If you conduct an informal survey of recent homebuyers, you’ll likely hear two different things about their real estate agent. They’ll generally answer with, “My agent was the best!” or “My agent was terrible.” Those two answers really show how important it is to find the right real estate agent. As a matter of fact, a great real estate agent can make your home dreams a reality or help you sell your current house for the best possible price. Obviously, a terrible one may not.

Pros and cons of using a real estate agent in Canada

In Canada, you aren’t required to work with a real estate agent for any part of the home buying or selling process. That doesn't mean that it the best idea to go-it-alone. It’s an advantage to have a real estate agent representing you as a buyer when you have better access to properties, gain market information like especially neighbourhood information, and have an expert on your side when it comes to negotiating a purchase and closing the deal.

There is a lot of paperwork and legalese involved in buying a house, and it can be overwhelming and costly to try and navigate it without help. Plus, your agent has a duty to inform you of crucial information they receive about the house. You won’t receive this if you aren’t working with an agent.

However, if you find yourself with a real estate agent that isn’t a good fit for you, it can feel like a real disadvantage. This is a very close relationship filled with emotions and vulnerability. Sometimes there’s a personality clash between buyers and their agents. Or, an agent may try to push a house on you that isn’t a good fit. Some buyers feel like their agent wasn’t an effective negotiator or didn’t seem to be on their side.

If you choose to use an agent, take the time to find one that’s a good fit for you, and consider signing a Buyer Representation Agreement (BRA) with them. We will cover more on that coming up.

How much does it cost to have a real estate agent?

Real estate agents get paid a commission when they are part of a sale. The commission is set by the agreement the seller has with their realtor, and the buyer’s agent gets a portion of that commission. The percentage commission is agreed upon between the client and agent at the outset.

In Canada, commissions usually range between 3% and 7% of the final sale price. This is split between the buying and selling agents. This varies a bit depending on where you live, and what the agent has negotiated with the seller when they listed the property.

Although you don’t pay anything upfront to have a real estate agent, the cost is part of the sale price. You either incorporate it into what you pay for your new place or what you deduct from your total when you sell your house. During the purchase negotiation process, there is technically room to negotiate your agent’s commission, but this is not common practice.

One more thing: if you are working independently as a buyer without an agent and you find a house you want to purchase, you can certainly try to negotiate a lower offer. Your leverage is that the seller’s agent will not be splitting the commission with another agent. What you miss in terms of having your own agent, you may gain in a lower sale price.

The search for a great real estate agent

You are serious about looking at properties. You might even be preapproved for a mortgage. Before you start looking at homes, you need to look for a real estate agent. Let’s start with types of real estate agents, also called realtors.

First, there are residential real estate agents and commercial real estate agents. When you’re looking for a home, you want a residential specialist. Unless you’re from an area with very limited options, don’t go for one who does both.

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Next, you want an agent who works for homebuyers, not just sellers. Again, this can be different if you’re in a very small or low populated area. Then you may only have one or two realtors and they likely represent buyers and sellers.

A buyer’s agent specializes in working with people buying homes. They know all about what to look for in a home and how to negotiate in your best interests. They also know the other agents and what the market is like for homes in your area.

Although it’s unlikely that you’ll come across an unlicensed individual promoting their services to homebuyers, it’s important to make sure that your agent is licensed as a local real estate agent. The specific rules vary from province to province, but every province and territory in Canada requires that individuals pass a written exam before becoming a licensed real estate agent. You can look up your agent’s license by province:

Newfoundland and Labrador
New Brunswick

Should I use a real estate agent that’s been recommended by a friend?

Those personal recommendations are super valuable when you’re looking for an agent. If someone you know has great things to say about an agent they’ve recently worked with, write that name down. However, you want to look for an agent who has great reviews from other people, too.

Next, you can check out testimonials about them, Google reviews, and even what people are saying in chats about agents. Good realtors get good reviews. However, there are some other questions to ask before you settle on one.

Location, location, location

This doesn’t just apply to the place you buy! It also applies to your real estate agent. Most realtors are specialists in a single city, and many in a specific area of the city.

You want an agent that knows as much about the area you want to buy in as possible. So ask what they know and where they’re experienced! You also can look for recommendations from home buyers in your ideal neighbourhoods. Community chats can be a great source for this info.

A local agent will have their finger on the pulse of the real estate market. They’ll know what’s selling and for how much, they’ll know where the houses are that meet your criteria, and they’ll often know about houses before they’re even on the market. Ah yes, the mythical pocket listing.

Experience matters for real estate agents

Look for a real estate agent who has experience helping buyers purchase a home. While licensing ensures they have a knowledge foundation, there are many things about real estate transactions that are gained through experience.

An experienced agent knows the neighbourhoods they’re working in, has negotiated effectively many times, and tends to have a broad network of connections. That network includes other agents as well as other experts that may be needed in the house purchasing process. People like home inspectors, mortgage brokers, real estate lawyers, notaries, and contractors. They often have valuable information about where to search for the best mortgage rates.

