I've been wanting to post some information about the For Sale by Owner websites such as ComFree, RealtySellers, etc for quite sometime now.
First off let me say that I'm a huge supporter of trying to sell your home on your own. Afterall it is your home so why should't you be able to sell it. What I'm not a fan of is the lack of rules and regulations that these For Sale by Owner websites can operate with. As a REALTOR® I have to comply with all sorts of rules, regulations and bylaws that allow us to be 100% transparent to all of our clients and I wouldn't want it any other way!
I hope the is blog post helps in understanding what you're paying for with For Sale by Owner websites and what difference a Professional REALTOR® can make for you in the sale/purchase of your home!
What I will discuss in this blog post is what these companies don't tell you, and how many properties they have actually sold. I think most of you will be surprised by the statistics I will share with you.
Two big forces that are competing for the consumers business is, ComFree and RealtySellers. There are a bunch of other for-sale-by-owner companies, but they have limited data, or they are not making enough of impression, so their stats are meaningless.
Before I discuss these two companies I will explain to you their business model.
In a nutshell you are paying these companies up-front for a website to advertise your property. That's all! If your property doesn't sell, you've already paid out the money.
Remember you as the homeowner are solely responsible for pricing, showings to QUALIFIED buyers, security, offers, negotiating, marketing, selling, etc. In other words, all the stuff that a REALTOR® does for you!
When you are using a flat free business like these two for-sale-by-owner companies, you always have to pay for the service upfront regardless of whether the property sells. The difference using a Real Estate Agent is that they only get paid when the property sells, so it is in their interest to work with you until the property sells.
All stats are taken from the Toronto Real Estate Board from January 1st, 2012 to December 31, 2012 and borrowed with permission. I'd love statistics for Regina, SK and area but they are unavailable. However, with my 9 years of real estate experience in the Regina and area market, I can tell you that these statistics will be very similar to our local market.
Let's look at the smaller of the two for sale by owner sites first:
RealtySellers listed 708 properties this year, and of those listed, only 309 were sold (43%). Out of the 309 properties sold with Realtysellers, 195 (63%) were sold to a buyer who was working with a Realtor. Usually a 2.5% commission was offered when a Realtor is involved in the transaction. The breakdown of commission is usually 5%, 2.5% goes to the Listing Brokerage and 2.5% goes to the Buyers Brokerage (Remember, fees are negotiable). Out of the 90,000 properties sold this year in the GTA only 0.3% were sold using RealtySellers.
Now lets take a look at Comfree which has the largest market share in the Greater Toronto Area, and is very popular in Regina, SK. Comfree listed 1287 properties this year. Of those properties listed, only 672 were sold (52%). Of the 672 that were sold, 368 were sold using a Realtor (55%). That translates to only 304 of the 1287 listed properties were sold without the services of a Realtor (23%). Yes, less than 1/4 of the homes listed on ComFree sell by owner! When the consumer sees a Comfree or Realtysellers sold sign they assume that these properties were sold without paying any commission. The truth is that close to 60% were sold using the services of a Realtor.
-Does the consumer know this?
-Wouldn't the consumer find this to be valuable?
Of course, but most information out there is somewhat skewed and misleading.
Again, it is the public that has to do their due diligence, but is this information readily available? No!
There were close to 1000 properties that never sold by these companies that required a flat fee. Let us assume the consumer paid $1000 for these services. That means that these companies earned $1,000,000 in revenue for just getting the listing. Only just over 1% of all properties sold in 2012 were sold by the two for-sale-by-owner companies that were discussed. The consumer needs to choose wisely and be aware of the services, choices, and the transperancy of these services.
Bottom line is we, as REALTORS®, are paid to take on every aspect of a home sale, as pointed out above, and provide both value and service! On the buyers end of things traditionally a very high percentage (somewhere around 97%) of QUALIFIED BUYERS work with a Professional REALTOR®. Ask yourself where the 97% are looking for homes? Tha's correct, most QUALIFIED buyers working with a REALTOR® are looking soley at homes listed by REALTORS® on www.REALTOR®.ca. Take that into account and the For Sale by Owner statistics above really start to make sense!
It truly is more than throwing your home up on a website (pretty pictures and all), and sticking a sign in the front yard. In fact it's more than marketing! It's service, qualified buyers and pricing the home properly. I do so much behind the scenes in order to provide my clients with the best service/value that they've seen in a REALTOR®.
Have you ever been to a quality restaurant, hairstylist or maybe needed a great lawyer, doctor, dentist at one point?
The service and value you receive are well worth it. Hire the professional that will get the job done and show you the service and value that you deserve. Period!
Again, I do wish anyone the best of luck in selling your home on your own, but you know where to find me if you decide you could use some professional guidance.