Full-Service Realtors, Discount Realtors, FSBO, IBuyer: What are the Differences?
The Province of Ontario doesn’t regulate real estate commissions and, as such, there is no standard commission but there are some typical models, as well as some newer entries into the marketplace. There is literally something for everybody, so how do they stack up?
For Sale By Owners (FSBO)
Not everyone wants to use a Realtor. Some homeowners prefer to sell on their own and we refer to them as For Sale By Owners. These people still need to contract through a Brokerage if they want their listing to appear on the Multiple Listing Service (MLS) but there is usually a flat fee payment. These payments vary and can get fairly pricey, depending on the service level. If the home doesn’t sell, the fee is NOT refundable. You’ll also pay upfront. Typically, the homeowner will do everything themselves such as conducting Open Houses, Buyer Showings, Marketing, Photography, Staging, Contract Negotiations, Sending Documents to Lawyers and Setting the List Price along with dealing with any hiccups or closing problems.
Cash For Home / IBuyer
There is a newer model just starting to appear in Canada where a company offers to buy your home for cash, usually within 7-14 days. The Seller doesn’t need to do a thing. No agents, no marketing, no open houses, no buyer visits. The ideal candidate is a home that needs updating or is distressed so that the buyer (usually a well-funded venture capital company) can buy the home for under market value, fix it up and flip it for a profit. The advantage for the Seller is it’s a no-hassle approach and it’s quick, but you have to expect to leave money on the table. These companies are NOT buying your home just to make you happy. There has to be something in it for them, namely the ability to make a return on their investment (profit). We’re starting to see their ads on Facebook here in our area. Local small investors do this as well but their preferred method is “lawn signs” that usually say something to the effect, “Cash for your home” or “We Buy Homes in Any Condition.” These are investors who are looking to make a profit on your property.
This brokerage model tends to limit services provided and may not have a brick and mortar presence, in order to pass along the savings to the Seller. Some of the services they may eliminate include:
- Professional photos, virtual tours and/or drone aerial footage
- Videos of the property
- Some may eliminate home prepping, house cleaning, window cleaning and staging
- Limited market both in print and internet/social media
- May offer less commission to the buyer’s agent
- There is a focus on transactions (transaction-based) rather than the customer experience
- Limited or no staffing to book showings and appointments
- Limited follow up or feedback to the Seller
Full – Service Commission Model
The higher costs of a full-service commission model include more services and a higher touch, more client-centric experience. Services may often include:
- Assistance with home preparation, cleaning and/or staging
- Professional photographs with a professional photographer often including video, virtual tours and/or aerial photography
- Floor plans
- Feature sheets and brochures
- Extensive marketing both in print and social media
- Targeted marketing
- Experience agents with high level negotiating skills
- Extensive market analysis to price your property correctly
- Lots of follow up
The Williams and Follows Turnkey Commission Model
This is our own creation that provides the client with a worry-free, everything is taken care of experience. Our team will assess the need, document the solutions, source the contractors and/or materials and project manage the entire preparation of the property to get it ready for the market so it attracts the very, best price. This is a full – service plus, plus model that has become increasingly popular for all kinds of Sellers. Budgets are established and work approved before we move ahead. This approach provides complete transparency and there are no surprises. Clients appreciate that absolutely everything is handled properly.
Full Commission Low Service Model
This is the one to avoid, where agents charge a full commission but provide very little service or accountability. It’s the model we hear the most complaints about and ends up costing you more in the long run. Often, the customer finds out after the fact that not very much is being done to actually sell their home. It’s important to find out, upfront, exactly what will be included in the agent’s services and what experience they have in negotiating contracts.
To find out more, give us a call at 905-442-5847 today! We’d love to provide you with a full consultation as to what may be the best option for you.