Real estate agents are licensed by governing associations as well as governments. You can also go to the organization in your province or territory that regulates realtors and see if there are any complaints or disciplinary actions against any agent you’re considering working with. You can even check if their license is up-to-date.

One more area of experience that’s kind of new: helping buyers during COVID-19. Rules and courtesies have changed during the pandemic. Sometimes they even change from one day to another!

Working with a realtor who can go virtual when needed, work with different social distancing rules, and respect your safety concerns, will help you get you the house you want, no matter what’s happening with the pandemic. Even if everything is virtual, your agent may be able to negotiate an in-person visit for a house before you sign a purchase agreement.

Alongside experience is availability. You probably want to find a real estate agent who’s working full-time, has good availability to show you homes on your schedule, and will be available when it’s time to make an offer. A part-time agent may work if you’re not in a rush to buy a house and the housing market is not currently hot or competitive. If it’s a seller’s market, meaning houses are selling fast and for close to listing price, you need an agent who can make sure you get the house you want before someone else does.

Important information about Buyer Representation Agreements (BRA)

At some point in your interactions with a real estate agent, they’ll ask you to sign a Buyer Representation Agreement (BRA). When this happens depends a little on where you are geographically, and your agent’s preference. Until you sign a BRA, you are welcome to engage with multiple real estate agents. It’s possible that this may gain you access to more properties, but since all agents are working from the same listings, not likely.

A BRA is a legal agreement that states you are the client of your real estate agent. When you sign one, you are agreeing to work only with that agent for a set amount of time. The BRA will list the services your realtor is providing to you, their compensation, what’s expected of the buyer, and other details.

Read this agreement carefully before signing. If anything is confusing, find out what it means. Some things that are common in a Buyer Representation Agreement:

  • Lasts for 90 days
  • You do not have to purchase a home during this time
  • If you purchase a home without your agent’s assistance, you may still be obligated to compensate them. Note: also check for a holdover clause. If there is one, it will extend the time you must pay the agent past the expiry of the agreement.
  • The agreement can be cancelled early if you both agree to do so
  • The agent is obligated to act in your best interests.

That last point is important. If you haven’t signed a BRA, your agent is not obligated to act in your best interests. Of course, everything else in the agreement is important too. And having one will clarify exactly what your agent must do for you for as long as the agreement is valid.

One more thing: it’s required by law that a BRA is signed before an agent can make a purchase offer on a residential property. Whether you’re buying a house, acreage, or condo, you must sign a BRA with your agent before they can submit an offer. These small delays can result in disappointment.

What are the red flags when researching a real estate agent?

Generally, an agent representing the seller and you, the buyer, is a red flag. This is called a double-ended deal. When an agent benefits from both the sale and the purchase of a house, it’s hard to know they’re looking out for your best interests as a buyer.

In some cases, this type of arrangement can work out. Usually, that requires a third party who can be a neutral presenter to the seller of any offers. Don't be afraid to protect your interests.

Another red flag is when you just don’t like an agent, or don’t want to work with them. House buying is stressful, exciting, and can completely change your financial situation for better or worse. You want to do that with an agent you like and are willing to spend a lot of time with.

If you can’t find any reviews or background history in real estate for an agent, they may not be a good fit for you. If you are just starting out, you may want to choose someone whose experience you can verify. Again, it takes research.

Another red flag for any buyer is just not spending the time to check into a few agents before choosing who to work with. Like we mentioned, a house purchase is a big deal; maybe the biggest deal of your life. So, you want to do it with the best possible realtor on your side.

Look for an agent who’s really good at sharing numbers. This includes things like how long houses stay on the market, what they sell for, how much they tend to go above or below asking price, and how many houses the realtor has helped clients purchase. Realtors who won’t give clear answers to number questions are a red flag.

How to be a great real estate agent’s client

The best real estate agents are going to be in demand, especially in a competitive real estate market. So, when you find one, you want to be the type of client they want to work with! Again, you want to build a relationship.

Like we mentioned earlier, one of the best ways to secure a buyer’s agent is to get pre-approved for a mortgage before beginning your realtor search. Being pre-approved means a lender or bank has already evaluated your financial situation and agreed in principle to a set mortgage amount. Therefore, the agent is not wasting his or her time.

Real estate agents love clients with mortgage pre-approvals because it shows you’re looking for houses within your budget, and you’ll be able to follow through with making an offer on a house. Remember, they are working for free until your property purchase is complete.

Another step is to be as clear as possible about what you’re looking for. Things like the type of residence, size, budget, features, and location. When you’re clear about what you want, your realtor can take you right to places that are a good fit. You’re all less likely to waste time looking at places that aren’t right for you.

Now it’s in your hands! Ask for recommendations, research agents that come highly recommended, and get ready to go find the perfect house for you! Welcome home, property owner!

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