Myths seem to surround Comox Valley real estate agents. Over the years I have heard a number of sayings about real estate agents. Based on my experiences as a real estate client, a number of them seemed reasonable to me at the time. As a Comox Valley realtor I continue to hear things about property agents. Some are true and some are not. In this blog, I will discuss a number of popular myths. For the purpose of this blog I use the term brokerage and agency interchangeably. Real estate agents are licensed through a specific brokerage in order to conduct business.
Myth 1 – All of the local Comox Valley listings agents receive a salary. While working as the “duty agent” in my Comox Valley real estate office, I have heard this from people a number of times. Some thought because I was working in the real estate agency office that I was paid a salary by the office. While there may be some exceptions, real estate agents generally work on commission basis. If they do not complete a sale (either as a buyer’s agent or as a seller’s agent), they do not get paid.
Myth 2 – Comox Valley Realtors receive a large commission on each sale. This is an area of the real estate business I did not fully understand as a client probably because it was never explained to me. The real estate commission is generally paid by the seller. However, when the seller does not offer a commission or one that is inadequate for services rendered by a buyer’s agent, a buyer may be asked to pay some of the commission. Let’s assume the commission is paid by the seller. A real estate commission paid by a seller is divided amongst the buying and selling agencies. This is generally done on a 50:50 basis but not always. Each agency then takes a share of their part of the commission and the remaining part goes to the agent. The agent then must deduct any referral fees paid, expenses, and like everyone else the taxes (income, and HST/GST/PST as applicable). What the agent takes home can be considerably less than the total commission paid by the seller.
Myth 3 – Comox estates and properties agents do not have many expenses. I have heard this myth many times in the past year. The reality is, for most agents, that real estate expenses can often be considerable. Typical expenses include the purchase of: licensing course and exam, travel expenses to and from the exam, post-licensing course, agency orientation course (s), Canadian Real Estate Association fees, provincial association fees, local real estate board fees, agency training courses, computer and peripherals, photocopier/fax/printer, financial calculator, camera and video camera with editing software, mobile phone and other devices such as a laptop and tablet, sign brackets and signs (yes these are paid for by the agent), lock boxes and lock box keys, websites, office supplies, etc. Ongoing costs include ongoing license renewal fees, personal marketing (this can be a very large expense), property marketing and advertising (this can also be a large expense), National agency dues, Region agency dues, CREA annual dues, provincial and local dues, website fees, MLS access fees (to maintain and access the MLS data that is provided to clients), continuing education courses, ongoing hardware and software fees, office supplies, agency and deal fees, fees to search for titles and other documents such as strata documents, auto expenses (driving clients around), etc. Real estate is a very expensive business and it is not uncommon for an agent to have 40 to 50 thousand dollars in expenses each year. Some top producing agents have expenses that are in the hundreds of thousands of dollars range. In many agencies, the agents pay for everything including charges each time they photocopy a piece of paper.
Myth 4 – Courtenay estates and properties agents make lots of money. Some top producing agents do but they also have considerable expenses. Most don’t.
Myth 5 – All Comox Valley Real Estate agents charge the same rate in a specific area. The Competition Act is Canada’s principle competition and federal legislation. It applies throughout the country to all economic sectors, including real estate. Price fixing agreements, market allocation/division agreements and supply/output restriction agreements are against the law. Commissions and other aspects of price are determined and established independently by the Comox Valley realty brokerages through which agents are licensed.
Myth 6 – All Real Estate agents are all the same. Real estate agents are NOT all the same. While they all must meet a minimum standard to become licensed and they must complete minimum continuing education requirements to maintain their licenses, real estate agents are as different as the individuals themselves. Each have different characters and levels of competence. What motivates one agent does not necessarily motive another. One agent may have substantial life experience while another may be fresh out of high school. This should not be a surprise to people. Think about your own industry. Are all of your colleagues or co-workers the same?
Myth 7 – Real Estate agents working in the same brokerage are part of a team. Generally, it is accurate to think of real estate agents working through the same agency as independent contractors and competitors. They each are sole proprietors of their own business (or they may have an independently registered Personal Real Estate Corporation) and their success or failure in business is their responsibility alone. No other members of the same agency are generating business for them. They must do this by themselves unless they have formed some kind of business team or partnership.
Myth 8 – Real estate is a loosely regulated industry. Real estate is a highly regulated industry, and Realtors are real estate agents who are members of the Canadian Real Estate Association and they are also required to follow the Canadian Real Estate Association’s code of ethics and standards of business practice. Unfortunately, like just about every other industry, some people either do not follow the rules or they try to “bend” them to suit themselves. When real estate agents do this, there are mechanisms in place that could result in fines and disciplinary action taken against real estate agents by their governing bodies. In some situations, real estate agents can face civil and even criminal prosecution when they do not follow the rules.
Myth 9 – Real Estate agents all provide the same type and level of service. The real estate industry, like more than 70% of the industries in Canada is a service-based industry. Real estate agents are paid for the professional services that they provide. While real estate agents are all educated and trained to a basic level of service, the type, and level of service that each provides can be very different. Just because two agents are working for the same agency does not mean that they provide the same type and level of service. While discount and full-service brokerages both exist, it is important to read the fine print in any and all contracts. You may be surprised at what you are getting for the price. Even within the same brokerage you will find agents who provide different types and levels of service. You will also find agents who work part time and full time. What is meant by full time to one real estate agent is not necessarily the same for another. When considering the hiring of a real estate agent who will represent you and your interest, ask them to explain their services and approach to you. You may be surprised just how different they are.
Myth 10 – Your interests will be better served by a top producing agent. This is a very common myth worth discussing. Top producing agents achieve this distinction by completing lots of sales. But what kind of character do they have? Is integrity the foundation of their character? Can they be trusted? What motivates them? Are they motivated merely by making money? Are they motivated by providing outstanding service to clients? Do they give to charity? Do they do so for the right reasons? How busy is too busy? At a certain level, anyone can become too busy. While there is not exact dividing line, top producers I have talked to say that they found when they had more than 10 buyers and 10 sellers on the go at any one time, they could not provide the same level of personalized service as when they had less than this number. One way to find out is to see how quickly they reply to your individual inputs on an ongoing basis. While only you can answer this question when it comes to who you want to represent you, it has been my experience that labels do not matter much. What matters most to me is the character, competence, and motivation of the person.
If you are thinking about buying or selling a home or property in the Comox Valley, contact Brett Cairns of RE/MAX Ocean Pacific Realty to discuss how he will go Above & Beyond for you to meet your real estate needs.
by Brett Cairns