Real Estate

Data on private home sales and role of agents

  • Last Updated:
  • Aug 25th, 2020 10:57 pm
[OP]
Newbie
Aug 24, 2020
3 posts
3 upvotes

Data on private home sales and role of agents

Does anyone know of any data source on what % of home sales in Canada are done privately, as in without involving any agents/brokerage firms?
I would assume those may be a very small % of the total sales, since most sellers/buyers (at least that I know of) have mostly involved agents. However, I'm just curious to find out how many people are actually buying/selling homes privately in this market.

I personally find it very absurd that the agents (seller/buyer) still get around 2.5% commission on a property sale, and which is usually on the market only for a few days in today's conditions. That is about 50K + GST going to the agents/brokerage firms for a house sold at 1 Mil. Also, they say that its the seller who usually pays for the commission of both agents, but this is not really true. The commission is actually priced in the total value of the house and the buyer is paying for both the agents in reality. This may also be impacting and inflating the overall house prices. Imagine Bob bought a house for 1M last year and if he wants to immediately sell it(for any reason) and not incur any losses, he will put the house on the market for a minimum 1.05M (1M + 50K commissions) just to break even, and then this cycle continues with every transaction.
I understand there are some great real estate agents out there and I'm not questioning their capabilities here. I'm just questioning the actual role of these agents in every buy/sell transaction since they are not considered as essential as lawyers, home inspectors, lenders and others who are necessary for the transaction to complete.

What are some of the reasons for you to involve these agents in the past while buying/selling properties and how is 5% commission really justified for the services they offer:
Is it due to their negotiations skills to provide you with the best price ?
Are you just too busy and so involving them will save time and energy ?
Is it because you are not familiar with the buying/selling process, making/accepting offers, filling out the legal forms etc.?
Is it since you were buying or selling for the first time ?

In addition to above, I'll be interested to see if there is any platform or service out there that would help buyers and sellers to execute transactions without involving any brokerages and in turn save money for both parties?

Thanks.
Top