When selling one's home, the desire to hire a real estate agent is waning in Canada, according to a new survey commissioned by PropertyGuys.com.
Canadians say real estate commissions are too high, agents don't have their best interests in mind and bidding wars are engineered by the industry, say respondents in the survey conducted on the Angus Reid Forum.
The survey found:
- 82 per cent of homeowners agree that the average five per cent commission real estate agents charge is too much.
- Fifty per cent say that agents don't have their best interests in mind when selling their home.
- Another 60 per cent believe that property bidding wars are engineered by real estate agents.
"There's an overwhelming sentiment that the status quo, and the commission rate that seems to sustain in Canada at around five per cent; folks don't like that and they find it too much," says Walter Melanson, director of partnerships at PropertyGuys.com in Moncton, N.B.
"We know there's a sentiment among Canadians to try something new and different … so many are disgruntled towards the amounts they paid in the past (to real estate agents) and they're likely to consider alternatives."
Melanson says there's a genuine consumer desire for change in the Canadian real estate industry.
"If we look at the traditional real estate industry, there hasn't been any great deal of reform and the little box they built about 100 years ago operates quite the same as it did then.
"You've got an industry today that doesn't want change and … those that suffer the most are the folks that choose traditional agents and are waiting for something big to happen within that space that helps them start to save money."
Want to go it alone? Here's what you need to know
While it's true you could sell your own home without a real estate agent, there are a number of factors to consider before doing so.
For starters, understand that real estate agents generally charge a five per cent fee for their services that include having forms and contracts approved by lawyers to execute a sale contract.
Real estate agents also advertise that your property is up for grabs beyond sticking a sign on your front lawn and they're front and centre whenever a potential buyer shows up to take a tour of your house or property to highlight the unique features and/or renovations you've done to the building. And agents also handle the negotiations with a potential buyer.
"Buying or selling a home is the single largest investment a purchaser or seller will make in his or her lifetime. As such, the services of a full-time real estate professional are required to ensure the best possible outcome," says Christine Matysiewicz, director, RE/MAX Ontario-Atlantic Canada Inc. "Surprises can arise at any given time during the home buying/selling process. From legal issues such as easements, encroachments and grandfather clauses to the negotiation table, the process is not without pitfalls."
If you're selling, your realtor will set a price based on comparable sales in the area. He or she will likely get a higher price for your property than if you tried to sell it yourself.
"Your home will also sell faster because of the exposure it will receive. Your realtor is also connected to your neighbourhood -- he or she will continually assess market conditions and how they impact your property," she continues. "Your realtor is also a skilled negotiator and has been educated on the complex laws and regulations in real estate and is trained to put together a legally binding contract … and if you're buying, your realtor can open doors to thousands of properties through the MLS system."
If considering alternatives, one should weigh their own needs and goals, as well as their own abilities, Matysiewicz advises. "They should know what level of personal involvement they are interested and available in having in the transaction process. Most of us have very busy lives," she points out.
Some questions consumers might want to ask themselves may include:
- Do you have the time, energy, know-how and motivation to sell/buy on your own?
- Will you be able to effectively market your home?
- Do you feel comfortable showing you home to strangers and can you make your home available to potential purchasers when needed, given your hours of work and other commitments?
- Will you be able to deal with a parade of potential bargain hunters and tire kickers?
- Can you overcome the emotional attachment you have to the property? Would you be able to negotiate effectively and accept criticism of your home?
Are you able to manage technical issues related to contracts and negotiations?
If you're selling and mulling over which realtor to turn to, Matysiewicz recommends touring your own neighbourhood to see who has a strong presence. It's ideal to engage someone who is very active in the local marketplace.
"Doing so assures they'll have the right mix of knowledge and experience to meet the challenges and identify the opportunities within that specific area. It's also more likely that they have established links to potential buyers in the area as well," she adds. "Family, friends and colleagues can also be a great source for a referral. Visit the local real estate offices that services your area. Don't be afraid to ask questions. You can also ask for and check references for your own peace of mind."
Meanwhile, the PropertyGuys' survey findings also shows 67 per cent of respondents agree traditional real estate agents, and their commission fees, are one of the factors contributing to home price inflation. In Ontario, this number was higher at 70 per cent.
This survey also finds:
- 66 per cent of homeowners polled say alternatives to traditional real estate agents will benefit home sellers.
- Only 19 per cent of homeowners think their real estate agent was definitely worth the commission paid.
- 87 per cent believe that how much money they have at the end of the day is most important when selling a home.
- 50 per cent of Canadians disagree that real estate agents have your best interest in mind when selling a home.
While those in the traditional agent/broker segment may want buyers and sellers to believe that it is dangerous not to use an agent, the truth is that the real estate market has changed and savvy consumers, with the right tools, technology and know how, can sell their home without the use of an agent, Melanson adds.
"The folks that connect best with our concept are those that are comfortable with showing their house themselves and in engaging with others," he says. "These are confident sellers. They lean more on process and systems than they do on people."
The Canadian Real Estate Association politely declined to be interviewed for this article. However, for undecided consumers, the CREA's How Realtors Help website provides information about realtors and the services they provide.