You’re parents are tired of you living under their roof or maybe you’re tired of living under their roof 😛 and now you need a place to live. How? Who? When? What? Where? These are all the questions you’re asking yourself. You’ve worked hard saving your money. From tracking your finances, cutting your spending and setting a goal you think you’re ready for the next step, what IS the next step though? That’s where a realtor comes into play!
So, you want to buy your first home? This is SUPER exciting but also extremely daunting and overwhelming. This is why this blog post is focussed on the basic information about choosing the right real estate agent for you, what you should expect and how they get paid.
(Scroll to bottom for a quick snapshot of all of the tips in this article!)
I started this post off with a How? Who? When? What? Where? So lets begin!
How do you begin the process?
When starting the process of buying a home whether its your first, second or 10th it’s always best to connect with both a realtor and mortgage broker before you start seriously looking. I suggest doing this because Realestate and the lenders that tag along, is an ever changing market. By connecting with a realtor ahead of time they can talk to you about expectations vs. reality and what the market is currently doing ex. Should you sell then buy? Buy then sell?
Who are real estate agents?
I keep tossing the names realtor and mortgage broker around as if you know exactly what they do, how they do it, how they get paid etc. Today we’re going to dive specifically into real estate agents (stay tuned for a post on mortgage brokers.)
Selling Agent Helps you
- Educate on market trends
- Educate on the process
- Determine strategic and fair market value listing price
- Get the best possible price for your property
- Negotiate contract terms
- Inform on decluttering/organizing/prepping home for open houses & showings
- Market property
- Hosts showings/open houses
Buying Agent helps you:
- Educate on market trends
- Educate on process
- Set expectations based on budget and location
- Send new & stale properties to you (stale properties: that have sat on the market for a long period of time that you may have new negotiating potential with)
- Find perfect home
- Negotiate contract & get you best possible price
Who pays the realtor?
If you are using a realtor to sell a property then as the seller you will be paying the realtor ONLY once your property has been sold.
Steps to selling Property:
Can take anywhere from 1 week or up to 3 months or longer depending on a number of factors (location, price point and marketing)
- List your property
- Receive/Negotiate Offer
- Accept Offer
- Go through subjects period [this is kind of as if the buyers have put your property on hold for a period of time while they get their finances sorted, typically a house inspection etc]
- Then completion
- Then Possession / Adjustment adjustment period is when the lawyers adjust all the finances accordingly , strata fees , property taxes,
You and your realtor will discuss commission before your property is listed. Commission is usually anywhere from 3%-8% ($200,000 house = $6000-$16,000). Now this may seem like a lot – but from here your realtor will need to split this commission with the buyers realtor. The standard is typically 3.25%. Every realtor has to pay fees to their managing broker (Remax, Keller Williams, One Percent) as well as marketing costs (which can get up to over $2000 if photography, videography, open houses etc are all done). You also need to remember that you are paying for them to have been working for you on call from anywhere from 1 week to a couple months & nobody likes to work for free 😉
If you are looking to buy a property then you do not pay your realtor. This is true about 99% of the time (there’s always a what if ). Your realtor will get paid by the selling agent, as I mentioned above. The selling agent splits their commission with the buying agent. There’s a couple things to realize from this, as I said above. No one likes to work for free and realtors are no different from you and I. Be reasonable with requests and expectations. Sometimes you will be looking for a property for quite a few months before you find that perfect place where all the pieces fall into place with your agent not getting paid at the same time they can be helping anywhere from 5 to 20 people.
When should you start looking for a real estate agent?
Any time! Honestly, I’d say as soon as the thought comes to mind;
“I think I might start looking to buy a place in the next couple months…”
It doesn’t hurt to get the conversation started! If anything it helps you get comfortable with your realtor, helps your realtor understand exactly what you’re looking for and helps you understand the market better in the area’s you’re interested in.
What qualities and skills should your realtor have?
There is just shy of 20,000 realtors in British Columbia alone, don’t choose the first realtor you hear of or first bus ad your drive by. Buying a home is the biggest purchase you will ever make and it’s not one you want to regret.
What to look for:
- Organizational skills – Are they showing up on time to meetings? Responding to questions in a timely manor? Are they clear on what they need, when they need it by? Do they get information to you quickly?
- Communication Skills – Are they informative? Can they answer your questions clearly and in a way you understand? Are they easy to talk to? Answer calls, texts, emails etc? Are they clear in what they will offer and how they specifically do business/processes?
- Social Media Skills – Are they on social media? Are they active on social media? How about creative and innovative?
- Marketing – Find out how they market themselves and their properties. Do they take videos? Have a professional photographer come in? Do they have a website they update with listings? Do they do open houses and have an open schedule for showings? What do they do for open houses?
- Will they send you properties that meet your criteria as soon as they hit the market? (listings don’t usually show up on public websites immediately but realtors have the inside scoop)
- Is this someone you could sit down and shoot the shit with?
- Do you relate? Maybe you’re looking for someone who is all business and gets straight down to it. Or maybe your looking for someone to sit down with chat real estate with over a beer and puts care into their relationship with their clients. I can guarantee you theres a realtor out their for you, so go with who you feel is best for you!
- Go with your gut! I know this seems silly, but honestly! You need to trust this person 100% and even if you can’t pin point the problem but you’re just not vibing, don’t do it! There’s another 19,999 you can choose from!
Where do you find these realtors?!
Well, as I had mentioned above social media is one great way to find realtors. This will also give you a snap shot of who they are and what they do. As simple of an answer this next one is… Google. Check out the webpages that pop up, browse the websites and see whats out there. Word of mouth is also another great way, see who co workers, friends and family use.
- Just because a realtor has a big name doesn’t necessarily make them better (I actually find they tend to give less personal service and are just looking to get paid)
- Make sure they’re current with the times! A lot has changed in the past 10-15 years, make sure they’re on social media, have a website and are current with real estate marketing trends. A lot of big names that have been in the game are outdated and don’t feel the need to stay current as they are making money no matter what. This hinders the number of people you are reaching which could stop you from getting the best value for your home.
- Social media is a a great way to find a real estate agent. Hop on insta and drop an appropriate hashtag and tons of realtors will pop up!
- Always remember in life, you get what you pay for. A realtor offering a smaller commission price than the norm may not result in more money in your pocket! Be sure to ask the right questions and don’t let finances be the 100% factor in your decision.
- Paying Property Transfer Tax: When purchasing a property you must pay property transfer tax (1% on the first $100,000 and 2% on the balance of the purchase price of the property.) That can turn out to be a lot of moola! Make sure to save up for that incremental cost as it can’t be worked into your mortgage. If you are a first time home buyer and the purchase price of your property is under $500,000 then you are exempt from the property transfer tax