Real Estate

Lower your Listing/Selling Fees - Use Flat Rate MLS

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[OP]
Deal Guru
Aug 2, 2010
13043 posts
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Here 'n There

Lower your Listing/Selling Fees - Use Flat Rate MLS

I'll likely sell my home next year. I've sold other homes but that was over a decade ago and longer. This has prompted me to think about what a listing agent really does and whether it is worth the 2.5% they want as a commission. As far as I can see, they do the following tasks (note this list of tasks has been confirmed as being accurate and complete by a real estate agent in this very thread, not to mention other ones I have spoken to):

1. Do a comparative analysis and provide you with a suggested listing price.
But, any agent will do this for free because they want you to get your listing. I constantly get flyers, cards in the door and sometimes phone calls offering me this service for free. The data for comparable house prices is not public as the MLS retains a tight control over it (but the Competition Bureau is currently considering taking them to court over this lack of transparency). This info is one of the few things they have left that is not public but should be. Also, listing prices seem to have little to do with what houses sell for, especially these days. Also, if you subscribe to zoocasa.com they will send you a daily email showing the sale prices of homes just sold in Toronto. Also, remember, a listing agent has nothing to do with what a house sells for. That has more to do with not accepting offers until a certain date and time, the number of offers you get, what you sign the offer back at and the fact a buyer's agent is getting a commission. It's not like the seller's agent jumps up and down yelling "Please bid more! Please bid more!". They have nothing to do with the price the offers come in at expect to communicate how in demand the house is, how many offers are on the table etc.

2. Suggest you stage your home. In this day and age this is an obvious thing you should do before listing your home. Everyone knows that. You pay the staging fee anyway, not the agent. They do nothing but suggest it and there are many companies to choose from. Here is a link to an HGTV.ca guide on how to do it yourself: http://www.hgtv.com/decorating-basics/1 ... index.html. The are many books you can get on amazon.ca that will show you how (borrow one from the library to save even more money!). If you want ideas on how to make your rooms look better take a look at houzz.com. There are millions of pictures on there to guide you and you can browse by style.

3. Provide you with one of their own clients as a buyer. Did you know that less than 2% of homes end up being sold to a buyer that the listing agent provided? In some markets less than 1%. Think about why. There is one listing agents but thousands real estate agents. What do you think the chances are that the listing agent will just happen to have a buyer lined up for your house. Extremely slim. Now, if you are crazy enough to have a listing agent then make sure you have written into the contract that the a double-ended deal (ie representing both the seller and buyer) will result in much less commission that the 5% (ie 2.5% seller + 2.5% buyer). Make it 3% or 3.5% but no more than 4% under ANY circumstances.

4. Take pictures of the home after staging for the brochure, website and MLS listing. You can do this yourself or pay a couple hundred bucks to a professional photographer. Believe me the pictures will be way better than what the agent provides.

4A. Have a home inspection done. This is a great way to pre-empt those who put 'conditional on home inspection' in their offer. Some may still want to have their own home inspection done as they may not trust the one you had done but if you have it done by a respected company (such as Carson Dunlop) that lessens that possibility. Also, it shows you have nothing to hide. Have copies of the home inspection available on the kitchen table beside the brochure during showings.

5. Write the MLS listing. Anyone with half a brain can write those flowery write-ups that agents do to make the home sound better than it really is. You can do just as well hiring a professional writer to write that if need be. Or, ask a few prospective agents to do a write-up and tell them that is part of your decision-making process on whom to choose or even whether to choose to have an agent represent you. You are not forcing them to do it and it's not your fault if you don't choose one of them as you gave them full disclosure. There - no guilt feelings. Also, it’s the walk through and price that sells the home, not a flowery write-up. That just gets them in the home but doesn’t sell it once the reality is revealed.

6. Prepare a brochure. You can pay someone a couple hundred bucks to do an incredible brochure with the gorgeous pictures the professional photographer you hired took, and have it printed on heavy high quality paper stock, better than any agent would provide you with. And, btw, the brochure doesn't sell the house. The walk-through and price do.

