You may want to read the previous chapter on the purpose of your new home here.
A qualified Realtor® can be a great boon to your home purchase. This holds just as true for home buyers as for home sellers – everyone can benefit from expert advice. As a buyer, you might know very little about the area to which you are moving. Existing homeowners may have an idea about the real estate market in their neighbourhood, having lived there for a while, but buyers moving a new location won’t know the local ins and outs. That’s why a skilled Realtor® with expertise in a specific area or pocket will be a great help – especially if she or he is honest with you.
Photo by Alan Cleaver
First-time buyers should consider retaining the services of an exclusive buyer’s agent. Such an agent is duty-bound to act in the best interest of the buyer and there is no conflict of interest between representing you and serving the seller. (We talk about the agent trust issues in greater detail in our seller’s guide.) Your agent will help you find homes that match your criteria and can even pre-screen the myriad possibilities in the area, saving you time and legwork. Be sure to ask your agent whether they have experience with houses in your price range and in your target location.
A well-connected and established agent will be able to access market information, statistics and resources that are not available to the general public. He or she can use this information to provide you with a sampling of homes comparable to yours in the area (‘comps’), and even an accurate valuation of your own place when you are selling – based on your home’s unique features and the current market conditions. When buying, your agent should be able to understand your needs well and translate them correctly into a useful comparison filter.
Toronto MLS Database
Sellers usually have real estate agents advertise their homes on the multiple listings service (MLS). This database is normally exclusive to real estate professionals; the public side of the website, Realtor.ca, only reveals basic information about listed homes. If you want to see the nitty-gritty details of any given listing, including how long it’s been on the market and whether any bids have been placed, you must ask your Realtor® to send you their special version of the listing. An agent can retrieve homes freshly entered into the MLS or search archived homes for previous selling prices.
Even though you will seldom be able to decide on your new home just from seeing its web listing, it is a convenient way to get a good overview of the available houses out there, from the comfort of your own computer! By examining a wide selection of homes currently for sale, you may well find significant differences between what’s out there (in terms of renovations, modern updates, etc.) and what is standard in your old place. This will help you adjust your expectations, if necessary.
Make sure you make good use of the MLS listings your agent sends you: take notes of what you find interesting and ask questions. Browsing MLS listings selected by your Realtor® may save you a lot of time and effort, and will let you choose specifically which homes you want to spend extra time investigating.
Photo by Intiaz Rahim
Agent Fees and Commission
When buying a home, signing with a real estate agent should not cost you anything up front. Your agent’s commissions are embedded in the house’s purchase price as a percentage of the sale. Each agent may have a slightly different commission rate; this rate should be clearly stated in the Buyer Representation Agreement that you sign, and be agreed upon by all parties.
Home sellers know how this mechanism works, so they factor both commissions into their asking price: a percentage for their agent and a percentage for yours. In the end, both parties’ agents effectively split the commission between them according to their own arrangement.
The Advantages of Working With a Real Estate Agent
If you are looking for a new home, you should cooperate closely with your agent and avoid seeking ‘deals’ or examining houses on your own. When you are driving by an interesting house for sale, it is not recommended that you call the number on the sign and engage in any negotiations then and there – as enticing as the home may look from the outside! Apart from the inherent dangers of this approach, you are probably wasting your time anyway. You might end up looking at numerous houses which simply do not meet your criteria or price range, which is probably why your agent hasn’t mentioned them to you in the first place. On top of that, if sellers think you are on your own (unrepresented), they will become more aggressive during negotiations.
Don’t hesitate to contact your agent first and ask her or him about that particular house; they will need the address to identify the house and its selling agent. An experienced agent will know instantly why they have not mentioned the property to you. If indeed this is a house that simply slipped off your agent’s radar, she or he can escort you there and arrange a tour when the owners are out.
Photo by Allan Foster
For Sale by Owner?
Some sellers do the FSBO (for sale by owner) thing, which means that they attempt to sell their property by themselves, without a professional representative. This route has become increasingly popular with the emergence of DIY websites that provide basic information and materials to sellers in exchange for a nominal fee. It is also a more popular route to take during a seller’s market, when bidding wars are common and it seems like just about any home will sell over the asking price.
In most cases, however, working on his or her own significantly limits the seller’s access to advertising channels and, in turn, to qualified buyers. Most FSBO offers are only posted online or in newspapers. FSBO sellers are in general less sophisticated and seldom completely ready for the entire procedure. They (or you) may end up having to hire professionals to assess the house and/or write the sale agreement. The cost of that may offset even a potentially better deal – which probably won’t be forthcoming, because most buyers have agents to represent them and won’t offer anything over market value. Especially if you are a first-time buyer (or seller), we do not recommend navigating the often-perilous real estate market without a professional behind you. Should you ever decide to shop on your own, be sure to at least hire a real estate lawyer to review your Agreement of Purchase and Sale. Your lawyer will help you avoid such pitfalls as restrictive conditions, title issues and warranty concerns, from contract to closing.
Now that you know more about the importance of being represented by a Realtor®, learn how to look for a home in Toronto.
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