Using Discount Real Estate Listings and what to expect
In recent years there have been a rise in discount brokerage firms promising to help cut commissions by charging an upfront fee to list a property on MLS. These persons/brokerages charge $199 upwards of several thousand dollars depending on what services the consumer buys al la carte, like photography, deal writing services, etc.
Is the consumer being served? In all cases, paying up front for something that costs nothing if working with a licensed agent, makes no sense. Commission is an incentive not a reward for selling a property. If the seller gets the price they want, then and only then do they pay a dime.
The free real estate representative pay out of their pocket for photographer, printing, marketing, videos, mailings and more, depending on who one chooses to represent them. There are many costs that the consumer never sees nor has to pay for. For instance, a pre-sale home inspection is often suggested from many reasons. This can cost upwards of $500 and is free to the consumer when using a sales representative that offers this service, such as myself. Why not take the freebies as they can give peace of mind when a deal is actually stuck. You know what to expect if the buyer insists on their own home inspection.
Is the public served? Many think so as they see that they can get a bargain from these low costs listings, at least that is what they expect. Com-free, Property guys, Zoocasa (recently closed up shop) amongst others are discount services in Ontario. The consumer figures that they can subtract at least five percent or more of the asking price with a discounted listing verse a traditional real estate brokerage listing. So let’s see what is actually saved.
Say we buy the Com-free package that runs $2000. We list our home for $650,000.
We receive an offer that is for $599,000 even though our neighbour sold within the last 6 months with a brokerage for $675,000. This is the only offer we have had in 3 weeks of listing. There is a Com-free sign on the property and on the corner. We are on MLS and realtor.ca. We had 3 weekends of open houses, 4 hours each day. Your time is worth $200 an hour, you and your wife attend all opens. That’s about $10,000 for time and effort.
You settle on a $625,000 final sale price and offer to kick in $5,000 of the $10,000 needed to replace the roof after the buyer has their inspection done and threatens to back out of the deal.
Say you had no mortgage. Your finally take home from the sale is 608,000 less lawyer fees. If you had used the real estate presentative that your neighbour used in the same market, they got you $675,000 less your selling fees (simply 5 percent). You would have had, after sale, $641,250 in your pocket. That’s a difference of $33,250. Even if you replaced the roof at the suggestion of the real estate representative to help prevent any setbacks in the deal, you still have $23,250 MORE in your packet verse the headache of selling the property on your own. So how much did you save? ZERO you lost $23,250.
So you see, discount is really a losing proposition in the sale of your home. Be smart. Put the money in your pocket not the buyer’s. Choose a real estate representative that can get you the most for your home, that does the work for you, spends their money to sell your home and make the process something to look forward to verse something to regret.