Real estate agents have been the go-to resource for home buying for as long as the business of real estate has existed. However, finding homes today can be done in many ways including using online tools (like those on TheRedPin.com) to narrow down searches. The questions often raised these days are: how do I find a the best agent to work with and do I need to use an agent at all?
In this piece, we take a look at:
- Who agents are
- What qualifications a good agent must have
- Condo vs. House – Having the right answer to your questions
- Points all real estate agents should know
- Do you need an agent?
- TheRedPin.com Experience
Who are Real Estate Agents?
Real estate agents – sometimes called salespersons – are representatives for the sale or purchase of real estate property including houses, apartments, commercial properties, and land. Another way to look at real estate agents are as intermediaries between buyers and sellers of real estate property. Their aim is to use marketing tools to garner the highest price possible for the seller, while on the buyer side, get the best deal, while ensuring integrity of the transaction.
Real Estate professionals traditionally make money via commissions. They earn a percentage of every dwelling they sell or help a buyer buy. Commissions can vary but they are generally 4-6%, split between the seller’s agent and the buyer’s agent, – usually around 5% for resale properties. For new construction, the commission offered by the developer is usually around 4%. While most agents work independently, sometimes real estate professionals will work with a firm who will take away some amount of that percentage, charged as a brokerage fee (split).
Qualification Requirements for Real Estate Professionals
To be employed in the real estate industry, real estate agents are required to have the following:
- Completion of secondary school
- Completion of a real estate training course
- Provincial or territorial licensure in the province or territory of employment
The Real Estate Council of Ontario (RECO) is a regulatory body that is responsible for administering and enforcing the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and associated regulations on behalf of the Government of Ontario. Since 1997, this self-managed, not-for-profit organization has aimed to provide protection to homebuyers and sellers through the creation of a sophisticated and informed industry environment. The act and other regulations are, however, still the responsibility of the Ministry of Consumer Services.
To be registered as a Salesperson with the Real Estate Council of Ontario and ‘trade’ in real estate in Ontario, you must complete The Salesperson Registration Education Program offered by the Ontario Real Estate Association (OREA). The OREA Real Estate College provides RECO-designed real estate education programs in Ontario, with a comprehensive overview of the industry and its many elements.
Here is a the Salesperson Registration Education Program learning path, as outlined by OREA:
Condo vs. House: Having Answers To Certain Questions
Homebuyers often go into a house search without truly understanding what it is that they want. No person in the world can then help to make you find your dream home. There are certain questions to help you break it down and give yourself the necessary points to help yourself or let someone else – like a real estate agent – help find your dream home. Let’s focus on condos vs. houses. This is a difficult decision to make but comes down to the various questions we’ve outlined.
1. Do you plan on having a family, perhaps sooner than later?
If you are planning to have a family, you may outgrow your condo space fast.; it’s important that you are putting your dollars towards the right space. If a backyard is important, you may want to drop the condo idea entirely and consider a house. However, condos may be all you need to raise a family, if all you require is a guest bedroom(s), a private family room and a terrace. However, you have to take cost into account as well; the bigger the condo, the bigger the price, maintenance fees and taxes.
2. Do you plan on getting future rental income?
Most condominiums in the city can be used as rental properties to generate income for yourself. If your intention is to buy one and live there for a short time, move out, and rent the space, you need to understand your property’s income potential. If it takes you too long to get from the front door to the bedroom in a 700 sqft apartment, you know the layout is rubbish (or you need to be on the TV show Hoarders). Layout, use of space (long cavernous hallways with no point reek of poor layout), views, and in-house conveniences all play a major part in the appeal-factor of your condo. Make sure you consult with your real estate agent about your property’s income potential.
3. Do you need a larger property anyway and are just investing for the sake of doing so?
Many people buy condos with full knowledge that they may need to expand in the near future. Unless you are planning to use the condo for rental income, if you are buying a property with an intention to move out anyways sooner than later, you may want to consider renting instead. This way you don’t have the mortgage and financial implications of your old condo to worry about and really, you are simply renting to find that perfect property to move into.
4. Is your condo worth the dollar amount?
Most often, a condo is invested in with decisions based on “great view” and “excellent layout”. If you were to only consider these points, then are all penthouses great units in every single building? You need to ensure that your dollar is going towards a suite in a property that is giving you the maximum value for your money. Location of suite inside the building (not close to high traffic areas such as elevators or garbage chutes), amenities, other added bonuses such as parking and lockers, all determine your property’s potential. This is another conversation that you must have with your real estate agent.
5. What’s the community like?
I bought a great 3-bedroom condo with 1500 sqft, parking, locker and more! Good deal right? Well, yes, if it wasn’t in one of the highest crime rated neighbourhoods in the city. It’s important to do your due diligence before you invest in a condo and research the location. Is the neighbourhood being gentrified? Or does it have a long way to go before it becomes a safer area? What neighbourhood amenities does the neighbourhood have that residents can access? What other developments are in the area? Are there decent schools? There are many questions that you should consider to evaluate your neighbourhood.
Things Every Real Estate Professional Knows
It is super important to understand that any individual you work with, be in a family member or a professional real estate agent, they need to help you with your search and they can’t do that if they have no knowledge about the industry or how the industry works.
Below are five rather general things that any real estate professional – especially agents – should know, helping you as the home buyer do your necessary due diligence and find you next dream home.
