Canada's Condominium Magazine
Many real estate companies offering consumers alternative ways to buy and sell residential real estate have sprung up in recent years. Most take aim at the traditional commission-based model, promising to cut or eliminate it altogether, using some form of fee-based model instead. One example promises that you can sell your home, if it sells for under $600,000, for just $6,900, and that’s with “the same full service” you would get at a traditional brokerage—MLS listing, home showings, open houses, signage and photos, advertising and all the rest. Another commission-free company promises a fee of just $1,200 rather than the “average” commission of $15,000. Again, the service is said to be comparable to what traditional brokerages offer.
These companies have plenty of testimonials to back up their claims, and why shouldn’t home sellers have more choice?
A new player on the let’s-shake-up-the-conventional-real-estate-model field is taking a decidedly more aggressive, even antagonistic, stance, focusing on what it characterizes as the questionable ethics of the industry. The old model needs a change, says this group, and they have “figured out” how to do what needs to be done to fix it. Calling their approach a “slap in the face” to the old ways of selling and buying real estate, they promise that their revolutionary system will protect consumers who are “sick and tired” of dealing with “unprofessional, unethical and inexperienced realtors” and their “sleazy presentations,” many of whom, driven by the commission mentality, push sellers to sell “whether or not it is in their best interest.”
Harsh words, most would agree.
Strip out the commission, the group argues, and consumers can benefit from greater honesty in the discussion about selling their home. Welcome to the “new age” of real estate.
Honesty is an excellent virtue, of course, but the harder benefit offered is the chance to save “thousands of dollars,” without compromising a full real estate service.
How can a brokerage offer this? By selling memberships in the Ontario Real Estate Protection Program. For as little as $3.92 a day, which works out to $1,430.80 a year, members will save, says the company behind the plan, Real Estate Advisors Inc., from $10,000 to $30,000 on the sale of their property, though we must take their word on this math. A hypothetical case given to illustrate does purport to show how a seller could save over $25,000 after a four-year membership in the program, by avoiding certain commissions, lawyer’s fees, and taxes.
In any case, whereas most real estate agents waste thousands of dollars on self-promotional advertising, most of it “driven by their ego,” the protection program uses “all that wasted money” to pass on as savings to its members. This, the statement from Real Estate Advisors Inc. ominously concludes, is something most real estate agents “don’t want the public to know.”
What they offer instead, (we are not in any way endorsing this but merely reporting on it) is “world-class professional service,” real estate legal fees paid for, protection from those unethical, unprofessional realtors who are waiting to prey on consumers, a larger down payment on the seller’s next home, membership in an “exclusive VIP group” of informed people, and more. Interested consumers can look into the plan for themselves.
Mistakes to avoid while going the traditional route
For those who choose to stick with the traditional realtor model, here is a list of the most common errors sellers make, according to a realtor contributor to Forbes. Eliminating these errors can save a seller thousands of dollars, he claims.
- Not hiring a professional to sell your home. This is sheer madness, according to the Forbes writer. Home sellers who try to do it themselves often end up taking longer to sell and sell for far less than those who work with an agent.
- Over-pricing or under-pricing is a huge money-losing mistake. It is critical to know your market and get familiar with comps of similar homes currently for sale to understand exactly what price tag your home needs.
- Neglecting necessary repairs. You will lose money if you don’t take care of repairs before the home goes on the market. Buyers will offer less or ask for a credit back for the work that needs to be done before the deal closes.
- Not removing clutter and junk. One of the least expensive improvements is to declutter and create a sense of spaciousness, from the kitchen countertops to the overstuffed closets to the trophy-lined shelves in the den. It costs you nothing to get rid of all that stuff, yet it reaps big rewards.
- Selling your home empty. A home should be dressed or staged. It is not necessary to go out and buy new furniture and accessories. If your furniture is already in another house, make the small investment in a local stager to give the for-sale home a new look that will charm potential buyers.
- Letting your ego get in the way when negotiating. Remember, this is a business transaction, perhaps the biggest one of your life. Take your ego out of the equation and put your head back into it.
- Failing to complete a full set of disclosures prior to closing. Too many sellers pay big bucks because they didn’t reveal it all. Being upfront and forthcoming about any of your home’s issues will save you lots of money and time, especially if the buyers end up uncovering problems themselves.
- Mis-timing the sale for maximum tax benefits. Even a sale mischeduled by one day can cost you tens of thousands in extra taxes. Talk to your accountant to find out if any long term capital gains tax breaks apply to you, and check your calendar to determine when they come into play.
- Overlooking junk fees and extra expenses at closing. Home sellers throw thousands away by not requesting and confirming a list of fees and expenses long before closing day. Make sure you and your real estate agent review estimated closing cost statements long before it’s time to hand over the keys.
- Using poor-quality photos. Many beautiful homes have horrible camera phone photos in their sale listings. More than 90 per cent of all buyers start their home search online, so be sure photos are top quality.