airbornesapper

Link to calculate land transfer tax...

http://www.ratehub.ca/land-transfer-tax

Aviator

The seller would pay no more commission, whether there is one or two realtors. If one realtor who acts for buyer and seller they get 100% of the commission, if there is an agent for each the buyer and seller, which is common place, then the commission is split between the realtors. I know of several agents who just collect listings and rely on other agents to bring buyers, the selling agent doing no more than putting the property on the MLS and a sign in the yard.

In our case there was only one agent involved who knew the people concerned and introduced us, for which he got 100% of the commission, no ads, no listing, very little work.

JonboyE

If a realtor can sell a house in a few hours I think they are worth a bonus. Isn't it about results, not effort?

Novocastrian

While I agree in principle, shouldn't the listing agent at least modify their fee if they didn't even list it?

An example: The house I bought in 1993 and still live in was brought to my attention by a friend (probably my best friend) who also lives in Richmond Hill. We were over on a proverbial "recce" and contacted the listing agent about the place. i.e. didn't bother with a buyer's agent.

She was decent enough to waive the buyer agent's 3% in order to close the deal. which wouldn't have happened if she hadn't done that, because the sellers had already reduced their price by over $100K, (1993 dollars), and couldn't manage with 3% less than I was prepared to pay.

I'd use her again. But she's dead now.

Just saying.

FlyingDutchman6666

I'm guessing property prices can go down as well as up, even in Canada.

Novocastrian

I'm sure you're right. But they haven't done so yet. I can't be arsed to check what a 1993 $ is worth today but the value of the house has increased by a factor of 3.5 to 4 in that time. My salary has only doubled.

Novocastrian

Oh sorry. I misunderstood. Yes, house prices dropped in Toronto in the very early '90s after a bubble between 1986 and 1989. We were lucky (as usual) to be in the right place at the right time.

FlyingDutchman6666

To you, it doesn't matter any more. But it does to the thousands of first-time buyers now, putting a mere 5% down. In many cases the downpayment is borrowed too, from the same bank. It's a good thing tax payers are guaranteeing these mortgages, so that's a relief !

Novocastrian

Cross post. I clarified.

FlyingDutchman6666

Yup, that sounds about right. The owner of company I worked for bought his first condo in 1989, it was supposed to be his first place after marriage. A few months after he had bought it, the market cratered, at some point he was losing 3% a month. He eventually sold a few years further down the line, at $100k loss (1993 dollars, probably).

25 years further on, he's teaching his kids to rent & save their money. I guess he was just unlucky...

Novocastrian

I guess.

Scribble

In UK, selling agent gets 2.5%, nothing goes to anyone else as there is no buying agent. Technically, the buyer pays nothing in Canada but if there was no buying agent then the overall commission wouldn't be as high as 5% probably.
Re: banks - it's just paperwork, it all gets checked over by the solicitor/notary doing the conveyancing in the UK.

I understand but it's not rocket science is it. I just don't believe that justifies a 2.5% commission when you can basically do all that work yourself by checking out a few houses, looking on listing sites, getting an inspection done if needed, and negotiating yourself.
Let's face it, if you buy a $300k house, the buying agent gets $7,500 (selling agent gets the other $7,500).
If they can save you that extra 7,500 in negotiation skills then fine but you could just as easily negotiate it down yourself and there's a certain conflict of interest there in that the buying agent doesn't want too low a price because it also reduces their commission.
Still, there are less people in Canada per sq metre so that may explain the high commission costs (supply demand).

JonboyE

Why not save a few more dollars and do the paperwork yourself? It can't be that hard. Maybe you can offer to do the seller's papaerwork too. Maybe negotiate a few more dollars off the price of the house?

You know, I don't think you do. It is an easy trap to fall into. You know how things work in the UK, therefore it can't be that hard to bluff your way in Canada. You might fall on your feet (and I hope you do) or you might end up getting shafted. Most likely you will end up paying too much for something that is not as good as you could have got.

Aviator

You clearly don't seem to understand how it works in Canada. Whether the commiion is justified or not is irrelavant, it is what it is.

The commission is negotiated by the seller when they enter into the listing agreement with the realtor, it may be 2% or 5%, whatever. When the property is sold, if there are two realtors they split the commission, if one, they get it all. The seller pays the same, any negotiation is done when entering into the listing agreement, not when making a sale. If the seller is desperate a realtor may cut their commission to help grease the wheels, but don't count on it.

