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There was a post here recently by a FSBO company blogger that claimed that to be a fact.

You have to ask yourself is it all hype to promote the FSBO services offered?

In reading the post I noticed that the poster claimed that no
real estate agents are involved when you purchase from a builder.
Hang on there just a minute if these sales are included in the 25%
then the 25% just suddenly took a real kick in the seat.  

Interesting that he/she says he/she is a former real estate broker and
yet his/her information about how new homes are sold is not correct
so I can only surmise that he/she never personally sold new homes.

First builders are a very sophisticated group of vendors, with huge marketing budgets that the ordinary home owner just does not have. They are selling many, sometimes hundreds of homes from their web sites and advertising. They effectively have their own private co-operative listing system with properties and sales offices that stretch across the GTA and beyond. they have the wherewithal to get the buyer to come to them on their terms. What private for sale by owner has that kind of reach or budget?

I also am a former real estate broker and during my time as an agent I sold many new homes both as a licensed real estate agent, and as a broker. I also worked direct for a Major Builder who shortly after I left opened their own real estate company and hired professional licensed real estate people to handle their new homes.

Just because a builder does not put his properties on MLS does not mean they are being sold privately the correct word is exclusively and yes some properties are still listed exclusively but for those who want maximum exposure MLS is still the best way for most residential resale properties. Do all Builders list their homes , no but many do and even more do when they get down to a few at the end of a project. Now ask yourself why would they do that even with their huge marketing ability? Perhaps Because they know it works!

Can you really save $10,000, $20,000 and even more in fees as the poster claims. Perhaps, but lets look at a home that is located in a subdivision of homes with several similar homes on the market. Lets assume similar homes have sold for $400,000 and they were listed at 5%, a common listing commission in a good market. If the home sells for $400,000 the Commission or fees would be $20,000.

Now put yourself in the shoes of todays buyer. They have access to all the same information you had, they have done their homework they know all of the above and they know you are expecting to save the fees but so are they

They also know you do not have the marketing strength behind you that the other homes have so they are potentially in a great position to haggle over the price, offering much less than they would on other homes.  Will you save some of the fees, possibly. Will you save them all, not likely.

If they are truly sophisticated buyers they may put conditions in the offer that seem Ok but literally tie your property up for months and in the end they do not complete the transaction as their conditions were not met.

What you would expect the real estate professional to do
is
NOW YOUR JOB.

The post also says "you have to step into the shoes of an agent" in so doing you need to ask yourself if you have what it takes? Do you have the tools you will need to do that? Do you have the knowledge, the ability to negotiate, can you show the property at a moments notice or at the prospective purchasers convenience, do you have someone to answer your phone 24 hrs a day 7 days a week, can you show the prospective purchaser comparable properties.

I could go on but they most important point is; while you are at work, or away on vacation, or even out for the evening, that potential buyer whose call you did not answer is out with your neighbourhood real estate professional buying a home they were shown, that is comparable to yours because it was what they were looking for and the price negotiated was acceptable to them.

Everyone has the right to buy or sell in the manner they choose but for the widest possible exposure you need more than a sign on the lawn and a post on a blog or add in the newspaper.

You need the exposure that only the combined membership of your  local real estate board can give You through the various networks and interrelated web sites in addition to a co-operative listing system.

Many agents today not only put your property on their own web sites they put them on their company web sites, other agents web sites, and many other web sites that promote real estate for sale. A really good agent will ensure your property is exposed to the widest spectrum of potential buyers by putting your home on literally hundreds of web sites as well as the MLS web sites.

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7 Comments on Is 25% of Real Estate in Canada Really Sold Privately??

SEP
10
2008
524,985 Points 33 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Great post Barrie - you're absolutely spot on!  The stats are misleading and promotional and certainly not helpful in terms of portraying the reality of the situation...

11:34pm • #1
SEP
11
2008
110,061 Points

Liz -Just a balancing perspective --- an informed consumer armed with the correct information is your best customer.

1:36pm • #2
OCT
19
2008

Hello Liz,

Great statement. I've been selling for some time now and our office has approached FSBO's for and most do not have a clue of what they are doing so most are not informed. the company whose customers we go after claims that selling your home is as easy as putting gas in your car. Now I'd like to know how they came up with that comparison because I've been selling homes for some time now and it's never been as easy as putting gas in my car. I do believe if you can do it on your own, and you have the time and the wherewithall than so be it. If you don't it's time to get a Realtor

Ronald
1:07am • #3
DEC
17
2008

Keep telling yourself that realtors deserve 5% in a transaction while the world passes you by.  Let's face it.  The days of realtors having the magic mls books that no one else had access to are long gone.  In the old days, a buyer would contact a realtor, tell them what they are looking for and the realtor would do all the foot work to present the buyer with some potential homes.  They worked for it!  Not that they aren't willing to work for it today, but the environment has changed.  Today, buyers sit on their computer, search the mls or fsbo's meeting their criteria and zero in to the homes they like.  THey contact the realtor or the private seller and take it from there.  

Realtors are not lawyers.  Don't try to convince potential sellers/buyers that they take all the legal complexities out of the transaction.  Bull!  A lawyer is still required in either case and only a little extra effort to fill the gap for offer forms, etc.  It definitely won't cost you $20,000 more!  

