Buyers agent – to use or not?

Although it seems still far away from the bottom right now, the RE bears on this site are looking for the days to transition to bulls when Vancouver RE is restored back to fundamentals. A common understanding (or the RE bear sentiment) is that after another one or two years deep dip, the market is likely to level down for a while. The bears then may start shopping around.

To prepare for that, buyer’s strategy needs to be considered. One of the main issues is whether to use a buyer’s agent or not. There are around 10K local Realtors (can someone provides the exact number?) – some of them are very experienced professionals that would help buyers a lot on one’s biggest purchase in life, while some others may just be con-men collecting commission only, or even worse, misleading/pushing the buyer for quick commission. A buyer’s agent does not necessarily have their interest aligned with the buyer’s when it comes to commission. This leads to the question on the poll “Are you going to use a buyer’s realtor?”.

I have listed some pros and cons of using a buyers agent here to start our brainstorming.

Pros:

1. Inside information. Some of sales information are only available to realtors (this may be worth talking about as another topic).
2. Expert advice. Get advice on various aspects, such as pricing, RE trend, construction quality, history, surrounding info and neighbors. Assuming you are lucky with a good realtor.
3. Safety. Feeling that the deal is “verified “/”protected” by a professional – may be purely sentimental. But most likely you do get less speculation on the decision making. Realtor does have to adhere to the Code of Ethnics, dealing with them is supposedly to be secured and you may have opportunity for recourse if you suspect their behaviors.
4. Less hassle. Free you up on most of the hunting job, paper work and other formalities/hassles/complications.

Cons:

1. Cost $$$. May be compensated by the service. Do you think the commission is too high, either percentage wise or absolute cost wise?
2. Risk of agent choice. Tough to identify the good ones, so you still have to do your own due diligence to prevent suffering from a con-man agent.
3. Less thrilling? You’ll lose part of the adventure/ excitement of the hunt (if you like to treasure hunt or pan for gold in the sand)

In addition to the generic comparison, there is a difference between purchasing a new house vs. resale. I guess for new house, especially new condo, buyer’s agent may not be as significant as in resale ones. And also for tricky regions, buyer’s agent may be more helpful in general.

[poll id=”31″]
-CZ
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ckung

Here is a question for you who want to buy without an agent. How would you know that you are buying that particular property at fair market price? I mean, without an agent you would not have access to past sales data to base your offer on. I work mainly with Buyers and one of my services is to provide a market value analysis on the properties my buyers would like to make an offer on. (I must admit it helps to have been a residential real estate appraiser previously) There have been numerous times in which my analysis indicated that a particular property was overpriced at that given time in the market. My advice to my clients in these instances is to only offer what is reasonable or just move on to other properties which more appropriately priced. There… Read more »

Ted

Ok, I for one would like to buy a home sometime in the future even if it goes down a bit in value. I have rented for three years now and have not done a good job of timing the market. If I had purchased three years ago I could have withstood a 30% correction and still be ahead. In addition I would have enjoyed the ownership of my home. I think we are getting fairly close to a reasonable level (Vancouver will always command a premium in my opinion). My target unit is at least 900+ square foot, two bedroom, two bath condo in downtown Vancouver. I have seen this type of unit escalate from about 500 – 550 to 700+. You can now get them in the low to mid 500’s again. I think 450 is about the… Read more »

The_Dude

"anonymous Says: December 22nd, 2008 at 7:49 pm Yes, threads like this one and Daves are very relevent; although bears like to fantasize about total meltdown most are preparing for a bottom soon. Best to be prepared." Well, then most will be losing even more money than I expected. Look, I agree that topics such as this are relevant and useful, but come on, this real estate market is not going to hit bottom for years. Believe me, we have time. Now, that's not to say that I won't buy before it hits bottom. If I feel comfortable, think that I'm going to stay in Vancouver, and the cost of ownership is only a bit of a premium to renting, then I'll gladly buy. But I think that I'll enjoy at least a couple of more winters in my rental,… Read more »

other ted

Well it won't cost me anything as a buyer in terms of cost since the seller pays the commision. But I will use an agent if I buy in Vancouver as my dad is a realtor. He is very good, helpful, family, and would give back the comission. All pluses. Its funny my dad does is a good realtor and goes the extra mile for his clients. But if I buy in Alberta I will just approach the listing agent. When I was looking in 2006 my agent in Calgary kept telling me to bid above asking price. The guy was a tool. During the same boom time frenzy I approached a listing agent and I could see the money sign in his eyes"doube comission" he told me he thought he could talk down his clients $20,000. Most times its… Read more »

Vansanity

#25 – Beauty article. I enjoyed that thoroughly. The recognition is nice, but the real reward is huge savings for all of us who've not bought into the hysteria. Viva la Crash! Re-Realtors: I'm pretty sure the RE Board loosened their rules a few years ago, where a realtor could now have another occupation and keep their license. Someone can correct me if I'm wrong. So, good news, you're potential future realtor may also be able to flip your burgers. "Would you like fries with that granite counter top?" realpaul – I agree with you to always negotiate hard. Negotiating is a large part of what I do for a living and I enjoy my work. I think some are a bit timid at negotiating and almost feel bad making "lowball" offers. My Father taught me similar lessons as yours,… Read more »

vancouverboom2
rubberduckie

I think that if the transaction costs were lower (commissions AND property purchase tax), it would make the market more liquid. And once it's more liquid, the cycles would not be as extreme. There could be modest waves instead of bankruptcy-causing bubbles.

Anonymous

"LL the waiters, customer service clerks, hotel cleaning staff, and used car salesmen buy in!"

Okay they've all bought in now, they all own $400,000 one bedrooms so now what???

