By Kim Rempel

There are lots of stories online and in print touting the benefits of selling your home yourself, without using a real estate salesperson. Do-it-yourself property sales companies promise that you’ll save thousands of dollars in commissions.

What most home sellers on that path don’t know, however, can land them in major litigation and financial loss. DIY property sales companies will barely touch the subject or avoid it entirely.



DIY companies will tell you that by saving the agent’s commission, that money goes straight to your pocket. On a $388,000 home, a 4.5 per cent commission would land at just over $17,000. Wow, look at all those zeros you can put in the bank if you do it yourself!

What sellers don’t realize is that buyers are fully aware that sellers are not paying commission, so they don’t expect to either. Buyers will not pay inflated prices just so sellers can have lots of zeros in the bank.

On that same $388,000 home, you might pay a flat fee of $900 or so with DIY companies compared to the $17,000 slice that would cover real estate professionals’ costs. Comparing dollars to dollars, to sell DIY-style seems a straight-forward and obvious choice. The DIY companies sell consumers on the idea that real estate transactions are primarily about sales.

What home sellers don’t understand is that much of the real estate transaction is legal. And in the realm of legal loopholes, what you don’t know can land you in a world of financial pain.

Laura Riddle, in her book Sell Your Home Now, shares the story of a private seller who fell into such pain. The private seller met with a confident, smooth talking buyer.

“I know what I’m doing; let me help you with the paperwork,” the buyer had offered.

“So the seller signed a notarized quitclaim deed, which is the legal document that signs your house away forever, which normally escrow or the attorney holds until the last minute… The buyer had the quitclaim filed and got the house for a $10 filing fee. The case went to court. Be on your guard; getting a buyer is just one-tenth of the process,” says Riddle.

If getting a buyer is just one-tenth of the process, what are the other nine-tenths about then?

Shh… DIY sales companies don’t want you to think about that.

Homeowners don’t realize that DIY selling is a bit like choosing to represent oneself in court. It saves money but it’s incredibly risky. Most people wouldn’t dare, because they know they’re up against a skilled professional in a complicated arena and they could get really, really hurt. Somehow this common sense doesn’t translate to the realm of real estate, even though the legal implications are considerable.

In his article, The Shocking Hidden Costs of DIY Home Selling, Jeff Stern of Re/Max Performance Realty in Winnipeg points out an issue that can affect sellers in a big way, even after possession.

“Once possession date arrives … just before the bank releases funds, there is another inquiry into the buyer’s credit to confirm there have not been any negative changes.

The part you don’t know, but really should: anywhere from seven to 30 days after possession, the bank performs this final inquiry into the buyer’s credit. If there are any negative changes to their credit, the bank is not obligated to fund the sale. It is possible the bank would refuse to fund the purchase even after possession… It happens. Usually when it does, the real estate agent and the buyer will together scramble for another lender’s approval… It can lead to litigation, financial loss and a whole lot of pain.”

The bottom line is that DIY sellers proceed unprotected for most aspects of the transaction.

Let’s face it. There are great agents and not-so-great ones. Some can be intimidating to deal with. They may go to a homeowner’s door and pressure them into signing with them. They may even promise to bring a buyer, but only if the owner hires them. They’ll be convincing. They’ll turn on the charm. They’ll use guilt. A seller’s agent, however, is used to such tactics and can skilfully fend off bullies.

An agent also protects sellers from buyers. Sellers who must deal directly with buyers can be intimidated. Their non-sentimental criticism may bother the seller. They may be demanding about getting a discount. They also may just be looky-loos out for a Sunday afternoon. Agents offer a third-party, thick-skinned barrier from such time-consuming annoyances.

In real estate, as in law, what you don’t know can do more than just hurt you – it can land you in major litigation and financial loss.

In a 2012 article for MoneySense, David Hodges wrote: “Many people who choose the FSBO route find it a stressful, time-consuming grind. Take Tawnia Vihos, who tried selling her Ottawa home with a FSBO service, but gave up: ‘It totally pays to have a real estate agent. More exposure and fewer headaches.’”

