Real Estate

There are a number of differences when it comes to the listing agent vs the selling agent in real estate.

This blog explains the differences in the listing agent vs the selling agent with regards to what their roles are, how they differ, and why they should not be the same person.

If you’re looking for an agent to help you buy or sell a property, read this blog first for important information on the listing agent vs selling agent in real estate!

Broadly speaking, there are two different types of traditional real estate agents:

• Listing Agents: This is the agent that represents the seller of the property. They help you price, market, and sell your current home.
• Selling / Buyer’s Agents: Help you search for, make offers on, and purchase your new home. This type of agent is commonly referred to as the buyer’s agent.

When you are represented by a realtor and have that realtor working solely for you as your agent, then regardless of whether you are hiring a listing agents or a selling agent, you can expect:

• Loyalty to You
• Duty to Avoid Conflict of Interest
• Requirement to Fully Disclose Information
• Duty to Protect Your Confidentiality

Because representing both a seller and a buyer in a transaction is a clear conflict of interest (the seller wants the highest price, but the buyer wants the lowest price), most real estate transactions involve both a listing agent (rep of the seller) and a seller’s agent (rep of the buyer).

Now, let’s get in to the roles of the listing agent vs selling agent.

What does a listing agent do for a home seller?
There is a lot to do when selling your home, and all of that is managed by the listing agent. From the day you start thinking about selling and want a market evaluation to the day you close and move out of your home, the listing agent will be there for you every step of the way. Here are some of the duties you can expect from a listing agent:

• Offers local housing market expertise & a competitive market evaluation: A listing agent will be one of the firsts contacts when you consider listing your home. They will be able to prepare you with a competitive market analysis to help you estimate market value of your home. A great listing agent will have a strong understanding of the market in your neighbourhood and be able to offer local market expertise for your type of property. This knowledge will serve you further throughout the process, specifically when you receive an offer on your property and need to negotiate the price based on market comparables (aka comps) and stats.
• Recommends a listing price & strategy: Accurately pricing property is perhaps a listing agent’s most important role. After reviewing the competitive market analysis with you and providing you with market comps, the agent should be recommending a listing price based on your real estate goals. They should know whether you can push the envelope based on the supply and demand market trends in your area, or if it’s better to price to sell or at market. Listing strategy and pricing extremely important when it comes to selling quickly while yielding the maximum amount of profit, so it’s important that you work with an experienced agent that is familiar with your type of home and area and can recommend an appropriate listing price.
• Helps you to prepare your home for sale: Listing agents know what sells a house and what turns prospective buyers away. They can suggest quick home repairs that will disproportionately increase market value, or possible renovations that will result in a good ROI for you. They’ll be the ones supporting you with professionals to get the home ready to market, and should be coordinating professional photography, videography and floor planners that give your property a competitive edge on listing sites.
• Lists the property on the MLS & markets online: Your listing agent will be able to advertise your home on the realtor Multiple Listing Service (MLS), which is a comprehensive database of listings for sale by licensed real estate agents in the area. The MLS is run by the local Real Estate Board, and is the site that links to all other listing advertised sites to ensure maximum exposure of your home. Since the majority of all properties are discovered through this catalogue, it’s a great disadvantage for a property to go unlisted.
• Advertises on social media & increasing exposure: A great real estate agent should have a marketing plan to maximize exposure of your home listing. Make sure that the listing agent you choose advertises on social media outlets like Facebook, Instagram, or REW.ca, in addition to the basic MLS listing advertisement. Ask them what other types of marketing they do, like open house mailers or email marketing to their database.
• Handles showings and open houses: The listing agent will be the one that is responsible for organizing showings and open houses, and allowing potential buyer’s and their agents access to viewing your home. A great listing agent should be doing all of their showings and open houses in person (rather than on lockbox), so that the buyer’s know all of the benefits or your property or in case they have any questions about the property. Listing agents can talk up a property, keep it safe, and act as an objective presence to make prospective buyers comfortable (nobody feels comfortable wlaking through a house while an owner is watching them like a hawk, so it’s good to have a 3rd party that the buyer can feel comfortable around). The listing agent also knows what to disclose and what not to disclose, to ensure that there aren’t any issues down the line.
• Screens potential buyers: Because a great real estate listing agent will be there in person to do their showings and open houses, they should be able to screen potential buyers to make sure that you’re able to separate serious buyers from the not-so-ready or not-so-serious to avoid wasted time. Your listing agent is there to confirm that buyers are pre-approved and prevent a collapsed offer at all costs.
• Negotiates offers on behalf of the seller: While most seller’s goal is to obtain the most amount of money out of their sale, negotiations also typically include stipulations about closing dates, subjects, terms, warrants, and deposits. Even once an offer is accepted, the agent is there to represent and negotiate if required during subject removal and assist with legal obligations and financial due diligence until closing. A great listing agent will be a strong negotiator, and put the seller’s best interests first.
• Helps with paperwork and closing: There is A LOT to know when it comes to real estate (believe me, I’ve written over 200 blogs on different topics… there’s a lot to talk about). Do you know the six most common subjects? Do you know what types of warrants to put in to a contract or cross out? How familiar are you with regional rules governing residential property disclosure? Do you know the difference in roles of a notary or a lawyer when it comes to completion? Selling a home is a high-stakes — and regulated — transaction. An experienced agent will help you navigate the sea of legal documents, contracts, and tax procedures to ensure you don’t inadvertently overlook an important detail that could result in an audit or lawsuit after closing.

