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.
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.
December 24th, 2008 at 11:08 am
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 are many, many other conscientious and honest realtors who work on behalf of Buyers including 1st time buyers out there. I offer to my clients over 20 years of real estate related experience and knowledge accumulated from working as a banker (commercial & residential mortgages), real estate appraiser and as a realtor. Also, managing and building my own home helps too.
I don’t mind you stating that you rather not use a Buyer’s agent but to slag or call realtors (in the general sense) dishonest, untrustworthy etc. is too much. If you think you can do on your own kudos to you but in my experience, the ones I met with same opinion as you oftentimes don’t know as much as may think.
December 23rd, 2008 at 12:05 pm
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 right number based on rent (1800 – 2200 per month for a newer condo) providing a 3.5 – 5% cap rate.
December 23rd, 2008 at 1:58 am
“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, banking cash before I have to consider whether to use an agent or not.
December 23rd, 2008 at 1:07 am
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 better to get an agent but in extreme situations which are probably over now it sometimes pays to do this strategy.