Sheldon was interviewed today and will be on Global TV Edmonton News tonight at 6pm.
You can watch the video here: http://www.globaltv.com/globaltv/edmonton/video/index.html?releasePID=tRWWXniPKEQv3v_2vgsoBxaumlmcINEd
Can anyone tell me the code I would need to embed that video here?
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The Edmonton Real Estate Blog is written by Sheldon Johnston and Sara MacLennan of Coldwell Banker Johnston real estate; both are licensed real estate associates in the Province of Alberta.
Aside from blogging, Sheldon manages the brokerage and assists clients buying and selling real estate in the Edmonton area, while Sara focuses on marketing and business development. If you're thinking of buying or selling real estate, or if you're interested in a career with one of Edmonton's most successful teams, contact them at blog@teamjohnston.com.
The opinions contained herein are those of the authors and are just that - their opinions. For legal information, consult a lawyer. For mortgage information consult a mortgage professional. For tax information consult an accountant. This information is not intended to solicit clients already under contract.
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Johnston Real Estate
Good job.
I recommend using a realtor anytime you decide to purchase off a builder or developer,unless you know the industry inside and out.
Even still, a realtor is your best bet not only to review the contract, but to negotiate a good deal based on comparables in the market.
No offence, but I prefer a professional such as a lawyer to review my contracts, and one that I employ and not provided by the builder. Having my realtor who’s background is more then likely not in real estate law, seems like a very poor choice.
Another, possibly better, option would be to have a lawyer review the contract. Depending on when the units were bought I don’t know if a lawyer or Realtor would have helped if the buyer thought he was getting a good deal at the time. Really they are no different then many buyers since May, 2007…most have lost equity/money the only difference here is these people haven’t taken possession yet.
I mean suppose the contract was reviewed by a Realtor and/or a Lawyer 2 years ago…you know from EREB updates at the time that the Realtors thought the market was going to continue to skyrocket (“It’s not a bubble”, “buy now or be priced out”) the Lawyer would make sure the contract was mutually binding for product the buyer wanted at the price agreed upon (two years ago you’ll recall it was the builders backing out of contracts to sell their inventory for no money).
Depending on the homebuilder, you’re likely going to get a better deal, price wise if you don’t use a realtor. Remember, the builder is paying 2 commissions then. One to the sales associate and one to the realtor. Do your homework and you’ll find the builder will have more room to negotiate. If you’re not going to do your homework and figure out what a fair price is, then use a realtor that sells a lot in the area you want to buy in because a good realtor, familiar with the area, will know the market best. If you go the do it yourself route, then I agree with others that say get a lawyer to review the contract. They don’t charge all that much to simply review a standard sales agreement.
For a used home…I wouldn’t buy squat unless I used a realtor.
Itchy,
If the builder is one of the 32 builders that are part of a Cooperative agreement with the REALTOR Association of Edmonton then you are guaranteed not to pay more by using a REALTOR. In some cases if they are not a part of that program, that might be negotiated or in some cases my clients have said they will pay our fee to represent them. In many cases some Agents may prefer not to deal with certain builders because of issues they’ve had in the past. I know there are certain builders that no matter how much they pay I don’t want to be involved with.
In the case of Sabb where you have a sophisticated person representing themselves and are aware of the issues involed in a presale then having the lawyer look over the paperwork maybe sufficient, but many times the devils not just in the details of the agreement but the details of the negotiations. Someone like Sabb may catch all the subtleties but for those that are less sophisticated I would recommend they have REALTOR representation as well. Many of my investor clients are extremely sophisticated and acknowledge what someone like me can bring to the table for them. However the presale situation calls for the right REALTOR (not just any REALTOR).
That’s why I said “depending on the builder”. First of all, there is no industry standard on what realtors are paid by new home builders…some are paid half commissions, some are full, and some are flat fee. Also I know that some sales associates get their commissions reduced if it’s a realtor deal and some don’t….again depending on the builder. I disagree on the point about guaranteed not to pay more if it’s a realtor deal though. If it’s full list price then I would agree with you. If it’s not full list price, how do you know? You make an offer and it’s accepted or countered. Especially in todays market when builders are taking offers and negotiating, in many instances, very close to, or at their bottom line. Let’s say a house is listed at 400,000 and the builder, after all his caculations, (cost to build/cost of lot/interest/etc.), comes out to a bottom line of 360,000. If the builder pays a realtor 10,000 and the sales associate 5000 on the sale (and I only use these figures because the’re nice and round) then his bottom line is now 375,000, as opposed to only having to pay the sales associate 5000…then his bottom line would be 365,000.
Obviously this doesn’t mean nobody should be using a realtor if buying a new home. It goes to your point of sophistication and knowledge of the particular market your shopping in. If you’re not willing to do the digging and taking the responsibility then a good realtor with local knowledge is priceless and will probably end up saving you money in the end anyways. I guess the bottom line is, there is more room to negotiate a lower price without a realtor/but if you don’t know at what price to start the negotiations, you might end up screwing yourself.
