As a seller, you want to know how much it will cost you to sell your home. There is no standard commission rate although some provinces tend to have their own way of doing things.
For instance, it is common in British Columbia and specifically our market here in the North Okanagan for the fee to be 7% on the first $100,000 and 3.5% on the balance. This rate is divided equally between the seller's realtor and the buyer's realtor. On a $350,000 house that would be a total of $15,750 and as a service, the fee is subject to GST and soon to be HST.
As I understand it, in Ontario a realtor offers their services for a flat fee of somewhere between 4% and 6%, which again is shared equally between the selling and buying agents.
Here in the North Okanagan, there are many different companies offering different levels of services and fees. How do you compare a realty’s flat fee of 3% to realty’s fee of 7% on the first $100,000 and 3.5% on the balance? You must render it 'apples to apples':
On a $350,000 house, in the first case the fee is $10,500 + GST and in the second case is $15,750 + GST. The comparison is a 3% flat rate vs. an effective flat rate of 4.5%. The first scenario costs you one-third less.
Know that real estate fees are negotiable. Also know that you get what you pay for. This is not a phrase to convince you to pay a higher fee for sub-par service but rather to consider more than just how much the commission will be. Here are some considerations:
1) We are all on equal footing when it comes to the MLS - aren't we? No. The MLS program has been upgraded and we can now load 20 photos rather than 8. Many realtors have not taken advantage of this and loaded a complete set of photos. Also, what is the quality of their photos? Are they blurry and showcase the furniture or the room?
Also, there is space to write a detailed commentary yet many choose only to write a short paragraph. There is also the ability to link the MLS listing to multi-media - which I do for my listings. I have begun to create a You-Tube slide show of the homes I am representing. Studies have shown that the more photos a prospective buyer can see, the greater the chances of them investigating that home further. In fact, the Century 21.ca search engine website has been found to be only second to MLS.ca as used by consumers in Canada. I post a full 21 photos on my website which increases the chances of them clicking on that home.
Do the other realtors you're interviewing have a personal website and how would your property be represented both in terms of photos and commentary? What other media are they using to get your home out there? I also use Twitter, Facebook and Kijiji.
2) A reduced fee for service does not always mean more in your pocket. What I mean is that you should find out what your realtor's negotiating track record is. What is the sale-to-list ratio of the homes they've sold? For 2009 the Okanagan Mainline Real Estate Board's average for Single Family Residential Homes was 92.03%. The average sale to list price I got for my sellers in 2009 was 92.91%. On a home with an asking of $350,000, that means $5,080 more in the pocket of the seller! A skilled realtor could put more in your pocket than you're saving on fees.
3) How skilled is your realtor in pricing your home against objective and supportable data? By focusing on fees, you may miss how important pricing your home is. If you waste valuable time on the market at the wrong price, you could end up selling it for less than if you started at the market price to begin with.
Does the analysis your realtor is providing you make sense? Is it full of information that doesn't really pertain to your home or are the comparables specific to where you live and style of home? Do you feel comfortable with the information you're receiving and is it delivered in a way that is clear to you?
Please see the testimonial from S.K on the main page of my website. She had met with 3 realtors in 2009 who priced her home against active listings. She chose one realtor, based on his realty's low fee-for-service platform and spent about 3 months on the market at about $50,000 over market value. Once she understood through my analysis what the value of her home was, she sold in 46 days for 97.13% of the asking price! Had she listed at market value sooner, she may have sold for even more.
These are just some of the things to consider when choosing a realtor. If you'd like to learn more and set up a half hour introductory get together to discuss selling your home, please send me and EMAIL or give me a call at 250-549-2103.