Real Estate

A No Agent Experience

  • Last Updated:
  • Mar 13th, 2018 7:46 pm
[OP]
Jr. Member
Jan 27, 2018
161 posts
128 upvotes

A No Agent Experience

I just want to share an interesting experience Today. I'm a hopeful buyer and I have no agent. I search for my own listings, find the ones I like, and then contact the listing agent for a visit, Today was my 2nd property visited. This was a >1M+ condo property in Yorkville.

  1. The 1st thing the listing agent does is before he would even confirm the visit, he would ask and make me confirm I am not working with any other agent.
  2. At the property, he spent more time asking me why I don't have an agent and trying to convince me to use him as an agent as opposed to selling me why I should buy the property.
  3. He asks me why I don't have an agent. I tell him I want to save the 2.5% and negotiate a lower price.
  4. He tells me the seller pays for the agent, and its "free" for the buyer. I disagreed and said both the buyer and seller pay for the agent via the 5% spread.

What I don't understand is
  1. Why is commission so high in Toronto? 5% spread is huge! What other deals cost 5% commission, especially when the agents don't even take on any liquidity risk? For example, a junk bond desk working on 100M deals usually take less than 1% commission, and they have to take on the capital risk and liquidity is even lower!
  2. Why do agents keep selling that its "free" for the buyer when it clearly isn't, its an insult to buyer intelligence.
  3. Why does the Toronto market not have tools available in many other markets (i.e., zillow, redfin, etc...)
  4. Why are agent commissions not flat rate as opposed to rate based? I don't see how you do more work on a $2M property vs a 500k property?
  5. The agent kept selling me that agents have more information, intelligence and experience than me. That statement may or may not be true, but how would I even quantify that and compare across agents? What can the agent do that the buyer can not? What do agents provide that I cannot do myself? Regardless of the advice an agent gives, the buyer (and seller) still needs to do their own due diligence.
85 replies
Jr. Member
Jun 3, 2017
173 posts
137 upvotes
deepzerg wrote: [*] Why do agents keep selling that its "free" for the buyer when it clearly isn't, its an insult to buyer intelligence.
Sorry for not providing an objective answer, but I do have to say that the Toronto Real Estate market as a whole is an insult to a buyer's intelligence.
Member
Mar 3, 2016
387 posts
237 upvotes
I had no agent myself when I was buying. Don't talk about it with them and just concentrate in asking questions about the property. These agents are trained at great length to make you a client. No need to reason with them or tell that you'll save on commission as actually this might not be true since the seller might still have to pay full commission but only to the seller's agent. Just do what you have to do get the property. You not having an agent may actually push that agent to work on your behalf when influencing the seller to accept your offer since they have the potential to pocket full commission rather than sharing it with a buyer's agent. Money talks louder than their ethics.
Newbie
Jan 19, 2018
61 posts
121 upvotes
I have asked these questions since 2010,when I bought my first home.
Here are some things you can do.
1. Negotiate a 2% rebate with an agent. That way you do all the work and save 2%. This is the best strategy. They will get 0.5% or $5,000 on a 1 Million Dollar sale for a few hours work so they should not complain.
2. Tell the listing agent a number that is 2.5% below what you want to pay and hold firm. The listing agent will either lower his commission or screw his listing client and and tell them to take a lower price so he can double end (double dip the commission)
3. Only sign the representation of the listing agent for that one property and only for 2 weeks. They will want you to sign your life away for 6 months. They can put the rebate right in the contract too. Video record the whole thing if you have to.

GTA Agents are real desperate these days. Sales have dried up and there are 48,000 of them. I just got the February sales numbers and they are down again negative -25% to-30%. It takes some time for all the data to stream in so there is 5% +/- shift that could occur.

Also, most commissions in the GTA are 3.5%: so it's 1% for the listing agent and 2.5% for the buyer agents. The listing agent has a 250% incentive to screw his client by getting your sales and double ending it.
[OP]
Jr. Member
Jan 27, 2018
161 posts
128 upvotes
lydia82 wrote: I have asked these questions since 2010,when I bought my first home.
Here are some things you can do.
1. Negotiate a 2% rebate with an agent. That way you do all the work and save 2%. This is the best strategy. They will get 0.5% or $5,000 on a 1 Million Dollar sale for a few hours work so they should not complain.
2. Tell the listing agent a number that is 2.5% below what you want to pay and hold firm. The listing agent will either lower his commission or screw his listing client and and tell them to take a lower price so he can double end (double dip the commission)
3. Only sign the representation of the listing agent for that one property and only for 2 weeks. They will want you to sign your life away for 6 months. They can put the rebate right in the contract too. Video record the whole thing if you have to.

