Last month, I shared with you all my house hunting journey. I can’t believe it was the same time last year that we found this home and bought it! I can’t believe I’ve been a homeowner for a year now. Almost surreal when I start to think about it.
I remember that the most exciting part of my house hunting journey was the day when we got the phone call from the real estate agent, saying that the seller had accepted our offer. I remember the moment vividly. BF and I were sitting anxiously, waiting for the call from the realtor. I remember my heart was racing a mile a minute. I don’t know why I had so much emotional investment, but I just did. We got the call and were surprised that the seller accepted our offer and were completely ecstatic. We were happy that no one else contacted the real estate agent, and that a bidding war didn’t happen.
Our Biggest Home Hunt Tip
I know I’m going to get hate comments from real estate agents for this, but I think our biggest tip in our home buying experience, was to use the concept of dual agency with our home buying.
In British Columbia, dual agency means that you are using the seller’s real estate agent to represent you as well. Real Estate Agents can agree or disagree to work with you, because some may see it as a conflict of interest (e.g. how can the real estate agent represent both you and the seller? Where do their loyalties lie?). They cannot be a dual agent for many clients (many whom we talked to only agreed to us and refused others). Some real estate agents decline to be in a dual agency agreement and wish to solely represent the seller. I think it depends on the real estate agents’ comfort levels with the concept of dual agency.
You as the buyer must feel comfortable with the concept of dual agency too – because sometimes you may worry that the real estate agent is lying to you, to try and make you “up the bid.” We certainly felt that way when we entered into the ‘bidding war’ that first time with the duplex. We knew she was trustworthy but we still felt unsure. It’s important to stay firm what you want to pay for the property and not let emotional uncertainty sway your decision.
How does Dual Agency Work?
Okay, standard commissions (for the big real estate firms) for real estate sold is:
7% on the first $100,000 and then 3.5% on the remaining balance. This is split between the buying and selling real estate agent, and paid by the seller of the home.
Therefore, if a house costs $300,000 (yeah, this is obviously an example since there is no way a house costs $300K in Vancouver), then:
$100,000 x 0.07 = $7000
$200,000 x 0.035= $7000
Total realtor commissions: $14,000
If you use a dual agent, the $14,000 is all theirs (and the real estate firm’s). Usually it would be half of this (to account for the other real estate agent involved), so $7000. Basically, with anything more than $7000, the dual agent will (should) be happy with. It would be “all gravy,” as they say. He or she will want to work for this and will aim to please both the buyer and seller. The real estate agent aims to sell the property as soon as possible, because a quick sale can reflect positively on their sales record.
If you’re looking to read more on how real estate commissions work, I have an old post about it here.
With the dual agent, we were able to knock off $25,000 from the purchase price at a time when homes were being overbid from the selling price. The real estate agent gave up some of his commission, and that way, we were able to save some money. The seller was happy (well, I’m not sure she was that happy, but she still agreed), the real estate agent was happy, and we were happy.
However, not everyone likes to use this type of strategy. Some home buyers like to have a real estate agent choose properties for them, and they like to have that personal touch. For some reason or another, we didn’t like the idea of using a real estate agent, perhaps we didn’t want to feel pressured to buy, and we liked looking at places on our own time.
Readers, do you have tips from your house hunting experience? What was your most vivid experience during your house hunt journey? What do you think about the concept of Dual Agency?
So, if you haven’t entered already, go enter “The Great House Hunter Contest for BMO Smartsteps® for Homeowners”! You can win 10,000 AIR MILES reward miles and all you have to do is do what I did (share your house hunting story).
the fine print:
There is no purchase requirement to enter into The Great House Hunter Contest for BMO SmartSteps® for Homeowners (the “Contest”). The Contest is open to all legal residents of Canada (excluding Quebec) who (at the time of entry): (i) have reached the age of majority in their province/territory of residence; and (ii) have an AIR MILES®* Collector Card. To enter, send an email to House.Hunter@bmo.com that contains (among other things) a story that discusses your “house hunting” experience and one (1) optional photograph to accompany your story. Prizes: Eight (8) Finalist Prizes (1,500 AIR MILES reward miles each); one (1) Grand Prize (10,000 AIR MILES reward miles); and two hundred and fifty (250) Entry Prizes (100 AIR MILES reward miles). Approximate retail value of the Prizes varies by travel service and date selected – example: from Montreal to New York return air travel for one passenger for October departure is 1,250 reward miles, which is approximately $342.00 CDN. Odds depend on the number, caliber and timing of eligible entries received. Skill-testing question required to be correctly answered to win. Full rules at: www.bmo.com/greathousehuntercontestrulesandregs