That seems to be the question theses days. The real estate industry has been working with the same general model over the last hundred years, but every so often someone comes along with a new concept or model they believe will improve upon tried and true.
The commission model, also known as the ‘payment for results’ model. What this means is, if your REALTOR® does not perform, or get you the desired results (to Sell your property), your REALTOR® does not get paid. This puts the onus on the REALTOR®, to get you the desired results, to get your property SOLD.
There are some REALTORS® that have experimented with different models to less than stellar results. In the most part, this is because the commission based model, the same one the Real Estate industry has used for successfully for so long…guarantees results, or you don’t pay.
The model brought into focus with the Competition Bureau’s fight with the Canadian Real Estate Association, is not new by any means, it has been tried, in various forms, and discarded many times throughout history. Part of the reason for this, pay-as-you-go, creates a lack of urgency within the Real Estate Industry.
Imagine, as the Seller, you have the time, and the inclination to sell your home by yourself, but, you want to market it on the MLS® service that REALTORS® belong to(like some big box stores, there are membership dues involved). So you contact a REALTOR®, which for a small fee will post your property on this service. Everything is great now, right? You have your home marketed to everyone on a well known website; the general public gets to see what you’re selling. However, there is no sign on your lawn, there is no formal marketing material, there are, no discussions in Real Estate firms about your property.
But, what about the millions of people who are working with REALTORS® because they understand, there is a code of Ethics; there are rules and laws that the industry is governed by. They also understand, the REALTORS® involved in a transaction, know more about the pitfalls and can avoid them wherever possible. The REALTORS® trade in Real Estate, day in and day out;
- Know which areas in a given region are known for water problems. Whether there’s enough, or too much in the way of contaminants.
- Know if the listing price is good, too high, or you’re getting great value
- Have access to how many times the property in question has been listed, and what the problem is likely to be, for it to continually be for sale.
- Have a good knowledge of the Laws that govern the buying and selling of real property, which apply in every real estate transaction, not just those that go through a REALTOR®
What it really comes down to, the results based model, is proven, it’s successful, and in the end, more cost effective, because when you add up all of the various costs involved, it is typically a lot higher than what you negotiated, with your REALTOR®.
Yes you have ALWAYS had the ability to negotiate how much you are willing to pay; you also get what you pay for.
Why was this prepared?
Surveys show that many homeowners and house buyers are not aware of the true value a REALTOR® provides during the course of a real estate transaction.
At the same time, regrettably, REALTOR® have generally assumed that the expertise, professional knowledge and just plain hard work that go into bringing about a successful transaction could be in jeopardy.
This publication seeks to close the gap.
Listed below are 136 typical actions, research steps, processes and review stages necessary for a successful residential real estate transaction for which a REALTOR® is entitled to fair compensation.
This list is by no means an attempt to set forth a complete list of services, as these may vary within each brokerage and each market. Many REALTORS® routinely provide a wide variety of additional services that are as varied as each individual transaction.
By the same token, some transactions may not require some of these steps to be equally successful. However, most agree that given the unexpected complications that can arise, it is far better to know about a step and make an intelligent, informed decision to skip it, than to not know the possibility even existed.
The personal and professional commitment of the REALTOR® is to ensure that a seller and buyer are brought together in an agreement that provides each with a ‘win’ that is fair and equitable.
The motivation is easy to understand. With the ‘payment for results’ model, the REALTORS® involved, receive no compensation, unless and until the transaction is complete.
The business models available, in today’s real estate industry can afford the homeowner a greater range of options. Always remembering ‘you get what you pay for’.
No matter which business model is chosen, before signing Listing Agreement, Buyer Representation Agreement or otherwise engaging the services of a REALTOR® agreeing to compensate them, the homeowner should understand exactly what services will, or will not, be provided.
For the extra measure of peace of mind, ensure the individual seeking to represent you is both a registrant of the Real Estate Council of Ontario and a member of the Ontario Real Estate Association…permitted to be called a REALTOR®. Check the RECO website www.reco.on.ca for a searchable list of registrants.
136, the number of typical actions, research steps, procedures, processes and review stages in a successful residential real estate transaction that are normally provided in return for their sales commissions. Depending on the transaction, some may take minutes, hours, or even days to complete, while some may not be needed.
