Most people use a real estate professional when buying or selling a home. It is important to understand everything about the services that they provide, before you sign or agree to anything.
Here are five important things to know:
Commissions are negotiable: Some agents may charge a percentage of the sale price, others may charge a flat fee. Agents will offer different services, depending on the commission, so ask questions about how your home will be marketed, whether in the newspaper, through flyers, online, or all three. Do not be fooled by the offer of a free valuation of your home in exchange for signing with an agent. Most agents will do this for free.
Agreements are for 6 months: When you sign a standard six-month agreement with an agent, you agree to pay a commission if you purchase a home during the period covered by the contract. That commission must be paid whether or not the agent was the one who introduced you to the home. You are also obligated to pay if you walk into a builder’s office and buy a new home by yourself during the same period. If you do not wish to make a commitment for six months, you can write in a shorter time period. You can also exclude certain types of properties, such as new homes or condominiums bought from a builder. However, be aware that experienced agents can offer very useful advice when negotiating with a new home builder, especially regarding views and what finishes you choose to help you get more value for your money spent later.
Open houses benefit the agent: In many cases, the only one who benefits from open houses are agents. They meet potential buyers, who may not be interested in your home, but who may become potential buyer clients of other homes that the agent knows about. There are also risks of people stealing valuables when they are inside your home, often by coming in pairs; one to distract the agent while the other goes through the drawers. When the open house is only open to other agents, then there is a stronger likelihood that the people coming will actually have clients who are potentially interested in your property. If you do permit an open house, ensure that all of your valuables, including computers and CDs, are locked away or removed during the open house.
Real estate isn’t always a great investment: If you are buying real estate as an investment, then the income from the property must be able to carry all the costs, including the mortgage payment, taxes, insurance, utilities and an extra 10 per cent for maintenance and repairs. This may also require a down payment of up to 25 per cent of the purchase price. If the income does not carry the costs, then you are speculating that the price will increase over time, which is a dangerous assumption.
Staging a home will get a better selling price: Professional staging typically involves spending money to bring in expensive furniture to make your home appeal to a wider group of potential buyers. Sellers are often better off decluttering their homes, removing excess furniture, putting a fresh coat of paint on the walls and perhaps putting in a new counter top in the kitchen, the one room that matters most to buyers.
Be prepared and ask the right questions before you hire your real estate agent, and you should have no surprises or disappointments later.