Real Estate

Real estate offer question

  • Last Updated:
  • Jul 26th, 2022 9:06 am
[OP]
Newbie
Feb 10, 2020
3 posts

Real estate offer question

Hello,

Quick question. I have bank approval for a mortgage for a new home, conditional to sale of my existing home. I approached listing agent directly so far and don't have my own representative. I thought they may be more motivated as there would be no commission split. Would be offering listing price, not a competitive market but it's been discounted several times. I have my home listed privately and have had several showings and will discuss offers with two parties in the next week.

The listing agent would not accept any offers from me, as my home is listed privately and not listed with a realtor or MLS. Bear in my mind the home I'm interested in has been empty, and cared for, for 2 years. I found this interesting, fairly normal ?
Last edited by CaelE44524 on Feb 11th, 2020 10:59 pm, edited 1 time in total.
20 replies
Deal Fanatic
Mar 27, 2004
8049 posts
6086 upvotes
Toronto
You clearly made a incorrect assumption about the price. I'll just leave it at that.
Full-time Realtor
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User avatar
Aug 11, 2019
208 posts
219 upvotes
Toronto
They may have discounted it several times because they didn't get the offer or bidding war they wanted.

Eg. listed price $900K but they actually want $1M.
All of the offers came in at $920K max, so they dropped it to $850k in hopes of drumming up new interest and eventually hitting that $1m.

Your house not being sold yet could also be a factor- as they don't want to put in any conditions on the aps.
Full Time Realtor
GTA & Surrounding Areas
Deal Fanatic
Mar 27, 2004
8049 posts
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Toronto
You are selling and buying the biggest assets you probably will ever involved with.. why not just hire an experienced agent instead of coming to a internet forum for advice? Based on your question you clearly have no understanding of commissions and market evaluation.
Full-time Realtor
Sr. Member
Aug 22, 2016
577 posts
369 upvotes
I would not pay that 2.5%+HST if you have finances and pre-approvals to go for the purchase. continue with your negotiations. You may have to up your offer if the market there is hot.
I just like to add that during the bank final approval process there is a step called appraisal and most lenders expects that the property is MLS listed and they usually trust the words of realtor then your own words with regards to market value of the house. Check purplebricks if they offer any service for buyers at very low price.
Deal Addict
Jan 17, 2006
2424 posts
2627 upvotes
Toronto
I did buy my home without agent few year ago.
May be I was lucky as seller was agent herself but that for sure allowed me to save tens of thousand dollars.
Deal Fanatic
Mar 27, 2004
8049 posts
6086 upvotes
Toronto
arbytor wrote: I would not pay that 2.5%+HST if you have finances and pre-approvals to go for the purchase. continue with your negotiations. You may have to up your offer if the market there is hot.
I just like to add that during the bank final approval process there is a step called appraisal and most lenders expects that the property is MLS listed and they usually trust the words of realtor then your own words with regards to market value of the house. Check purplebricks if they offer any service for buyers at very low price.
Here is the problem with saying "I would not pay that 2.5%+HST ". You have to understand how the listing agreement works. The seller has already agreed to pay the Listing brokerage 2.5% to pay the coop brokerage 2.5%. You are assuming you are getting back that entire 2.5% if you buy directly. That can't be further from the truth. The listing agent will just take that 2.5% for themselves as a multi rep deal.

Don't try to outsmart the system. You can either get a real estate license yourself and keep the coop completely minus brokerage splits or just get a realtor that can negotiate for you and give you cash back. The former will cost you $4000 at least and probably half a year of your time. The latter is the easier method and what most people do.
Full-time Realtor
Sr. Member
Aug 22, 2016
577 posts
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oasis100 wrote: Here is the problem with saying "I would not pay that 2.5%+HST ". You have to understand how the listing agreement works. The seller has already agreed to pay the Listing brokerage 2.5% to pay the coop brokerage 2.5%. You are assuming you are getting back that entire 2.5% if you buy directly. That can't be further from the truth. The listing agent will just take that 2.5% for themselves as a multi rep deal.

Don't try to outsmart the system. You can either get a real estate license yourself and keep the coop completely minus brokerage splits or just get a realtor that can negotiate for you and give you cash back. The former will cost you $4000 at least and probably half a year of your time. The latter is the easier method and what most people do.