I would not defend realtors as I believe what they charge is outrageous for what they do, hence the 'for sale by owner' concept is growing.

JonboyE

<puts aside a mountain of tax returns>

I’ve started a new post otherwise it would look like I am having a go at scribble. That is not the intention.

Now, I know that opining about stuff we know **** all about is the meat and drink of this forum. If we were only allowed to post things we actually understood there would have been four threads and sixteen posts since this site was founded. However, the bone headed arrogance of some people who see a large $ number and assume it’s a rip off, and they could do better themselves, really ****** me off.

I have lived here 14 years. I am used to reading and understanding complex legal documents. My clients are nearly all in the trade in one form or another, from realtors to property developers with real estate brokerages, real estate lawyers, general contractors and subs all in between. I am even licensed to buy and sell commercial real estate. If there is any layman in Canada who is able to buy and sell a home on their own it is me. Would I? Not on your ******* life. I value the advice of good people and think a good realtor is worth every dollar of their commission.

That said, some people do buy and sell without using a real estate agent. It can be done. And, if you know what you are doing it is not that difficult. I don’t think either party gets an optimal deal out of it but sometimes if each party gets a slightly sub-optimal deal it is a good deal. The key is knowing what you are doing.

A newbie, fresh of the boat, does not know what they are doing. It doesn’t matter how much they think they know, in truth they know virtually nothing. As a newbie, getting their heads around this concept is a key to their future happiness and prosperity. Three things a newbie does not know, but that a real estate agent does, are:

1 Local knowledge. Which areas are on the up and which are not. What the local schools are like, what the commute is like, which areas are good for families and which are good for young people, or old people. They know where the grow ops are. They know what the nearby land is zoned for so they know how the area will develop in the future. They know where the new sewerage plant will likely be built in a few years. They even know that, although this looks like a nice quiet street, three doors up they have a grown up child who gets in from work at 11.00 pm and sits in the back yard smoking and listening to loud music.

2 Price. The price a house sells for is private information in Canada. So how do you know if the price a house is listed at is a fair price? Are houses selling below or above listed prices? Both happen. The real estate agent has access to selling prices. They can help you formulate your negotiating strategy by showing you what similar homes have sold for recently and the likely selling price of your chosen target. You may think that you can get the best deal by starting with an “insulting” offer and work your way up until you reach the seller's bottom line. The most likely outcome of this strategy, except in the very weakest of markets, is that you will be told, politely, to **** off. You have to pitch your initial offer at a price that will make the seller think it is worth getting into a negotiation. Your real estate agent can tell you what this is. Also, what else do you offer: deposit (what? You offer deposit with an offer?) and subjects (what? Again.)

3 The contract. Just like the UK, a sale is not binding until a written contract is exchanged. The difference in Canada is that it doesn’t take months and is usually done in a few days. I bought one house that was done within five minutes of making the offer. The exchange of contracts is done before your lawyer sees them and all they can do is administer the mess you have got yourself into. A real estate agent is not a lawyer, and most of the contract they use comes pre-printed from the Real Estate Board, but they know how to draft your offer to protect your interests as best as possible, what to include and what not to include to make your offer more attractive than other buyers, and how to progress an accepted offer to a binding contract.

If you chose not to use a real estate agent you don’t get a reduction in price. I have yet to see a listing that says $300,000 or $295,000 if you are not working with a realtor. In practice what happens is the listing agent pockets both commissions. So, given that the services of a real estate agent are effectively free to the newbie, IMO only a ******* stupid newbie would not use one.

And one last thing, this conflict of interest thing is complete ******* and shows that whoever complains about it has no idea what they are talking about. It also suggests that their own avarice is clouding their judgement somewhat. A real estate agent does not get rich selling a house. They can make a living selling lots of houses. They can get rich (and some do) selling many, many houses over many numbers of years. You may not think they do much to earn their commission but they can only earn that if they have clients. They do work hard, very hard, to get clients. This is the tough part of their business. They work even harder not to loose them.

There is a concept in business of the lifetime value of a customer. For a real estate agent the value of a customer in not just the commission they will earn on one sale. It is also the commission they will earn when the customer comes back to ask them to handle their next move. It is also the commission they will earn from everyone the customer refers to them, and who they refer to them. Any one customer could be worth hundreds of thousands of dollars over a real estate agent’s career. Given that they will trouser about $10 for every $1,000 you spend does anyone seriously think they will try to trick you into paying $10,000 too much just so they can earn an extra $100 and forfeit your value as a customer?

<gets back to tax return.>