Does the Buyer Pay the Real Estate Agent's Fee?

Q - I'm ready to buy a home. Do I have to pay the real estate agent? 

A - In most instances, the buyer's real estate agent gets paid from the proceeds of the transaction.

The listing agent's Brokerage has a listing contract with the seller that specifies the dollar amount or percentage of the selling price that will be paid to the brokerage upon completion of the transaction.  Out of that, the contract stipulates the dollar amount or percentage of the selling price that will be shared with the selling real estate agent's Brokerage.

The respective agents also have agreements with their Brokerages as to what percentage they will receive for their services.  These fee agreements vary within a real estate company and among real estate companies.

So, if the home is on the multiple listing service, you are not likely to have to pay anything extra as your agent will be paid out of the transaction.

There are, however, situations where the buyer pays the agent either in part or the full fee. These are situations where a contract is drawn up between the selling agent's brokerage and you.

Do Open Houses Sell Homes?

Q - Do Open Houses really sell homes?  My real estate agent suggested doing an Open House. 

A - For the past 8 years, the Victoria Real Estate Board in BC, Canada, has been surveying how buyers find the homes they have purchased.  Throughout all the years, Open Houses have accounted for about 2%.  So how do buyers find their homes?  The majority find their homes through their real estate agent, next are internet sites -  the major one being Realtor.ca, and thirdly, the real estate lawn sign.  Open Houses are at the bottom of the list with classified ads.

It is very important to be aware of this since Open Houses pose a risk in terms of the security of the owner's possessions and the safety of the real estate agent.  We no longer pick up strangers in our cars but we continue to allow strangers to wander through our homes during an Open House.  

There really isn't much of a chance of selling your home through an Open House.  When asked, most real estate agents admit this fact.  So why do real estate agents do Open Houses?  It is an opportunity to meet new buyers, who might be turned into clients, and it ensures the seller that the agent is working on selling the home.

There are some exceptions.  When a builder is developing a project and establishes a show suite in which Open Houses take place, these Open Houses provide an opportunity for potential buyers of new construction to be able to preview designs and quality inherent in the project.

Large franchise or local real estate firm?

Q - Should I list my home with a large real estate franchise or a smaller local real estate firm?

A - This is a frequent question.  Large franchises do a great deal of advertising promoting themselves.  The consumer often sees this in a positive light and presumes that such a firm will provide a substantial marketing program for their clients. That may or may not be so.  

Real estate agents are independent contractors and are considered self-employed.  It is the real estate agent, not the real estate firm, who plans and pays for all the advertising and marketing of your property.  So discuss the marketing of your property with agents of your choice regardless of the size of the firm.

Franchises often indicate that, because of their size and their many locations, they are more likely to have referrals for new buyers from their offices across the country.  This can also be said of smaller companies because they network with other companies across the country.

Speak to 2 or 3 real estate agents from different companies and find out first hand what kind of marketing they will do for you.  Make a list of question beforehand to be sure you cover all your questions.  This will help you make the right decision.