Selling a home, especially for the first time, comes with a lot of considerations. How should you price your home? How will you market it? How will you get it on the MLS? and more.
That’s where a listing (a.k.a. seller’s) agent comes in. If this is your first time selling your home, you may be wondering why you need a listing agent and what they do.
To break it all down, we’ve created this guide with the help of Janai York at Sotheby’s International Realty.
That’s where a listing (a.k.a. seller’s) agent comes in. If this is your first time selling your home, you may be wondering why you need a listing agent and what they do.
To break it all down, we’ve created this guide with the help of Janai York at Sotheby’s International Realty.
What is a listing agent?
A listing agent is a real estate agent who works with someone selling their home, hence their other name: seller’s agent. A listing agent is independent from the buyer's agent representing potential buyers of that same property.Why should I hire a listing agent?
While you can sell your home without a listing agent, this may not be the best idea, because the process involves many complicated steps. “It really becomes almost like a concierge service, if it's done properly, where the seller can relax and let somebody else work through the process,” says Janai. “If you're working as an FSBO [for sale by owner], then all of that has to be done on your own, and you might not be working with the best information.”There are documents to prepare, getting the property cleaned, scheduling photography days, preparing a listing to post online, scheduling home tours and more. That’s not even to mention handling offers, navigating negotiations and so on. Plus, agents have expertise and experience to leverage when marketing your home that you likely don’t.
How do commissions work with a listing agent?
A listing agent collects a commission based on the final sale price of the house. Commissions are negotiable and will be whatever you and the listing agent agree to. Commissions get paid out at the end of the selling process, when financials such as taxes, strata fees and other charges – called adjustments – are being dealt with. In BC, as mentioned, commissions are negotiable, and some agents may use the following formula: 7% of the first $100,000 and around 3% of the remaining balance. The listing agent then generally offers about half of that to the buyer’s agent for the work they’ve done. That means both the listing agent and buyer’s agent receive around 3.5% on the first $100,000 and about 1.85% or so on the remaining amount, plus any applicable taxes. But remember, it doesn’t have to be this calculation, you can work with your agent and set the commission to whatever you both agree on. Because the listing agent’s commission comes out of the final sale price of the home, you won’t be handing cash directly to your listing agent at any time.Do I have to sign a contract?
To get your home listed on an MLS (multiple listing service) site, like REW.ca, you must sign a contract with an agency. As Janai explains, “we are designated to be your representation, and you are our clients. There's a specific reason for that. When you're working with a realtor, we have a fiduciary duty when you're our clients to act with a certain level of openness [and] integrity. There's a list of things we have to provide that is almost similar to a lawyer.” A contract helps ensure that happens.But there are steps before you’re required to sign, giving you the chance to see if a particular listing agent is right for you. First, you’ll see a Disclosure of Representation in Trading Services (DORT) form. This form will explain the difference between being represented by an agent versus not doing so. You’ll sign and initial this form, but it’s not a contract. Instead, think of it as an acknowledgment that you’ve reviewed this information with the agent.
From now on, confidentially applies. “We have to give you full privacy, like confidentiality, so anything that you say to us now becomes confident to us only about your motives, about your reasons for selling – nobody else gets to know that because that may hurt your chances to get your best price,” Janai says. “And we maintain that confidentiality even after the transaction is done. We have a duty to not act with conflicts of interest.”
If you determine that you like this agent and want to work with them, you’ll go over the actual contract together and what it means, including the commission structure (a.k.a. remuneration). You’ll sign this listing agreement, as it's known. Once you sign this contract, you’re committed to that agent. You can cancel the contract if you want later, but if you don’t sign with a new agent (or sell your home to someone behind your old agent’s back) there will be a 90-day period after cancellation during which, if your home sells, you’ll still have to pay that agent their commission.
So, to ensure an agent is right for you, research them beforehand. See how long they have been in the business and working in your market. When meeting with them, ask them if they have experience with homes and situations like yours. And as Janai notes, don’t be afraid to ask a potential listing agent if they can work with your timeline and goals. But remember that until you sign a DORT with an agent, anything you say can be shared with other parties, including with other agents or later interested buyers. Be careful about spreading information around before signing a DORT.
Will the listing agent help me price my home?
One of the most important tasks an agent will help you with is determining the price of your home. This process, as Janai puts it, “is a bit of a science and a bit of an art form.” There are lots of variables that will ultimately determine the estimated price of your home, but they breakdown into a few major categories according to Janai:The price of active homes nearby. That is, what’s currently selling nearby, which are, in some ways, your competition.
What’s sold recently nearby. For instance, if you’re selling a two-bedroom condo in Vancouver’s West End near Davie St., your listing agent will look at similar properties in the same area.
The unique aspects of your home. Your agent will consider things that could enhance, or detract from, the value of your home. Recent renovations might up the price, while defects could decrease it, for example.
What is the market like during your selling timeline? Is it currently a buyer’s or seller’s market? How are interest rates affecting buyer’s habits?
Pricing your home appropriately is one of the most critical things to getting it sold and a major reason to use a listing agent. Your home will have a BC Assessment value too, which your agent might consider, but this value is for determining property tax, not the fair market price of your home.
Your listing agent will also consider what didn’t work for others, including cancelled and expired listings. “We look at those and again do a similar analysis: age, size, all those factors come into play again that gives us an idea of what the market is absolutely not willing to pay because, typically, those homes were overpriced or they had some other issues that made them undesirable for buyers,” Janai says.
A listing agent will bring years of experience, confidentiality, support and more to guide you through everything. And critically, they’ll help you determine the price of your home. As Janai says, “Just make sure you're working with the right person for you, because it is the biggest thing you're going to do. It's an emotional journey, and having the right partner representation will make that so much more stress free.” If you’re considering selling your home, REW has agents ready to help you.