Homesellers: Do You Really Need a Realtor?

You are selling your home, and you want to get the best price you can to maximize your profit. Do you need a Realtor? Can't you sell it yourself and save on the commission?

It's best to have an agent on your side who will coach you through the process, be your advocate in negotiations, advise you on preparing your home for sale - and provide access to the most powerful homeselling tool of all. That tool is the database of homes for sale, locally called the MLS.

What's an MLS? When you hire a Realtor to sell your house you sign a contract to sell the home, and your home is "listed." Locally, most of these are exclusive arrangements, meaning the sale of the home will result in the Realtor getting paid.

A multiple listing service (MLS) is what it sounds like - a collection of thousands of listings in one database. The service allows Realtors to see what's available throughout a region. Moreover, such Internet sites as mls.ca offer nationwide listings, exploding the power of the MLS.

How can a sign in your yard and some ads in the newspaper compare with thousands of Realtors seeing your house in that database? How are all the potential buyers working with buyer's agents going to find out about your house?

Today's market is flat, and it does favor buyers, most of whom are using a Realtor. You might be able to sell on your own, but for how much and after how long? Moreover, if most buyers are using an agent and are under contract, you’ll have to pay them at least 3% at sale and then how much are you really saving (assuming the offer is at Fair Market Value)?

The advantage of the MLS is exposure. By letting a large number of people know about your home, you are more likely to get a good price for it in a reasonable amount of time.

But is it worth 6 percent? Sellers pay the entire 6 percent commission on the sale of a home, which consumes $12,000 of the profit on the sale of a $200,000 home. So, is it worth it?

Well, what if you didn't sell the house at all? You might try, in vain, month after month to sell, and miss out on that great home you wanted to move up into, just so you could save a bit. Worse yet, you might buy that perfect house assuming you would sell yours soon and wind up paying two mortgages for a while.

Who pays the commission? The commission is really paid by the buyer. How can that be possible? It winds up in the seller's column on the settlement sheet, but buyers pay commissions in a certain sense.

Consider this: An automotive manufacturer sells cars to dealers, who then sell them to consumers. Consumers pay for the car, plus they pay the dealer. The dealer's profit is built into the price listed on the window. This practice is so common; we don't think we are paying the cost of the car plus the dealer's profit. We just consider the price vs. the vehicle value, and after a little negotiating, pay for it.

In a similar way, the 6 percent or 7 percent commission is really built into the price of the home. Because Realtors' fees are around 6 percent*, the commission was probably included in the price of your house when you bought it 10 years ago. Now you are selling it, more than likely, for a fair bit more. That 6 percent is still built into the home's value and price. And it’s the buyer who pays that price, which includes the Realtor's fee.

Finally, if you want to sell your home quickly, safely, and for a good price, nothing beats listing it with a Realtor.

*There are NO standard Commission fees and they fluctuate amongst Brokerages. Each Brokerage sets their own commission fee structures.