Selling Through Realtor vs. For Sale by Owner
Many independent companies along with most levels of government and countless Realtors have done studies on how to sell your property. (Get the best possible price in a reasonable amount of time with the fewest problems) The outcome of these studies are not surprising. They all say that using a Realtor and the MLS system (Now Realtor.ca) is the very best way.
The facts are 90% of all homes that are sold in the market are listed with Real Estate Agents. Out of the 10% left over there is a percentage of sellers that decide not to sell, some houses are transferred to relatives for $1.00 and a very small percentage are sold privately. What are the chances of you selling your home by yourself and what is the true cost of doing so?
If your home is worth $200,000 on the open market and you hire a Realtor you will have to pay the Brokerage from the proceeds of the sale.
A 5% commission, would mean $10,000.00 plus HST. That is a lot of money…So you decide to try to sell privately. You write an ad and pay a small amount to promote your home, then you wait for the phone to ring… You are thinking “this is easy.”
Meanwhile, most Buyers, have contracts with Realtors to find them a home in exchange for a commission. You may get a call to see your home… Today’s Buyer is nervous of paying too much and or making the wrong decision. They often go back to the Realtor for advice, after all, the price of a home is a lot more money than the $10,000.00 you are worried about and the biggest Investment of their lives!
Any Realtor working for a Buyer who brings you an offer will be asking you for a commission or reducing the price of the offer and the Buyer will pay the commission. A 2.5 %commission to a Buyer’s Realtor is not unusual. So you are now saving half the cost of a commission, or are you? No one was working for you. Inevitably, the balance of your savings will get eaten up during the negotiation, due to the fact that you are emotionally invested in moving on and less experienced at negotiating than a Realtor. Therefore as a Seller you are more likely to make the wrong move or comment that can work against your home’s value. Further you have already put money out of your pocket to advertise etc.
Did you know that 80% of all FSBOs (For Sale by Owner) end up getting an Agent… usually after 1.5-2 months of trying to sell themselves? Meanwhile a lot of time is lost and unfortunately time is money for everyone!
A simple mistake of trying to sell yourself for 1-2 months of the spring market may mean you sell for less and lose a lot of time in the process.
Furthermore, studies show FSBOs typically receive less for their homes. More than 5% less! Some say the percentage lost is much higher than 5%. So that 5% commission that you thought you were saving is now costing you.
Have you ever seen a Private Bank Sale? Not sure if you’ve noticed, but banks like to “make money”. If banks thought they could sell homes on their own and save the commission they would. Power of Sales and properties under Bankruptcies are listed through Real Estate Brokerages.
Bank employees who are transferred are offered relocation packages with Real Estate services paid.
Governments move a lot of people. Just think of the Armed Forces alone. Private Companies and Government’s Unions have fought for Realtors fees as part of a transferred member’s relocation package, they too see the importance and value of a Realtor’s service.
Recently Global News had a top Real Estate Lawyer speaking to this very subject. He believed that selling your home through a Realtor was the most prudent and best right way to proceed. Did you know that Lawyers in Canada are licensed to sell Real Estate but they choose not to because they see the value set of a Realtor and know it is not an easy value set to fill!
Let’s face it…it does not take a study or a Lawyer to tell you your home will be seen by far fewer Buyers if you are selling privately than it would if you used an Agent through MLS (Realtor.ca).
Again, giving your home maximum exposure is essential to selling your home for the best possible price, in a reasonable amount of time with the fewest problems.