Our feet are still stuck in two feett of snow but it’s time to think about what happens each spring: the largest number of real estate transactions. But here’s the catch; housing transactions conclude in spring, but they start in February. The best time to sell your house is definitely in February and March. This is when most people put their house up for sell in the hopes of finding a buyer quick enough to move in the spring or early summer time. As we approach the crucial moment to put a “for sale” sign in front of your home; the $20,000 question is: Should I Get a Real Estate Agent?
If you have read this blog in the past, you know that I’m not a big fan of realtors. However, I’ll put my assumptions aside and look at the reason why you should use a realtor and how you can put $20,000 worth of commissions directly in your pocket.
By definition, a real estate agent will take care of selling your house including all the tasks involved such as:
Assessing the property value: researching for comparables and establishing the value of the property according to the current market.
Marketing the property: completing the listing on the internet, newspaper advertising, taking pictures, writing an attractive description).
Visiting the property with potential clients: arranging visits, answering questions, using his network to attract more potential clients.
Negotiating: receiving the offer of purchase from the buyer, negotiating with both the seller and the buyers. Offering support and facilitating the sale.
Legal protection & paperwork: technically, the real estate agent is not responsible for the legal aspects of the transaction. However, he uses proven legal documents drafted by his banner. He takes care of all paperwork including certificate of localization, offer and counter offer, conditions, seller’s declaration, etc.
As you can see, it’s not like the real estate agent doesn’t do anything to sell your house. He does some work and should get paid for it; I’m not arguing with that. However, I have a problem with the bill you have to pay. Since the realtor has to pay a commission to his banner and rent an office, the commission rate the seller pays is ridiculously high. For a house selling for $390,000 (which is about the average selling price in Canada according to the Canadian Real Estate Association), a 5% commission is worth $19,500. This amount is before taxes. When I look at my wallet with the seller’s perspective, it hurts to pay 20 grand for a single transaction.
The answer to the question “should I get a real estate agent?” is answered by another question: “can you successfully sell your house alone?”. Since I’ve just outlined the main realtor’s tasks, let’s see if you can do all of them and keep the $20,000 in your pocket.
Assessing the property value: Assessing a property value isn’t that complicated. You look at your property in terms of neighborhood, equipment (central A/C, fireplace, central vacuum, garage, flooring, etc), number of bathrooms and general square footage. After a few hours, you will be able to find houses similar to yours and this will dictate the price you should sell at. Just ask yourself why someone would buy your house that is $20K higher than the neighbor’s house showing similar features. And don’t answer because your place looks better ;-).
Marketing the property: 85% of potential buyers look on the internet to filter properties. Therefore, if you are able to list your property on a few well-known websites, you can reach most of the market. Writing a description of your house is not rocket science either. Just read a few descriptions of houses similar to yours and you will see what is being highlighted.
Visiting the property with potential clients: This only requires that you answer the phone and schedule appointments. In fact, most potential buyers prefer to visit the house by themselves and will come to you if they have any questions. I don’t think I really need someone to tell me I’m entering the kitchen!
Negotiating: This is probably the part where taking a realtor seems appealing. In fact, it’s not. Most people hate negotiating and that includes you and your potential buyer. If you have done your research and pulled out valid comparables, you can simply sit down with your buyer and show him why you are selling at that price. Ask him to come with comparables that validate his rationale of offering you less. It is a bit painful, but keep in mind that you are doing this for $20K.
Legal protection & paperwork: Since the real estate agent is not legally responsible if there is a problem with the transaction, the legal protection is not as important as it may seem. Then, sites like By The Owner offer legal support and a set of drafted documents where you only have to fill in the blanks.
I’ve sold two houses already. The first one was done with a realtor and the second one was sold on my own. I was only 23 when I bought my first house and dealing with a real estate agent was a complete nightmare.
#1 He confused both parties on the moving date (while insisting to be the middle man between the buyer and seller).
#2 He didn’t verify the certificate of localization (which was wrong and I had to run through various hassles to get it fixed).
#3 I didn’t sell my house at a higher price than the regular market (after doing my own research, I would have come up with the same price anyways)
#4 He cost me slightly over 10K (5% commission about 10 years ago)
But, I would be lying to you if I told you that selling my property by myself went smoothly and without hassles. After I saw the kind of service I had gotten using a Realtor, I decided to sell my second house by my own means and put in on the market with two different websites.
#1 I sold my house at the price I wanted (my house was listed in the same range as many other properties in my neighborhood)
#2 It took me 10 days to sell it (compared to 6 months with my previous house with a real estate agent)
#3 I went through rounds of irritating negotiations (the ugly part of selling on your own is when you come upon a fierce negotiator. The guy came back at each step of the sale to negotiate the price lower and being very negative about my house. It was irritating and I almost lost my temper at one point).
#4 No confusion with regards to moving, the transaction went smoothly (in the end, both the buyers and seller got their house on time and we all moved with smiles on our faces).
Overall, the process went relatively smooth in regards to the transaction but I had to deal with a tough buyer several times. It is true that I had to spend a few more hours to sell my house, but what is 20 hours compared to $18,000?
And this is my point: I understand the job done by a real estate agent but even though he works hard, the pay check is just too big for my pocket. What he does can definitely be done yourself without too much hassle. And if you hit a few road bumps in the process, ask yourself if they are worth 20K.
What do you think, should you get a real estate agent? Tell me about your story.
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