But They Are Doing Me A Favour!

Are they?

I have been knocking on a lot of doors lately. Last week I had the pleasure of talking to a gentleman about his listing with a C21 agent. As he answered the door and saw my PropertyGuys.com Beetle over my shoulder he was quick to blurt out "I already have an estate agent." He continued on in his proper British accent about how the agent was giving him a deal by lowering the price on the house he was purchasing because he had listed with her.

So in this case the house was listed for $459,900. That means that the commission the home seller was expecting to pay was $24,097.50 including GST. What I am trying to figure out is how is this agent going to reduce the purchase price of the house they are buying by nearly $25,000. Generally if an agent does both sides of a deal (working on behalf of both buyer and seller) they reduce their commission from 5% to 4%. Let's say this agent was feeling awfully generous this day or even more likely, motivated to move the property and adjusted her commissions to 2.5%. For her to reduce the price by $25,000 it would mean this couple was buying at least a $1,000,000 home. Seems like a bit of a stretch for an upgrade, but possible.

If you are shopping to buy a house and the one you want is listed with an agent keep in mind that if they offer to work both sides of the deal to reduce the price of your purchase, under the condition that you list with them, they are not doing you any favours.

If they want to do the world a favour, they would let you sell privately and then you could pass on some of your savings to people that could REALLY use it...


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M