  • BenLson

    Agents definitely aren’t going away anytime soon. Even if you are doing it yourself as you say you are still using one. It also depends on where you are. In the ‘burbs, using an agent is a no brainer. Who wants to deal with the hassle? In Manhattan where I work, different story. Agent managed FSBO in NYC is the only viable alternative.

  • Alan M.

    One of the most important things to understand about Agency Law, is how the Courts go about deciding whether an Agency Relationship existed or not and there can be a multitude of varying factors. The beauty of our Court system is that it tends to be more than prepared from many things in the present tense because they have already been addressed in the past. The fact that someone has listed their home on the basis of being a “mere posting” and that the actual listing contract may indicate the Seller has a “No-Agency” Relationship with the Listing Broker doesn’t lock-in the nature of this Relationship as a Customer Relationship. When a matter goes to Court, the Courts will decide what the actual nature of the Working Relationship was, based on what actually transpired between the Seller and the Listing REALTOR/ Brokerage and not what they agreed to in writing, as to what the nature of the Agency Relationship would be!

    The basic nature of a “mere posting” listing is one where the Listing REALTOR/ Brokerage agrees to place the Property Listing on the local MLS (Multiple Listing Service) — on a No-Agency basis and not act as the Seller’s Agent. As part of this concept the listing Brokerage/ REALTOR has an obligation to verify the accuracy of any of the information that will be made public that is included on the Listing Agreement. The Listing REALTOR would also have an obligation to disclose any Latent Material Defects that are disclosed by the Seller. Note, it is very important that the Seller is given a full and proper Agency Disclosure, in a timely manner, in part, because they may want to discuss something with their Lawyer prior to listing. The Listing REALTOR would have an obligation to explain any Industry Forms that are used to complete the listing process and they could take photographs from the Seller to put up on the MLS (Multiple Listing Service) and that’s essentially it. The concept doesn’t preclude the adoption of additional services going forward, but the problem is that the Listing REALTOR/ Brokerage needs to realize at what point they’ve crossed the “line” by providing “advice” of a nature that would be considered “discretionary” — thereby creating an Agency. A Lawyer is going to easily recognize where that Agency “line” would be, but the average REALTOR/ Practitioner will not. This aforesaid fact, in and of itself, is a definitive reason why “mere postings” should not exist!

    Consider some of the actions a REALTOR might take that would create an Agency with a “mere posting” Seller. The most obvious one would be: completing a CMA (Comparative Market Analysis) for a Seller. Placing a Brokerage For Sale sign on such a Seller’s property gives the impression the Brokerage is acting as an Agent. Offering a “Consultation” after a Seller has chosen to be a Customer, implies that advice may be offered beyond what is necessary to facilitate a “mere posting”– when the nature of said advice isn’t strictly qualified. When the Listing REALTOR/ Brokerage makes a promise such as the following: “In this day and age of internet marketing photos are crucial to your success, and as a top producing REALTOR® I know what to, and what not to photograph.” they confirm a general willingness to provide “advice” of a “discretionary” nature, from the commencement of the Listing Contract!

    So, in a functional sense, what is the problem with a REALTOR assuming an Agency, while at the same time regarding someone as a “No-Agency” Customer? The simple answer is that you can no longer treat them as a Customer, who is not entitled to some Agency consideration. For example, had the Listing REALTOR/ Brokerage maintained the “mere posting” Seller as but a Customer, the REALTOR would still have the option of asking such a Seller to sign a Fee-Agreement, in relation to a Buyer Prospect that the Listing REALTOR/ Brokerage may want to bring to the property. Should the Listing REALTOR/ Brokerage have assumed an Agency Relationship with the Seller, and then ask such a Seller to sign a Fee-Agreement, in relation to a Buyer Prospect — you have a very serious conflict or problem, in an Agency sense! It is important to remember that a typical industry “Seller Fee Agreement Form” reinforces the fact that the Seller only has a No-Agency Customer status.

