Do you think that you should Beware Of Commissions That Are Too Low And Too High?
We're always looking for a deal. Deals are fantastic! I'm especially guilty of this. I drive three blocks to save 5 cents per litre of gas! I haggle for beer nuts with flea market vendors! I would rather take my car to a shop for an oil change rather than the dealer! This is normal human behaviour, and I'm sure none of us will change our daily routine of looking for the best deal.
The difference between looking for a deal with everyday purchases and looking for a deal when selling your home is this: The cheaper gas won't immobilize my car, the cheaper price on beer nuts doesn't affect the quality, and the dealer's expensive oil is no different than the shop's oil. With Real Estate, you get what you pay for - and the price of having a full-time professional realtor who invests his/her own time and money to give clients peace of mind and results is a DEAL in it self...
Be weary of Brokerages and Sales Representatives advertising 2.5% total commission. This statement is usually followed with an asterisk. This “total” represents the amount paid to the listing broker. Payment to the co-operating broker must still be taken into account. Therefore, those half-true advertisements should read: 2.5% to the Listing Broker and 2.5% to the Co-operating Broker, for a total of 5% commission.
Also, beware of the Discount Brokerages offering 3.5% total commission (1% for the Listing Broker and 2.5% for the Co-operating Broker). As discussed earlier, how effective is an agent going to be in terms of effort and marketing of your home when his/her commission is minimal. I know that if I were offering my services at 1%, I would consider leaving out open houses, newspaper advertisements, just-listed cards, and colour feature sheets.
The issue in Real Estate is this: The “best deal” is not always how much the service will cost. There are costs involved that are directly related to the work that is performed and the result that this work achieves. When dealing with your largest earthly asset (for most of us this is your home), the “best deal” is the deal that nets you the most amount of money for your home, in the least amount of time, with the fewest hassles. Generally, real estate commissions are between 5% and 6% for residential transactions. Start asking the questions of realtors offering to do it for more than 6% or less than 5%.
So, if you are thinking of selling and buying a homes this year, should you buy or sell first? I've had many clients purchase before they sell. I just want you to have all the information so you can make the best decision for yourself and your family. You may read more about buying or selling first here
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I wish you much success, good health and happiness today and always!
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