Saving Realtor Commission May Just Cost You More

For Sale By Owner

No one likes to pay for a service and this  applies to the sale of a home.  Who wants to pay that commission and for what?   A number of new house marketing We have heard the radio commercials for Comfree claiming how home owners can sell their home and pocket the $20,000 or $30,000 in real estate commission.

In the last 18 months, our Toronto real estate market has seen various new house marketing portals spring up which all offer sellers the option to list and sell their home without a Realtor.  It is possible to sell your home privately and I have seen homeowners successfully negotiate a good deal with a buyer.   But their success was not because of some third-party mls marketing firm, but from a neighbour, family member or friend knowing the true value of the house and working out a fair deal.    For those sellers buying into the do-it-yourself mls marketing….well only one out of the ten of you will actually sell.

Here is a great example of a recent home which was up for sale in Toronto’s east-end and was listed through a mls real estate posting service.

 

 419 Cummer Ave

Sold:

$470,000  

Toronto, Ontario M1N C14

List:

$525,000  

Plan 3465 Lot 9

90% List

Detached

Fronting On:

S

Rooms:

6+3

 1 1/2 storey

Acreage:

 

Bedrooms:

4 + 1

Dir/Cross St:

Midland and Kingston Road

Washrooms:

2

Lot:  40 X 101 Feet  Irreg:   

1×3, 1×4

List:

COMFREE COMMONSENSE NETWORK, BROKERAGE   416-284-4751

 Selling:  COMFREE COMMONSENSE NETWORK, BROKERAGE

Now the house did sell but it did take a beating on price.   Well I am sure you are surprised at the price, but when buyers see a home listed as a for sale by owner you can be sure they are looking for deal, just like the seller.

I was not part of this deal so in keeping with RECO I can not comment on specific of this deal, but I can speak confidently on what I suspect happened.   The seller had decided to go with what is known as a mere posting.    This means the house is listed on mls.ca, however the seller is responsible for everything else:

  • all phone inquiries on the house
  • booking any buyer showings
  • any disclosure issues
  • no insurance coverage regarding inaccurate listing information
  • determining a buyer’s financial ability to purchase
  • all negotiations including conditions, price, deposit and accuracy
  • and dealing with dozens bottom feeder real estate agents who promise everything and deliver nothing

So the story on this sale went like this.  The seller most likely asked a couple of local agents to pull together comparables and once they got what they needed they figured they could easily sell it themselves…pocketing the commission was always their intention.

With the house being overpriced and offering no commission incentive to Realtors this house became invisible.   However it did attract the attention of one buyer who saw for sale by owner and figured a deal might be had.    The long and short the seller took a $55,000 hit on their selling price and most likely still had to pay some commission to the flat fee brokerage who bought in the buyer.

It is very rare where a seller using a flat fee brokerage is successful in selling their home.   As I said at the beginning, I have no issues with homeowners selling privately, but you want to go into that world with realistic expectations.