Quick question

We are coming house hunting in Toronto in September, is it correct we will need to sign a contract with just one realtor or not?

Rob

If you are the buyer, you don't have to sign a contract with any realtor at all.

If you end up buying a house, the realtor who showed you around the house will split the commission with the vendor's (seller's) realtor. The commission that goes to the realtors will be paid by the vendor, not by you, the buyer.

Although a few (very few) vendors give realtors exclusive listings, by far the majority of vendors give their realtors multiple listings. That means that the realtor publishes the property with the Multiple Listings Service. All realtors in the area who belong to the MLS, which essentially is all realtors, then have access to information about that house and are allowed to make arrangements to show that house to their clients. If one of those clients ends up buying the house, the realtor who showed them the house will split the commission with the listing realtor (the vendor's realtor).

In recent years some people have been paying a realtor a fee to advise them during the house hunting and buying process. The rationale is that, since the buyer's realtor ordinarily receives his/her commission from the vendor, the buyer's realtor (under the normal arrangements) cannot be truly objective. He/she is not motivated to look after the buyer's interests, since, at the end of the day, it is not the buyer who is paying him/her. So some people feel that they can be more confident of finding just the right house at just the right price if the person who is working with them is more motivated to look after their interests, which they feel is the case if they are paying that person.

We have never paid realtors when we've bought houses. On the other hand, we've done quite a bit of homework ourselves and have made ourselves familiar with the market into which we were moving before we bought anything.

The other precaution that helps is to make the Offer to Purchase subject to a satisfactory inspection by a building inspector. In fact I think it's plain crazy to buy a house without including this step.

The other thing that I believe is that, once a realtor has shown you several houses, the decent thing to do is to buy a house through him/her. A realtor may show a given person a dozen houses and that person may end up buying a house through another realtor altogether. In that case, the realtor who has invested a substantial amount of time in that prospective buyer ends up being left in the cold. Although you legally are within your rights to do that, I don't think it's the decent thing to do.

How could you inadvertently leave your realtor (the one who already has shown you several houses) out in the cold? You could pop into an open house one Sunday afternoon, start chatting with the realtor who is holding the open house, and end up buying the house through him/her without getting "your" realtor involved. Alternatively, you could be driving down the street, see a For Sale sign, and phone the realtor whose name and number is display on the sign. Again, you may end up buying the house through that realtor, without any involvement by "your" realtor.

If you find yourself in any of those situations, the right thing to do, in my opinion, is to phone "your" realtor, and say, "I've seen a house that intrigues me at 1524 Third Avenue. Can you arrange for me to see it?"

I've never lived in the UK but, from what I've seen on this forum, Canadian realtors work harder for their money than UK real estate salespeople do. In Canada it is customary for the realtor, and not the property owner, to show the prospective buyer around the house. In fact, the owners are encouraged to absent themselves during the showing.

[QUOTE=Judy in Calgary;5121600]If you are the buyer, you don't have to sign a contract with any realtor at all.

In Calgary they are bringing in that you do have to sign a contract with a realtor before they show you a house. This came in in January 2007 and then the Calgary real estate board decided that it should become compulsory in October 2007.

Some realtors will make you sign up for a year, but it can be just for one day, so my advice as a realtor is as you have to sign the contract to see the house, make sure it is for a short time. You may not like the realtor and decide to get another one!!

And as Judy said in the above post, you do not need to pay a realtor, if they want you to put down a deposit for their advice, or to make sure that you do buy through them, then just get your self another realtor, with a large choice there are plenty who do not charge at all.

Here in Manitoba you do not have to sign a contact to get 'BUYER AGENCY" .

But many agents will try and get you to sign a Buyer Agency Agreement so that they can tie you into buying through them and at their preferred commission rate. You may have to "top-up" their commission if that offered on the house you buy is less than that you have agreed on.

There is nothing wrong with this provided both sides are happy with the arrangement.

