Real Estate

Cash Back Agent Vs No Cash Back Vs Buy yourself

  • Last Updated:
  • Apr 13th, 2019 1:44 am
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA

Cash Back Agent Vs No Cash Back Vs Buy yourself

Hi friends

So i am looking to buy a residential property and i understand there are 3 available options

1. Get a realtor who sends you listings etc, you go for viewings, close everything and he takes his commission of 2.5% approx
2. Do the same thing in step 1, but ask that realtor for some cashback like 1% cashback
3. Do everything yourself, skip the buying realtor part, view listings yourself and negotiate on price with the sellers agent, as he'll be saving 2.5% commission for himself (that he had to pay to buyers agent)

So what's the best and recommended option? and what are pros and cons of all these options

Thanks
34 replies
Deal Expert
User avatar
Aug 2, 2010
15193 posts
4935 upvotes
Here 'n There
it ain't #3, #2 if you can get it and feel you'll get the same service as #1
Member
Feb 15, 2018
333 posts
406 upvotes
#2 would be the best out of the options you presented. Forget #3.

Depending on your time frame, there could also be option #4 - which is you getting a realtor license and keeping all the buyer's agent commission.
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA
eonibm wrote: it ain't #3, #2 if you can get it and feel you'll get the same service as #1
Yeah i have also heard this from couple of agents, but i don't believe this. What special you get if you pay full commission?

I am fine with going myself for viewings, lookout listings etc. I understand there isn't much negotiation room in this real estate market. The offers are made as per the recent sales trend in that area and I can see all that information from websites like bungol.ca, housesigma.com etc

I also believe if an agent is good he'll be good at that thing even after giving some rebate. If the agent is crap, he'll always be crap, irrespective of how much you pay.
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA
canuckstorm wrote: #2 would be the best out of the options you presented. Forget #3.

Depending on your time frame, there could also be option #4 - which is you getting a realtor license and keeping all the buyer's agent commission.
Nice, can you please elaborate on the time frame for option 4.
I am fine with reasonable time frame of a month or so, but are there any recurring costs after getting license? like annual license fee, insurance, monthly/quarterly brokerage fee etc?
Member
Feb 15, 2018
333 posts
406 upvotes
webester wrote: Nice, can you please elaborate on the time frame for option 4.
I am fine with reasonable time frame of a month or so, but are there any recurring costs after getting license? like annual license fee, insurance, monthly/quarterly brokerage fee etc?
One of the posters on your thread, Eonibm, is the authority on that licensing option and from his signature you can link to his ongoing thread on this matter.
A month might not be enough time for you to study and get a license. I imagine it could take 3 to 4 months. Again it all depends on which province you are in and the home prices. In the GTA with average houses costing north of a $1m, the commissions are huge and would offset whatever you spend in taking the course and whatever desk fees you pay at a brokerage. YMMV.
Sr. Member
Jun 7, 2017
965 posts
721 upvotes
BC
If you are confident and able, #3 first. Otherwise, #2.
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA
canuckstorm wrote: One of the posters on your thread, Eonibm, is the authority on that licensing option and from his signature you can link to his ongoing thread on this matter.
A month might not be enough time for you to study and get a license. I imagine it could take 3 to 4 months. Again it all depends on which province you are in and the home prices. In the GTA with average houses costing north of a $1m, the commissions are huge and would offset whatever you spend in taking the course and whatever desk fees you pay at a brokerage. YMMV.
thanks, i found the thread https://forums.redflagdeals.com/earn-ba ... t-1745993/
[OP]
Jr. Member
Apr 6, 2019
175 posts
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GTA
Furcorn wrote: If you are confident and able, #3 first. Otherwise, #2.
So option 3 is still practical. Do listing/seller agents ever pass on such fee portion? If anyone has tried it and it worked for them, i would give it a try for sure.
Member
Feb 15, 2018
333 posts
406 upvotes
webester wrote: So option 3 is still practical. Do listing/seller agents ever pass on such fee portion? If anyone has tried it and it worked for them, i would give it a try for sure.
9 out of 10, this arrangement will only line up the pocket of the listing agent as he will get the full commission. Is there a guarantee that he will lower the house price by 2.5%? Maybe - however, it all depends on the market and your negotiating skills. What if you would have still gotten that 2.5% discount anyway, even if you had gone with your own realtor? Maybe a motivated seller who was willing to discount by 10% but the selling realtor convinced you that 2.50% was a good deal. So, you could get both a discount on the home price and a cashback - those two are not mutually exclusive.

Keep in mind that you are working in a scenario where there is assymetric information (the sellers have more knowledge than you). The only way number 3 would work is if you were to close that information gap and know how much that house should be selling for and how much the buyer would accept. If you are prepared to do your own comps research and look through the land registry to find out how much the current owner paid and when they bought the house - you will pretty much have an idea of the lowest price they will accept. If the owner paid half the listing price 20 years ago - chances are there is more negotiating room as he has both gained in capital appreciation and also paid down the mortgage. Whereas, a seller who just bought 2 years ago might still be under water. It is this type of info a buyers agent might be able to get you. However, do not expect the seller's agent to get you that sort of info - therefore, zero advantage to dealing with the seller's realtor - unless you already have all the info he has.
Last edited by canuckstorm on Apr 7th, 2019 2:05 pm, edited 1 time in total.
Sr. Member
Jun 7, 2017
965 posts
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BC
webester wrote: So option 3 is still practical. Do listing/seller agents ever pass on such fee portion? If anyone has tried it and it worked for them, i would give it a try for sure.
It's not the seller's agent who would pass on savings, it's the seller. You simply approach them and request they lower the price by 2.5% and pay no buyer's commission. The seller's agent can write this up appropriately.
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA
canuckstorm wrote: 9 out of 10, this arrangement will only line up the pocket of the listing agent as he will get the full commission. Is there a guarantee that he will lower the house price by 2.5%? Maybe - however, it all depends on the market and your negotiating skills. What if you would have still gotten that 2.5% discount anyway, even if you had gone with your own realtor? Maybe a motivated seller who was willing to discount by 10% but the selling realtor convinced you that 2.50% was a good deal. So, you could get both a discount on the home price and a cashback - those two are not mutually exclusive.

