The scenario I am about to describe plays out all the time. You have finally decided it’s time to sell your beloved family home. You are ready to make that next move, whatever it might be, and you know the market is very strong. You are excited for this life change.
In extremely hot markets there can be a tendency for some people to think houses “sell themselves”. You know, throw a sign up on a lawn, take some pictures with a cellphone and wait for the offers to flood in. This is of course a fallacy, and in fact it takes hard work, timing, a solid strategy and a great realtor to get top dollar. So where do you find said realtor?
This is where things can get murky. At last count there were over 50,000 registered real estate agents in the GTA, and that number seems to rise every month. Realtors are the “proverbial” dime a dozen, just like a bunch of hapless dudes packed in a nightclub looking to score. Your cousin is a realtor, your uber driver is a realtor, everybody it seems is a realtor.
So how do you decide who to hire to guide you through what is likely the biggest and most important transaction of your life? There are many ways to go about it.
1) If a real estate agent has helped you in the past (and did a good job), you could hire them again. This method is highly recommended.
2) You can ask a trusted family member or friend for a referral for a realtor they have used in the past. This is also highly recommended.
3) You can hire a family member or friend who is a realtor. I’m generally ok with this, provided the realtor is experienced and competent, although some people do have reservations with mixing business and friendship.
4) You can hire the realtor who sends you the most flyers or has the most billboards. This is where things get less clear cut, and often you don’t even end up directly working with (or even interacting with) the face on the flyer or billboard.
5) You can post on a Facebook community group you are looking for a realtor. I find this inane and attention seeking, and I feel embarrassed for the inevitable flood of agents pitching their service online to a total stranger.
6) You can hire the discount realtor who charges the least commission. UGH UGH.
Options 1 and 2 are preferred then, with 3 being acceptable as well under the right circumstances. If you think 4, 5 or 6 are the best options you can probably stop reading this blog right now and get back to day drinking. With that established, you are now ready to meet with your preferred realtor. So what should you do next?
Ask questions, tons of questions. Ask your realtor what their marketing plan includes, what their online and offline platforms include? Are they versed in social media? Are they set up to connect with all potential buyers in this new world we find ourselves in? How many homes have they sold in the neighbourhood in the past couple years?
Ask what services are included. The end objective is to have your home presented in the best possible way, and it takes work for this to happen. Ask your realtor if they are providing a design consultation, and by extension establish if your home requires staging to get to a 10 (the grand majority of homes do) Make sure all of these services are INCLUDED in your commission package.
Establish a commission package. In modern real estate the standard commission rate is 5%. As mentioned above the commission you pay as a seller should include any and all marketing fees, services etc. If your realtor ever comes to you and says you are responsible to pay for staging, home inspections or anything at all above and beyond the agreed upon commission show them the door immediately.
Address commission reductions. I would be naive if I didn’t recognize the presence of discount agents and brokerages. Like a bad smell they continue to linger. One thing to keep in mind is that real estate commissions are split evenly down the middle. So on 5% you pay 2.5% to the agent you hire to manage the sale, and the other 2.5% to the agent that represents the buyer.
If you do hire an agent and they propose giving a commission “cut”, it is vital to ensure that the cut is reflected on their portion of the commission and not the portion paid to the “buyer” agent. Especially in this market, it is more challenging than ever to help buyers find a home. If an agent sees that a home is offering less than 2.5% and not fully compensating them, they will often find ways to direct their buyer away from the house and instead focus on another one where they will be paid properly. As a seller this means your house will not sell for top dollar.
Get a second opinion. Even if you are 95% certain you have found the right realtor, you should still seek a second opinion from a different realtor. Even if it only serves to reinforce the strategy and price estimate of your first choice, the stakes are simply too high to not have a second set of eyes look things over.
Vision board the sale. In the current market the sale strategy is extremely clear cut – under price (or under list ) the offer price, hold off on looking at offers for a week and then create a bidding war and hugely “over asking” sale price. I may not love this process for buyers, but it undeniably works for sellers and I don’t see it changing any time soon.
That being said, as a seller you need to know what’s happening leading up to offer night. Has the home inspection been completed to share with potential buyers? What day are we going on MLS? When is our offer date? Are we open to a bully offer, and if so what would that number need to be? What days are we posting on social media or sending out flyers? What day and time is the virtual open house? What day are collecting agent feedback? I could go on but you get the point. All of these dots need to connect.
Selling a home is something most people only do a couple of times in their lifetime, and in many cases is a huge portion of retirement plans and estate planning. It must be done correctly, and that always starts with finding the right real estate agent.