7. {Optional) Create a separate web-site for your property. Most agents don't do this, but merely post you on their website. Again, couple hundred bucks and you can have your own website if you want. The MLS website though has recently been improved and that may be all you need.

8. List the property on MLS. Again, a very routine process which uses the information you've already gathered in the steps above. Not rocket science and can be done for a flat fee now for under $1,000.

9. List the property on Craigslist and other such websites. Hmm, a grade 6 student could do this and it’s free for anyone to do. Another routine process using the information above.

10. Hold Open Houses. It's a dirty little secret that Open Houses are primarily for the agents' benefit, not the vendors. Less than 1% of all homes sell through open houses. Studies back this up. Agents hold them in order to give themselves exposure and to find clients who don’t have an agent yet so that they can then hopefully then represent them. Why do you think you are required to give personal data (phone numbers, etc) and sign in when viewing a home. Because they think you might steal a chatchka? Noooo. They wouldn't know if you took it anyway as agents don't follow you around the home. Also, its to show the client how many people came through the home and give them a false sense that the property is being 'marketed'. Yes, it does happen the odd time that someone buys a house because of seeing it at an open house (<1% as I said), but few people buy a house because they were just driving around not intending to buy a home but then just happened to be walking or driving by, see a home, walk in and then decide to buy. Anyone who wants to buy a home will go see it with an agent and any agent worth his or her salt will not show a home during an open house. They will do it privately without a bunch of gawkers and tire-kickers around. The only aspect of an Open House that is worth doing at all is an Agent's Open House where real estate agents can come by on one or two different occasions to see the home so they can then determine its suitability for their clients and talk to their clients about it. And you can have an 'Agent's Open House' with a flat rate listing. All it is is a couple of different days and time slots that the house is open for agents to see. If you really want to have an Open House and ignore my advice here is some info on holding them from an agents' point of view: http://www.nolo.com/legal-encyclopedia/ ... 29857.html

11. Provide access to the home. This use to be a big deal but now with lock boxes the listing agent doesn't have to be available to open the door so that buyer's agents can show their clients the home. Some people think they are saving time if they have a listing agent but the fact is you still usually have to tidy up and leave the home when the buyer's agent arrives whether you have a listing agent or not.

12. Accepting offers not before a certain date/time to created a bidding war and then negotiating the sale. This is an aspect which some people think would be daunting to handle themselves but is it really? Pick a date and time to accept offers. Then accept them then. There's your bidding war. The Agreement of Purchase and Sale is a standard form that has been used for years. The only real variables in it are price, closing date, deposit, what is not excluded from the sale and any conditions. The 2 conditions that you might see are conditional on financing and/or on inspection. Many buyers are forgoing both of these to make their offer look more attractive (but of course forgoing the inspection condition could be problematic).

Now, this may not stop so-called 'bully offers' where the buyers' agent does not respect the fact that offers are not being accepted until a certain date and time. There is nothing you can do about this except not deal with them.

Btw, FYI, as of June 1, 2015 all offers must be registered to avoid the practice of phantom or bogus offers where the sellers agent may tell the buyers agent that there is a another offer competing against theirs out there when there actually is not. This is an unethical practice that is illegal but agents still do it. The new legislation will require proof of these offers to be presented after the fact if the buyer suspects this has happened. This should entirely stop this unscrupulous illegal unethical immoral practice that some agents currently engage in.

As for the rest of the 'negotiation' process once the offers are in it's basically just signing back the offer at different prices. That sure ain't rocket science. Pick a price higher than was offered which you are comfortable with and sign it back. Duh. These are not the days of yore where buyers wanted all kinds of conditions, mortgages negotiated, etc. Now people get their own financing and pay cash. Your real estate lawyer can give you the very short list of what is required in the contract, what to look out for, etc. but better still pay him a few hundred bucks to have him there to read the offers with you. They have a lot more expertise about real estate contracts than your agent would anyway.

Negotiating comes down to the following 'do loop':

Do until offer accepted:
1. Get offer;
2. Review and accept or sign back at a higher price (maybe change a condition);
3. Go to 1.

