Buying From a Private Seller - Buyer Beware!
The following is just one of many very real case scenerios for the unsuspecting private seller and potential buyer proceding without a REALTOR®. 
A private sale selling for $300,000 in a neighbourhood of similar houses sold for an average of $300,000, seems fair, right? What you may not have thought about is that sellers often evaluate their property values comparing recently sold houses in their neighbourhood without thinking about commission included in the price. An average commission amount of 5% on this $300,000 house is $15,000. The house really should be selling for $285,000. Essentially, you''ll be paying the commission on the purchase AND then commission when selling in the future.
If you invested the $15,000 instead of over paying, it would be valued at $21,038 after only 5 years* or $81,411 after 25 years! Incredible.
What if you needed to sell 1 year after buying it? List the house for $308,100, an increase of only 2.7%** and you'll pay $15,405 commission if you want to hire a professional for best results. That leaves $292,695.00 to pay off your $300,000 mortgage. Not so fair. Remember, an agent working on your behalf will do a Comparitive Market Analysis to ensure negotiations start on a fair playing field.
The private seller in this case lost the opportunity to sell quickly because they refused to lower their price and the smart buyer bought another home in the same neighbourhood. In today's buyers' market, it's anyone's guess when the next buyer will be interested. As seen in many other private sales, the seller ended up hiring a REALTOR® after 4 months. It's unfortunate she wasted the time and thousands of dollars already paid to the private property company.
*Average annual return on investment of 7%. **Halifax Regional Municipality, NS average value increase, Sept 2013 for single family homes.
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