    The truth is that we probably haven’t even scratched the surface when it comes to the Provincial Regulatory Authorities understanding what has been transpiring with “mere postings”. An audit of a Brokerages files, in and of itself, isn’t likely to expose the sort of Agency issues that I expect are common with the “mere posting” listings. While a Managing Broker or Broker of Record is responsible to be aware of a members activities, which includes approving any and all marketing material, a Provincial Auditor isn’t likely to have reviewed a Real Estate Practitioners website. The long and short of it is: if a licensed Real Estate Registrant/ Practitioner, REALTOR, doesn’t realize that they are doing anything wrong, what are the chances that a Customer of such an individual is going to catch on, or even want to go to the trouble of lodging a formal complaint?

    • Hard Working Realtor

      Actually Alan you could say the same thing for a Realtor doing a CMA, not getting the listing and the sellers uses that advice to sell privately. Does that happen a lot? In fact, when it comes to the gray that exists around agency and how our industry members execute it, if you apply your argument then much of our activity as Realtors would be called into question. CMA’s. Advising friends and family. Interfering with other agents lsitings!! It’s clear your bias which makes everything else you post not ncredible.

      • Alan M.

        HWR,

        My bias towards being interested should be seen by those who want to do more than “just get it done” as being the correct kind of bias!

  • Alan M.

    “Building a brand image is a key element of successful marketing.

    Everything identifying your business — its name, product and service names, slogans, logos, taglines and even sound marks — together produce a distinct brand image among your customers. Memorable branding gives you a competitive edge and promotes customer loyalty and repeat sales.

    In today’s competitive marketplace, your brand can become one of your most valuable assets as it becomes more and more recognizable to customers over time. This value can become so great that you can use it as an asset to leverage financing with banks and other lending institutions.

    Protecting your brand and its associated products and services is critical to your future sales. Trademark registration gives you exclusive rights. Without this protection, a competitor could use your brand or something similar that customers could confuse with your brand.

    You can register trademarks to protect key elements of your marketing and corporate brands. This includes logos, product/service names, slogans and more.

    Why register your trademark?

    1/ It shows that the assets are yours.

    2/ It gives you exclusive rights across Canada for 15 years and may be renewed indefinitely.

    3/ It stops others from using a confusingly similar trademark.

    4/ It allows you to flag infringements by others.

    It helps with trademark licensing, which you can use to increase revenues and increase your brand’s reach.” end of quote.

    Regarding Marco Juras’ following statement, herein, and with regard to others who may be so, like, minded: “If I could put the seller’s contact info on realtor.ca I would.” What Marco would like to do, I feel, is particularly inconsistent with: “Without this protection, a competitor could use your brand or something similar that customers could confuse with your brand.” — from a commercial perspective, but just as importantly (perhaps even moreso) there is also the ethical perspective in relation to an, uninformed or unrepresented consumer walking up on our: Trademarks.
    I’ll conclude by giving the appropriate credit for my quoted material regarding the benefits of registering a Trademark: Intellectual Property Office, Government of Canada!

    • CREA Update

      Realtor trademark in 2015 = Home of the $1 REALTOR

      Realty is really hard to accept.

  • Hard Working Realtor

    Sadly Marco based on Alans comments I suspect Alan isn’t to active in the real estate market. Because if he practiced as he preached he simply wouldn’t get it done, and if he did it could be painful for all involved. This business is about getting it done and if I spent all my time focused on regulation my clients would walk. Don’t get caught up in debate with Alan, it’s what he needs foe whatever reason.

    • Alan M.

      HWR,

      I assume you have watched those crime related dramas on television, and, invariably, at some point the D.A (District Attorney U.S.) enters the room to confront the accused. The D.A. always throws a question at the accused, hoping that the accused person will respond, before their lawyer can remind them to: shut-up. The smile that you see on the D.A.’s face, when the accused keeps talking, isn’t a friendly smile — it’s happy smile!

      HWR, I think that there is a misconception that people like yourself don’t give me any “happy smiles” because you, absolutely, do. I expect that when I am dealing with people of your disposition, my clients are going to come out on top every time — without me even breaking a sweat!

