26 October 2010
It’s quite possible that it will mean cheaper fees and a wider range of real estate services.
“CREA will certainly not adopt or enforce any rules denying the ability of members to provide mere postings for sellers,” – says the agreement.
Actually, some brokers already offer listing services at discounted price, but they work in the so called “grey area”.
The new agreement allows all agents to offer their services without fear of reprisal from the Canadian Real Estate Association, which owns the MLS (more than 90% of the sales are made through MLS).
Of course, this agreement influences full service agents as well, and sometimes not in the best way, because a lot of attention is focused on what you can save.
John Andrew, Queen’s University professor, says the new rules mean today’s standard 5% commission rate may change in the future.
The agreement makes sure that private sellers who use the MLS will be not shut out. In addition to it, CREA is also prevented from implementing the rules that would prevent listing a seller’s contact information in the realtor’s site. In other words, in case you want to make a private deal, you can contact a seller directly.
The deal also determines the minimum compensation rate for buyer’s agents – it should be at least 1 cent.
Meanwhile, many agents say they will keep offering full services to their clients. Their goal is to let their clients focus on their lives and not to waste time on house searches.
How much can you actually save?
Of course, the difference in costs can be different. Let’s look at two examples.
Full service broker:
Yes, the prices can be different, but usually it’s about 5%. We’ll take 4% for our example.
Generally, 1.5% of the sale price goes to the selling broker and 2.5% – to the buying broker.
If the house price is $500,000, then you’ll have to pay $7,500 to the listing broker and $12,500 – to the buyer’s broker.
If you decided to sell your home yourself and list it on the MLS, you could pay a flat fee, for example $300. Here you can save $7,200 you would normally pay a listing broker.
But in this case you’ll have to show the home yourself and do all the negotiating. It’s necessary to add the advertising expenses and see how much time you will spend showing the house to potential clients.
In this scenario only you would decide how much you want to pay to the buyer’s broker.
Of course, if the buyer contacts you directly, then you will save another $12,500.But if the buyer comes in with a realtor, you’ll have to pay a certain compensation. Usually, it’s about 2,5%, depending on your negotiations. Well, according to the new rules, it should be at least 1 cent, but in this case don’t expect the realtor to make a big effort to sell your property to their clients.
In other words: you can certainly save a few thousand dollars and do all the work by yourself, but it can be not so easy. Moreover, it might cost you more if you make mistakes along the way.