So, let's summarize:

Item 1 is free from any agent. Zoocasa can give you similar info.

Items 2-11 are what agents call creating their 'marketing plan' for your home. But, please, it’s not all the complicated. They make it sound all complicated and sophisticated involving a lot of work but as you can see when you break down the individual tasks it's really not much that anyone couldn't just do themselves. I have enumerated items 2-11 to various agents that have asked to be my listing agent when I sell my home and have asked them to tell me exactly what the other aspects of their 'marketing plan' is other than items 2-11 and they all look at me without saying anything and then go "well, er, um," and stumble and don't really have any answer. No surprise there!

I know that there could be some legal issues with respect to a property that an agent could discover and that need to be disclosed but who do you think they might be using to find that out? A lawyer? Of course! One you could pay yourself anyway.

Now I may have missed one or two things in my 'marketing plan' so if anyone has anything to add, let me know and I will add it to my plan. And, of course if any agents are reading this feel free to comment on those other elusive tasks you perform. UPDATE: Even though I have received many comments on this thread, most lauding me for the great content in this OP, I have yet to hear one item that needs to be added to the steps above from any agent that reads RFD. There are a couple that have posted on here that I know of but they are at a loss to add anything. No surprise there!

So, are items 1-11 worth 2.5% of your home value? For a million-dollar property that's $25,000 + HST. You could do it all for less than the HST on the commission you'd otherwise pay. And, you have an MLS listing to boot and agents will still be clamouring to sell your home because they are still getting their cut and maybe even more than normal. Yet you are paying less. Now, is it worth paying a 2-3% commission to the buyer's agent? Probably since agents simply won't show houses unless it feathers their nest enough even if it is the best thing for their client. You could go with a totally private listing that is not on MLS but you would not get the same exposure and less exposure means lower demand for your home and likely a lower price. Would that absolutely happen? Not necessarily but it makes it more likely.

The best approach for sellers is to do a flat-rate listing.

The best approach for buyers is not to sign a contract with an agent. Do the search yourself on mls.ca, guava.ca or zoocasa.ca and call the listing yourself. That way you'll save 2.5%. Just make sure the seller knows they will not have to pay a buyer's agent by attaching an addendum to the front of the offer noting this or by noting it on bold lettering right on the agreement of purchase and sale. Make sure you don't sign anything the listing agent might give you allowing them to get a buyer's commission (if it is not a flat-rate listing). Now, because the listing agent is saving 2.5% +HST they can reduce the price by that much. Better still if it happens to be a flat-rate listing because then 5%+HST has been saved combined by both parties.

My advice to people who want to list a home:

Use a flat-fee real estate agency to list your home on MLS. Get get comparative data to use to help determine what to list at. Pay them or others to do the simple items 2-11. Many already include some of those services in the flat fee. If you do not want to use a flat-fee listing and want some hand-holding then offer the listing agent 0.5% as a listing fee, but no more. Agent's will balk at this at first but when you tell them you'll find someone else who will most will quickly change their mind. Make sure though that they agree to do all the steps outlined above. Even at 0.5% they still make a lot of money. That explains why there are major real estate brokerages that will list homes in Rosedale in Toronto for 0.5%. It also gives them exposure by putting their name out there. No wonder the people who live in Rosedale can afford to. They are savvy and know not to pay ridiculous listing fees!

Offer 2-2.5 % (including HST) to the buyer’s agent so they won’t shun your home. No agent is going to not show your home because it is a flat-rate listing. They couldn’t care less about what the listing agent is getting for the sale. They are out for themselves and themselves only. Hell, offer 3.0% (including HST) which is way less than the combined 4-5%+ you’d pay if both the buyer’s and sellers agent were getting a commission and every agent would come out of the woodwork to show your home, even to the exclusion of other homes that might be as suitable or even more suitable for the client. Oh, I am being cynical here am I? Not at all. I’ve seen it happen and have had agents tell me stories about it happening. The house I am in right now happens to be one I found on my own even though it had been listed for a couple months and was within the price range and geographical area I told her I was interested in. The agent was only showing me higher-priced homes but never showed me this one. Funny that. ;)

I see this as the only way to counter the fact that buyers + sellers agents together want to get paid double what they were a mere 7-8 years ago for selling a home. Tell me, has anyone else's wages double in such a short time? This is a simple and effective way to lower your selling costs.