Pre-Listing Activities
1. Make appointment with seller for listing presentation
2. Send seller a written or email confirmation of listing appointment and call to confirm
3. Review pre-appointment questions
4. Research all comparable currently listed properties
5. Research sales activity in the area from the MLS® database
6. Research days-on-the-market for similar properties, location and price
7. Review property tax roll information
8. Prepare a ‘Comparative Market Analysis’ (CMA) to establish fair market value
9. Research property’s ownership and how it is held (deed)
10. Check municipal tax records for lot size
11. Verify the legal description from public records
12. Check Planning Department of Municipal Offices for current zoning
13. Check for land use restrictions or special zoning
14. Verify legal names in the Registry Office (or deed)
15. Prepare listing presentation with researched materials
16. Drive by the property to assess the Curb Appeal, compare with neighbourhood
17. Start formal office file on the property
18. Confirm school district and effect of schools on property value
19. Determine whether property is subject to a shoreline road allowance (if applicable)
20. Review all pertinent information to ensure that it’s complete
Listing Appointment Presentation
1. Explain the various agency relationships and get written acknowledgment that this has been reviewed.
2. Give the seller an overview of current market conditions and projections.
3. Review sales representative and brokerage credentials and accomplishments.
4. Review and confirm all legal descriptions and ownership details.
5. Measure exterior and establish the square footage above grade.
6. Confirm lot size from owner's survey or make a note on the listing if none is available.
7. Note any lot line fencing, easements, and variances.
8. Discuss with the seller the possibility of a seller take back (STB) mortgage and other options.
9. Review any appraisal that may have been made.
10. Present CMA to the seller, including comparable sold properties, current listings, and expired listings.
11. Offer pricing strategy based on experience and current market conditions.
12. Discuss a marketing plan to meet the goals of the seller.
13. Explain the advantages and power of a Multiple Listing Service MLS®.
14. Explain the use and power of web marketing.
15. Explain the work the both the sales person and brokerage do behind the scenes and their availability on evenings and weekends.
16. Explain the sales professional's role in taking calls and screening for qualified buyers and curiosity seekers.
17. Present and explain the strategic master marketing plan.
18. Review and explain the Listing Agreement and obtain the signature of the seller(s) and give the seller(s) a copy.
Once the Property is Listedn
1. Measure and record all room dimensions.
2. Obtain house plans if available.
3. Make a copy of any house plans.
4. Copy survey and retain in listing file.
5. Advise seller of how showing appointments will be made.
6. Prepare instructions for salespeople showing the property and confirm with the seller the best times to show the property to prospective buyers.
7. Have mortgage verification forms signed and submitted to mortgagee.
8. Verify with lender any penalties, terms, and current rates and if the mortgage can be discharged.
9. Check on whether the current mortgage can be assumed and under what terms.
10. Confirm any condominium fees or homeowner association fees currently in effect.
11. Get a copy of the condominium bylaws if applicable.
12. Confirm supplier of hydro or any other provider of utilities.
13. Calculate the utility usage for the past 12 months from seller's records.
14. Verify the availability of any septic bed layout or permits at time of installation.
15. Water - if municipal check on rates for the past 12 months.
16. Well Water - confirm well status and have health unit test so remedial steps can be taken if required. Also, advise of any abandoned wells on the property and put on the listing.
17. Determine natural gas, heating oil, or propane supplier's name and telephone number.
18. Note on listing any rented appliances (hot water tank, furnace, etc.)
19. Verify security system and terms.
20. Ascertain if and lead-based paint, asbestos insulation, UFFI, or latent defect needs to be disclosed.
21. Prepare a list of property features such as pool, sauna, landscape, pools.
22. Prepare a list of chattels included or excluded in or from the sale of the property.
23. Compile a list of recent improvements, repairs, and maintenance.
24. Send a letter to the seller to advise the insurance company if the property is vacant.
25. Explain the advantages of a lock box and have extra keys made.
26. Verify if the property has rental units and if so:
27. Inquire as to weather they comply with the zoning bylaw, fire, and electrical safety.
28. Make copies of all rental agreements.
29. Determine ownership of appliances or any other chattels.
30. Verify and list all rental amounts and deposits held.
31. Inform tenant(s) of the listing and discuss how showings will be handled.
32. Arrange for installation of the For Sale sign.
33. Assist the seller in filling in the Seller Property Information Sheet.
34. Give the seller a blank copy of the Agreement of Purchase and Sale and discuss it with them.
35. Explain the offer presentation process and the possibility of multiple offers.
36. Discuss the type of conditions that will likely be included in an offer to purchase.
37. Discuss results of any Curb Appeal Assessment, Interior Decor Assessment, and ways to improve appearances for showings.
