The Role of a Listing Agent

The organized real estate industry has, for decades, maintained what some people consider a monopoly on resale homes in Canada. In Alberta, the industry is predominately controlled by large traditional brokerages. Flat fee or discount real estate companies are, however, making substantial inroads and gaining considerable market share. The collective of REALTORS^® in Canada owns the Multiple Listing Service^® (MLS^®) and in order for you to list your home for sale on the MLS^® System, you must hire a REALTOR^®. The vast majority of transactions conducted through the MLS^® System involve two real estate agents, a listing agent and a buyer’s agent.

So which agent actually “sells” your home, the listing agent, or the buyer’s agent? Most home owners think it’s the listing agent, however, the listing agent plays virtually no part in the actual selling of the property. In fact, it is unlikely that the listing agent will ever even speak to the eventual buyer of your home. Yes, the listing agent puts your home “for sale”, however, after the home is on the MLS^® System, it is the buyer’s agents that sell the features of both your home, and the community.

The role of a buyer’s agent is fairly straight forward and not really cloaked in mystery like that of the listing agent. The job description of a buyer’s agent is simple. Find a suitable home in a suitable community for his or her client, and then write an offer that is acceptable to both parties of the transaction. In some cases, this can involve a substantial amount of work for the REALTOR^® or, in other cases, relatively few hours if the buyer knows exactly what and where they would like to purchase. In Alberta, home buyers are generally not required to pay their agent’s commission, common practice is that the buyer’s agent is paid by the seller, through the listing brokerage.

The role of a listing agent, whether flat fee or traditional, is more predictable with regard to the amount of work involved, but a little more complex with regard to their duties. And even though it is the MLS^® System, not your listing agent, that actually sells your property, it is important to understand what attributes you need to look for when hiring this REALTOR^®. Unfortunately, when homeowners interview REALTORS^®, they erroneously focus on “how” the REALTOR^® will sell their home. What these sellers fail to recognize is that all REALTORS^®, from all real estate companies, have the same marketing plan… it’s called the MLS^® System. The MLS^® System is what you pay for when you hire a REALTOR^®, any REALTOR^®. Forget about the extravagant marketing plan being pitched to you by a traditional agent, it doesn’t exist, or if it does, it is redundant and useless.

It’s important to understand that each and every home sale has three distinct phases, the listing phase, the selling phase and the negotiation phase. What you should be looking for in a listing agent is their ability to price your home properly, thoroughly and professionally manage your listing while you are for sale and expertly close a deal. Find an agent that can perform these duties competently and you will likely enjoy a successful sale. Find an agent that can perform these duties competently, and at a discounted fee, and you will enjoy an even more successful sale.

The Listing Phase

The most important variable in the sale of any home is the asking price. Residential REALTORS^® estimate the value of all potential listings by performing what is called a Comparative Market Analysis, or CMA. Given this, why is it that most homes get listed too high and have to go through one or more price drops prior to selling? One reason is that many sellers think, want, or need their home to be worth more than it actually is, and many REALTORS^® will knowingly agree to this incorrect value for fear of losing the listing. Or, the REALTOR^® doesn’t have the experience and expertise to properly evaluate the property and incorrectly gives the sellers false expectations. Unfortunately, each year in Alberta thousands of MLS^® listings expire, or are terminated, and go unsold.

The good news is that some REALTORS^®, like ours at rhinorealty, are extremely skilled at evaluating your property based on their experience and the most recent comparable sales data. These agents will stand by their suggested list price even when faced with the prospect of losing a listing. They understand the value of their time and conclude that if a listing is not likely to return an income due to unreasonable seller expectations, it makes no sense to take on the work. Remember, neither REALTORS^®, real estate companies, nor real estate boards determine the value of your property, the market does. Good REALTORS^® price homes properly, not so good REALTORS^® do not. In any type of market, a properly priced home will ultimately lead to the highest possible sale price.

The Selling Phase

An often heard critique of REALTORS^® is that you never hear from them after the sign goes up. And, in many cases, the complaint is warranted. A listing agent may not be responsible for “selling” your home per se, however, they are obliged to manage the selling process. Some REALTORS^® get this, and others do not. Managing a listing is very time consuming, it involves accurately reflecting the home on MLS^® System, ongoing communication with the seller and other REALTORS^® as well as constantly monitoring competitive properties. Good listing agents will be able to describe to you in detail how they manage their listings from start to end, bad REALTORS^® won’t even understand the question. While a well managed listing cannot guarantee a buyer will write an offer on your home, a poorly managed listing will almost certainly guarantee one will not. Be wary of REALTORS^® that show up for an interview ill-prepared and disorganized, it’s probably how they will manage your listing.

The Negotiation Phase

Lastly, you need to hire a REALTOR^® that has the experience and skill to negotiate the terms of a deal most favorable to you. However, remember that in order to negotiate an offer, one has to exist. Here again, homeowners have a misconception that listing REALTORS^® have some mysterious means of attracting offers. It is important to understand that REALTORS^® don’t attract offers, houses do. Regardless of what real estate company you have chosen, if your home is on the MLS^® System and it has been priced and managed properly, it will likely attract an offer. The eventual outcome of that offer can vary largely from one REALTOR^® to another.

Understand that your listing REALTOR^® will only nominally add to his or his commission by recommending you hold firm and gain another $5,000 or $10,000 on the sale price. For example, a common real estate commission in Alberta is 7% on the first $100,000 plus 3% on the balance of sale price, with each agent, the listing agent and the buyer's agent, normally taking half of that amount, 3.5% on the first $100,000 plus 1.5% on the balance. Therefore, a listing agent only benefits $150 by getting you another $10,000 for your home. The question becomes, then, will your own agent be more interested in just getting a deal done than in negotiating your best price?

New or less successful REALTORS^®, that “need” a deal, perhaps due to their own financial circumstances, may not be the best candidates when choosing a listing agent. Experienced and busy REALTORS^® who have deals closing all the time, like ours at rhinorealty, tend to want to “win” the negotiations, whether it’s for your benefit or their own personal satisfaction doesn’t matter. When they win, you win. Additionally, these more experienced REALTORS^® will know how to negotiate all the additional terms of the offer to your advantage and to increase the chances of condition removal.

Conclusion

In summary, when hiring a listing agent, don’t look for one with some grand marketing plan, as you will simply be paying higher fees for useless redundant marketing. Simply find a REALTOR^® that can competently evaluate, manage and negotiate the sale of your home. The MLS^® System is all the marketing you need. If you are able to find such a REALTOR^® that belongs to a flat fee full service real estate company, like those here at rhinorealty, then the net proceeds from your sale will be higher.