Flat fee services, discount real estate brokerages, and consumers frustrated with high real estate commissions have benefited from Realtor.ca (MLS) new rules. Mere listings and a la carte unbundled real estate services are finally rolling out, giving consumers more choice, control and involvement in selling their homes. Gone are the days where the Realtor was the gatekeeper, the knowledge-knower and the only game in town.
Most people at least consider selling their home privately. How hard can it be, right? Home selling franchises like Comfree and the Property Guys have for years scooped up this For Sale By Owner (FSBO) market by offering second-rate real estate advice, poor marketing services, and websites that are difficult to navigate and secondary to Realtor.ca (MLS). These companies are not real estate companies. They are marketing companies. And they make a lot of money.
The Property Guys and Comfree always make you pay upfront. Their advertising entices you to “save the commission” as they make thousands and thousands of dollars every year on houses that don’t even sell. By most reckoning, fewer than 1/3 of all FSBOs sell and the majority of those have at least one real estate agent involved in the sale. Where’s the commission saved? In fairness, they are not completely terrible. They sometimes are successful. And, they are not the same.
Flat fee brokerages have sprung up and are slowing getting a toe hold. Unfortunately, with high insurance premiums, slim profit margins and commissions (the buyer’s agent still has to get paid), the volume isn’t there yet to support this low-cost, high-volume business model. The services they offer are lacking. Many are located out of town. They are difficult for both potential homebuyers and local realtors to deal with and with so many other houses on the market, many home sellers who list with discount brokerages simply get eliminated through untimely and unprofessional communication and incomplete information.
Flat rates and commissions
Until the real estate business can settle into a new model, the best course of action for home sellers is to negotiate commission with a licensed real estate agent at a top-line brokerage. Many people are unaware that realtors are allowed to negotiate their own commissions and can offer flat rate fees.
With the changes to the MLS, home sellers can have their cake and eat it too. In the above post I talked about how full-service real estate agents can offer flat rates. Here’s a excerpt from that post.
excerpt: Flat Rates vs. Percentages
You can also negotiate a flat rate with your listing brokerage (say $10,000 commission to sell your house, of which they’ll pay the cooperating brokerage $4,500). You cannot mix flat rates with percentages. You cannot say, “I’ll pay the listing brokerage 2% of the selling price and he can pay the cooperating brokerage $3000.
The unbundling of real estate services – selling real estate a la carte.
There are two models that full service, licensed real estate agents are starting to employ. They are: real estate consulting and flat fee selling. Real estate consulting operates on a per hour basis. Frankly, I don’t know how this works but I suspect it’s like working with a lawyer, with upfront fees. I’m not about to be the test monkey on that flight.
Flat fee selling
If you’d like to discuss flat fee selling with a full-service real estate agent (like me) here’s what you should expect to receive.
1) In-home consultation to determine listing price (CMA), marketing strategy (open house, virtual tour, photos, info sheets), discuss flat fee commission rate, verify measurements, discuss and sign documents.
2) Your listing processed and sent to the local real estate board. Realtor.ca (MLS) picks it up at our local boards – Kitchener Waterloo Real Estate Association (KWAR) and the Cambridge Association of Realtors.
3) Servicing your listing. Realtor follow-up with prospective buyers, agents, brokers, lenders, lawyers, home inspectors and other service professionals. Amendments to your listing. 24-hour live person answering service.
4) Internet Marketing. Our websites are search engine optimized
5) Representing and advising you through negotiations. Dealing with offers or multiple offers. Following through until with cooperating real estate brokerage and their lenders, lawyers, home inspectors, appraisers with any issues until resolved. Handle amendments, waivers and disbursements until sold and closed.
Some of these things, home sellers can easily take care of. Most homeowners can take the photographs, prepare the feature sheets, distribute flyers into neighborhood mailboxes, and order newspaper ads.
To negotiate a flat fee, here’s what you need to have ready:
1). Full property address including postal code.
2). Names of owners as they appear on the deed.
3). Room measurements.
4). Survey (if freehold).
5). Latest Property Tax Bill – (current year if listing after June 30. Previous year if listing before June 30).
6). List of up to 3 important features of every room.
7). Brief description of property. No more than 420 characters, including spaces. To be emailed or put onto a flash drive.
8). List of items such as appliances, window coverings, equipment (garden, pool, pool table) that is included in the purchase price. Must have fewer than 220 characters including spaces.
9). List of exclusions. Fixtures like chandeliers, mirrors or big screen TVs attached to the property that you want to take with you.
10). List of rental items (i.e.: water heater).
11). Mortgage information: including outstanding balance, current payments, interest rate and payment schedule.
12). Complete contact information for your lawyer.
13). Up to 9 photos in .Jpeg 640×480 format. To be emailed or put onto a flash drive.
14). Your complete contact information including email addresses and phone numbers.
Be prepared to list your home before you take the next step.
Call or email to invite us over to get started.
Keith Marshall 519.729.4116
You pay peanuts, you get monkeys
You get what you pay for. Using our services is not going to be the cheapest. For home sellers who focus on price and price alone, there is plenty of evidence that demonstrates lost time, lost opportunity and lost money. Ignore the crucial factors of expert advice and professional service, at your peril.
Edit: October 22, 2014 I received a comment to this post by email. Sorry for the confusion. Here is the email.
Website Possibly Misleading
You can also negotiate a flat rate with your listing brokerage (say $10,000 commission to sell your house, of which they’ll pay the cooperating brokerage $4,500). You cannot mix flat rates with percentages.
“You cannot mix flat rates with percentages.”
REBBA 2002, Section 36
commissions or other remuneration may be an agreed specific amount, a percentage of sale price, or a combination of both.
So a mix of a flat rate and a percentage are allowed in Ontario.
Why do you indicate “You cannot mix flat rates with percentages.”?