What does a selling agent do a for a home buyer?
The selling agent, also known as the buyer’s agent, will help the buyer navigate through purchasing a home from start to finish. As a buyer, here’s some of the duties you can expect the selling agent to cover:

• Helps buyers find financing: One of the most important steps to avoid time and gain clarity for a buyer is to get pre-qualified for a mortgage. Selling agents can connect buyers with credible lenders and experienced mortgage brokers to ensure that the buyer has a clear picture of their affordability and what the mortgage payment is going to look like. This financial backing will ensure that when a buyer is ready to make an offer, they can do so quickly and with confidence. A great buyer’s agent will have a team that they can recommend to help the home buyer get a great rate and a mortgage that meets their needs.
• Discovers new properties: Many public sites like REW.ca or Realtor.ca have a lag from when the property is listed and when it actually hits the realtor MLS site. Furthermore, they often restrict the amount of information available (like pet or rental restrictions). Selling agents will have full access to all properties on the MLS (the biggest real estate listing database), as well as a wide network of agents and any private listings available to you. Using this comprehensive catalogue, selling agents are able to pick out the properties most suitable for their clients and expedite their house hunting journey, as well as set you up on auto notifications so that all new properties that match your preferences are emailed to you instantly without need of manually searching!
• Coordinates and guides property showings: This is the most visible role a selling agent plays: walking their clients through the prospective properties they’ve selected for them and organizing a tour with the listing agents. A great selling agent will know the area that you’re looking in and how other homes compare, so that they can provide you with an unbiased and informative opinion on the properties that you’re interested in.
• Offers you a comparative market analysis on properties you’re interested in: Great selling agents have the same in-depth knowledge of the housing market as their listing counterparts (ideally more), and understand whether a property has been fairly priced and how it can be expected to increase or decrease in value over time. They will be able to provide you with an estimate of market value based on the recent comparable sales for properties in the same area, as well as given you an opinion on what offered prices are too high or too low.
• Prepares & negotiates offers on behalf of the buyer: The selling agent acts as an objective legal representative for the buyer, and is responsible for presenting offers and counter-offers to the seller and/or seller’s agent on your behalf. The buyer’s agent writes the initial offer presented to the seller, so they will be able to guide you and recommend appropriate prices, subjects, clauses, terms, and dates to add to the contract of purchase and sale. In addition to a deep understanding of the complicated closing process, selling agents are capable of negotiating neutrally, absent the intense emotions that buyers can feel when bidding on a new home.
• Helps with subject removal and performing due diligence: The subject removal process requires a lot of reviewing, paperwork, correspondence and bookings to ensure that due diligence is done and you know what you’re purchasing. Whether it’s reading through strata documents, setting up a home inspection, calling the city, reviewing the title search and property disclosure, or helping you obtain a quote for home insurance, the selling agent is there to support the buyer during subject removal and make sure you are fully aware of what you are purchasing.
• Helps with paperwork and closing: Buying a home is a complicated process, and the selling agent is there to help with facilitating the accepted offer, subject removal, and closing process in addition to the team of a mortgage broker, inspector, and notary or lawyer. This process involves a huge amount of paperwork, disclosures, and legal documentation. Agents have extensive experience with paperwork, contingencies, and the other legal ins and outs of the home buying process. They’ll help ensure your closing goes smoothly and prevent any surprises down the road.

