Selling your house without a real estate agent can be a great way to save money, but only if you do your research and are willing to put in more of your own time.
While you won’t pay commission when going with a for sale by owner option, I wouldn’t consider the entire commission as money saved. This is because you may have to lower your price slightly lower than other comparable homes, and if you don’t you may have to deal with some lower offers. But having this extra room to lower your price isn’t a problem, it actually gives you a competitive advantage. As an example, if your commission would have been $15,000 you could reduce your price be $5,000 or even $10,000 and still come out ahead.
So what price should you be setting? Have a look at similar houses on Realtor.ca and also look at the listings on sites that help you sell on your own like ByTheOwner and ComFree. Don’t just look at prices, but also information like how long it’s been on the market. If the same house has been for sale for awhile then keep in mind that it may not be properly priced.
One of the downsides can be a lack of exposure from not being on MLS, not only for the people who won’t find your house on Realtor.ca, but also because real estate agents are very unlikely to show their clients your house. The other downside is availability for showings. If you’re only available late at night and on weekends, then you may miss too many sale opportunities.
With a down market, a relatively cheap townhouse, and no previous experience with the real estate process, I did use a realtor for my sale. While we don’t plan to sell again for a long time, I might try selling my house myself if it’s a sellers market when that time comes. Have you sold your home without a real estate agent? If so, leave a comment and let us know about your experience!
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Great post especially since the MLS system is going through some changes due to competition/monopoly laws.
I have heard that you can post to MLS through a realtor for a small fee. Has anyone tried this before?
I am guessing you still have to pay a lawyer to draft up the final paperwork which still might cost you $500-$1000.
Hi Trevor,
Were still waiting to hear if CREA will be changing their rules based on the competition bureau’s findings. The public should know by January. I have seen some agents try to put homes on mls for a flat fee ($999), but that doesn’t include the co-operating brokers fees (Usually 2.5%). Plus agents are not allowed to accept a dollar amount and a percent because that goes against The Real Estate Business and Brokers Act. It would be wise to check the fine print of anyone offering MLS for $999!
William
I think it can be a great idea to save money by selling your own home without hiring an agent. You can be more competitive in pricing than other home sellers who are using a real estate agent.
Of course, you have to do your homework and be fully aware what you are getting into.
Thnx for the article. I think a lot of people get in over their head regarding selling their own home to save money. Sure, you may save 2.5% in commissions (you still have to pay 2.5% to the buying agent), you could lose 5%+ in the final sale value of your home!
I’m pretty against the current system. Why should I still pay 5% commission on my $2 million house, given it should be a similar effort made on a $500,000 house?
It’s all about a fixed rate mortgage!
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Seems like a high risk strategy to save money that most people won’t feel comfortable with (buyers included). And most buyers expect a discount anyway when they see “for sale by owner”. The problem is also exposure. Site like ByTheOwner are probably gaining more traffic year over year, but the first place most people still check is the MLS websites.
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The big issue here is the MLS monopoly. If it gets cracked, people will be able to list without paying a fixed percentage to an agent. This will make agent fees more competitive than there are now.
Yes! Lack of exposure may be overcome by advertising on e-real estate for homeowners. This is mostly private owners selling their home direct. There was also many auction rooms where owners paid a fee to Auctioneer. I have not heard of this option for selling your own property for sometime. The other concern for me is knowing your market and current property values, what is selling and what is slow. Providing you know your market and the climate selling yourself is quite an effective way of gaining a win win for buyer and seller.
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I couldn’t agree more, availability is very important when you are trying to sell, you certainly expect it when you are trying to purchase.
There are some downsides to selling a home without a real estate agent. Another reason is that buyers realize you don’t have an agent and can try to do some hard negotiating with you and drive your price below market level because you are already “saving money” from not paying a commission and they think they should benefit from those savings as well.