The Toronto Real Estate market continues to be strong. It’ relatively easy to sell a relatively well priced house in the Toronto market. That said, how should sellers go about the process of selling? Do the service of a “full service” broker add value in such a market?
On May 9, 2014, The Toronto Star ran articles with differing perspectives.
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Robert McLister, founder of the mortgage rate comparison web site RateSpy.com, says there’s no question a bias exists against the discounters. He’s had first-hand experience, having sold his home in nine days after listing with a full-service agent. Prior to that, his property sat for several months when he tried listing on his own.
“We had a dozen showings in the first few days after re-listing with a commission, but just one showing in five months when we used a $1,000 flat-fee MLS listing service,” said McLister.
This bias may not apply to agents who build a minimum fee into their buyer representation agreements (since they know they’ll earn something, even if the vendor isn’t offering a commission).
McLister says that not all discount brokerages pay less than the going rate to cooperating agents. Some charge only 1 per cent or a flat fee to list, but still pay 2.5 per cent to the buyer’s agent.
You can list your home for as little as $800 using a service like ComFree.com, which includes an MLS listing, a lawn sign, high quality photos, coaching and support from a licensed realtor. Since 1997 over 130,000 Canadians have sold their homes through ComFree.
Another alternative to a traditional real estate agent is a service like PropertyGuys.com. In 15 years, they’ve helped nearly 60,000 Canadian home sellers save on real estate commissions. For $2,600 you’ll get your property listed on MLS, a professional appraiser will help you with your pricing strategy, and a lawyer can assist you through the process.
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You don’t have to pay upfront: Do-it-Yourself marketing companies are not real estate agents. You usually pay $1,000-to- $2,000 up front, for pictures, videos and to have your home listed on the MLS system. However, you get no money back if your home doesn’t sell. With a real estate agent, if your home doesn’t sell, you pay nothing, even though the agent may have spent a lot of time marketing and using all of their own and their company contacts to sell your home.
Abidding war is unlikely: Bidding wars are the norm in the GTA and other parts of Ontario. In virtually all cases, the home is sold by a real estate agent. The reason is that it takes experience to price the home properly. Second, the process is fair because no one knows what anyone else is bidding. With a private seller, there is no duty of confidentiality, so the seller can tell one buyer what another buyer is bidding. Buyers do not trust the process so there is no bidding war.
You negotiate on your own: When you do it yourself, it is difficult to know what a fair price is for your home. You might have to pay an appraiser to find out. When a buyer hears that you are saving commission, they will want to split the savings. So you don’t get all the commission savings and you also have to negotiate with a buyer who is likely represented by a real estate agent. This agent will use all their experience to figure out how low you will go, while giving nothing away about their own buyer.