to help you find a house that you like and want to live in, they are there to make the most money they can. So they charge you a ton of fees, and then only show you properties where they like the fees they'll get paid.

Will I EVER use a realtor again? Nope. Will I tell anyone I know who wants to sell or buy a house to use a realtor? Nope. Will I do everything in my power to market my OWN house even though it's listed with a realtor????? Yes.

That's my vent for the day. I'm stuck in a situation that I hate, because I didn't bargain for people being greedy for money and not taking the easy $2000 and having me be happy.

If you have any comments, please feel free to add them.
Angrily,
Melissa

Prin
August 4th, 2005, 01:41 AM
K, here it's very different. The seller pays the realestate agent a percentage of the selling price, and the listing agent and the selling agent split it. Remax for example, charges around 7% and if a Remax realestate agent lists a house, and another agent sells it, usually the lister gets 5% and the seller gets 2%. The buyer of the house doesn't pay a cent to the agents. :)

Dogastrophe
August 4th, 2005, 07:40 AM
It sounds like it is time for you to find a new agent -- one that will work with you and not, as it sounds, against you.

Schwinn
August 4th, 2005, 09:45 AM
I think I need to go to the headache thread...

I'm sorry, I wasn't quite sure. Am I understanding that you are paying your agent to buy a house?? That isn't right. It never costs to buy a house. And I agree...time to find a new agent.

Bearsmom
August 4th, 2005, 09:58 AM
I know that agents charge anywhere from 2-6% commission for selling your house, and then they "split" the commission with the agent who is representing the people who are selling you their house, if you're using the same agent to represent you when buying a house. Southern Ontario's real estate market is pretty competitive, so you'll see a lot of agents cutting their commission here.

THIS is why we have a lawyer, let them figure it out.

Heading on over to the headache thread, too....

StaceyB
August 4th, 2005, 09:59 AM
I can double check as my mom used to be a real estate agent but I think it works like this.
You are charged a fee when you sell a house, % of selling price. That amount is then split with the one who lists(advertises) your home and the one who finds a buyer for that home.

BMDLuver
August 4th, 2005, 10:06 AM
http://www.reca.ab.ca/rulesam.htm

Here's a link to Real Estate Rules and Regulations in Alberta. Perhaps you can have a gander and make sure that everything is above board. :D

pags
August 4th, 2005, 10:19 AM
Well.. It's my understanding that there are buyer's agents and seller's agents. Most of the time we dont' specifically hire a buyer's agent... We go out looking for a house and we find something we're interested in and we end up talking to the seller's agent for that house... And that agent in turn acts as a 'dual agent' representing both buyer and seller (uh and with obvious conflicts...).

BUT Okay.. When we bought this house we didn't have time to look at anything and we weren't even sure what city we wanted to move to... So we hired a buyer's agent. He did the footwork, the searches, scheduled the walkthroughs, and ultimately set up the closing. We as the buyers - paid him nothing to do this... Instead - when we finally closed on a house our agent (buyer) and the homeowners agent (seller) worked out a split of the commission on the sale of the house.

It works less like when you buy a car or when you buy groceries.. and more like when you put a car up for sale at a used car lot. When the car sells YOU -the seller - end up paying the lot a portion of the sale price for their commission. You're not paying someone to buy your car.. You are paying someone to sell your car. Same principle.

Having said all that -- I'll never use a realtor again either. :p I bought my first house realtor free (and darned cheap and stress free!!) and my mother sold her house recently realtor free... All hail the internet!! :)

kandy
August 4th, 2005, 11:39 AM
My son just bought a house a few months ago. He didn't pay the realtor(s) anything. He went through an agent who was a friend, and she wasn't the one who had the house listed, so the two of them had to split the commission (and that came out of the sale price). The only up front expense he had was for the loan company and their fees - which they knocked down to $1500 from over $3500 because he told them he couldn't accept the loan if he had to pay the $3500.

Lucky Rescue
August 4th, 2005, 11:55 AM
I"ve never heard of a homebuyer paying a commission - it's always the seller as they the ones getting paid.

That being said, I think the commissions are way too high. If I were to sell my house now, I would have to pay an agent 21,000$ - a year's salary to many people. Oh, and tax on top of that.

I bought my first house realtor free (and darned cheap and stress free!!) and my mother sold her house recently realtor free... All hail the internet!!

Really? Did your mother do it all own her own? Don't you need to have quite a bit of real estate and financial knowledge to do this? Wasn't your mom afraid of having unscreened strangers in her home with her?

I would love to do this, but am afraid.

melanie
August 4th, 2005, 05:36 PM
a friend of mine saved over $30000 by doing it herself. and you dont need lots of background knoweldge either, simply because there are heaps of informative guides and books out there o n how to do it yourself and save heaps. yeah its a bit of effort and learning but it is worth the $$$$$.

my friend used on of those guides, i cnat remember which one but she siad it was pretty straight foreward and not to hard....

check it out, dont give the fat cats your cash......

