Having been in this business for several years, there are some interesting things that we have seen and some general misconceptions that seem to exist.
One is the fundamental misunderstanding of commissions. Generally speaking, commissions are paid by sellers, be it homeowners or developers. Those wishing to sell properties hire an agent to represent them and showcase their property to prospective purchasers. When that property is sold, the seller pays commission to both the agent that they hired (listing agent) and the agent that brought them the buyer. (Buyer agent) As a purchaser, you are not responsible for paying commission. There is an exception to this rule that plays out very infrequently but occurs when one is under contract and the seller is not paying standard commissions.
Further, some believe that going directly to the listing agent or directly to the developer is a savvy move that is going to pay dividends. Sadly, this is rarely the case. Going directly to the listing agent allows said agent to improve their rate of commission by what is called “double ending the transaction”. This means that through multiple representation, (you and the seller client) the listing agent will be able to secure a larger portion of the total commission as a buyer agent isn’t involved. It also means that as a buyer, you are largely unrepresented and your interests take a back seat to those of the seller. In the case of pre-construction, the developer pays a commission to the agent representing the buyer. Erika and I often use this commission as a form of leverage to negotiate more favourable contract terms and/or upgrades on our clients behalf. We essentially share a portion of that commission with you through upgrades. Absent the commission, (no agent, no representation) this ability doesn’t exist. Additionally, Erika and I offer a number of other pre construction services
Now, onto the subject of BRA’s. Buyer Representation Agreements. 😮 Let’s hear from the Real Estate Council of Ontario… RECO about BRA’s. Click this link to learn more… BRA. While it may feel like one is being “locked in” with a B.R.A., it is really only clarifying the responsibility of the parties involved. Signing a B.R.A. contractually ties you to the agent and the agent to you. With a formalized agreement, the agent owes you a fiduciary responsibility. Fiduciary. Generally speaking, B.R.A’s are signed for a 90 day period but can be longer. Anything longer than 6 months requires a specific acknowledgment.
Please reach out if you have any questions or comments. We’re always available and are happy to help.
Erika & Mark