DIY, traditional home sales both strong despite competition

Teresa Estevez took on the task of selling her Mississauga home privately after finding the price of hiring a real estate agent to be more than she’d anticipated.

“I can’t afford to pay an agent right now because of the high commission,” she said. “We invested all of this money into the house. … If I was to get an agent, I would be losing [money].”

She’s not alone.

Property Guys, one of several companies in the GTA that specialize in private home sales, has experienced growing interest in its services. Nathan Donavitch, owner of the Property Guys Toronto Downtown-West franchise, said his business has tripled since 2007.

“We’ve never had a sale not go through because it was a private sale,” Donavitch said.

Marketing your home

Non-realtor companies often offer listing systems that allow sellers a way to advertise their homes to pool of potential buyers.

Some now also offer access to the Multiple Listings Service (MLS), previously only available to those selling through traditional real estate agencies, which is blurring the definition of what a private sale is.

“Some of these companies are members of TREB (the Toronto Real Estate Board) and are putting the properties on MLS. They have chosen to have access with limited representation,” TREB president Richard Silver said.

“Commissions are also being offered to the cooperating brokerages … so are they really private sales?”

Selling through Property Guys costs around $1,000 for a basic package that includes signs and an online listing. Extras, like audio tours of the home, are offered for about $100 each.

And it’s up to the homeowner to facilitate open houses and keep track of potential buyers, which are roles usually performed by a realtor.

According to the Toronto Real Estate Board (TREB), in Ontario a commission of about five per cent is paid on a sale, which translates into roughly $25,000 on a $500,000 home.

It’s money well spent, TREB president Richard Silver said.

“A lot of the work in selling does focus on the preparation and marketing,” he said. “Not doing so could leave money on the table for the seller, but that is their decision to make.”

That decision, Donavitch said, is an easy one to make for some.

“People are happy when [they] can save $20,000, $30,000, $40,000,” he said.

Despite the increase in homeowners opting to sell privately, the services of TREB’s members continue to be in high demand, Silver said.

“Last year was the second-largest year for the Toronto Real Estate Board,” he said.

2 comments:

  1. Brian,
    As a homeseller I know that the agent doesn’t get ALL the 5%. I know it’s split between two agents usually and I know that their brokerage takes a cut of that as well. But I also KNOW that the 5% is coming out of my pocket. Where it goes from there I don’t care. I simply know that it impacts my bottom line. You may not realize it but what you are doing is shedding light on the fact that the traditional realtor system is broken.

  2. A statement like, “agents make a commission of about 5%” is very misleading. I am sure that is not what TREB said because TREB knows that the 5% is split between the two brokerages (one that lists the house and one that sells the house), therefore each brokerage gets 2.5%. After that, the brokerage takes its cut, usually 10%-30%, and another few thousand dollars are spent on marketing and promotion out of the realtor’s pocket (if they have a extensive marketing plan). That means the same $500,000 home gives the realtor somewhere between $5000 to $7000, about 1/5 to 1/4 of what you are leading the readers to believe.

    What you also fail to mention is that simply listing a home on MLS does not guarantee a sale. Last year, about 49% of listings on MLS expired without selling. That means your chances are 50/50, so the MLS alone is not going to sell your home. I am sure TREB gave that stat to you as well but it was conveniently left out of the story.

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