In a sweltering real estate market like Canada's, the smartest option for many homeowners thinking of a move may be to simply wait until things cool off.
But if your debt levels are in check and you view the ‘ exceptional resiliency’ of the national housing market as prime opportunity to sell your home, the next step is to figure out the easiest, most efficient and cost-effective way to do so.
As a home seller, you have three options:
1. Go the For Sale by Owner (FSBO) route, which can include buying a sign from the local hardware store and doing everything yourself - listing (whether open or exclusive agency), marketing, staging, viewings, and negotiating with prospective buyers on your own - or paying a flat-fee marketing service like PropertyGuys.com to assist you during the process.
Selling a home privately, without the help of an adviser, may turn some people off. But PropertyGuys.com, which now has 123 locations across Canada and more than 10,00 active listings as of this year, are working to help make the process less daunting for clients.
“The days of simply putting up a sign on your lawn are long gone,” says Nathan Dautovich, the franchise operator for the Toronto Downtown and West area.
And with the Competition Bureau ruling last year to allow flat-fee listings to appear on the Multiple Listing Service, where an estimated 90 per cent of houses are bought and sold, the franchise operator’s signature round signs are becoming a familiar fixture in Canadian front yards.
For an upfront fee, in the $400 to $2,000 range, sellers can choose from a menu of options, depending on the services they require.
“We try to provide local expertise with all the tools you need to sell, including access to market, data, licensed appraisers, marketing materials - like signs, listings on the website and flyers - and we’re there to help every step of way,” Mr. Dautovich says.
But "every step of the way" does not include some of the more time-consuming, stressful and frankly annoying parts of selling, such as arranging viewings, open houses, fielding calls from potential buyers, soliciting feedback and the negotiating process.
Mr. Dautovich acknowledges that it is “not right for 100 per cent of people.” For example, he says his 92-year old grandma would not want to show her property on her own.
The discount brokerage, which offers a flat-fee listing service and flat-fee MLS services, is another option for the seller who does not want to pay the higher fees of a realtor. It may be most suited to people who are selling a property that is in demand, according to Phil Soper, the president and CEO of Royal LePage.
“If you've got a vanilla property in a highly-desirable neighbourhood and not looking to price above market, or selling a home in a newer development where pricing is well established, one may feel comfortable with going with a lower-fee agent,” he says.
But he underscores the point that like in any other fee-per-service industry, like law for example, there are different levels of experience and expertise.
“Discount brokers have not invested in continuous education,” he says, “so they need to discount their fees in order to get the business they do get.”
So if you're trying to command a higher price for your home, or selling a unique property that may only appeal to a select buyer, a good agent with a solid reputation at a full-service brokerage might be worth the commission he or she charges, Mr. Soper says.
The fee is negotiable, but will generally fall between 5 and 7 per cent, where it’s often split 50/50 between the listing brokerage and the co-operating brokerage or buyer’s agent. Many sellers view this fee as excessively high, but Mr. Soper suggests there’s good reason for hiring a professional and it comes down to extracting value for the home and reducing stress on the client.
“Lots of people do their own income taxes and defend themselves in traffic court, but when the issue at hand involves more than over $100,000 in transactions, most Canadians want external help and will pay the commission if it means they can avoid the stress, headaches and burden of selling their houses.”