      Editor Jim has declined to publish some of my responses to you — including my most recent attempt, but the fact of the matter is: it is far better anyway when you make my arguments for me, and even better yet, when you make them more eloquently!

      • Hard Working Realtor

        No. No I haven’t. I get my education from real life. But I’m sure you’re sure you’re right.

  • Marko Juras

    Thanks for the semantics Alan M :)

    • Alan M.

      Not-at-all, Marco. Thank you, for the perfect completion to my points!

      • Marko Juras

        You do realize how poorly spun all your points are? Normally I would have replied but I figured it would take me more than two hours to address all the spin.

        For example,

        “but it is absolutely beyond the pale, when the Listing Brokerage has set itself up to receive any direct inquiries on such a property”

        Haven’t set anything up, simply can’t put the sellers contact info on realtor.ca -> http://www.huffingtonpost.ca/2015/05/01/competition-bureau-real-estate-ruling_n_7192072.html

        If I could put the seller’s contact info on realtor.ca I would.

        • Alan M.

          Marco,

          Other Broker’s have already testified at the Tribunal that situation hasn’t presented any real problem for their “mere posting” seller’s!

  • Alan M.

    One of the most powerful marketing tools used by “discount brokers” is the suggestion of a level of commission that is charged: typically, in an industry sense, that is higher than what they charge. The word “typically is defined as: ” normal for a person, thing, or group : average or usual” At this point in time the term “discount broker” shouldn’t exist, but when brokers who want to be perceived as such use the term: “discount commission” it reinforces the notion of a: “discount broker”. To avoid any public misconceptions, diligent, Real Estate Boards/ Associations, for some time, have insisted that a Broker who engages in marketing by using commission comparisons, also must use a “Disclaimer” to avoid any public misconceptions, such as: “any reference to real estate commissions (such as 6%) is done strictly for comparison purposes only, as real estate commissions are negotiable by law.” When I review: http://www.marcojuras.com, I see a reference for comparison purposes to 6%, however I don’t see any disclaimer!

    When we market to the public, we should also think in terms of making it absolutely clear when we are talking about a Full-Agency Representation product verses a No-Agency Representation product, such as: “mere postings” — for many reasons, but not the least of which is the communication of REALTOR value relative to any commission level being charged? Once again, when I review: http://www.marcojuras.com, I can’t find any reference under the product that is referred to as a: Flat-fee, “mere posting” listing product wherein the term “No-Agency” appears, let alone an explanation of what “No-Agency” would mean, as it relates to his Flat-fee, Mere Posting, listing service product.

    When a “mere posting” Seller isn’t clear regarding the subject of No-Agency, then by default there would be absolutely no reason to think they would have any understanding of how the presence of No-Agency effects or adjusts what is applicable pursuant to the REALTOR Code of Ethics. From a “Code of Ethics” perspective the REALTOR is exempted from “discovering facts” as it relates to a “mere posting” but how many of these seller’s realize this? We certainly know that any unrepresented Buyer’s of “mere postings” can’t be expected to have any comprehension whatsoever of the consequence of this particular issue/ discussion.

    Regarding the following, herein, statement from Marco Juras:

    “I start of by explaining on my website (below) and then we discuss it at time of listing paperwork. I’ve never had anyone do $1, for example, and I’ve done 141 mere postings in my career. Explaining the facts is the key. For example, every mere posting I go to visit I’ll print out the last 20 sales in a 1 km radius to their property to show them that 18 or 19 of those last 20 sales the buyer had their own representation (only 1 or 2 double-ended; typical ratio in Victoria, B.C.). When they see the facts presented they typically opt for a fair cooperating commission.”

    The last sentence from above: “When they see the facts presented they typically opt for a fair cooperating commission.”, needs to be reconciled against the following, from Marco’s website: “With a Flat Fee MLS® package, also known as a ‘Mere Posting,’ you get the exact same powerful MLS® exposure as a ‘Full Service’ listing; however, you take on some of the work yourself including…” The question or point here is, for everyone who practices, in the sense of: to what extent can we ethically separate the subject of the “Cooperating Commission” that is offered regarding an MLS type listing, when making a reference to the “power” of MLS? In my opinion, the subject of MLS power or effectiveness isn’t severable from the subject of the amount of the “Cooperating Commission”, and I believe that Marco reinforced the aforesaid with the following comment: “When they see the facts presented they typically opt for a fair cooperating commission.”