I personally don't like it, and I don't use them, my view is, a) if you don't like me its best we part early, and b) if i can't negotiate an adequate commission from a deal (normally only necessary when I am helping someone buy a house that is "for sale by owner" and no commission is offered) then I'm not much use as a negotiator, and need to find a different profession.

If you get good service from a Realtor, make sure you buy your house through them, if not find one who is of use to you.

Thanks for the update, Helen. I didn't know about that.

Anyone who pays somebody trying to sell them something has to be a total muppet!

The agent is making (in Quebec anyway) 7%..... that's right, 7%.... from the seller. I sold my place in Scotland for 0.75% commission.

I was in Montreal recently on a recce, and had one agent trying to get me to commit to him (nothing in writing). I told him flat, I would talk to the agent listing the property, period.

Never, ever, agree to pay for him to sell you a house. 7% from the seller is more than enough reward for taking you to see the place.

PLUS... the service I have had from them so far is at best dismal.... a week to answer a simple e-mail (all three!).

This could explain why there are properties on mls.ca that have been hanging around for well over a year. One I saw in Montreal has been up since 2005! And the dozy owner didn't have the gumption to change agents!! Dumb or what!

Surely this is what everyone else on here is saying not to do?

If you buy through a realtor, you're "paying" either way - don't you think the seller reckons commission into their price? We did You, the buyer, is paying that.

They split their commission with the buyer's agent, and quite often it's <high-ish percent> on the first 100k, then a much smaller percent above that, or whatever.

Have you read about dual agency? I'd avoid it.

I just bought one that's been up for almost 2yrs, 3 agents inc. FSBO in that time as far as I know. It sold when the price dropped to a realistic level for the market here. I don't know that changing agent is always the answer, accepting that you're not going to get what you want for it, is.

I don't know Steve, it's the first post I've looked at about EAs. Why not, exactly? PS... the point of my post is to discourage people from being hoodwinked into paying an EA to show them a house.

Sellers take advice on price from the EA. They are supposed to be the experts. If the EA says ask X, and you decide to ask X-y, then you will kick yourself forever wondering if you could have got more.

I don't think anyone's disagreeing with you about paying an agent to show you a house, that's not right at all. However, the general and consistent advice on this forum and elsewhere is to get yourself a "buyer's agent" rather than going direct to the seller's agent. The debate has been whether you need to enter into a formal written contract with your agent before viewing properties.

The seller's agent is, by definition, contracted to represent the best interests of the seller. The buyer's agent is trying to get the right deal for you, who have retained their services. You don't pay the buyer's agent - he or she will split the commission with the seller's agent. Some will insist on signing paperwork before showing properties; some won't. You may choose to avoid those agents who want you to sign an agreement with them up-front.

This seems to be a perfectly sensible solution to the conflict-of-interest problem that has gone such a long way to give UK estate agents a poor reputation for honesty. It's advice I'm glad we took when we were looking to buy this time last year.

No, you certainly do not have to pay a realtor when you purchase, unless you choose to do so and sign a buyer's agency contract. The commission the seller pays is split between listing and seller agent and their respective brokerages.

Where I strongly disagree with you is buying through the listing broker. That's fine but not advisable. Get your own agent to represent YOU, so there's no conflict and you can be sure the agent is acting for you and not the seller.

Oak, Star

Understood. However, the "buyers agent" is as committed to achieving a high price as the sellers. It's a split commission.

I have dealt with an agent acting on my behalf. Acting is the operative word. He was telling me all sorts of twaddle to try and get me to buy a house that anyone with half a brain and an internet connection could see was way overpriced.

Best bet? Deal directly with the sellers agent and play hardball. That's a good thing about Canada... if you lose this beautiful house, there are thousands more!

You've lost me there. Who said to sell for less than a realtor recommends?

Sorry, I have to make this clear. Fellas, they are ESTATE AGENTS!! They make their living selling houses. The higher the price, the higher their income. Do you seriously believe that a "sellers" EA is going to talk the price down??? It's the most obvious conflict of interest ever! Do it yourself, or get a lawyer. Don't hire another EA... it's like asking wolves to babysit lambs!