Edmonton SFH resales prices UP 3% so far this month:
http://www.bobtruman.com/Edmonton_SFH_stats/page_1918017.html
Sheldon,
Can you point me to a list of bulders that are a part of the Cooperative agreement you mentioned?
Thanks.
Hard to tell since he now uses a rolling 30-day calculation.
Good to see you on the news Sheldon. A note of appreciation that I want people to hear. We’re always quick to complain, but when praise is in order, don’t always state it.
I have been searching for a while now to get a good realtor to help me purchase my first home. Whenever I called a larger firm, they assured me I’ll get their top realtor, but at the time of the meeting, they send me some new hire.
I was so frustrated and assumed it would be the case when I contacted Sheldon and Sara. Just yesterday at supper time, out of the blue, I chatted with Sara on their website chat, and with no fuss or difficulty, they agreed Sheldon would see me THIS SATURDAY and help me with my search. That’s it, that easy! Without any prior relationship or anything. Even though it is clear Sheldon has a lot on his plate, they didn’t even attempt to pass me off! And I don’t even have a huge budget.
Thanks Guys, really looking forward to working with you.
Just a happy customer who wants to share in case others have encountered the same thing.
Jason
Jason:
That’s great – glad it worked out for you. Would you not consider working with a newer hire even if you know they’ve been trained well? Do you think performance of a newer hire will differ significantly from a veteran in terms of buying a new home?
Mona,
Yes for an investment this big, I would definitely only use a very experienced realtor. I held out until I found one. Though a realtor with 2-3 years experience might be quite competent, you just can’t compare what they can do for you in terms of negotiating, finding properties with great potential, etc what someone with 20 years experience like Sheldon can do for you. It’s definitely worth finding someone with many years under the belt when you are investing half a million dollars!!!
I forgot to say that every agency I called assured me that the less experienced agents were top performers, loved by their customers, etc. They could be right, but what else are they going to say, it’s still their agency at the end of the day. So I would take that witha grain of salt.
I actually use differing strategies for buying and listing.
If I have to use a Realtor to buy a house I typically find the house(s) I want and approach the listing Realtor. Why? Because when the listing Realtor sells their own listing they get double the commission, so assume they have more incentive to make it happen (After all, like me, they work to make money). This of course assumes that you know the market well enough that you are confident selecting a property and a price on your own. I read an interesting U of T study that looked at multiple bid situations in Real Estate and determined that where the listing Realtor represented both a buyer and seller his buyer was successful twice as often. Note I am not saying things should work this way but they do, as real estate commissions are often in the tens of thousands you can see how the prospect of doubling that would be an incentive the listing agent-not to mention the listing agent presents the offers to the homeowner.
In selling a house I cite a U of Chicago study that showed Realtors houses usually stay on the market longer than their customers houses but sell for 4% more. The point of the study is that a 5% commission on 380,000 versus 400,000 isn’t incentive enough to the Realtor to hold out for a higher price. So I interview them first on the price they think I should ask. I’ll add last time there was an 80K spread from highest to lowest in my “market evaluations”, so know that the low guy might want a quick sale, the high guy wants the listing so may be creating false expectations. Really it’s up to us to know what our homes are worth as a “market evaluation” is sometimes more about the company trying to get the listing then it is an objective look at what the house is worth, a independent appraiser is a good bet if you are in doubt. After I find someone I am confident with on a pricing point I go into how the home will be marketed (ie ads outside the mls, frequency of open houses) and commission. While Realtors sometimes try to negotiate higher commissions say on the first 100K and lower ones on anything above I always ask for the opposite and try and pay a higher % the closer they get to listing price (I figure if they told me they were confident in the price they proposed this would be acceptable).
What I’ve found is a really mixed bag out there, some great Realtors and some really, really bad ones. Usually experience wasn’t a great predictor of who would be which. I’ll admit I am a demanding customer as well, but for 10-20K I feel it’s my right.
The last one I listed was early 2007 and I just went to Macs and got a FSBO sign and got more then any Realtor quoted me, but in fairness the market went steeply up from Jan-May 2007 so it might be just that the house went up as I was contemplating the sale.
Really I think the current semi-monopoly of self regulating RE boards is a concept we will se evolve over the next few years. Though I’d love to see a “How to find the Right Realtor” article.
Hands down a realtor with experience. Approach smaller firms and insist you work with whomever you wish. You are the customer, and the kind of investment you are making for the next 25 or so years is worth being pushy if you ask me. You can’t tell me someone whose been in the business for 3 years is as competent as somone whose been in it for 20. Of course with that experience must come dedication.