    I think that there is some kind of fear based misconception that Registrant/ REALTOR’s are obliged to show listed properties even if it means losing money and taking on a potential liability as well. What we are obliged to do is to enter into clear contracts, including Buyer Agency Contracts, so there are no misunderstandings. The Canadian Charter of Rights and Freedoms, doesn’t come in second to any Canadian Legislation!

  • RossK

    The first and single biggest mistake and misconception still being practiced by most BROKERAGES in 2015 is the FREE CMA. In most provinces supplying a CMA constitutes the Brokerage supplying “Advice” and under most province’s trading legislation, a registrant cannot excuse themselves from acting in a Client relationship when advice is being supplied. (remember RECO’s BBQ warning issued to all Ontario registrants in RECONNECT).

    After a CMA has been supplied by a Brokerage there is a HIGH RISK for an undisclosed Dual Agency problem arising that is created for the brokerage who issued that CMA irregardless with which brokerage that seller eventually listed with.

    A CMA cannot be issued with a waiver of agency from a trading legislation standpoint ( although the waiver could hold up in civil proceedings irregardless of registrant charges).

    Any Failed Brokerage who supplied a CMA as a means to get in front of a seller cannot at a later date state the price they gave was wrong. Any Buyer with that failed Brokerage as such cannot be fully represented by the Failed Brokerage in the purchase of that property even though no formal written agency relationship to earn commissions was ever entered into with said seller. On the contrary the Seller is fully entitled to expect the CMA price issued by the Failed Brokerage is upheld to the Buyer to substantiate the legitimacy of an Asking Price. Certainly the Buyers position would be compromised in this instance.

  • Alan M.

    One aspect of the business that organized real estate emphasizes heavily is: Agency Law. Fundamental to the subject of Agency Law is knowing the difference between a Full Agency Client Relationship and a No-Agency Customer Relationship. The fundamental nature of a “mere posting” is that it is a No-Agency Relationship, not a Full-Agency Relationship!

    Regarding the following statement, herein, of Marco Juras: “I’ve been offering mere postings since October 2010 and properties sell for market value. I would by lying to the consumer if I said I can get them more with a full service listings.” The aforesaid, can only be taken as an “absolute” claim that “mere postings” achieve the same price results as Full-Agency/ Service MLS. I find it very difficult to believe that a Managing Broker would approve of such an “absolute” claim, period, but particularly as it is contained in a public statement that could be regarded as a marketing piece. I looked at the subject, REALTOR’s, Brokerages website and it wasn’t evident, to me, who the Managing Broker would be. How could a “mere posting” listing REALTOR suggest that they don’t generate any price or market value for offering Full-Agency Representation to a Seller, but at the same time can accept their inherent value on the buying side, as per: “This year every single mere posting seller that has sold and stayed in Victoria has used me as a buyer’s representative to purchase their subsequent property.”? Marko seems to be saying that he provides added value when negotiating on behalf of Buyer’s, but, for some reason, not Seller’s, or that Buyer’s just like keeping him around!

    As “mere posting” (MLS) sales results become intermixed with Full Agency/ Service, sales, results, it would be very difficult to differentiate between the two realities, as far as the actual price results are concerned, for a juxtaposition comparison — unless a CMA is structured to look at said sales results independent of one another. For someone who desires to promote “mere postings” it is easier to claim that the results should be the same. Should a REALTOR undertake to suggest that “mere postings” achieve similar price results to Full-Agency/ service listings, they should be required to back-it-up or validate their claim with a CMA comprised exclusively of such sales.