Prin
August 4th, 2005, 05:40 PM
We had an agent looking for us for over a YEAR! FREE. She did everything- paperwork, research etc. Buyers are not supposed to pay any agents. Seriously. I think you just had a really bad one.

pags
August 4th, 2005, 05:56 PM
Really? Did your mother do it all own her own? Don't you need to have quite a bit of real estate and financial knowledge to do this? Wasn't your mom afraid of having unscreened strangers in her home with her?


Yes. Mom did it all on her own. The house she was selling (the one where I grew up) was difficult to sell according to realtors because it was 'overbuilt' and in a rural location. You see it was a huge and beautiful place out in the middle of no where on a lake. Since location is one of the most important factors in pricing a house usually... the realtors she had talked to originally put an incredibly low price on the house. I can't remember the exact figures but it went like this -- 4100 sq ft house on one acre and a private lake to be sold for no more than $80,000 USD. Take out the realtor's commission on top of that and... Uh.. I don't think so.

Soooo Mom took it to the internet and listed on places such as FSBO.com at $185,000 USD. She made her own website and promoted it everywhere she could find a place to list it. She was a little nervous about the strangers coming to see it so what she did was set up appointments so that her neighbors were either there with her -- or my husband and I could be there with her to show the house.

I kid you not... she listed it for the first time on the internet in May 2004 and she closed on the sale of her house for her asking price in July 2004. She says the key was lots and lots and lots of pictures - so very little was left to imagination or worry for prospective buyers.

When it came down to someone making a serious offer though, LR - she hired an attorney to take it from there... to make sure everything was watertight and that the title was handled properly, etc. In the end she says her advertising cost + attorney's fees came to just under 700 dollars.

Prin
August 4th, 2005, 06:00 PM
In the end she says her advertising cost + attorney's fees came to just under 700 dollars.
In Qc to close, you pay a notary about $1000 to draw up the official contracts, even with an agent.

pags
August 4th, 2005, 06:03 PM
In Qc to close, you pay a notary about $1000 to draw up the official contracts, even with an agent.

Nods Prin - it's about the same here in closing costs... But of course we can also negotiate which party pays the closing costs too. In my Mom's case she agreed to pay attorney's fees only and the buyer paid the rest.

nymph
August 5th, 2005, 04:43 PM
Are you selling or are you buying?

There are 2 kinds of agent: seller agent and buyer agent. Sellers pay their agent, but buyers don't. Buyer agents get paid by splitting the commission from seller's agent, usually half/half in Ontario. If a listing agent (seller's agent) sold the house on his/her own, he/she would get the full commission.

Assume that you are selling your house, what I don't really understand is why is that making any difference to you? Say you need to pay your agent $4000, that's $4000 out of your pocket, that's it. How your agent chooses to do with his/her $4000 shouldn't really be of your concern, right?

If you are buying a house and your agent isn't willing to show houses to you that he/she hasn't listed, then I'd suggest you to hire another agent.

wjranch
August 5th, 2005, 09:07 PM
In Ontario, when you hire a real estate brokerage to sell your house (the sales rep. only represents the broker...you didn't hire the rep you hired the broker he works for) you pay that broker a commission (usually 5% in our area)
It is entirely up to the broker to ensure that all parties recieve their portion of commission... ie: 50% to the selling(listing) broker, he then splits it according to the contract with his sales person....
50% to the buyers broker who then splits it according to his contract with his sales rep....
the seller pays commission and GST (if applicable)
the buyer does NOT pay it!
I know that some areas of the US use buyer agents and seller agents....that is 2 different types of brokerage. We do not have that system here in Canada. And we do have LAWS that govern real estate. The first place I'd suggest you look would be the the Canadian Real Estate Association (CREA) for direction on what to do about this situation. It could possibly be a misunderstanding?? She's/He's referencing how much she/he would be paid upon the sale of a property.... not neccessarily coming from your pocket??
Hope this helps some
:)

glasslass
August 11th, 2005, 08:44 PM
We just closed on the sale of our house yesterday. We went through an agent and I really feel she earned her commission. We had to put on a new roof as a condition of the sale. My neighbors across the street have the exact same floorplan as we have. They put on a new roof less than a month before we did ours, through the same roofing company. Our cost was over $1000 less with our agent handling all the arrangements. She also saved us $ when we replaced the bathroom sink. During the offer/counter-offers process, she set limits on our expenses that we wouldn't have thought of by being extremely meticulous with the legal wording. Today, we have no worries of problems coming back to haunt us. Now she is our buying agent while we look for a new house. After we buy our new one, we'll put our second home that we are presently living in up for sale. Believe me, she's motivated to find us a suitable home. She won't get her commission for the second sale until we're in our new one.