Now before all you real estate agents get all huffy and puffy about my post, I am not saying you are ALL bad people. There are some very good agents out there but one thing that motivates all people is money and everyone operates in a way such that they further their own economic interest. Real estate agents are no different. You don't need to pay their exorbitant fees.

Btw, here is a list of what agents say they will do for you in listing your home: http://www.superiorschoolnc.com/postlic ... agents-do/. This is from a US website so some of the terms may not be applicable to Canada. The length of it and the excess verbiage reminds me of how we padded our essays in high school by being verbose to make them look longer and make them look like we did more work. You can distill all of that list of 101 things down to my list above. That list is intentionally made to look very long and involved in order to pull the wool over your eyes. It repeats the same things over and over with different language trying to make the items look different and the list look longer. Don't by the hype and smoke and mirrors. Put the money in your own pocket. All listing agents care about is their commission, not you as they only put food on the table if a transaction happens. All it has to do is happen for them to get most of their commission, not that it benefits you at all or gets you the best price. Never forget that!
525 replies
Deal Addict
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Jan 31, 2007
1399 posts
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Aurora
eonibm wrote:
May 22nd, 2014 6:15 pm
Hell, offer 3.0%
Don't forget, you have to pay HST on that 3.0%.
I was offering around 1% to buying agents a couple of years ago and would get hang-ups and attempted lectures/anger because I was using their precious MLS. Ended up selling in only a couple of days.
Today, I was looking for a Will template on RFD and I was advised to consult a lawyer. Why? I don't need a lawyer, I need a free template, which I'm just gonna Google...
[OP]
Deal Guru
Aug 2, 2010
13043 posts
3270 upvotes
Here 'n There
Yup, I altered it to include the HST. Still 3% including HST is way more than they'd be getting otherwise unless it's an exclusive listing and almost none are these days (as that's idiotic because it reduces the exposure of your home).
Deal Addict
Jul 3, 2011
4985 posts
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Thornhill
It’s a piece of cake according to this private seller who blamed Realtors anyway for her not being able to sell despite the fact that two Realtors also had stale listings in her building.

selling-home-privately-experiences-flat ... 1451297/2/


Don’t forget what Freakonomics taught you - Realtors take longer to sell their own homes for more money. So ask yourself when an offer comes in - do I sell quickly or hang in longer for that sure to be better price in about 9.5 days?

Good luck. I mean that.
Penalty Box
User avatar
Aug 11, 2005
3878 posts
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licenced wrote:
May 22nd, 2014 9:21 pm
It’s a piece of cake according to this private seller who blamed Realtors anyway for her not being able to sell despite the fact that two Realtors also had stale listings in her building.

selling-home-privately-experiences-flat ... 1451297/2/


Don’t forget what Freakonomics taught you - Realtors take longer to sell their own homes for more money. So ask yourself when an offer comes in - do I sell quickly or hang in longer for that sure to be better price in about 9.5 days?

Good luck. I mean that.
If he/she hired a realtor, will they magically make the entire real estate market just for her?
Penalty Box
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Aug 11, 2005
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Great high content post. This should be stickied.
Deal Addict
Jul 3, 2011
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Thornhill
Please ask that question again so that's understandable. Appreciate it.
Luckyinfil wrote:
May 22nd, 2014 10:15 pm
If he/she hired a realtor, will they magically make the entire real estate market just for her?
Deal Addict
Dec 8, 2008
1688 posts
124 upvotes
licenced wrote:
May 22nd, 2014 9:21 pm
Don’t forget what Freakonomics taught you - Realtors take longer to sell their own homes for more money. So ask yourself when an offer comes in - do I sell quickly or hang in longer for that sure to be better price in about 9.5 days?