    I haven’t looked at many real estate websites that offer “mere postings” but I did look at: http://www.markojuras.com, today. In particular his section on Flat Fee MLS, which he says is: “also known as a Mere Posting..” When I consider the services that Marco lists in relation to the aforesaid section, in my opinion what he describes isn’t a “Mere Posting” — it is some sort of hybrid real estate product. As part of a “one hour consultation” Marko includes a CMA (Comparative Market Analysis) on the Seller’s home. It’s important to remember that, at this point the Seller has already chosen a “Mere Posting” service and consequently No-Agency, Customer, Representation. A CMA is a function that is associated with a Full-Agency, Client, Representation — unless contracted for independent of any listing contract! Even though the listing brokerage of a “Mere Posting” isn’t actually selling the listing, as a “Listing Agent” per se’, Marko’s list of related services also mentions installing a Professional Fair Realty For Sale sign on the property. Said list of services also states: “Buyer’s not working with a REALTOR will be directed to you.” but, if the aforesaid is intended to imply that the REALTOR or Brokerage won’t try and take such Buyer’s as new Clients it isn’t a guarantee — nor is it something that would it be policed, and within the same paragraph it also says: “If you are uncomfortable showing the property directly to buyers I can show your property and we can negotiate a reasonable commission for my services on an individual basis.”

    Providing a CMA to a Seller in a situation where the Seller is but a Customer (Mere Posting) and not owed any duties whatsoever of “confidentiality” or “fiduciary” duties is highly problematic, but it is absolutely beyond the pale, when the Listing Brokerage has set itself up to receive any direct inquiries on such a property, itself — beyond the internet exposure that is unavoidable! We shouldn’t expect a Seller Customer to be properly able to manage their disclosures after receiving “Agency Disclosure” — particularly when, the ensuing discussion includes a full discussion as to the homes market value! This situation is particularly remarkable for British Columbia, as they have made an absolute commitment to Designated Agency.

    • LookUpAlways

      This is a fantastic post. Very knowledgeable and sadly the general public does not know, for the most part, how full agency versus no agency affects them.

      • Carolyne L

        LookUpAlways

        http://www.carolyne.com/representation.html

        http://www.carolyne.com/buyerinfo.html

        http://www.carolyne.com/sellerinfo.html

        http://www.carolyne.com/caution.html

        http://www.carolyne.com/offer.html

        Note: I am NOT selling anything – I wrote these consumer education articles for my own visitors: would-be buyers and sellers, to provide them with general information that made my work so much easier when called upon to reserve an appointment for meeting in person.

        I have had such tremendous response over the years from people who already had their own sales reps and from those even who had no intention of currently buying or selling but had just a general interest in real estate planning for the future.

        Because some of the material is an abundance of information to understand, that the public doesn’t deal with every day of the week the way we do, readers can return at their leisure and pick up where they left off.

        Perhaps some REM readers will find the information useful, too.

        Not looking to debate content, construction or intent. Just simply sharing my experience over the years.

        If writers such as Kim wish to use my articles, material or quote from it, please let me know your intent to do so. The copyright MUST remain intact.
        Thank you.

        Respectfully
        Carolyne L 🍁

      • Alan M.

        Thank you,

        Yes, it is sad. When the “mere posting” seller’s haven’t received a proper “Agency Disclosure”, one of the other points they won’t think of is that prospective buyer’s will expect them to disclose personal information that we can’t disclose without the expressed consent from our principle, under Full-Agency. We also can’t communicate anything we may know about our principles “bottom line” but the “mere posting” seller will be expected to do so and if they don’t the prospects are likely to think they are just being uncooperative.

  • Marko Juras

    “My biggest issue with FSBOs (including a certain marketing company that ends in “Guys”) is that people do not understand at the outset how much commission they will actually be paying.”

    I haven’t experienced this lack of understanding in my personal mere posting business. 95% of my mere posting listings offer a commission amount where the buyer’s representative does not negotiate additional commission.

    I start of by explaining on my website (below) and then we discuss it at time of listing paperwork. I’ve never had anyone do $1, for example, and I’ve done 141 mere postings in my career. Explaining the facts is the key. For example, every mere posting I go to visit I’ll print out the last 20 sales in a 1 km radius to their property to show them that 18 or 19 of those last 20 sales the buyer had their own representation (only 1 or 2 double-ended; typical ratio in Victoria, B.C.). When they see the facts presented they typically opt for a fair cooperating commission.

