Buying or selling a home can be an exciting, but also stressful experience. You are dealing with large amounts of money, banks, lots of paperwork and strict deadlines. Although there is no legal requirement to have a realtor complete these transactions, many find having one relieves a huge weight off their shoulders!
Real estate agents, or realtors, are provincially licenced individuals who assist with the purchase and sale of properties. They are held accountable to certain professional standards and a reasonable duty of loyalty and care when facilitating these important transactions.
The roles of a realtor differ depending on who they are representing in the transaction – the buyer or the seller. It is important to know both pros and cons of working with and without a realtor when buying or selling a home.
Do I need a real estate agent to sell a house?
Technically you do not need an agent to sell your home, however there are several benefits to having one.
Selling a home can take up a lot of time and effort and unless you have super negotiation skills, you may not get as high a price as you would like. The main benefit of having an agent on the seller’s side is that they are the ones to do all of the negotiating for you. Research shows that homes sold with an agent, were sold at a much higher price than without one.
Agents have the resources to determine what the fair market value is for your home and also the knowledge and skills to obtain the best possible price for you. Since they are paid by commission (which can vary from 3-6% for residential properties in BC), it is in their best interest to get you the highest bid.
Once you sign a listing agreement with an agent, which could be a Multiple Listing Agreement or an Exclusive Listing Agreement, your agent will be able to promote your property on databases providing listing information to other agents and buyers. This maximizes the audience and exposure of your home, which increases the chances of a higher offer. They are also able to identify serious buyers in the market versus ones who are just “shopping around.”
Much of what real estate agents do is marketing. They have the skills and tools to promote and showcase your home, as well as their knowledge and resources. A good agent will know how to make your home look its best, whether that means staging and reorganizing your home, or capturing the best angles in photos to maximize space. They can offer professional advice on what to include in your home’s listing and how to make it as appealing as possible. You are able to use their advertising resources to obtain the best possible deal for your home.
On the flipside, the major drawback to using an agent to sell your home is the amount of commission you pay for their services. As mentioned above, agents usually take somewhere between 3-6% of your sale price, which usually ends up in the tens of thousands.
You are also bound to a listing agreement with your agent. If you do not like the agent’s marketing or advertising techniques, or come to any disagreement regarding the property, it can be very difficult to get out of the contract. You are giving up a certain amount of control of the sale process, so it is important you trust your agent to limit any chances of disagreement.
Do I need a real estate agent to buy a house?
Similar to selling a home, there is no legal requirement to go through a real estate agent for a purchase. The purchaser doesn’t actually pay the realtor directly, so often it is no question of whether to use one or not. The seller’s agent splits their commission with the buyer’s realtor from the sale proceeds. However, if the buyer doesn’t use a realtor, the seller’s agent might reduce their commission percentage, which will save the buyer some thousands.
Although you could save some money by not using a realtor to purchase, there are several reasons why most people choose to use these services. The main reason would be because searching for the right house is pretty much a full-time job – hence a profession built around it. A good agent is aware of the available properties in a neighbourhood and have access to exclusive databases to conduct thorough searches. They can find the specifics to match your needs much faster than most could on their own.
Agents are bound by a duty to put your interests ahead of their own, and make it a priority to find out exactly what you are looking for. An experienced agent will be able to identify when properties are overpriced or if you are actually getting your money’s worth. If there are serious repairs that need to be done, you can rely on your realtor to have that awkward conversation and negotiate the best possible price for you.
Your agent is required to give full disclosure about a property and its problems, which could save you a lot of time and money in the long run. This is not reciprocated by the seller’s agent – they do not owe you this same duty or loyalty. Your agent is on your side and a good one will be a great help during a complicated transaction.
“Dual agency”, also known as “multiple representation” or “transaction brokerage” is when a real estate agent represents both the buyer and seller in a real estate transaction. This practise is allowed in most provinces across Canada, except for British Columbia.
There is a concern that an agent representing both the buyer and seller could harness a conflict of interest. If the buyer is looking for the lowest possible price and seller is looking to sell for the maximum, then inevitably there will be a conflict of interest. The duties of the agent will be put to test and it can be difficult to find a middle ground to satisfy all parties.
The only exemption to the dual agency rule in B.C, is when the property is in a remote or underserved location and it is not possible for the buyer and seller to have separate agents. Some examples of when the dual agency exception is permitted is when there aren’t any other real estate agents in the area; if the property requires significant travel or special travel arrangements to visit; or if the transaction is urgent and there is a shortage of time to involve another agent. The urgency of time should not be confused with convenience and will not qualify as an exception.
Most people would agree that hiring a real estate agent is very beneficial. Unless you are well versed in the policies of buying or selling a home, confident in filling out contracts, have completed extensive research on the market, have the time to search or advertise properties and have excellent negotiation skills, it is highly recommended to work with a realtor.
A property transaction requires a lot of paperwork which can be complicated and confusing, especially if you are a first-time buyer. Agents can clear any questions and help with negotiations to save you time, money and stress.
It is also a good idea to have a real estate lawyer review the real estate documents and agreements before signing, to ensure you do not run in to any legal issues down the road. Titan Law’s real estate lawyers are here to assist you with your property transactions and answer any questions you may have. Contact our team today for a smooth closing!