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Pitfalls of low commission realtors?

Admiral Beez

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When you see houses basically selling themselves in Toronto I question why sellers need to give up tens of thousands to a realtor. DIY selling without any realtor support must have some downsides and risks, but what are the pitfalls of using these new 1% guys?


One sneaky thing about these 1% realtors is the small print, where it says 1% plus buying realtor's commission. Is the buying realtor another 1% or more? This firm, https://modernsolution.ca/ keeps it more honest and puts it upfront, 2% split 50/50 buy and seller agents.

Why would anyone go to the 5% or more commission realtor? If I sell my Cabbagetown semi for $1 million, for example, I could pay $20K for the low commission guys or $50K for the traditional realtor. What would I get for that extra $30K in fees?
 

lenaitch

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About half way down:


Your low-ball agent's 1% doesn't necessarily drive position of the buyer's agent. With a low-ball agent, I would also be concerned about things like insurance, reviews, etc. and what they are offering to provide for their commission; it might not be much more than what you can do yourself. Even some full commission agents are little more than listing collectors.

In an hot (active) market and you are willing to a DIY sale (advertising, staging, scheduling, offers, paperwork, negotiations, etc.) I think you are correct that paying high commissions is a waste of money. Even in an active market, I think the key is getting your product out there via advertising, mls or whatever.
Regardless of using an agent, I think anyone that tries to do a real estate transaction without a lawyer, is nuts, and there are those who think they can get away with it. I think a lawyer is even more important when you go it alone.
 

Admiral Beez

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Regardless of using an agent, I think anyone that tries to do a real estate transaction without a lawyer, is nuts, and there are those who think they can get away with it. I think a lawyer is even more important when you go it alone.
My family has sold property before using ONLY the lawyer. I agree, it's the legal liabilities and obligations you need to manage, stuff the realtors are often rubbish at. When I sold my house in Fredericton the selling agent demanded I sign a Property Condition Disclosure Statement (PCDS). I refused, saying I am not an expert in any of these things, have only lived in the house myself for two years and have no idea about wiring or the state of anything. I gave the realtor the original seller's PCDS but refused to sign one. The house still sold.
 

lenaitch

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I have never completed a disclosure form (Seller Property Information Statement in Ontario) and never would. Our agent asks, I decline and they put the form away without comment. I didn't want to and they didn't care. It has never come up in a sale negotiation.
For that matter, I have only used a home inspector once, and only because the house was built in 1890 and I wanted a second set of eyes. From what I saw in the report, I wasted my money.
 

Admiral Beez

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For that matter, I have only used a home inspector once, and only because the house was built in 1890 and I wanted a second set of eyes. From what I saw in the report, I wasted my money.
Agreed. The release of liability/responsibility that the home inspectors make you sign are a clear indication that their service is mostly snake oil. Imagine having an electrician inspect your home‘s wiring and giving no assurance.


The inspection is not a guarantee nor does THI guarantee any items or opinions described on this report.
 
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lenaitch

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If you are lucky enough to have a go-to general contractor that you have become comfortable with, and they are willing to do it, you are far better to toss them a few hundred bucks to do an inspection. Most good GCs are pretty good at looking at infrastructure from developing estimates and can get a good sense of the 'bones' of a house. Even at that, no one is tearing things apart to inspect everything.
 

marcopolo36

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About half way down:


Your low-ball agent's 1% doesn't necessarily drive position of the buyer's agent. With a low-ball agent, I would also be concerned about things like insurance, reviews, etc. and what they are offering to provide for their commission; it might not be much more than what you can do yourself. Even some full commission agents are little more than listing collectors.

In an hot (active) market and you are willing to a DIY sale (advertising, staging, scheduling, offers, paperwork, negotiations, etc.) I think you are correct that paying high commissions is a waste of money. Even in an active market, I think the key is getting your product out there via advertising, mls or whatever.
Regardless of using an agent, I think anyone that tries to do a real estate transaction without a lawyer, is nuts, and there are those who think they can get away with it. I think a lawyer is even more important when you go it alone.

Your so-called "low-ball" agent may have had 2% commission a few years ago, today your property is double in value, so 1% actually yields the same dollar value in commission. So what actually makes this real-estate agent "low-ball" - the fact that his or her greed did not appreciate faster than inflation rate ?
 

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