Good luck. I mean that.
i know of someone who got a decent offer in a buyer's market, whose agent insisted he reject the offer, then got no offers for months and could not sell the place. doesn't always work out.
Deal Addict
May 5, 2008
4539 posts
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Winnipeg
2.5 percent total is a good commission. Most agents think they are worthy for 5-7%
Deal Addict
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Jan 11, 2004
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Victoria
The hardest part is price discovery. Sure many agents will flash around numbers to get your attention and your listing but will they actually spend the time and pull all comparables? Probably not unless they are really sure you're not just shopping agents.

In Victoria there is a parallel system to the stupid and useless realtor.ca website called pcs and vreb matrix that allows you to search for and track prices. If there's anything similar in Toronto I'd get access to it because it's very useful for price discovery purposes. In BC you can also access sales reported to the property tax agency which is highly useful to capture private sales. You have to watch the tax data though because some of the transactions are obvious deals between relatives where the prices are crazy low.
Deal Addict
Jul 3, 2011
4985 posts
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Thornhill
It happens often enough that sellers will look a gift horse in the mouth because it showed up within a few days of listing thinking well if I got one so nice this soon, a better one is around the corner, then they pay the price later. The only way this works out is when market prices are climbing and it often takes months to actually get a better offer which after you account for the carrying costs of those months, never mind the stress, means a loss and an experience you want to forget - quickly. The Realtor was out of bounds to insist on anything, if that is what they did.

I know of a property in TO that has been on the market for a year or more now. Every 2/3 months or so the listing is terminated and renewed at a 2-4% higher amount with a new brokerage. It's an investment property that was purchased just a few months before it was first relisted. Rents are under par, the property would undoubtedly be a hot commodity in 1970 but it's advertised now as upgraded and the owner was slapped with a compliance order just after they bought it. Meanwhile the current 1% cap rate is less than this owner purchased it for. Its 2nd listing Realtor to whom I spoke was frustrated by the number of offers rejected but it was clear there was no room for negotiations.
leoben wrote:
May 22nd, 2014 11:03 pm
i know of someone who got a decent offer in a buyer's market, whose agent insisted he reject the offer, then got no offers for months and could not sell the place. doesn't always work out.
Deal Addict
Dec 5, 2009
4921 posts
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Some very good ideas here but I would not offer less than 2.25-2.5 to buying agent as you will significantly limit the buying pool. Especially in a cooler market.
Penalty Box
User avatar
Aug 11, 2005
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dealguy2 wrote:
May 22nd, 2014 11:36 pm
The hardest part is price discovery. Sure many agents will flash around numbers to get your attention and your listing but will they actually spend the time and pull all comparables? Probably not unless they are really sure you're not just shopping agents.

In Victoria there is a parallel system to the stupid and useless realtor.ca website called pcs and vreb matrix that allows you to search for and track prices. If there's anything similar in Toronto I'd get access to it because it's very useful for price discovery purposes. In BC you can also access sales reported to the property tax agency which is highly useful to capture private sales. You have to watch the tax data though because some of the transactions are obvious deals between relatives where the prices are crazy low.
No it's not. All a realtor would do is to go into MLS, filter previously solds in the same area with the same bedrooms and print/email it to you. Takes all of 30 seconds.
[OP]
Deal Guru
Aug 2, 2010
13043 posts
3270 upvotes
Here 'n There
licenced wrote:
May 22nd, 2014 9:21 pm
It’s a piece of cake according to this private seller who blamed Realtors anyway for her not being able to sell despite the fact that two Realtors also had stale listings in her building.

selling-home-privately-experiences-flat ... 1451297/2/

Don’t forget what Freakonomics taught you - Realtors take longer to sell their own homes for more money. So ask yourself when an offer comes in - do I sell quickly or hang in longer for that sure to be better price in about 9.5 days?

Good luck. I mean that.
You are faced with that question anyway, even if represented by a real estate agent. And, since you are saving 2.5% you certainly have the luxury of waiting if you want to.

No one is saying it is a piece of cake. There is work to do. You missed my point which is that the services provided by real estate agents like you as a listing agent is not worth 2.5%.

I note that you also have not been able to add any useful tasks to those which I have already enumerated. That is VERY telling!

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