I know a hairstylists with three!

anonymous

Yes, threads like this one and Daves are very relevent; although bears like to fantasize about total meltdown most are preparing for a bottom soon. Best to be prepared.

Paul

#41 – some really good points

I don't post much on this site and I don't know about the demographics of this blog but it seems to be over-populated with bears who just want to hear more of the same thing, which is that "prices will drop 70-80% and we can all be living in mansions on Point Grey Road soon." People don't contribute fresh ideas because any posting that requires more than a IQ of 90 gets swept under the rug or ripped apart rather than generate intelligent dialogue. There will be a bottom eventually in the real estate market, but it will be long before ALL the waiters, customer service clerks, hotel cleaning staff, and used car salesmen buy in!

condohype

After the Real Estate Board of Greater Vancouver called off its 2009 conference and trade show two weeks ago because of the downturn, the blogger-in-chief of Condohype wrote, "Too bad the party's cancelled because that activity sounds awesome. In my book, it's an invitation to show up in my 'The Blogger Was Right' T-shirt with my dogs Case and Shiller. I'm devastated this can't happen now."

The sarcasm is perhaps a little undignified, but you can hardly blame them for feeling satisfied. They diagnosed market madness. And, with varying degrees of insight and eloquence, they were correct.

[The Globe and Mail, December 22, 2008]

Ulsterman

ok, so i don't know how to use my href's as well as i thought.

Here's the link the simple way – for me anyway.

http://news.bbc.co.uk/2/hi/business/6172846.stm

Ulsterman

Let's look at a country similar to ours where they have much, much lower real estate commissions – the UK. If they can break this monopoly / oligopoly then so can we. Here are a few lines from an older article published at the height of the UK boom in 06. "Asda (a large UK supermarket chain) is charging 1% commission, compared with a national average of 1.5%." This wild and crazy supermarket also sells alcohol to reprobates buying their weekly groceries, but that's an argument for another blog. "Now they've gone with a "virtual" estate agent, Housenetwork Estates. The company offers many of the services of a traditional estate agent, but sellers have to show potential buyers around their property themselves. Because Housenetwork does not run a chain of expensive shops, it has cut costs. It charges £199 plus… Read more »

NO -LYMPICS

Unless mistaken any RE agent has

(i) errors and omission insurance (aka consumer protection

and

(ii)access to the MLS (list of potential supply)

Other than that….if you found a screaming RE deal on your own , either a lawyer or a notary would suffice to do the legal work, subject to a property inspection(highly adviseable)… and you can negotiate sans commission, correct ?

Anonymous

It's not just the bloggers talking now….

World faces "total" financial meltdown: Bank of Spain chief

markx

Just like newspaper classified ads is somewhat obsolete in this internet age, the traditional realtor is "somewhat" obsolete today. Besides the monopoly of MLS, I really don't see any other legal monopoly of the realtor association. For someone with a few weeks a training, I would think a lawyer's assistant would be more useful in negotiation, at least they know more about the law. Or maybe it's cheaper to have a RE lawyer on speed dial, and pay him/her by 20 minute segments during the transaction. My feeling is, realtors are not guaranteed to be more knowledgeable than the regular posters here. They certainly don't have a law degree! On traditional commission scheme, a realtor would get paid 15k for a two-bedroom condo transaction. (just estimate). That would translate to 50 hours of lawyer time, if you get billed at… Read more »

admin

Or another one titled: “I think the bailout is wrong and people should take responsibility for their actions” ? Bailouts would be a good topic, I thought this was an interesting comment from back in april: I don’t have a problem with salespeople and hype artists like Rennie and Good pumping up the market, but I’d like to hear them pledge that the free market should remain free in all circumstances. This means NO US style government bailout of overextended home buyers. When the market turns down and some people go through foreclosure or are struggling with higher rates on homes that are worth less than they owe we better not hear Bill Good complaining how tough thing are and how NOBODY saw this coming. I wish someone would have gotten some local luminaries to give their opinions about 'bailouts'… Read more »

domus

"I’m enjoying the post-peak discussions, for what it’s worth"

MrBear: you ain't seen nothing yet!

This RE crash is going down the history books….many more interesting discussions will follow, come Spring.

MrBear

Or how about a thread where we take a bunch of craigslist 'please buy my assignment' postings and try to figure out which ones are real and which ones are satirical? Maybe that's just too hard.

I'm enjoying the post-peak discussions, for what it's worth.

domus

True, we should not be repeating the same tantrum over and over: pope is right.

How about a new post then, titled: "Why people who mindless decided to buy RE in Vancouver in the past 2 years deserve to lose money" ?

Or another one titled: "I think the bailout is wrong and people should take responsibility for their actions" ?

blueskies

how about a posting on

"how-to fall onto your own sword" …gracefully

the bulls missed that chapter in their hubris manuals……

admin

Am I the only one to think that this topic is pointless

I'm not sure, I would assume that at least some readers of a real estate focused blog would be interested in some day buying real estate. I didn't see anywhere in the article that CZ said its now a good time to buy.

We all know that real estate prices in Vancouver are absurd, even after months of falling prices, but how many ways can you say that before it gets boring?

domus

Can you just use a lawyer to do paperwork? How much does it cost? Do you know anyone who did it? Any good lawyer?

I told you so

So from what I have read. A buyer's agent has two main tasks: To find the right house for the buyer and to help the buyer with all the paperwork.

I can see how the first one can be done by the buyer however, how complicated is the paperwork? Is it so complicated that it is worth paying 10k or more? Can anyone with experience using a buyer's agent go in to more detail as in what are risks involved, etc? If possible, I would like to know about both kinds of experience, good and bad.