For every good realtor story out there, there is a bad one.  Case in point.  I recently sold my cottage.  It was listed over a period of 18 months with 2 different relators, through MLS.  The price was set based on their market assessments.  The interest was minimal in 18 months.  In fact, all showings were done by other realtors.  Once the listing expired for the last time, I listed with an FSBO. Got a nice sign, paid $70 to have the listing in a weekly newspaper flyer.  Within 1 month, I had more showings than in the previous 18 months.  The cottage sold within 6 weeks.  

Since I showed the cottage myself, I asked the potential buyers how them found me.  Some said they drove by the sign, but most found the property on internet.  This is the part of the equation that is drastically changing the value proposition of the realtor.  The days of getting as many listings as you can, try to sell them, but if you don't, hey someone else can sell then and you receive 50% the cut... are long gone.  Especially with the overbidding days when you spent a whole Sunday afternoon having an open house and the home sold within 48 hours.  Someone explain to me how this is worth $20,000 in commission... NOT!

The fallacy that realtors have special access to market information are great negotiators, etc, is just a bunch of bull.  You all know it.  The time of reckoning has come therefore you better figure out a better model to convince potential sellers to use a realtor.  FSBO's are everywhere now.  They offer all the forms you need, give you all the advice you need, in some cases have ex relators on staff to help you out. The word is spreading and sellers are starting to figure out that they might just want to be more flexible in showing the property themselves if they can save $20,000.  Even if they give half to the buyer through a discount, they are further ahead.  

THe easy popcorn deals will migrate to fsbo.  The harder deals where a  good realtor is needed will continue to use their services.  The good ones will excel and rightly so charge for that skill.  The bad ones who think they deserve $20,000 to hold a open house when the market is booming, will die off.

There's a sucker born every minute, but they are becoming more educated every day and ones educated them (FSBO, internet) are the ones making the money. 

 

Paul
11:28pm • #4
DEC
19
2008
110,061 Points

Paul -  I firmly believe, as I stated in my post, "Everyone has the right to buy or sell in the manner they choose" In fact, one of the advertising promotions I used, handed out, or had delivered, when I was in the business, was a Magazine that was designed to promote FISBO's (I paid to advertise in the magazine and I paid to have it distributed) But let me reiterate for the widest possible exposure you need more than a sign on the lawn, a post on a blog, a spot on a FISBO site or an add in the newspaper.

You seem to have missed the whole point of this post. It was about a persons right to chose and understanding those choices and the consequences of those choices as well as a balancing of the misleading information that the FISBO operator was feeding the public. 

The FSBO market has always been there, and always will be there. It is no different than the backyard mechanic, who fixes his own car because $70 or more a flat rate hour is too much, or the homeowner, who finishes his own basement with out getting building permits, permits for the plumbing or inspections for the wiring he put in, because its cheaper.

Real estate agents are governed by legislation, rules and regulations designed to offer some form of protection to the consumer, the FISBO is governed by his own moral character or lack therof, by his honesty or dishonesty.

You are correct about the power of the internet and are missing the fact that the MLS book was replaced by a publicly accessible web based portal realtor.ca (formerly mls.ca) years ago. That and the literally hundreds of co-operating web sites that most agents listings appear on gives a definite advantage to the homeowner using a proffessional agent who uses all the tools available. Your choice of agent can be a very critical factor in getting your home sold.

Your perception of the real estate profession and how it functions is a little outdated. You do not seem to realize that the 5% or 6% commission is not etched in stone and hasn't been for many years.  And yes certainly in a "Sellers Market" the agent or the FISBO seller does not have to work as hard in order to sell a home. In a sellers market a FISBO owner can do well if they are well informed. (but who do they go to for that information ... that real estate agent you are bad mouthing and that MLS service that provides information that the press uses)

I can't comment on your personal experience as there is not enough information but I am glad it worked for you.

It will be interesting to watch what happens as the market is rapidly changing to a buyers market.

As in any economic downturn some agents will leave the business but then so will many people who currently work for the big three auto makers and many other businesses as they struggle to survive

7:08pm • #5
FEB
02
2009

The Canadian Real Estate Association (CREA) claims they believe that real estate brokers account for 75 to 80% of transactions in Canada. According to figures for 2003, more than 440,000 homes were sold by a broker. This leaves as many as 150,000 or 25% that sold in the same time period without the aid of a broker.

With technology advancing at the rate it is, will these figures do nothing but grow?

Statistics from Wikipedia and The Globe and Mail.

2:12pm • #6
MAR
16
2009
110,061 Points

To our anonymous FSBO Operator ---To use your figures if less than 25% of the sales are conducted privately why would anyone who did not have the marketing expertise, multiple web sites, sales ability or a myriad of other talents skills and tools a REALTOR® brings to the table ignore 75% or more of the potential buyers who do use a REALTOR®

As I have always maintained.

Everyone has the right to buy or sell in the manner they choose but for the widest possible exposure you need more than a sign on the lawn and a post on a blog a single website or an add in the newspaper.

You need the exposure that only the combined membership of your  local real estate board can give You through the various networks and interrelated web sites in addition to a co-operative or multiple listing system.

 

4:56pm • #7

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Barrie Clulow

Uxbridge, ON

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