Frequently Asked Questions

With me, there is no such thing as a dumb question.

How Much Commission Do You Charge To Sell A Property?

This is one of the first questions potential clients want to know when they contact any Realtor.  There is not a standard answer when it comes to real estate commissions as every agent's commission structure and level of service is unique. However, I will do my best to outline what service I provide my Sellers.

In Greater Victoria, it is commonplace for a Seller to pay a commission of “6 and 3” on their property’s final sale price. This is translated as 6% on the first $100,000 and 3% on the remaining balance.   The commission is evenly split between the Seller’s agent and the Buyer’s agent – 3% and 1.5% each plus applicable taxes (including GST) when the transaction closes. Real estate commissions come out of the proceeds of the sale.

How Do Real Estate Commissions Work?

There are three ways to structure a commission payment:

Percentage of the sale price

Fixed dollar amount

Combination of the above

If an agent is only installing a lockbox and listing your property on the MLS, you are likely overpaying for their work. A real estate broker should commit to sell your home for the highest and best price possible, using all the marketing tools and resources available. No two realtors are the same and neither are their services, knowledge or commitment to their client.

Are Real Estate Commissions Negotiable?

Yes, they are. Keep in mind however that not all services are the same. You have every right to seek alternative options when hiring a Realtor. In Victoria, there are many choices to fulfill your needs.  Some companies offer “mere posting” options, meaning they list your property on the MLS without agent representation leaving the entire process up to you.

Real estate commissions fees vary, depending on the brokerage and the services being provided - here is no standard or fixed fee as some people assume. Remember commission fees are written into the listing agreement, the contract between the Seller and the Listing Brokerage. Meaning, the Seller must agree to the commission before signing the listing agreement.

Do Buyers Have To Pay Commissions?

Generally speaking, no.  The Buyer's agent is compensated through the listing brokerage from the proceeds of the sale.  The purchaser is not responsible for any commissions or associated fees.  There are exceptions to this rule for some Buyers depending on what they have arranged with their Realtor.  As a Buyer, it is recommended you review compensation details with your Realtor in detail before signing a representation agreement.

What Is An Exclusive Listing?

An Exclusive Listing is a Listing Agreement with a Seller and a real estate brokerage, however the listing itself does not appear on the MLS System. Exclusive Listings are sometimes called “off-market listings” or “pocket listings.”

Generally, these listings can only be viewed within the same brokerage as the Selling agent and typically attract buyers through direct referral. Exclusive listings do not appear on (the public side of the MLS System).

Your home may have less visibility to other real estate agents and prospective buyers compared to listings marketed on the MLS System.

There are several reasons that a Seller may consider and Exclusive Listing strategy:

There is an added level of privacy during the home selling process. This is often a popular approach for luxury homes at higher price points.

Exclusive listings are less invasive when the house is not open to the public. The listing agent and Seller have more control and can oversee things by qualifying potential purchasers in advance of viewing to avoid unnecessary inconvenience, preparation and disruption. Estate properties or homes occupied by elderly owners sometimes use this method.

Exclusive listings are an excellent way to “test the market” before exposing the listing to the public. Agents can invite colleagues and clients to view a property to provide feedback on pricing, condition, location and staging before formally listing the property online. This can be a wise choice for listings that are difficult to price or have a unique value proposition.

What Is The Downside Of An Exclusive Listing?

Victoria's real estate market has been hot for some time.  It does not make sense for a Seller to list their property off-market unless there is a predetermined strategy or rationale as to why.

It makes the most sense to expose a property to the open market to obtain the highest and best price for a home. If a home is not advertised to a large Buyer pool, the Seller could leave money on the table. While it’s impossible to predict what a Buyer may be willing to pay you for your home – I am confident it could more if properly exposed to the open market.

What Is A Bully Offer?

A bully offer is generally a pre-emptive offer with the purpose of "bullying" others out of the buying process and typically for significantly over the list or asking price and prior to the stated offer date in your listing. 

Bully offers are almost always an unconditional, take it or leave it offer usually accompanied by a sizable certified deposit cheque. For a bully offer to work, the offer has to be so enticing to the Seller that they fear losing the opportunity to sell at a premium. 

Some people incorrectly think that a bully offer means being the "first" buyer to offer on a home. This isn't the case. Instead, a bully offer is an offer that the homeowner would have a tough time refusing.

What Is My Property Worth?

One of the essential things any Realtor will do is work with a Seller on the initial listing price. Your Realtor should be researching the market and perform what's called a Comparative Market Analysis (CMA). 

The CMA compares your house to similar properties in the area that have recently sold as well as the properties currently listed for sale. Besides location, CMAs consider elements such as pricing, features, lot size, and structure condition. A properly researched CMA and analysis of recent sales often point to a market price suggestion for your property.

A Realtor should consider the following when doing a CMA for you:

How long did it take for this comparable properties to sell?

Were there any price reductions to facilitate a sale, or did the home sell with multiple offers being presented?

Did the property sell after having been withdrawn from the market, rebranded, and reintroduced into the marketplace?

Were there unique features that the marketplace either rejected or paid handsomely for in the case of unique sales?

Realtors should explain how these sales impact the sale of your own home and conduct an independent analysis to gauge all relevant market variables. Current pricing considerations need to be justified based on past sales and current market conditions.

