Personal Finance

Selling your home by yourself works better in a sellers' market.
By Gail Bebee | 15/05/17

The Canadian Real Estate Association reported that the national average home price was $548,517 in March 2017, up 8.2% year over year. At the 5% sales commission charged by real-estate agents in most provinces (as reported by online brokerage ComFree, the commission on the sale of the average home would be $27,426 plus HST. Given the calculation method, commissions march in step with home-price changes and can be much higher in hot real-estate markets. For example, in Toronto, the total commission for a home sold at the average price ($916,567 in March) would be almost $52,000.

About the Author
Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at gbebee@gailbebee.com; her website is www.gailbebee.com.

The cost of selling a home using a professional real-estate agent is a significant chunk of change, and sales commissions rise in step with escalating house prices. If you believe that the commission an agent would charge is not good value, there are ways to reduce the costs of selling your home.

To gain the services of an experienced real-estate agent for the lowest cost, use the time-tested consumer strategies of shopping around and bargaining. Identify three agents that your research has shown are top sellers in your neighbourhood. Ask each to present a proposal on a marketing strategy for selling your home, the estimated selling price and commission, and any included value-added services such as home staging.

Evaluate each agent's proposal, then meet with your preferred agent and negotiate with her to obtain the most favourable terms for the agreement to sell your home. Make sure the agent knows that she is competing for your business.

Obtaining a reduced commission is more likely in a hot real-estate market where strong buyer demand means agents are scrambling to find homes to sell, or if your home is located in a coveted neighbourhood where homes seldom go up for sale. In these cases, you can argue that a fee reduction is warranted since your home should sell quickly and the agent's selling expenses will be low.

If the agent refuses to lower the commission, ask for a reduction if the home sells faster than the average time to sell a home in the area.

When negotiating with a prospective agent, keep in mind that any commission reduction usually comes out of the dollars the agent actually receives. This will be less than half of the full commission as it is normally split between the buyer's and seller's agents, and agents pay a portion of their commissions to the brokerage where they work.

Hiring a realtor who offers traditional real-estate services at a discount is another way to reduce the cost of selling your home. For example, One Percent Realty -- which operates in B.C., Alberta, Saskatchewan, Ontario and Nova Scotia -- charges a $6,900 commission for homes under $600,000 and 1% plus $900 for homes over $600,000. The buyer's real-estate agent receives a $3,000 flat-fee commission, which One Percent Realty claims is enough to entice agents to show the home. Don't expect the same level of service and marketing that regular full-service realtors provide.

If you are prepared to do some legwork, to deal directly with prospective buyers and to spend some dollars on marketing, it is possible to sell your home without hiring a real-estate agent, and save thousands of dollars in selling costs. You must also possess the fortitude to ward off the many real-estate agents who will pester you to list your home with them.

Selling your home by yourself works better in a sellers' market. Agents representing buyers typically do not show clients homes being sold privately. However, when few homes are available for sale, a buyer's agent is more likely to approach a private home seller to negotiate a commission if she shows the home to her clients and they buy it. As well, in a sellers' market, potential buyers struggling to find a home to buy are prepared to deal directly with a seller.

There are companies that support homeowners who want to reduce home-selling costs by doing the work themselves. Services range from strictly advertising to comprehensive support that includes an in-home consultation, pricing assistance, professional photos, feature sheets, for-sale signs, online advertising on the company website and the real-estate industry's Multiple Listing Service (MLS), ongoing advice and negotiation of the sale. There are local players in this space such as GrapeVine Home Marketing in the Ottawa area, OKHomeseller in B.C.'s Okanagan Valley, and DuProprio in Quebec, as well as larger players that operate in several provinces.

ComFree is a flat-fee real-estate brokerage operating in Alberta, Saskatchewan, Manitoba, Ontario and Quebec. It advertises three home-selling packages with prices that vary, depending on the local market. In Toronto and Ottawa, packages range from $300 to $500, and in Calgary from $400 to $600. If you combine ComFree's top package with their offerAssist service, which includes an agent receiving offers, negotiating the sale and completing the paperwork, you get all the services of a regular realtor (essentially the comprehensive support outlined above), except for booking appointments and showing your home, for about $2,500. If an agent finds you a buyer, her commission would be extra.

PropertyGuys is not a real-estate brokerage, but a franchised real-estate services business. It operates in every province but Quebec. Like ComFree, home-selling packages and pricing are tailored to local conditions. Nathan Dautovich, who owns the downtown Toronto PropertyGuys franchise, offers a basic package for $3,000 and a $4,000 RealEstatePro package with more extensive advertising. In Calgary, the latter package costs $3,500 and in Ottawa, it is $2,000. It includes the aforementioned comprehensive support plus an appointment-booking service. A professional appraiser establishes the selling price. Real-estate lawyers provide advice on all offers.

How effective are these home-selling support services? It's hard to say. Both PropertyGuys and ComFree publish testimonials from satisfied clients, but neither company was willing to provide sales data for this article. What can be said is that sales success depends not only on selling support services, but also on other factors such as home features and location, local market conditions and how much effort a home seller is willing to expend.

On your home-selling journey, a cost-benefit analysis of your options is a mandatory first step. Your best choice will not necessarily be the option with the lowest dollar cost, but rather the one providing the most benefits at the lowest cost in terms of your time, money, effort and stress level.

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