    Blur on my website:

    “Choice of co-operative REALTORS® commission (minimum is $1). The amount you choose to offer to REALTORS® showing your property is a strategic decision and it can be changed throughout the listing at no extra charge. The minimum is $1; however, you may choose to offer something like 1.5% or an absolute value such as $5,000 or $10,000.”

  • LookUpAlways

    One more thing – Ms. Rempel should likely have disclosed that Jeff Stern, the agent quoted in the article, is also her client. As an agent, I must disclose my personal relationships when I have my professional hat on. Did Ms. Rempel help him write the article from which the quote was taken?

  • LookUpAlways

    Articles like this happen when people who do not have any experience in real estate sales write about it. The content is ok, but does not really highlight any of the real issues with FSBOs.

    First, you have to accept a premise, that there are two real estate markets in Canada: Vancouver/Toronto and Everywhere Else. Many articles are written about sellers’ markets. Much of Canada, other than Van/TO, are buyers’ markets. I work in a buyers’ market, where houses do not fly off the shelf and there are very few bidding wars. A good agent is invaluable in a buyer’s market. In a seller’s market, FSBO sales are more common.

    The example used regarding the quit-claim deed is really a red herring. This is highly unusual. It is much more likely that a seller will get in trouble with disclosure issues, which are often actionable.

    I am also confused by Rempel’s claim that a bank can withdraw financing AFTER possession (i.e., after closing). I have never, ever heard of this. On closing day, the funds transfer from buyer to seller, or the property does not close and the seller retains title. It is as simple as that. If something happens to the buyer’s financing after possession, that is not the problem of the seller at that point, but rather, the buyer’s issue. Those statements were very confusing.

    Prior to firming up a deal (sales go through three stages: conditional, firm, and closed), a seller’s agent would insist on a financing letter from a buyer’s lender. If you did not receive such a document, you would not consider the financing condition met and the sale would not be firm. Occasionally, something happens between firming up a sale and closing, so that the sale does not close and the property has to go back on the market. Fortunately, this does not happen very often, but is much more likely to happen in a private sale as individuals do not have the ability to qualify a buyer (ascertain they have the ability to fund the purchase on the closing date) like real estate agents do.

    My biggest issue with FSBOs (including a certain marketing company that ends in “Guys”) is that people do not understand at the outset how much commission they will actually be paying. I have sold clients into FSBOs and have successfully negotiated a 2 or 2.5% commission for myself as buyer’s agent. So over and above the fee you pay to the marketing company, or for a mere posting, sellers will likely have to pay a buyer’s agent to bring a buyer. The initial cost is often supplemented by additional costs for professional pictures, answering service for appointments, and the addition of a mere posting on MLS. Many times, the seller ends up paying well over 3% to sell the house, and she does all the work, plus pays slightly higher legal fees.

    In one case, the seller would not agree to pay me a commission. I explained to my buyers that they would have to pay me, and that if they agreed to do so, I could negotiate fairly aggressively. I did, and they got an outstanding price for a semi-detached home (the lowest sale price on that street that year). The seller was highly motivated to sell without paying commission, to the degree that he agreed to a great selling price, and then an amended further reduction for deck replacement.

    Further, if I bring a buyer to a FSBO, I must sign the seller to a special agreement that identifies them as a “customer,” as opposed to a “client.” I have a burden of duty to treat them ethically and fairly, but I advocate only for my client. In essence, the seller is unrepresented in the transaction.

    Finally, if I have buyers with a tight timeframe, I steer clear of FSBOs. It takes too long. I have clients coming to my area from another province this month. We have three days to get a property under agreement and inspected. I will not take them to any FSBOs as it is too difficult to get private sellers to understand that time is of the essence.

  • Alan M.

    Once someone has committed to offering “mere postings” I think it’s fair to say that like: Marko Juras they will claim what Marko has claimed herein (in terms of effectiveness), or remain silent — it’s an axiomatic proposition, otherwise the ethics of it becomes a clearer problem. What other Registrants or Practitioner’s, from across the land, have come on REM to make the same claim about effectiveness — not including those who are not readily identifiable ?

