When you are searching for your next home, or even an investment property, you will almost always want to use a Realtor for a variety of reasons.  You want them to help you research the market value to make sure you are making an offer that isn’t too high, to research and obtain documents that are necessary for your purchase such as the title and strata documents, and to cast an experienced eye over an investment that is probably the biggest one of your life.  And, best of all, it’s free!  Right?

Unfortunately, even with a Realtor (and, in fact, because you have a Realtor) three problems surface.

  • Your Realtor is paid by the real estate brokerage of the seller.  They pay the Buyer’s (your) Realtor roughly half of the commission on the sale.  Although commissions vary, in most cases it’s pretty well the same, 7% on the first $100K and 2.5% on the balance.  Some Sellers though choose to use discount brokerages, which offer less commission.  Realtors are always supposed to hold the interests of a client above their own but there is a huge temptation for your Realtor to only show you the listings that generate the best commissions for themselves.  I collect a flat fee of .5% plus a $700 admin fee, refunding to you the balance earned from a typical commission.  Therefore I have no incentive whatsoever to hide (or to denigrate unfairly) properties that might earn a smaller commission.  You get to see it all!

2.  If you select a property that you want to make an offer on, and it offers your realtor less than the typical commission he is used to, he will often put a clause into your offer that forces the seller to pay him extra commission.  The trouble is, that’s coming out of your pocket!  For example:  Bill and Jean look at the market value of their house, figure out what they need to get out of the sale, add all the expenses they will have (including commissions) and come up with a bottom line.  Let’s say that is $950K and they list it at $985K, using a discount brokerage.  Sally, the Buyer, likes the house and she goes through a series of offers and counter-offers until she hits their bottom line – $950K.  Great, that should do the trick.  However, her Realtor has put a clause in her offer requiring the seller to pay him an extra 10K in commission.  Now your offer isn’t worth $950K to Bill and Jean, it’s worth $940K.  Now Bill and Jean can’t go below $960K in order to get their minimum price while paying your Realtor.  So who paid Sally’s (the Buyer’s) Realtor’s commission?  She did.

It is almost impossible for the commission offered to the Buyer’s realtor to be less than my minimum fee.  So, with me, you will never miss out on a home you really want (or pay more than you have to) because of a greedy realtor.

  • The biggest myth in Real Estate is that using a Realtor to buy a home is free for the Buyer.  It’s like that free whistle in your box of Cheerios.  Do you really think it’s free?  Of course you don’t.  You know it’s been costed in with all the other items that go to make up the product’s total net cost and then the end product is marked up to it’s selling price.  It’s no different with Real Estate.  In the example above Bill and Jean built into their asking price all of their expenses.  But, as an agent with One Percent Realty, if I am willing to sell a house for 1% and get .5% for myself and .5% for the Buyer’s agent, why would I want more when I am the Buyer’s agent?  So, if Bill and Jean are using the vast majority of Realtors today, you would end up getting back thousands in commissions.

Stop paying huge Realtor commissions when you buy a home.  You could save enough to pay for a renovation of your new kitchen.  And that really would be free!