How to pick a realtor and best avoid pitfalls like double-ended deals
Double-ended real estate deals aren't the only dangerous menace lurking in the murky waters of Canada's red hot real estate markets. Because even when realtors are only working one side of the sale, it can be hard for a buyer or a seller to know if they've found the right person to really look out for them.
While researching Marketplace's recent report on double-ended deals in Canada's housing market, we asked a few real estate experts for their best tips on what to ask a realtor before signing up in the first place. Here's what they told us.
Do your homework
"Think about what you've got to do to get a job today," former TREB president Stephen Moranis says. You'd need to fill out an application, attach a resume, offer some references, and if you're lucky go meet in person for at least one round of interviews. "I'm not saying you necessarily have to be that crazy, but I don't think consumers take enough time interviewing an agent both for if they're a seller or if they're a buyer."
Moranis advises interviewing two or three realtors before settling on one. And sometimes, going with your gut is the best policy. "At the end of the day, I think your most important element is sort of the subjective stuff," Moranis says. "Are you comfortable with this person? Can you relate with them? Can you communicate with them? Are they on the same wavelength with you?"
Learn their history
That's not to suggest that harder questions don't matter, too. In particular, business professor Cynthia Holmes at Ryerson University in Toronto says she thinks experience with your specific neighbourhood — and the type of property you're looking to buy or sell — is key.
"Make sure that agent has experience in your location and with houses that are similar to yours," she says. "Because market knowledge is very important, and market knowledge is related to location in large part."
She advises asking a prospective realtor specifically about local factors. "I would ask the agent what their experience is in the neighbourhood and how many sales have they already achieved there," she says. "How many listings do they currently have?"
Moranis says there are reams of data related to real estate transactions, all of which is accessible to realtors. But customers never ask for it. "I want to see the real straight goods on the trading in this particular neighbourhood," Moranis says. That means not just sales volumes and selling prices — get numbers on how long houses tend to be on the market for, and what agents and brokers brought bids and offers to past sales.
"The facts are all available," he says. " You know the agents have access to all that information — why wouldn't I want to walk through all that with you?"
If a realtor isn't willing to be open about the number, walk away. And thanks to increased scrutiny on realtor commissions in recent years, it's helpful to always remember: the fee is negotiable.
What's the plan?
Once you've found someone you want to work with, the next step is to figure out what they have in store for you. A big way that realtors differentiate themselves these days, Holmes says, is with their marketing plans. In hot markets, hanging up a shingle and having an open house can get you foot traffic, but a smart realtor has a plan to set your property apart. Will they have open houses, list your property on various websites, and arrange for a virtual tour?
"If they'll give out postcard mailings, if they'll take professional photos, if they'll stage your house," Holmes says. "Not all of those things are typical, so it's good to get a good idea about what the agent," has planned, she says.
Avoid the double-ended deal if you can
While Marketplace this week uncovered abuses in double-ended deals — where one realtor represents both sides of a sale — not everyone is convinced they are shady by default.
"I've seen agents who do it right," real estate lawyer Mark Weisleder says. "I'm not in the camp that think they should ban it."
Weisleder says it's not necessarily against your best interest to work with a realtor who's doing both sides of the deal, as long as they do it the way some of the better ones he knows of are already doing: bring in someone at arm's length when it comes time to present all bids to the seller.
"In my opinion, a third person, usually a manager, should present all offers to the seller, so that no one is perceived to have an unfair advantage," he said.
Weisleder says a good agent where a double-ended deal is potential, if there are multiple offers, would set up a system like that "to convey to everybody that the process is going to be fair."
"If I was a buyer or a competing agent," he said, "I'd say that looks pretty fair."