GTA Agents are real desperate these days. Sales have dried up and there are 48,000 of them. I just got the February sales numbers and they are down again negative -25% to-30%. It takes some time for all the data to stream in so there is 5% +/- shift that could occur.
Thanks for the tips.

I don't understand this rebate business. Why can't I just lower the price by 2.5% instead of asking for a rebate when I don't have a agent? Rebate vs lower price is not equal to me, I want a lower price because I don't want to deal with the consequences if CRA claims the rebate is income.
Newbie
Jan 19, 2018
61 posts
121 upvotes
The rebate is the way they do it. It's BS I know. CRA will not consider the rebate income. Its actually gets taken off of the price.
Please make sure that they put it in the contract and only sign for 2 weeks. Honestly just record the conversation.
Deal Guru
User avatar
Mar 23, 2008
12333 posts
8755 upvotes
Edmonton
You can’t do that because the seller is the one that has made a commitment to the buying/selling agents. You’re not in control of that.

C
[OP]
Jr. Member
Jan 27, 2018
161 posts
128 upvotes
lydia82 wrote: The rebate is the way they do it. It's BS I know. CRA will not consider the rebate income. Its actually gets taken off of the price.
Please make sure that they put it in the contract and only sign for 2 weeks. Honestly just record the conversation.
not saying I don't believe you, and i believe this statement should be true with 90% probability:
"CRA will not consider the rebate income" -- but until the CRA says it, i would believe it otherwise. afterall, I'm the one dinged for it not the internets and everyone else that claims this statement as well.
[OP]
Jr. Member
Jan 27, 2018
161 posts
128 upvotes
CNeufeld wrote: You can’t do that because the seller is the one that has made a commitment to the buying/selling agents. You’re not in control of that.

C
why can't this commitment be modified? at the end of the day, why can't i offer a price that is 2.5% lower, and the listing agent and seller sign an amendment to their contract saying the listing agent only gets the 1% commission and not double end.
Deal Expert
User avatar
Sep 21, 2010
15185 posts
4570 upvotes
Montréal
What's the agenda for the listing agent wanting OP to get an agent? Just trying to help their brethren?
Hard work, inheritance, interest on interest accumulating, and stock and real estate speculation. It's all good.
[OP]
Jr. Member
Jan 27, 2018
161 posts
128 upvotes
tranquility922 wrote: What's the agenda for the listing agent wanting OP to get an agent? Just trying to help their brethren?
he wanted to be my buyer agent.
Deal Expert
User avatar
Sep 21, 2010
15185 posts
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Montréal
deepzerg wrote: he wanted to be my buyer agent.
LOL, what a joker, what does he bring to your table save for conflict of interest? I thought he was suggesting *another* agent, not himself! LMAO.
Hard work, inheritance, interest on interest accumulating, and stock and real estate speculation. It's all good.
Deal Addict
User avatar
Dec 13, 2016
3747 posts
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tranquility922 wrote: LOL, what a joker, what does he bring to your table save for conflict of interest? I thought he was suggesting *another* agent, not himself! LMAO.
The conflict of interest would be to a seller as getting double the commission the agent now has every incentive to make a sale including a significant drop in price.

I used a sellers agent when buying a condo and boy did they want to make a sale. I did get a discount.
Member
Mar 3, 2016
387 posts
237 upvotes
deepzerg wrote: why can't this commitment be modified? at the end of the day, why can't i offer a price that is 2.5% lower, and the listing agent and seller sign an amendment to their contract saying the listing agent only gets the 1% commission and not double end.
The seller has a contract signed so you can't just come and change that. Also, I think you are new to this buying process as the asking price is not the final price they will accept. They might ask way more what it's really worth. So you offering price-2.5% may not even be good for you. Just offer according to what other other units on the market and recent sales and the rest will play for itself. If you use the seller's agent for the paperwork, this might actually play in your favour since they are double ending. Agents have their own interest first and he was probably trying to get you as a client, that is making another sale even if you didn't make any offer for that particular unit.
Deal Addict
Nov 22, 2004
1514 posts
604 upvotes
This topic, along with the debate on Toronto/Vancouver Real Estate keeps being beaten to death, reincarnated, then beaten again. Anyways.
What I don't understand is
Why is commission so high in Toronto? 5% spread is huge! What other deals cost 5% commission, especially when the agents don't even take on any liquidity risk? For example, a junk bond desk working on 100M deals usually take less than 1% commission, and they have to take on the capital risk and liquidity is even lower!
In the last 2~3 years, most standard commission structure that I've seen is 3.5% - 1% to seller's agent, 2.5% to buyer's agent. This varies depending upon what is negotiated with the client but unless the selling agent is spending money to stage and do other things, I doubt they're able to charge 2.5% just for listing the property. At least it's not been my experience with all the agents I've worked with in the last couple of years. It might have been the norm once, it isn't now, but the "5%" number still keeps coming up in all realtor bashing threads.