1. Knowledge of Local Pricing
A good agent will understand property prices in a particular area, providing details about price drops, demand for homes and if the current price of a property is a good deal or not. It is important that buyers understand that an informed agent is not just an excellent resource to filter down a list of great properties, but one that can dictate your financial commitments for the foreseeable future.
Potential investors can use pricing developments, with the help of their agent, to determine the value of a property and the potential gains in the long run. At the end of the day, your agent is finding you the properties and it’s important they understand local pricing and local pricing factors to let you make good investment decisions.
2. Knowledge of New Developments
Understanding a community is one of the most important traits an agent can have. Buying a property is not just about the suite/house. It is about the surrounding community, the available amenities, infrastructure, conveniences, etc. All of these factors come together to dictate the long-term demand of your property.
Things an informed agent should provide include new road and infrastructure developments, especially new schools and pathways. In addition, the rapid development of new condominiums, shopping amenities, transit, community centres are all signs of growth and evolution of a particular neighbourhood, which would increase the demand of property in that area in the long run and drive up prices. Without the knowledge of these elements, it is impossible to make a sound, complete decision on any property.
TheRedPin.com, for instance, has access to every single new development in the GTA before it’s released for sale to the general public.
3. Knowledge of Areas with Low Tax Alternatives
Gaining financial wealth or financial return is one thing but losing money is a whole other story. Tax implications can seriously affect the bottom line and the desire to live in a particular property. An informed real estate professional will help buyers identify areas with the best and worst tax structures, especially if finance is an issue.
Additionally, agents should understand when a particular area is going to have a reassessment. A reassessment is a revaluation of a property’s tax payments, which could mean an increase in taxes, throwing a curve ball on your planned finances.
Also, prospective buyers should stay away from areas that are overcrowded and over saturated. For instance, if an area has an abundance of condominiums, schools are filled, roads are congested and transit is struggling, there will be investments made to build more infrastructure to deal with the increased need. Where will this money come from? Increased taxes!
4. School Rankings
School rankings are just one example, but it’s the kind of information that real estate agents should be able to provide to prospective buyers immediately. TheRedPin.com, for instance, has all of this information right on the website for each property.
The reason why information such as school ranking data is important is because it will affect how individuals and families buy a home. You want to send you child to a good school, perhaps one that has a focus towards extracurricular activities or one that is more academic. If, however, you purchase a home in an area where the eligible schools are not all that great, you are investing in a property with negative returns. That doesn’t help nor will it help future buyers of the property, unless of course, schools are not a part of their search criteria to begin with.
5. Savvy and Knowledgeable in General
It’s important that you as the buyer do your own due diligence before you go about finding a new home. An informed agent will also be able to provide you, without hesitation, details about a neighbourhood, a home and be generally savvy about real estate. By doing so, they can communicate better with you better and match your requirements with the kind of property you want. Agents who are not savvy will not be able to be proactive in finding you the necessary information you need, especially when your out and about during a home showing and such.
Do You Need An Agent?
Let’s address the elephant in the room. No, you technically don’t need an agent. However, if you want peace of mind, then you absolutely need an agent. You could go about buying a house yourself, searching for properties, facilitating all the paper work, negotiations and legal items and organizing all of the various financial commitments involved. However, the fact is, not everyone has the time or savvy to do what a real estate agent does (especially if you’re a full-time professional). Here’s a list of things that agents take care of:
- Solicit property sales listings from prospective vendors
- Assist vendors in selling property by establishing asking price, advertising the property, listing the property with listing services and conducting open houses for prospective buyers
- Assist prospective buyers in selecting, visiting, inspecting and making offers of purchase on real estate properties
- Advise clients on market conditions, prices, mortgages, legal requirements and related matters
- Draw up sales agreements for approval of purchaser and seller
- May rent or lease properties on behalf of clients.
Unless you are ready to take on all of that – we recommend you have an agent to help you with your search, use their skills, give you excellent customer service and offer you real advice.
The traditional work structure of an agent is very tedious and involves things that they should not be doing. To give you a good understanding of what we mean, here are some traits and daily activities of traditional agents:
- 80% of work time is given to prospecting, marketing and doing administration work
- Must balance and pay-off a lengthy list of expenses including auto, brokerage fees and marketing tools
- Must make buyers happy with decent prices but make enough via commissions
- Must make sellers happy but also balance the prices to make buyers happy and still make enough on commissions
- Commissions are their primary source of income
Our solution? Our agents simply work very differently:
- 100% of their time is spent helping buyers and sellers, supported by TheRedPin.com’s internal customer loyalty, marketing, administration, technology and management team for all their other requirements.
- Conduct in paperless business – working on iPads
- Focused on making buyers/sellers happy without worrying about commissions and their take-home amount. This is because they are paid a salary and then paid a bonus per transaction based on a customer’s feedback of their service
- They are provided with the resources and tools to be aware of every new residential construction in the city, exciting new developments and infrastructure changes
- Use their experience and motivation in a team setting, fueled by the expertise of other departments
By taking out the financial burden and the back-end work, we let agents do what they need to do: give buyers and sellers full-time professional advice and support.
Navigating down the road of real estate can be a difficult journey to take on your own. Real estate agents are essential in helping homebuyers make informed decisions about their new home and help them navigate through the formalities and legalities that are necessary to own their new property. It is, therefore, important that the homebuyer does the necessary due diligence and find a knowledgeable real estate agent to help them on their house hunt.