Is It Better To Work With A Bank Or A Mortgage Broker?

I typically recommend that it’s in your best interest to work with a capable and tenured mortgage broker however the decision is yours. 

A mortgage broker is able to shop around rates and terms to find you the right option that best suits your needs.  A bank on the other hand only has access to their products and services. A mortgage broker isn't tied to one lender and can find the best possible financing arrangement at no additional cost to you most likely - there is no real downside.

Mortgage financing can be overwhelming for some and it is always best to ensure you understand the terms and conditions before signing.  If you aren't sure, it is recommended you speak with your lawyer.

How Much Do I Need For A Deposit?

Deposits are generally 5% of the offer price at a minimum. For really hot properties with multiple offers, it is recommended you have a 10% deposit available when submitting your offer.  Your deposit cheque applies against your purchase price due on closing.  If you aren't successful in your offer, the deposit remains with you.

Is A Deposit Amount Refundable?

Deposits are returned to a Buyer if there are conditions in the offer that are not satisfied.

Say for instance you had a condition to obtain bank financing in your contract but were unable to find a mortgage.  In this case, you would not be able to remove your financing condition and the offer would expire.  You would then have your deposit amount refunded to you.

The Buyer and Seller would still need to to sign a release form before your deposit cheque is returned to you.

Keep in mind, if you have not acted in good faith (or if the Seller feels you did not act in good faith), they may refuse to sign the release and apply to hold back your deposit. In this situation, the funds will remain in the named trust account, and the dispute between the Buyer and Seller would become a legal issue settled through court if not settled in advance.

How Much Is The Property Purchase Tax?

The general property transfer tax applies for all taxable transactions. The general property transfer tax rate is:

  • 1% of the fair market value up to and including $200,000

  • 2% of the fair market value greater than $200,000 and up to and including $2,000,000

  • 3% of the fair market value greater than $2,000,000

If the property has residential property worth over $3,000,000, a further 2% tax will be applied to the residential property value greater than $3,000,000.

If the property is mixed class (such as residential and commercial), you pay the further 2% tax on only the residential portion of the property.

If the property includes land classed as farm only because it is used for an owner’s or farmer’s dwelling, up to 0.5 hectares will be treated as residential property.

If you’re a foreign national, foreign corporation or taxable trustee, you must also pay the additional property transfer tax on the fair market value of the residential portion of the property if the property is within a specified area of B.C.

When trying to calculate your potential land transfer tax liability on the purchase of the property, it’s always best to speak to your real estate lawyer.

You are a former Home Inspector. Can You Do a Home Inspection for me?

No... Under the current rules set out by Consumer Protection BC, I am not permitted to conduct formal home inspections as a licensed home inspector. When it is time for an inspection, I advise you to  use the services of a provincially licensed professional Home Inspector.

As your Realtor, I will use my previous inspection experience as we discuss any property deficiencies that may be concerning or need to be addressed. 

Aside from having a trained eye for deficiencies around a property, my home inspection training and experience allows me to review any other Home Inspector's report and interpret their findings.  This will help you, as a seller, to get the most money for your home.  You won't have to simply reduce your asking price as a result of the buyer's home inspection report.  

And if you are a buyer, remember I  will credit you up to $600 toward the cost of your home inspection!

Do I Need A Pre-Listing Home Inspection?

I believe that it is in the Seller’s best interest to have a pre-list home inspection done shortly before listing their property.  There are three main reasons a seller may elect to do this.

1. Make Minor Repairs Ahead Of Your First Impression On The Market

Sellers know a lot about their home, however a pre-list home inspection reduces the number of red flags that may be found in a buyer’s inspection report. An inspector will help point out minor faults that the Seller may be able to remedy before going to market. Small items such as leaking faucets, missing handrails, electrical cover plates and so on which the owner can quickly and inexpensively fix. An inspection report can be updated once these items are taken care of.

2. Honesty Is The Best Policy

Pre-Listing Inspections tell buyers about the details of your property and that you are willing to ‘show your hand’ as the Seller. An inspection will reveal all that’s known about the home’s condition when it was inspected. An honest seller wants prospective buyers to know what they are walking into so there are no surprises later which will delay or collapse the deal.

3. Seller Convenience

A Pre-Listing Inspection is also a great tool for reducing the inconvenience of having your home inspected.  While some Buyers may still want to have their own home inspection done, some Buyers may be comfortable with the Pre-Listing Inspection you had done.  

Let's say there are five separate inspections during one week of showings - that’s approximately 15 hours you'll have to be away from your home. You’ll need to give the potential Buyer and inspector privacy and time to look at the property.

The objective in getting the highest dollar amount for your home is to keep the pool of Buyers as large as possible.  Giving them a sense of confidence about your property due to your transparency and upfront report will keep them interested, focused and, above all, ready and willing to act.

Having a Pre-Listing Inspection does not necessarily mean there won't be inspections by other parties. But, it will cut back on the total number of inspections to make things a little easier for you and for a prospective buyer to offer on your property.

MLS® property information is provided under copyright© by the Vancouver Island Real Estate Board and Victoria Real Estate Board. The information is from sources deemed reliable, but should not be relied upon without independent verification.