Why do agents keep selling that its "free" for the buyer when it clearly isn't, its an insult to buyer intelligence.
Sales & marketing, that's all. Some concur, others are pushy.

Why does the Toronto market not have tools available in many other markets (i.e., zillow, redfin, etc...)
The case for more transparency is already ongoing. Not limited to Toronto, it's across Canada. I hope they win so consumers can get more info, I'm all for it.

Why are agent commissions not flat rate as opposed to rate based? I don't see how you do more work on a $2M property vs a 500k property?
The market determines the commission. Years ago the 'standard' used to be 5%, now it's 3.5% (or whatever is negotiated). If enough people decide they want a flat fee, it might just happen. For the selling side, a flat fee structure might make sense, on the buying side, it doesn't make sense to me. But that's a different debate.

The agent kept selling me that agents have more information, intelligence and experience than me. That statement may or may not be true, but how would I even quantify that and compare across agents? What can the agent do that the buyer can not? What do agents provide that I cannot do myself? Regardless of the advice an agent gives, the buyer (and seller) still needs to do their own due diligence.
That's just the agent trying to sell himself. Try to remember there are ~48,000 of them and not all of us work the same way. Also note that double-ending is a frowned upon practice and they're trying to bring it to an end. Sometimes buyers themselves encourage it by negotiating a rebate then getting the agent to double-end.
Anyways OP, you aren't obligated to work with any realtor. They get paid only via commission so they would try to sell themselves. If you're comfortable with the whole process, find a real estate lawyer and draft the offer. Or find a realtor and negotiate whatever you deem fair to help you as needed.

I focus on commercial and investment properties on the buying side for the most part, and only do residential if it's for friends/family and sometimes people here on RFD. Commercial is a lot more work and takes longer but it's worth not having to deal with the attitudes and insincerity that's so pervasive on the residential side from both the realtors and the people.
Realtor @ Royal LePage Ignite Realty
[OP]
Jr. Member
Jan 27, 2018
161 posts
128 upvotes
Sam9876 wrote: The seller has a contract signed so you can't just come and change that. Also, I think you are new to this buying process as the asking price is not the final price they will accept. They might ask way more what it's really worth. So you offering price-2.5% may not even be good for you. Just offer according to what other other units on the market and recent sales and the rest will play for itself. If you use the seller's agent for the paperwork, this might actually play in your favour since they are double ending. Agents have their own interest first and he was probably trying to get you as a client, that is making another sale even if you didn't make any offer for that particular unit.
Even if its signed, why can't the parties come along and change the contract via an amendment?
Deal Addict
Nov 24, 2013
1578 posts
889 upvotes
Toronto
I have nothing against agents. If their client market support paying them a flat rate, 3.5% or 10% commission, so be it.

My opinion is that technology is going to make the job obsolete anyway. I wouldn't be surprised if a few years from now, you will be able to do a virtual 360° tour of the property and view an inspection report online with the house being sold via a bidding process.
Member
Mar 3, 2016
387 posts
237 upvotes
deepzerg wrote: Even if its signed, why can't the parties come along and change the contract via an amendment?
And why would the seller's agent agree to that? They won't and this is not how it works. You are yet to make an offer and they will change a contract for you? Also you may not be the only potential buyer. Back in the days when the market was hot, some buyers with agents were offering 100K above asking price so you trying asking for a change in a contract that the agent will never agree will be ignored.
Deal Expert
User avatar
Sep 21, 2010
15185 posts
4570 upvotes
Montréal
BiegeToyota wrote: The conflict of interest would be to a seller as getting double the commission the agent now has every incentive to make a sale including a significant drop in price.

I used a sellers agent when buying a condo and boy did they want to make a sale. I did get a discount.
There are many scenarios Not just what you mentioned and it can be against buyer or seller. That's all I said, there's COI. How can that be assailable?
Hard work, inheritance, interest on interest accumulating, and stock and real estate speculation. It's all good.
Deal Guru
User avatar
Mar 23, 2008
12333 posts
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Edmonton
deepzerg wrote: Even if its signed, why can't the parties come along and change the contract via an amendment?
I feel like you’re missing the point... You can put whatever you want in the sales agreement. But the seller can scratch out whatever he doesn’t like and make a counter-offer.

You’re also missing the point that it shouldn’t matter to you how much of a commission the seller’s agent gets. If he can negotiate a 10% commission, how does that affect you? You figure out a price you’re willing to pay, and make an offer based on that. If the seller’s agent needs to cut his commission to make the deal work for the seller, that’s between the two of them.

C

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