Listing Agent vs Selling Agent Commission
At the time of listing a home, the seller and their designated real estate agent agree to a gross commission; which in turn will be split between the listing agent and a buyer’s agent.

The seller then pays the buyer’s agent commission, also known as the cooperating brokerage commission, to the buyer’s agent. Offering a full cooperating commission is done to encourage Buyer’s Agents to bring their Buyers to see the property, and the agent whose Buyer actually purchases the property receives their split of the commission upon completion.

Just to reiterate – Buyers do not pay their Buyers Agents!

The Seller pays a commission to the Sellers Agent who then splits that commission with the Buyers Agent when the property sells! We buy houses in Topeka

A typical gross commission (split between the listing & selling agent) in the Lower Mainland is 7% on the 1st $100,000/3% on the balance, in which a typical portion of 3.255% on the 1st $100,000/1.1625% on the balance is typically given to the selling agent (buyer’s agent). The difference between the gross commission and the selling agent commission is what the listing agent receives as a commission.

Thinking about investing in some commercial real estate this year?

Let me cut to the chase, out of all the options available to you, buying (or partially investing in) commercial properties could be your best bet as an investment. It’s a relatively stable asset, has a familiar feel for investors since it’s residential, and the lending terms can get fairly aggressive.

Now, even within this category there are many options to think about. For the sake of simplicity, let’s get specific and stick to the good old-fashioned (and often lucrative) apartment complex.

Where do you start?

When researching the purchase of your first apartment complex, there are seven main areas that you must look into, learn about, or easily master by investing with a trusted professional.

I won’t be diving deep on any of these areas in particular, the purpose of this article is to quickly give you an idea of what you need to know to make a smart investment.

OK, let’s take a look at the seven areas you need to have some expertise in before buying your first apartment complex …

Determine Your Investment Strategy

There are basically an unlimited amount of different ways you can invest in an apartment complex, depending on asset type, property class, location, investment strategy, and more. Finding the right investment strategy for you is very important. In my experience, the best commercial real estate investment strategies are:

• The Commercial BRRRR (hat tip to Bigger Pockets!) also known as Value-Add
• Ground-Up Development
• Long-Term Buy and Hold

Depending on your goals, you may choose to stick with one method, or diversify with multiple strategies.

The most common strategy for investing in apartment complexes is the BRRRR or value-add method since there are many older apartment complexes out there that could see a significant increase in value through renovations and repositioning.

How To Pick The Best Location

You’ve heard it said that success in real estate is all about “location, location, location.”

When it comes to investing in an apartment complex, this is even more true. And finding the right building for YOU can be a daunting task, if you’re on your own.

How do I suggest you approach this, when you’re trying to find that perfect building? Here’s a five-step approach that can give you a great head-start:

• Find a great broker (see below)
• Decide where you want to buy/invest
• Determine which asset class / building type you’re going after
• Narrow your search
• Tour potential locations thoroughly

Now, there’s obviously a lot of detail within each of those items above, but we’ll cover a few of those items a bit further below.

If you start your apartment complex investment strategy with this location approach in mind, you’ll find it saving you a ton of time and headaches down the road.

Find A Great Commercial Real Estate Broker

Finding an ethical and excellent broker is incredibly important in the commercial category. In fact, apartment complex deals are almost exclusively done through brokers.

The good news is that commercial brokers bring a number of benefits with them. By virtue of working in the field, an experienced commercial broker will know the market through and through – they can help you meet your goals while staying true to your budget.

Brokers are the front-line in the search for exemplary apartment complex sites. Here are just three of those benefits:

• The broker will do the heavy lifting for you
• An experienced broker is invaluable during negotiations
• They won’t cost you a dime up front

Now, the bad news is that most brokers in this world represent the sellers, exclusively. That means that if you’re bringing a buyer’s broker to the table, you’ll likely have to pay their commissions. If you’ve retained the right broker, their fee will be worth every dime as they help you find the right location and assist you throughout the process.

Enlisting the help of a good commercial broker gives you the peace of mind that an industry professional is protecting your interests.

As anyone looking for commercial space will quickly learn, most sellers will be represented by their own broker, which makes it even more important to even the playing field.

Not only will a commercial real estate broker be a valuable asset during negotiations, but also throughout the entire search.

The right broker will be able to take care of everything from researching and curating an initial list of properties to finalizing the (sometimes complex) deal.

Don’t skip this step!

How To Find A Commercial Real Estate Lender

This is an interesting time to go out looking for a commercial real estate lender. Many banks and other commercial lender types are a bit gun shy right now, due to the effect 2020/2021 has had on certain parts of the commercial sector.