We had the same experience as Jason, except we were the sellers. We lost thousands of dollars piddling around with a new hire agent first who did a terrible job of marketing and gave us terrible advice on pricing in a declining market. Sheldon and Sara came in and sold our place in 3 days. There were extremely professional and honest and Sheldon was able to negotiate a great deal for us. (Sara is a class one photographer and her marketing strategies are second to none!).
I’ve had both positive and negative experiences with Realtors.. Back in late 07 during the multiple offer craze, I offered 287K for a decent Northeast bungalow through the listing Realtor. The seller just happened to be “out of town” and couldn’t review my offer until a few days later. The seller accepted an offer for 290K, but the selling realtor was an associate of the listing realtor also with the same brokerage. It was totally legal what they pulled and also a great strategy to suck more commission out of the buyer. Whether you’re buying a sofa, car, truck, or home in Edmonton, the rule of thumb is buyer beware. Sheldon and Sarah may be above board, but at the end of the day, it’s the commission that puts the bread and butter on the table. Any person involved in a profession that is 100% commission based, such as real estate agents in Canada, are concerned with one thing, which is making a sale at maximum commission. That is Human Nature 101.
Jason, can you tell me how the new realtors get their experience if no one wants to hire them? I know experience is a great asset, but I am certain some new young realtors can play the game quite well.
Sidney Crosby, Patrick Kane, Jonathan Toews, Patrick Sharp, Sam Gagner are hockey superstars and as far as I know, they do not have more than 5 years experience in the NHL… I assume the same phenomena is true for realtors. I also assume there are dinosaurs with tons of experience, but that are not up to date with technologies, markets, economic situation, etc…
Sheldon as a lot of experience and I am confident his new trainees are quite as good as he is if he provides a solid training.
AMEN
Sheldon and Sara,
Are there any regulations within EREB that prevent realtors from having for sale signs in front of houses but not entering them in the mls system? We have noticed 3 properties doing this over the past 2 months in the neighbourhood we are looking at. One agent put the property back on the market just so we could see it with our agent and then took if off again the next day. And judging by the listing history they have done this over 15 times in the last year.
Cheers
That list can be found here from a previous article we did on our blog.
http://edmontonrealestateblog.com/2007/07/have-you-ever-b.html
I’m not sure if that’s the most current list or not.
Mona,
Time in does not equate to competency, and should just be part of the criteria used in selecting your REALTOR.
Carllecat,
It takes a long time for my new trainees to get up to speed on little things. To this day I still have very experienced people call me for advice from time to time. My point is not to use someone for something very specific like buying an investment property that has no experience in the area. I’m not saying don’t use anyone new in the business.
Realist,
From my perspective if I take care of my clients and I give them the right advice and they know that there is no pressure to do anything and they can trust in what I say then the money takes care of itself. People are going to buy and sell no matter what. Many of those people are going to want some who works for them, works hard for them and knows what they are doing. As an aside many buyers and sellers who I’ve worked with who never bought or sold with me, and decided to use someone else have sent me alot of referrals. I guess that means in the end they did recognize what I had to offer them.
So for me your Human Nature 101 needs to be re written
Itchy,
All I can tell you is that it is all over the map in terms of how builders will compensate a REALTOR. Generally the bigger they are the more they recognize the value of the industry and list most of their product on MLS. Jayman and Sterling homes come to mind. However, I think people should consider talking to a REALTOR to see what they bring to the table in that regards. Many like me will pass on working with the builders. Too many headaches and too much potential for problems.
Ryan Ellis, who did the interview was quite surprised when I illustrated that someone who is banned from having a license to trade in real estate, can in fact work for a builder as a salesperson in their showhomes, and it happens.
No. The listing can be exclusive to that brokerage. However the Real Estate Act prohibits advertising a property that a broker has no authority to advertise.
Each time they take the listing off the market and put it back on it costs them $100.00 so I’m not sure its a marketing ploy. There are several options you have but you should discuss this with your REALTOR.
Sheldon,
I get your point, and I reiterate the fact that an experienced realtor does not always mean a successful one. New trainees will become good realtors if they get the appropriate training and supervision.
I agree, but I wasn’t talking about who is successful. Success can be measured many ways. I was simply talking about a specific type of transaction that requires certain skill sets and knowledge.
Realist, it sounds like in your case there may have simply been a higher offer and things worked as they should. By selling to you the realtor would’ve made the full commission for the house, as opposed to half as he/she did when a selling realtor was involved (depending on the commission that was negotiated, but I am describing a typical scenario). Also, assuming a 3% commission, the dif. in commission between the two prices is negligible ($90.00). In my experience the listing Realtor typically gives me an idea as to what an acceptable bid would be as he/she is privy to all offers as well as the homeowners expectations. Another factor would be the conditions attached to the offer, I have seen sellers take slightly less money in favour of an unconditional offer.
The only scenario I can think of beyond the seller simply accepting a higher offer is that he was doing a favour for the selling realtor in waiting for his offer, which shouldn’t happen but as we’re all just human likely does from time to time.