The number one question you need to ask yourself if you're selling your home this spring is: How do I net the most money?
It's not how do I get the most money for my home. It's how do I keep the most money in my pocket after paying all my expenses, including commissions and fees.
Discounters are popping up everywhere now that they can access the Multiple Listing Service.
Then there's still the full-service broker who promises a better price and ultimately more money in your pocket.
A settlement last year between the Competition Bureau and the Canadian Real Estate Association, which represents about 100 boards across the country and almost 100,000 agents, allows consumers to have "a mere listing" on the MLS. Being on the MLS system is key since about 90% of transactions are handled by organized real estate.
A poll commissioned by LawPro and TitlePLUS, which sells title insurance, was released Tuesday and it shows confusion still exists in the marketplace.
The poll found even though 72% of Canadians were not aware of the changes made to the MLS, 45% of Canadians would still consider selling privately or using a real estate lawyer to help them
"What these findings show us is that there is an appetite among Canadians to conduct the sale of their home privately," says Ray Leclair, vice-president of TitlePLUS.
So you can be a do-it-yourself real estate agent and use the MLS. But do you want to?
Market conditions have to factor into your decision. There hasn't been a U.S.-style collapse here, but it's no longer a seller's market, meaning you don't just stick a sign in the ground and wait for the pigeons to flock. You're going to have to work.
"For the discount that you're getting, am I willing to take the gamble that my house is being shown at its optimum," says Gary Siegle, Calgary-based regional manager for mortgage broker
Invis Inc., about private selling.
He says the industry has been sticking to its guns when it comes to commission rates -generally around 5% of the purchase price -so if you're using an agent, the negotiation might be on the service being provided for that commission.
"The professional service real estate agent is not going to give [commission up] just because someone has access to the MLS. They have to articulate the value more to justify their fee," Mr. Siegle says.
Phil Soper, chief executive of full-service firm Royal LePage Real Estate Services, says the industry has not moved much off commissions since the agreement with the government.
"I think the impact in the market in the first year postchanges has been in the low end of the market," says Mr. Soper, who says that narrow segment of the market is less than 15% of the overall sales volume.
He says for sale by owner or FSBO companies are now merging their operations with independent agents so customers also get an MLS listing as part of their service. "I don't think they are actually selling any more houses. The listings are just showing up on more websites than they used to," Mr. Soper says.
One of those FSBO companies is PropertyGuys.com. Walter Melanson, managing director of the Moncton-based company, says he currently has about 9,000 active listings across the country.
"I watch the comments [of the major real estate companies] and they say nothing has changed and nothing will ever change and that's the way they built their mousetrap," Mr. Melanson says.
What he and others are doing is creating a service that allows you to list with his company for as little as $399. When you sign up, his website hooks you up with a registered real estate agent who doesn't do much but put your home on the MLS, for an extra $299.
The company's Ontario representative, a licensed real estate agent, has close to 1,000 listings.
She's based in Hamilton but accepts listings from as far away as Elliot Lake, so she's not doing too many showings.
"We want someone to compare how much it costs to sell your home using PropertyGuys to, say,
Re/Max. You do that math and you'll see quite the difference," he says.
It's no small amount. When you consider the average home is now selling for close to $375,000, at 5%, that's $18,750 in commission.
However, consider if you do choose do it yourself on the MLS, you are forcing buyers to jump through one more hoop. In the case of Property Guys, the buyer has to click on the MLS broker's listing office and then punch in the listing number before he's directed to the seller.
"The bounce rate is amazing," Mr. Melanson says. "Who wouldn't look for their dream home and make that extra click? Our data says people will make that click. We've had to deliver magic within a narrow set of rules."
But you have to wonder whether that extra work will affect your sale price at the end of the day. If you save $20,000 in commission, what's the point if your house sells for 5% less?