Saving Real Estate Fees: Is It Worth It?
We have the absolute worst neighbours you could ever imagine on one side (I challenge anyone who may think otherwise), so when they put a “For Sale” sign on their lawn my husband and I did the dance of joy. We were excited watching them pack up the trampoline, jungle gym, swimming pool, sandbox and other outdoor toys. We waved goodbye to the oversized carved grizzly bear and wolf that were loaded on a flatbed (with a crane, no less). We had to stop ourselves from asking if we could help them pack.
Unfortunately our happiness was short lived. You see, the “For Sale” sign was a for sale by owner (FSBO) and was put up LAST September. Yes, almost a full year later they are still there. They have advertised only on Kijiji and have received no offers on their home. I don’t think many people have even been around to view it. Also, in my opinion, it is way overpriced for the style and condition of the house and they won’t consider reducing the price.
This got me thinking about how effective low fee real estate companies are at selling your house in a timely manner.
Welist.com and comfree.com have basic packages that start at $249 and $299.95 respectively for six months. They both give lawn signs and feature sheets and list your house on their own websites and magazines. An evaluation and documents package are also available at this price. Other than this, the homeowners do the viewings, find their own buyer and handle the sales themselves.
A new offering by both companies is MLS service. Since only licensed realtors can list on the MLS they work with Online Realty Brokerage. The increased fee of $649 to $999 gives sales assistance from a real estate professional.
HomeAtEase.ca is a bit different in that it not only offers a $395 flat fee but also a 1% full service MLS plan.
I know that many people who sell their homes balk at the high real estate commissions they have to pay. After all, it is a fair chunk of the selling price and usually seems to be for not much effort on the part of the realtor. However, how comfortable are most people with doing their own active negotiating and selling? Not to mention completing the documents correctly.
85% of people buy from MLS listings, so how efficient are the websites and magazines that the low cost companies use? Most of these people like to use a realtor to help them give a fair offer to purchase as well as check out any irregularities in the home. It’s a confident person who can negotiate on his or her own behalf.
Realtors are not going to show a property to their prospective buyers if they aren’t going to receive their own regular commission. How easy is it to negotiate a commission with a buying agent? Doesn’t that defeat the purpose of going with the inexpensive plan?
All of the houses I see for sale with welist and comfree signs seem to be on the market for quite some time. Often when they then switch to an actual Real Estate company, the house sells within a month or so.
Do you think it’s better to use a realtor when buying or selling a property or would you rather keep the commission and negotiate for yourself?
Maybe your neighbours have overpriced their home. I don’t think it’s worth it to me to pay a selling real estate agent $15000 or more to sell my house. I’ve bought and sold several houses (some through agents, some privately) and I’m comfortable showing the home dispassionately, negotiating and closing. I would hire a professional (not a real estate agent, but an assessor) to value my home before putting it on the market and get papers drawn up by my lawyer. I would offer the buying real estate agent 2% (possibly 2.5% if the house sat on the market too long) to encourage them to bring me buyers. I’m so glad private sellers can get their listing on MLS now!
@Tracey H
Our neighbours have definitely overpriced their home – by my unprofessional estimate, about $50K too much.
You sound like you’re comfortable with the whole sales process but I think you are in the minority. Most people don’t have your confidence or expertise.
Like every house on sale around my area are overpriced like that. Home value has dropped (and has kept dropping) over the past few years.
You say you have sold a few FSBO properties. We have been negotiating since JUNE with our tenant of almost two years whose lease expires at the end of December. We have priced it soundly compared to comps. They keep offering way too little and try to justify this by saying IF YOU HAD A REALTOR YOU’D BE PAYING THEM THAT AMOUNT – they just want the 6% to go away to their advantage and gain instant equity in my home! They could turn around and sell it and make $30K. Have you heard buyers throw that argument in your face before? Either they really can’t afford it or think we just want to give them our house and our equity.
If you really think it would be that easy for them to sell it for $30K more then you should just sell it for $30K more to someone else.
More likely, though, like most FSBO folks you’ve deluded yourself into thinking your house is worth not just 6% more than it’s worth but more like 10 or 20% more. “FSBO’s” in our town (Canmore) are, almost without exception, in dream land. Drop your price by 6%, sell it to your tenants (I mean, geeze, they’ve been your TENANTS for crying out loud, how easy was that sell???), and be glad it’s off your hands. Now is not the time to be greedy.
Actually not that east at all we negotiated for 4 months and finally when we thought it was over the call and say they can’t get financing. They have until tomorrow to find some.
I hope it works out for both your sakes!
Although I could negotiate the sale, I prefer having a a disinterested party negotiate for me. There is much more to the sale than just negotiating the price. There is a lot of paperwork which is down played by people who think they can sell their house themselves. I think the net price of sale by owner is similar to the net price of homes sold through brokers.
@krantcents
I agree with you about the paperwork. There’s a lot of legalese that can be misunderstood by either/both parties. A law suit is the last thing I want to deal with after I sell.
I would have loved to save the fees. HST piled on didn’t help!
We spent 3.5 months updating and cleaning our house for sale. The ROI was over 400%. However, we were exhausted at the end of the process and we didn’t want to deal with showings at odd hours, critiques of the house among other thing.
Our old house was near a high traffic street where we could have place signs to get people to look but I agree, we wouldn’t have gotten the agent driven traffic at all.
Our agent had the house sold and papers signed in 28 days.
@Sustainable PF
You had a pretty fast sale. I think a lot of buyers believe that the savings on realty fees should be passed on to them and will try to low ball the price. They don’t seem to understand that the seller wants to save on fees not pass the whole amount on to them.
I agree with krantcents that the net result will often be similar but you’ve done all the work!
My brother sold his house in just a couple weeks, FSBO, posting to several places online and holding two open houses. They did not hire an agent, but I think they paid $500 for a kit.
Now there’s a FSBO I can respect. He obviously knew what he was doing.
I think it all depends on how quick you want to sell your house. If you don’t have a lot of time to waste (because maybe you already made a commitment on another property), then a real estate agency will probably get you the fastest results.
Using a real estate professional is almost always your best choice. Other companies advertise all the savings “but” never, and I mean never advertise:
1 – How much commission the sellers ended up paying a buyer agent (On top of what your paid XYX FSBO Corp)
2 – How much their home sellers sold for comapared to realtor sales on comparable properties in the area
3 – How much money they take from sellers who after so many months end up cutting theor losses and hiring a professional.
4 – And is your time really free? If you take 6, 9, 12 months to sell on your own. What hourly wage do you make? And apply this to how many hours you worked to get your property sold…I can assure you, its not cheap.
5 – They will never let you know how much traffic you will lose if listing with a FSBO. Let me tell you, it’s a very high percentage.
6 – Negotiations. Yes, the meat and potatoes of the industry. If you hire a really good agent, they will negoiate ffar better then you to sell your home. In fact, they probaby justify theor commissions from selling your home higher then the price you could get yourself…it’s whay they do for a living.
I could go on and on with all the misconceptions. But remember, no one in most occupations out there will be happy working for free. A realtor will not work for free and bring his buyers to your home…would you?
Negotiating a fair commission and services package is the best route to go. So don’t get caught up in all the attractive marketing hype.
Remember…”You Get What You Pay For!”
Lee
The last point about negotiating is often overlooked. Realtors are open to negotiation and working out what is fair. They are of course happy to take the standard 6/3 or whatever but if that doesn’t seem fair to you, present an offer that is.