Keep in mind that you are working in a scenario where there is assymetric information (the sellers have more knowledge than you). The only way number 3 would work is if you were to close that information gap and know how much that house should be selling for and how much the buyer would accept. If you are prepared to do your own comps research and look through the land registry to find out how much the current owner paid and when they bought the house - you will pretty much have an idea of the lowest price they will accept. If the owner paid half the listing price 20 years ago - chances are there is more negotiating room as he has both gained in capital appreciation and also paid down the mortgage. Whereas, a seller who just bought 2 years ago might still be under water. It is this type of info a buyers agent might be able to get you. However, do not expect the seller's agent to get you that sort of info - therefore, zero advantage to dealing with the seller's realtor - unless you already have all the info he has.
Thanks i got your point. Apparently, the 2nd options seems better one
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA
Furcorn wrote: It's not the seller's agent who would pass on savings, it's the seller. You simply approach them and request they lower the price by 2.5% and pay no buyer's commission. The seller's agent can write this up appropriately.
Thanks, I'll give it a try on couple of listings and see how it goes. Else option 2 seems to be the one which is working for most people here.
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA
General question:

So after this thread i received private messages from some realtors about offers etc, or how they are different/better than lot others.

So how do you guys read those messages? If someone isn't open to reply in public and wants to share their techniques in private, that person sounds fishy or seems trustworthy?

Just out of respect for the forum, I ain't naming anyone who PM'd me after this thread.
Deal Fanatic
Mar 27, 2004
5373 posts
3275 upvotes
Toronto
option 2 is your best bet. 3 isn't as easy as you think it is. As you won't be saving the 2.5% since the commission agreement is between the listing brokerage and the sellers.
Full-time Realtor
Deal Guru
Jun 26, 2011
13771 posts
3796 upvotes
GTA
webester wrote: General question:

So after this thread i received private messages from some realtors about offers etc, or how they are different/better than lot others.

So how do you guys read those messages? If someone isn't open to reply in public and wants to share their techniques in private, that person sounds fishy or seems trustworthy?

Just out of respect for the forum, I ain't naming anyone who PM'd me after this thread.
They are messaging you privately because they are not allowed to solicit here
Deal Fanatic
Jul 3, 2011
5792 posts
2958 upvotes
Thornhill
disclosure: I am a Real Estate Broker who is not one of those who solicited you.

Anyone cam make a claim - they are actually pointless unless they can be supported. Consider that if you had even just 2 make such claims, each is saying to you that they're better than the other person who they can't even identify.

Unless your decision is driven by the size of rebate, you can always ask them for a written performance guarantee to back up their claim.
webester wrote: General question:

So after this thread i received private messages from some realtors about offers etc, or how they are different/better than lot others.

So how do you guys read those messages? If someone isn't open to reply in public and wants to share their techniques in private, that person sounds fishy or seems trustworthy?

Just out of respect for the forum, I ain't naming anyone who PM'd me after this thread.
Deal Fanatic
User avatar
Feb 2, 2014
8780 posts
2515 upvotes
Toronto
webester wrote: Hi friends

So i am looking to buy a residential property and i understand there are 3 available options

1. Get a realtor who sends you listings etc, you go for viewings, close everything and he takes his commission of 2.5% approx
2. Do the same thing in step 1, but ask that realtor for some cashback like 1% cashback
3. Do everything yourself, skip the buying realtor part, view listings yourself and negotiate on price with the sellers agent, as he'll be saving 2.5% commission for himself (that he had to pay to buyers agent)

So what's the best and recommended option? and what are pros and cons of all these options

Thanks
As per the listing agreement between the seller and listing brokerage, the seller isn't saving 2.5% if you don't have an agent. The listing brokerage doesn't have to pay out the 2.5% in that case (they keep it all).

So choose 1 or 2.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Member
Feb 15, 2018
333 posts
406 upvotes
webester wrote: General question:

So after this thread i received private messages from some realtors about offers etc, or how they are different/better than lot others.

So how do you guys read those messages? If someone isn't open to reply in public and wants to share their techniques in private, that person sounds fishy or seems trustworthy?

Just out of respect for the forum, I ain't naming anyone who PM'd me after this thread.
There is nothing fishy about realtors soliciting your business by sending you PM's. The forum rules do not allow them to market directly on the forum threads - but they are allowed to PM. I am not endorsing any of them but can tell you that most of them are very knowledgeable realtors who have contributed a lot of useful advice to this forum and I wouldn't have a problem giving them some of my business. Just do your due diligence by taking the PM conversations offline and verify if they are who they say they are. Should be easy to do as Realtors are registered in their province of practice and you could look up their name.
[OP]
Jr. Member
Apr 6, 2019
175 posts
46 upvotes
GTA
RolandCouch wrote: They are messaging you privately because they are not allowed to solicit here
Thanks. However, I personally feel a balanced approach would be responding to the question asked publicly, and then PM for soliciting.

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