The saying “time is money” was never truer than when it comes to selling your house. You can spend a lot to get most of the legwork done for you, go the DIY route for minimal expense or choose an option somewhere in between. But which one is right for your family’s situation? Use our guide to find out.
Hiring a real estate agent
When you hire a conventional real estate agent or Realtor, you’re paying for someone else to do virtually all the work, including market analysis (how much are homes like yours selling for?), advertising (flyer handouts, a website showcasing your home), hosting open houses and showings, and negotiating with buyers. Some agents absorb the cost of added services, like hiring a home stager to direct you on decorating your home for maximum appeal.
How much will all of this set you back? Most agents work on commission, and receive a percentage of your home’s selling price – often 2.5%. Add that to the additional 2.5% you’ll have to shell out to the buyer’s agent, and you’re out a significant chunk of cash. For example, selling a $400,000 home conventionally will cost you $20,000 in commission fees, which may be subject to sales tax, depending on your province. But, for busy parents, it’s a relief to know someone else is taking care of the details.
Going for a discount
You can save a few thousand dollars by shopping around for an agent who accepts less than 2.5% commission. Some go as low as 1% of your property’s selling price; others charge a flat fee.
Keep in mind that the less you pay your agent, the fewer services you can likely expect, warns Gary Morse, a Kentsville, NS-based Realtor who’s also president of the Canadian Real Estate Association.
Even Andrew Doumont, a Toronto agent whose company is called One Percent Guys, agrees. “There’s almost always a catch. Some make you pay extra to be on MLS (the online listing service that allows a wide range of potential buyers to see, and become interested in, your property), or other types of advertising.” Some discount agents won’t do much except list your home on MLS, so be sure to ask for a detailed description of what you’re getting. Doumont doesn’t charge a penny more than 1% (plus 13% Ontario HST) for his services, which include professional photography and advertising. His advice is to ask yourself which of the bells and whistles you actually require to sell your home at a satisfactory price. “You don’t necessarily need them all,” says Doumont. Consider using an agent who bills on a fee-for-service model – meaning, you pay only for the services that are most important to you, and nothing extra.
Read on to find out how to sell your house yourself>>
Selling it yourself
Steph Tanner, a mom of two, saved thousands of dollars by selling her Kitchener, Ont., home privately in 2011. But she cautions that it requires a significant commitment. The most time-consuming part of all is the showings. “We’re lucky that we have flexible jobs,” says the catering company owner, whose husband is an open-source software developer. “If someone wanted to see the house during the day, my husband could work from home, or if I wasn’t booked, I could do it.”
Another challenge of selling privately is that it’s really hard to get enough eyeballs on the home you have for sale. Real estate brokerages have the ability to list properties they represent on MLS, a database of homes for sale that agents (and only agents) can access to help find homes for clients looking to purchase. Similarly, only local real estate boards, made of Realtors and brokers, can list properties on realtor.ca, a version of MLS that anyone can view. And while there are many local and national private-sale websites on which anyone can advertise a property at low or no cost, you can’t just throw your listing online and expect a quick sale, says Rob Reay, owner of the Edmonton-based private-sale site forsalebyowner. ca. He recommends DIY-ers cast a wider net, listing on his site and others like it, as well as on social media like Facebook and Twitter, online classifieds like Kijiji, and ads in your community newspaper.
Even though it was a lot of work, the experience was positive enough to convince Tanner and her husband to sell privately once again. This time, she has signed up with Moncton, NB-based propertyguys.com, a real estate marketing service with more than 120 offices across Canada. For a fee, they will also put your house on MLS – something they can do thanks to a partnership with a brokerage. The fee is typically about $1,000, plus the cost of a listing package, which varies depending on where you live.
A few other considerations: Selling sans agent means you’ll be the one negotiating with buyers on price, and it can be hard to keep your emotions out of it. The offers you get might be lower than you hoped, since buyers expect a discount when they know you’re not paying a commission. Finally, when you forgo an agent, you may still need to hire help in other areas. For example, when you finally do find that perfect buyer, you might need a lawyer’s help to draw up the agreement of purchase and sale.
As the CREA’s Morse puts it, “You get what you pay for.”
A version of this article appeared in our June 2012 issue, with the headline “Smart moves” (p. 62).