The pendulum is always swinging in business and, it is definitely a seller's market in Calgary right now. All the media articles are pronouncing it loud and clear and they are not wrong. So what exactly does that mean?
Currently there is approximately 1.5 months of active inventory available-meaning if no new listings came on the market, it would take 1.5 months to sell the existing listings, at the current rate of sale. To put that in relative terms, it is similar to an unemployment rate of 3%. Homes in the most popular areas and at the popular price points are selling fast. Almost too fast. The first thing people think is either "I can sell this myself" or "I can use a discount brokerage", because the market will sell my house, but either way "I can save the realty fees."
In theory this sounds great. More money in your pocket is always a good thing.
But wait...here is what you also need to be aware of:
Real estate transactions are complex, full of legal implications, and highly regulated. There is a great blog recently (by Judy Lynn Kiersey of California) that discusses the benefits of using a REALTOR® as opposed to selling For Sale By Owner (FSBO). The complexity extends beyond FSBOs. Buyers can also run into issues in their quest to ‘make a great deal’.
First, realize this is not an unbiased blog. When entering the real estate business, the feedback we got from family and friends was that they felt underwhelmed by their experiences in the customer service area. We specifically chose a full service model to bring something different to the industry.
Now let's discuss doing this real estate "thing" on your own. If you were to look at selling on your own, to save the real estate fees, that’s fair and sometimes seems the best route. I have always been one to look at the numbers to determine strategic direction. So what do the numbers say about a FSBO of your home?
- According to NAR (National Association of REALTORS®) statistics, the average FSBO sold for 17% less than those using a REALTOR®. That is a significant loss considering the fact you can engage the services of a REALTOR® for approximately 3-5%. Or, an average LOSS OF NET RETURN of 12-14%!
- It takes longer to sell a FSBO. According to a study by Northwestern University, the average FSBO takes 19.5 days longer to sell than those sales using a REALTOR®. This translates to another 1% loss of net returns.
- It is unlikely that a FSBO actually sells. According to Zillow, only 2% of FSBOs actually sell; not great odds.
Now let's look at buying on your own. Today, researching a home is easier than ever before with all of the online tools available. However, by the time you find that dream home online, the listing may be 24-72 hours old already. That means that those actively working with a REALTOR® will have already seen the property. Not a big deal on some properties, but on the "hot deals" and most desirable listings, you may be too late.
Calling the listing agent may seem like a good idea as well. In theory, it makes sense for you to think you may get a better deal. But, the contract for real estate fees is already in place by that time. And, if the listing REALTOR® is doing their job, they are already representing the seller FIRST - not you. In essence by doing that, you have no real representation. This situation creates a Transaction Brokerage deal – meaning the agent must give their loyalty to fairly developing the transaction, not to working for you exclusively.
On the biggest purchase in your life, is that what you want? NO ONE working fully on your behalf?
Well you say, “we can do all of these things with a "no-frills" agency” and save some money. There is certainly a place for discount or low-service realty and there is a place for full-service REALTORS®. Just like there is a place for fast food restaurants and a place for full-service sit down restaurants. Like fast food, the “no-frills” or discount agency works on volume: “get ‘em in and get and ‘em out. NEXT!
I recently saw a visual that depicts the activities of a full-service REALTOR® in process of their job to assist you in buying or selling of a home. (If you deserve credit for this-please let us know by email!)
According to this, there are 43 different functions full-service REALTORS® do on your behalf. Some have to be done more than once. Just like the difference between fast food and your favourite sit down restaurant, these activities have to be done. A full-service REALTOR® will do all of these things. “No-frills” companies can certainly provide a fast food-like experience, but very few rave about the dining experience they get with fast food in terms of service or quality. Buying or selling a home on your own, or using a discount service means you will have to do the things a full-service REALTOR® does on your behalf.
Do you have the time or knowledge to maintain your life and add these activities to it?
The bottom line is, using a full-time REALTOR® does the following for you:
- significantly increases the probability that you can actually sell your home
- reduces the total length of time to sell your home, meaning less stress
- saves you work, allowing you to focus on everything else in your life
- provides proper representation in the biggest transactions of your life, reducing your legal risk
- and ultimately, nets you more money – up to 10-15% more in your pocket!
LESS STRESS and risk, MORE RETURN on your investment and LESS WORK for you, by using a full-service REALTOR®....sounds like a “no-brainer”!