Three months ago a coworker of mine put his home on the market and insisted on listing it himself to save the commission charged by a realtor. He staged the home, conducted showings and even had the paperwork ready for a potential offer if it became available. The costs were dirt cheap and he stood ready to save thousands he would have spent on a realtor commission.
That was three months ago. It still hasn’t sold. He isn’t impressed.
He conceded defeat and hired a realtor, and the home sold in less than three weeks (for a substantial discount).
Growing Number of ‘For Sale by Owner’ Companies
There has been a growing trend in the number of people who are able to sell their home online and save the commission that a realtor would charge. Some of the companies that have been gaining in popularity include ComFree, Property Guys and House Maxx.
ComFree is considered one of the biggest in Canada and advertises that it has sold nearly 150,000 properties since 1997.
Changes to MLS
The Canadian Real Estate Association (CREA) owns the Multiple Listing Service (MLS) in which the large majority of homes are listed for sale. In 2010 they agreed to changed the way homeowners can access listings on the MLS system.
Previously consumers were forced to use the services of a realtor in order to access MLS when selling their home.
The changes made in 2010 mean consumers now have the option to pay to list their home on MLS, but not the other services provided by a realtor. The costs to list a home on MLS are approximately $300. Under the old rules the seller had to pay for several other services along with this fee.
Changes in the Market
The changes made in 2010 effectively give consumers more choice when buying/selling a home.
Rather than paying for services they may not want or need, consumers can pay a low fee of $300-$700 to list their home on MLS themselves.
Full service brokerage firms now compete with smaller companies offering to list the home on MLS for a small fee, with the seller doing all the other work involved.
Advantages of Using a Realtor
– Marketing expertise. Realtors are professional marketers and are in tune with today’s market (what sells and what doesn’t). This can be a great resource for a seller who isn’t quite sure how to market their home.
– Market value pricing. Sellers using a realtor have access to the database of properties in your area to determine the current market price for your home. This means it will likely be competitively priced and increase the chances of a sale.
– The time factor. As a seller, do you really have the time to stage your home, show it to potential buyers and conduct open houses? As a buyer, do you have time to constantly search the market for new listings and contact sellers to arrange showings? A realtor does all these things and can save you lots of time
– Negotiations. Some people aren’t comfortable negotiating with others, especially with significant amounts of money. Realtors can act as a guide for buyers/sellers to make a deal fair for both parties
Advantages of a Private Listing
– Commissions saved. This one is obvious. You can save thousands by selling your own home. ComFree states that a seller can save $19,250 in commissions for a home that sells for $500,000.
– More choices means more options for sellers. Many companies such as ComFree offer service packages that sellers can choose from including current market information, signs and high-quality photos of the home for MLS – all for less than $700
– As a buyer you may be able to negotiate a lower purchase price since the seller wont have to pay thousands in commissions if he/she listed their home privately
Conclusion: Perhaps my coworker would have been better off using a realtor from the beginning because he ran into several obstacles that could have been prevented – missed showings due to work commitments, low quality photos of the home and priced too high for the current market.
On the other hand some people are more ‘hands on’ and insist on selling their own home and pocketing the savings in commissions. With the changes made to the way homes are bought and sold consumers now have more choice than ever on what services they will pay for and how much they will pay. This can result in huge savings for both buyers and sellers willing to do it themselves.
What do you think? Are realtors required when buying/selling a home?