Cashback from RE Agent
How much is a reasonable amount to ask from RE Agent? Buying a rental property in Ontario for 200 K
Sep 18th, 2013 11:51 am
Sep 18th, 2013 11:56 am
Sep 18th, 2013 12:02 pm
Sep 18th, 2013 12:34 pm
Sep 18th, 2013 12:53 pm
Speedy1 wrote: ↑Interesting question. I have done it once and I am thinking of doing it again. It depends on a number of factors.
1) Do you know the agent? Have you worked with him before?
2) How much work is he doing? Is he driving you around, selecting the property for you, doing a ton or research for you, have spent a lot of time on you already, is he getting you a really good deal, etc. Figure out how much his commission is and decide what is a fair commission based on $/hr of his time spent/expenses.
Some agents earn $10,000 just for doing 5 hrs of work, which I think is way too much.
Sep 18th, 2013 12:59 pm
2.5% maximum, and that's gross (before expenses, kick backs to the agency, income taxes).
Sep 18th, 2013 1:14 pm
Yeah lets not get into all that really. We all pay taxes, we all have expenses. RE Agents are not gifts of god to mankind that they wouldn't. Any commission any broker pays is built into the cost of the buyer and the seller. So i am paying the agents indirectly.alkizmo wrote: ↑2.5% maximum, and that's gross (before expenses, kick backs to the agency, income taxes).
I can see people asking for a cash back when they're selling AND buying, but you're just buying, he's already getting half of what a normal client would do (selling & buying).
As for Speedy1's comment about making 10,000$ just for 5 hours of work, well that's the thing with peolpe working on commission. They can works 20 hours for random people that never end up buying or never back down on the price, thus never selling, then never renewing the contract. They get zip/nada on that work. It averages out with that 10,000$ for 5 hours of work.
Sep 18th, 2013 2:30 pm
As a buyer, you are not paying squat. Seller is. If you want to save your money, go into the transaction without an agent.oasis2002 wrote: ↑Yeah lets not get into all that really. We all pay taxes, we all have expenses. RE Agents are not gifts of god to mankind that they wouldn't. Any commission any broker pays is built into the cost of the buyer and the seller. So i am paying the agents indirectly.
Anyhow,
I am just surprised its that low for a low $ transaction - if that's accurate. I would think that a % model works for bigger dollar amounts not a 200 K property and some flatter number for a smaller dollar figure.
Sep 18th, 2013 3:47 pm
It's 5% for the seller to pay out to BOTH agents (buyer's agent and seller's agent), hence the 2.5%, they split 50/50
Sep 18th, 2013 5:34 pm
You are always paying for it no matter which way you look at it. If the agents didn't exist, and you bought using an online system, pricing would come down by that 4%/5% and you would pay less.boyoflondon wrote: ↑As a buyer, you are not paying squat. Seller is. If you want to save your money, go into the transaction without an agent.
Sep 18th, 2013 5:43 pm
So at 200 K that would mean the agent gets around 3 K assuming he gets 1.5% of the 2.5% on 200Kalkizmo wrote: ↑It's 5% for the seller to pay out to BOTH agents (buyer's agent and seller's agent), hence the 2.5%, they split 50/50
They don't have a floor price, you just get less agents interested in working to sell for you if the house is worth too little to make a good commission, then you end up with the cheaper agents.
Sep 18th, 2013 6:44 pm
Sep 18th, 2013 7:26 pm
I definitely don't agree with 'always'. In theory, sure, but in reality, not quite. The value of an agent's time comes into play, so if you think about it, they can actually under-price your property by $10K in order to make a quicker sale - they can save a ton of time and effort, and they're only out $250 (2.5%) whereas the difference is much, much bigger for you. I think there's a perception that interests between RE agent and client are always aligned because of % commission, but that's not the whole picture. Not saying that you can't trust any RE agent, but it's something to be aware of.
Sep 18th, 2013 8:11 pm
Sep 18th, 2013 8:14 pm
Sep 18th, 2013 10:12 pm
That sounds very much what an RE agent would like you to believe.boyoflondon wrote: ↑As a buyer, you are not paying squat. Seller is. If you want to save your money, go into the transaction without an agent.
Sep 18th, 2013 11:09 pm
True, but why hire a buying agent if you're more than capable of looking for a house yourself? In some cases, realtors don't add any value whatsoever.
Sep 18th, 2013 11:25 pm
That means the selling agent took a hit. Commission is basically always 2.5% for the buyer's agent and then the seller's agent agrees to reduce their fee, often because you bought a house with them where they easily made their 2.5%.boyoflondon wrote: ↑5% is VERY optimistic! 3-4% is more realistic. I sold my last house for 3.5%.
Sep 19th, 2013 10:09 am
seriously? What would you rather make $1000 in 1 day or $2000 in 30 days?oasis2002 wrote: ↑You are always paying for it no matter which way you look at it. If the agents didn't exist, and you bought using an online system, pricing would come down by that 4%/5% and you would pay less.
In fact, mathematically it is always in every agents interest to get the price as high as possible because that increases the commissions for both the buyer and sellers agent. And as a buyer you as a result get a bigger mortgage. Don't fool yourself or someone else into believing you don't pay as a buyer.
Sep 19th, 2013 10:19 am
It's not as easy to visit a bunch of houses without an agent. You'd have to wait for an open house, or contact the seller's agent to arrange a visit (who will then pocket the whole commission).