If the seller realtor is forcing the seller to reject a deal like this then they are not acting in favour of the seller which they agreed to. There is nothing about outsmarting the system here. You are pulling of something that does not exist. Not sure what city you are talking about. that agreed 2.5% is not written in stone. In Toronto itself you can get that back if you are a buyer with no agent, there are houses selling each day with walk-in buyers with no agents.
Deal Fanatic
Mar 27, 2004
8049 posts
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Toronto
arbytor wrote: Not sure what city you are talking about. that agreed 2.5% is not written in stone. In Toronto itself you can get that back if you are a buyer with no agent, there are houses selling each day with walk-in buyers with no agents.
The listing agent represents the interest of the seller. not your interest..
and seriously..
the heck are you talking about????
how can you get back 2.5 as the buyer w no agent,??
not written in stone? you are making a fool of yourself. you dont know how ignorant you sound right now.
Full-time Realtor
Sr. Member
Aug 22, 2016
577 posts
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oasis100 wrote: The listing agent represents the interest of the seller. not your interest..
and seriously..
the heck are you talking about????
how can you get back 2.5 as the buyer w no agent,??
not written in stone? you are making a fool of yourself. you dont know how ignorant you sound right now.
wow. how many houses you sold? You seem to be pretty pissed off at my response.
sellers reduce the house price by that 2.5%+HST. that is how you get back that money.
Deal Fanatic
Mar 27, 2004
8049 posts
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Toronto
arbytor wrote: wow. how many houses you sold? You seem to be pretty pissed off at my response.
sellers reduce the house price by that 2.5%+HST. that is how you get back that money.
The listing agent has to agree to do that, it's not up to the seller. the seller has already agreed to paying the listing brokerage and coop brokerage a set %.
Full-time Realtor
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Mar 27, 2004
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arbytor wrote: wow. how many houses you sold?
I sold like 25 worth about 20m in 2019. what about you?
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Deal Guru
User avatar
Mar 23, 2008
13006 posts
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Edmonton
arbytor wrote: wow. how many houses you sold? You seem to be pretty pissed off at my response.
sellers reduce the house price by that 2.5%+HST. that is how you get back that money.
As the buyer, you have limited control over where the money goes once it leaves your pocket. From what I know, your best bet at reducing the commission you pay is to find a hungry realtor to work with you on a specific deal, where all they (hopefully) have to do is put together the offer and do a little back and forth. And then you negotiate a slice of their commission.

If you try to just reduce the price by the 2.5%, it doesn't matter to the seller whether you intend for that money to come out of the realtor's commission or not. The value of the house is the value of the house, and they've signed a contract with their realtor outlying the commission structure. The realtor doesn't have to give that up just because you want to save a few bucks.

Having said that, if you get a hungry seller/realtor, you may luck out and get a price reduction. It may or may not be based on any kind of commission reduction. But in a reasonably active market, the seller can wait for the next chicken to pluck.

C
Sr. Member
Dec 28, 2010
898 posts
394 upvotes
Toronto
oasis100 wrote: I sold like 25 worth about 20m in 2019. what about you?
I was actually hoping for a bigger number with 25 sold. But, 20M seems about fair.
That's 2 sales/month and 500k in commission without gst. I say congrats!! and looks like whatever system is out their does work.
Deal Fanatic
Mar 27, 2004
8049 posts
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Toronto
Karma2000 wrote: I was actually hoping for a bigger number with 25 sold. But, 20M seems about fair.
That's 2 sales/month and 500k in commission without gst. I say congrats!! and looks like whatever system is out their does work.
I work with many fthb on rfd. not everyone buying $1m plus homes. majority are in that 500 to 700k. buyers that are transitioning to their second home are usually in that 1m plus range.
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Sr. Member
Aug 22, 2016
577 posts
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oasis100 wrote: I sold like 25 worth about 20m in 2019. what about you?
Very selective response. me? I had a great life in 2019 and did not paid any realtors salary. Good Luck in 2020.
Deal Addict
Aug 30, 2011
3527 posts
1268 upvotes
Ottawa
arbytor wrote: wow. how many houses you sold? You seem to be pretty pissed off at my response.
sellers reduce the house price by that 2.5%+HST. that is how you get back that money.
Why would the seller do this? As sellers of several parcels of severed vacant land, where a couple of the buyers did not have their own agent, it honestly never occurred to us to pass on the commission savings. Would you? Our agent had, in the contract, a reduced commission if the buyer didn't use an agent. The agent worked for us to get the best price.
Deal Guru
User avatar
Feb 2, 2014
10416 posts
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Toronto
CaelE44524 wrote: Hello,

Quick question. I have bank approval for a mortgage for a new home, conditional to sale of my existing home. I approached listing agent directly so far and don't have my own representative. I thought they may be more motivated as there would be no commission split. Would be offering listing price, not a competitive market but it's been discounted several times. I have my home listed privately and have had several showings and will discuss offers with two parties in the next week.

The listing agent would not accept any offers from me, as my home is listed privately and not listed with a realtor or MLS. Bear in my mind the home I'm interested in has been empty, and cared for, for 2 years. I found this interesting, fairly normal ?
Where are you buying OP? You said it's not a competitive market, so I'm guessing it's not Toronto.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
[OP]
Newbie
Feb 10, 2020
3 posts
CdnRealEstateGuy wrote: Where are you buying OP? You said it's not a competitive market, so I'm guessing it's not Toronto.
Middle nowhere prairies, houses don't go on bids or sell in days, more like weeks to months.

I didn't think a listing realtor could deny any offer without presenting it to their client, let alone for the listing price on a house that hasn't moved. Basically gate keeping as my condition was private sale of my own property.

Agents aim for 5%, 2.5% to split, sometimes 3%. They use MLS/marketing software for prior sales to get market pricing, then post it up. 4-6 prefilled forms, lawyers do the rest. Doesn't take much work so I figured I'd try private. Bought and sold a few places already. My place is priced more than competitively, I've reviewed the last couple years of sales and current listings. Not opposed to using an agent, just a trial at this point.

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