That said, in my opinion, this hesitancy can be overcome and it only applies to certain types of deals. So, yes, you can find a great lender for your project/investment, it’s just going to take a little work.

Here are four ideas to get you started:

1. Prep a Great Loan Package

Many would-be investors go overboard here. I always advise people to keep it short and powerful. Stay between 3-5 pages, including only an Executive Loan Summary and a Pro Forma Operating Statement at first. If done well, this will be enough to get serious interest from your prospective lender.

2. Think Small

This might seem counterintuitive, but starting with small, local banks might be your best bet. Maybe even your own bank would be a good place to start. You can talk directly with the top loan officers and/or the President, making a great pitch to the right people, and your chances of finding a sympathetic ear skyrocket.

3. Get Ready to Work the Phone

There’s an old saying in business, “You’re only 2,000 cold calls away from becoming a millionaire.” I don’t think you’ll need to make that many calls to lenders, but prepare yourself for the possibility of needing to reach out to 100 banks. This is the game, my friends. Embrace the suck.

4. Know Your Stuff

This might be obvious, but too many take this for granted, and come up empty handed. Spend whatever amount of time is necessary researching your building, the neighborhood and town it’s in, talk to people in the neighborhood if you can … in short, know your asset inside out. The more intelligently and effortlessly you can speak about your project, the better chance you’ll have at closing a loan with a great lender.

If you go all in on these four tips, you should be able to get a deal done with a lender. If not, just open up a can of never quit and keep at it. Much of this game is simple brute force persistence.

When you do that, you’ll be that much closer to closing on your first apartment complex.

Do Your Due Diligence (Free Checklist!)

Due diligence is one of the most important parts of making sure you’re investing in the right property.

Questions about what you should inspect in the property and reviewing (and understanding) financial documents is crucial to putting together a good deal.

Here’s more good news … I’ve put together a comprehensive checklist called, appropriately, Due Diligence Checklist for you, and it’s entirely free!

The Art Of Raising Capital

Money is a finite resource. Investing in commercial real estate is expensive, so chances are good you’ll run out of your own capital rather quickly.

Learning when and how to properly raise capital is crucial if you’re looking to find the right apartment complex and then grow from there.

As a place to start thinking about whether or not you should raise capital, here’s a short list of the pros and cons.

The Pros Of Raising Capital:

• Scalability – Third-party capital can fuel the growth of your real estate portfolio faster than you could ever scale on your own. More money = more deals. Scalability can also increase your profitability, too.
• Experience – If you’re raising capital from partners with investment experience, they can help ensure the success of the project and bring their expertise to the table.
• Another Set of Eyes – It never hurts to have others take a look at your deal. They may find positives and negatives that you had overseen.

The Cons Of Raising Capital:

• It’s Expensive – Investors will expect a significant portion of the equity in the deal since they’re putting up the majority of the capital. It’s not uncommon for investors to own 70%+ of the equity of these offerings.
• You Don’t Call All the Shots – Once you’ve taken capital from an investor, they will expect you to utilize that capital responsibly to get them a return. You may not actually work for them, but you really do.
• Additional Complexity – Once you’re no longer the only investor in your deals, they become more complex. You’ll need to decide on a deal structure, put together an operating agreement, decide how to report financials, etc.

Obviously, this is a complex and high-stakes topic to try to understand, much less master. I strongly suggest you work with (or at least consult) an experienced professional before diving into the world of raising capital.

Syndication: The “Easy Button” For Buying Your First Apartment Complex

A commercial real estate syndication is a way for individual investors to pool their funds together in order to buy a larger and more stable asset than any of them could have done on their own.

Since they are an investment offering, real estate syndications are governed by the Securities and Exchange Commission (SEC), so each offering must file documentation with and report to the SEC.

The general intent of any commercial real estate syndication is to reduce risk, spread out the cost to each investor, and build wealth and passive income.

Some of the pros of engaging in real estate syndication include:

• Access to larger assets and projects
• More stability due to higher unit counts and / or location
• Less money out of your pocket if you’re the syndicator / deal sponsor
• Completely passive real estate investing and cash flow if you invest with a sponsor
• They can support onsite, professional management
• And, all of the tax benefits, forced appreciation, and write offs just like any real estate investment

Commercial real estate syndication is — in my opinion — an excellent way for a new investor to find and close on their first apartment complex. In fact, syndication is one of the vehicles we focus on most.