38. Arrange for the office tour and report comments back to the seller.
39. Load the listing into personal database for transaction management.
Entering the Property in the Multiple Listing Service MLS® Database
1. Prepare and check MLS® data input sheet.
2. Upload to Real Estate Board – MLS® Data Input.
3. Proof read listing as it appears in Realtor.ca, and other websites
4. Take additional photos for uploading to MLS® and for use in flyers. Talk to the seller about virtual tour possibilities.
Marketing the Listing
1. Create both print and Internet ads with seller's input.
2. Co-ordinate showings with the owner, tenants, and other REALTORS®. Return all calls, weekends and evenings included.
3. Install lockbox if authorized by the seller.
4. Prepare personal mailing and contact list.
5. Generate mail merge letters to contact list.
6. Order "Just Listed" cards and handouts.
7. Prepare flyers and feedback faxes.
8. Constantly review MLS® listings to ensure property remains competitive in price.
9. Prepare property marketing brochure for seller's approval.
10. Arrange for printing and distribution of the approved brochure.
11. Distribute property brochure to all company salespeople.
12. Mail out "Just Listed" notices to the immediate neighbourhood residents.
13. Advise company network referral program of the listing.
14. Provide marketing data to buyers coming through international relocation.
15. Provide marketing data to buyers coming from referral network.
16. Submit ads to company website.
17. Price changes promptly conveyed to all databases and Internet groups.
18. Reprint supply of brochures as needed.
19. Update mortgage information as available to all marketing facilities.
20. Follow up on feedback e-mails and faxes sent to representatives who have shown the property.
21. Discuss feedback with the seller to determine if changes are required.
22. Place regular weekly update calls to the seller to discuss the marketing activity and results.
23. Receive and review all offers to purchase submitted by buyers and buyers' representatives.
24. Evaluate offers and prepare a "net sheet" on each for owner comparison.
25. Counsel owner on each offer, explaining the merits and weakness of each.
26. Contact buyers' representative to discuss qualifications and motivations of their client.
27. Fax or deliver the SPIS to the buyer's representative or buyer prior to offer if possible.
28. Confirm that the buyer is qualified by a mortgage officer.
29. Obtain pre-qualification letter from a mortgage officer.
30. Negotiate all offers on the seller's behalf, setting condition time limits and closing date.
31. Prepare and convey all counter offers, acceptance and/or amendments to the buyer's representative.
32. Fax copies and mail originals of all documents to the seller's lawyer.
33. When the offer to purchase is settled and finalized by the seller, deliver to the buyer's representative, leaving a true copy with the owner.
34. Deliver the deposit to the Trust Account as soon as practicable.
35. Provide a copy of the executed agreement to the office for filing in the deal file.
36. Advise and counsel the owner on the handling of offers while the original transaction is pending, i.e.: days to meet conditions in the first offer and procedures.
37. Update personal transaction program indicating Sale Pending.
38. Assist buyer in applying for financing, if applicable.
39. Arrange for an appraiser to inspect the property and give any information including comparables, survey copy, etc.
40. If STB - get credit report of buyer for seller and review it with him/her.
41. Order a septic tank inspection, if applicable.
42. Deliver the water test from the health unit to the mortgage company.
43. Arrange other inspections as required by financial institutions and/or insurance company.
Mortgage Tracking
1. Contact lender regarding mortgage application progress.
2. Prepare/obtain waiver or condition removal documents and deliver to the lawyer for the seller.
Home Inspection
1. Co-ordinate buyer's professional home inspection.
2. Review the inspection report.
3. If repairs are required, assist the seller in obtaining a trustworthy contractor to perform required repairs.
The Appraisal
1. Schedule appraisal appointment.
2. Provide the appraiser with comparables used to set list price.
3. Assist seller in questioning appraisal report if it seems low.
Closing Preparations and Duties
1. Work with buyer's representative to arrange any visits prior to closing as agreed to in the Agreement of Purchase and Sale.
2. Arrange for trust deposit monies, if in excess of commission due, to be given to the lawyer for the seller.
3. Be available for any concerns/questions from the seller.
4. Advise MLS® that the property has sold and supply details as to price, date of sale, selling brokerage.
These 136 actions reflect the level of skill, knowledge and attention to detail required in today’s real estate transaction, understanding the importance of having help and guidance from someone who fully understands the process…a REALTOR®
