Kingston Real Estate

I've copied this article from the Toronto Star today (December 6th, 2010)

By Mark Weisleder | Sat Dec 04 2010

When you use an agent to sell your home, you may agree on a commission as high as 5 per cent with the proceeds split two ways. One half goes to the agent who works for you and the other half is paid to the agent who finds the buyer and helps negotiate the deal.

Now that the federal government has brought more competition to buying and selling a home, there are more ways for you to sell a home by yourself. That means the role of the real estate agent acting for the buyer will become even more important to you and the buyer.

Most people understand that when you sign a listing agreement to sell your home if you sell during the term of the agreement, you owe commission to that agent.

It’s a little different for when you’re buying a home. Here, you agree to work exclusively with one agent to find the property you want. The agent protects your interests and negotiates the best price for you. This becomes important if you are involved in a bidding war because you’ll need an objective third party to guide you, to make sure that you do not get too emotional and end up overpaying for the property.

In exchange, you agree to pay this agent a fee, typically a percentage of the sale price. For example, if the homer costs $200,000 and you agree to pay your buyer agent a 2 per cent commission, the cost is $4,000. Usually, the agent will get the commission from the seller. If the seller refuses to pay, then the offer will be readjusted to $196,000, and the buyer will pay the fee directly.

When interviewing buyer agents, be sure to ask for references and then follow up and call them. If you are nervous about signing the agency agreement, you might want to consider signing for a short term, let’s say 14 days, to get a feel for the kind of service your buyer agent will provide. You must understand though, that if your agent shows you a home during that 14 day period that you later buy, you will owe commission.

Sellers should make the effort to co-operate with buyer agents as well, even if they are trying to sell their home by themselves. One of the main reasons is that when a potential buyer approaches a seller directly, the seller has no idea whether this buyer is really looking for a home or even has the financial ability to afford the home. They may in the extreme case be a thief who is only looking to see whether they can come back to this property at a later time. When you work with a buyer agent, you know that they have already qualified any potential buyer so that you have the comfort of knowing that this buyer is in fact ready to buy and more importantly, can afford your home.

In addition, because the buyer agent will protect their buyer by conducting the appropriate due diligence on the property itself, there is less chance that the buyer will discover problems after closing. This means that the seller will not likely be sued by the buyer after closing. This means peace of mind for the seller after closing, as well.

There are advantages to both buyers and sellers in working with buyer agents. Understanding this will make your next home purchase or sale decision much easier.

Real estate lawyer Mark Weisleder is the author of Put the Pen Down! What homebuyers and sellers need to know before signing on the dotted line.