How Does Your BRA Fit?

They are not one size fits all, or so my wife tells me!

Garth Turner had a great post on his Greater Fool blog exposing the Buyer Representation Agreement and the dangers of signing one.

There were a lot of really good points brought up in this blog. The one area that he didn't get into is that not all agreements are equal. A BRA is as varied as a seller's agreement and depending on the local real estate board or even individual realtors, they can differ.

For the first time I am going to ask for homework. Think about what you would look for in your BRA. If you could write a BRA that would fit you like a...well bra, what would it look like?

M

What does "Discount Realtor" really mean?

Just who is getting the service?

Let's first understand what the traditional "high fee agent" (5%) break down looks like. Typically a 5% commission is split 50/50. Meaning 2.5% goes to the buyer's brokerage and 2.5% goes to the listing brokerage. This means in a $300,000 home there is $15,000 in commissions paid. Man, that's a lot of skin!

In a typical discount brokerage 3% Program the listing brokerage typically discounts their fees down to 0.5% and offer 2.5% to the buyer's brokerage or on occaision they do 1% and offer 2% to the buyer's brokerage. In one way the listing agents are not getting "their share" and may skimp on the service. The other, buyer's agents will prefer to show other listings where they get 2.5%. Same house as above and your still spending $9,000. Still more then a skinned knee!

A typical 1% Program the agent is not offering any commissions to buyer's brokerages and are expecting to work on behalf of both buyers and sellers. The real danger is that for buyer's to get the info they have to call your agent. Your agent now has a buyer looking to buy a home. Your home pays them 1%. Every other home listed with agents (High Fee or Discounts presented above) get your agent more money. Why would they push your home when they can sell the one up the street and make more money! It may only be $3,000 if it sells but unfortunately for you they sold one of the two above and made $7,500 so you sit with their boring old square sign on your lawn selling other peoples' houses!

Ever think someone was telling you one thing and then doing another?


M

Exclusivity...at it's finest!!

Who are you being exclusive to?

The term "Exclusive Listing" is one that had gone by the way side it would have seemed. More and more I am finding people with that sticker on their sign though. I ran by one this morning and it got me thinking. What is that agent offering as an "Exclusivity"?

Traditionally the reason a home seller would choose to go the route of an exclusive listing would be to save on commissions. The listing agent has said that in order to save on the buyer's agent commissions "we won't put the listing on the MLS and I will market it locally on my website, in the paper and through my network of buyers". This really is not that far off selling it privately, except your agent is going to charge you 2-2.5% if a buyer ends up bringing an offer.

I mean the whole term "exclusive" comes from "excluding" things, right? Why when you are selling your home would you want to exclude putting your home in front of buyers? Pick an agent in your town, any agent. Go to their website and browse through it. Was that a good experience? Heck most of them when searching for homes just point you back to Realtor.ca anyway!

If you are looking to save money when selling your house going to someone who drives an $80,000 car and talks about all the houses they sell is probably not going to do it, exclusive or not. Going to the agent around the corner, or the one who's son plays with yours at school and lists 3-4 houses a year probably isn't going to help you much either. The biggest bang for your buck is to ensure your listing looks professional for the online shoppers, has plenty of eye catching signs for the drive buy people and is in front of as many people as you can afford to get it in front off. Traditional real estate agents will charge you 5-7% ($15,000 - $21,000) for the average home sale ($300,000 house in the Waterloo Wellington area). Discount agents will charge you 3-4.5% ($9,000 - $13,500). Exclusive listings usually run 2-2.5% ($6,000 - $7,500) but REALLY limit your exposure.

Selling privately with PropertyGuys.com gets you all the same exposure to buyers, including a listing on Realtor.ca, for under $2,000 for the average home seller. Could be less depending on what options you want, not the value of your house!

So if you are ready to jump in, say it "I'm ready and you're the one I want!"


M