    Submitter, Jack Ramone seems to have an ongoing, online, interest in promoting (the one herein isn’t his first) the FSBO company that he has endorsed herein, but unlike a licensed real estate brokerage Jack Ramone isn’t obliged to disclose any “conflicts of interest” that may be inherent to doing so — in the event he has a direct connection to said FSBO company, or perhaps indirect, as some sort of preferred partner.

    Alias “Evan” took exception to my response to him (apparently it wasn’t polite enough) but within his reasoned mind apparently thought that him accusing the author of the subject featured article of writing a: “Very flawed article with many outright lies.” — was an acceptable immediate insult. Unbelievable! Organized real estate attracts all kinds, but why would an “Evan” even be interested; what’s his agenda? It amazes me when industry detractors come on here and spout, as though they should understand something they’ve never been apart of, and also don’t feel any obligation to explain their interest — even if said explanation was total fiction!

  • Marko Juras

    I am finishing up 2015 in Victoria, B.C., with over 90 transactions and approx. 60 sold listings with a split of approx. 35 full service and 25 mere postings (as part of my business I offer mere postings in Victoria for $799 upfront plus $699 back-end on successful sale). *Not bragging, just conveying that I have a lot of experience with this on both ends*

    I’ve been offering mere postings since October 2010 and properties sell for market value. I would by lying to the consumer if I said I can get them more with a full service listings. I would really be lying to the consumer if I said I can net them more (after adjustment for lower commission) with full service; this is simply 100% not true.

    Full service vs mere posting is more about how much work the seller wants to take on and how comfortable he or she is in doing that work. For example, I’ve had quite a few local Victoria lawyers use the mere posting option as a seller with that type of background might be more comfortable with a mere posting.

    Echoing comments below, yes, I have seen mere posting clients hold out and obtain more than I thought the property was worth at the same time I’ve seen a few clients leave a few dollars on the table. In my experience I’ve seen more people successful hold out than leave money on the table so these arguments in my opinion are a net wash.

    One interesting thing I’ve seen over the years is it is extremely rare for someone to call and say, “Marko can you come by our home and explain full service vs mere posting.” 98% of the time clients call and they already know which one they want. The mere posting offering isn’t eroding my full service business.

    This year every single mere posting seller that has sold and stayed in Victoria has used me as a buyer’s representative to purchase their subsequent property. It is the best buyer generation tool that I have and it doesn’t cost anything.

    And yea, I love the legal scare tactics. Guess what, if your house floods every winter and you lie on the property disclosure form doesn’t matter if you are full service or mere posting. As the seller you lied.

    • Alan M.

      Marco,

      For the record, I absolutely believe you when you say the following: ” I would by lying to the consumer if I said I can get them more with a full service listings. I would really be lying to the consumer if I said I can net them more (after adjustment for lower commission) with full service; this is simply 100% not true.”

      To quote Henry Ford: “whether you think that you can or think that you can’t, you are usually right”

  • Jack Ramone

    Article definitely makes sense in states where Realtors do REAL work (including standard legal docs). For example I know in California typically lawyers aren’t involved, so having a good Realtor is probably crucial.

    However in NYC where I am having a lawyer is legally required, and the brokers here ONLY do the salesy part of matching buyer and seller. For that there’s no way in hell I’m paying 6%. In NYC just for your reference that’s over $100,000 on average (6% x $1.87mm avg property sale price) … that’s not justifiable under any circumstance. So at least while I’m still in NYC I’m going to continue to stick with my FSBO DIY companies like Hauseit.com, realdirext etc

  • Alan M.

    One of the many things that we are taught in real estate school is to avoid using “absolute” terms and or expressions. For example: this home is totally renovated! The reasoning for avoiding absolute terms should be obvious: potential financial liability, as a result of being incorrect.

    Consider the following quote from RossK, as it relates to the “absolute” component:

    “The Cone of Silence sales reps are required to put on in order to join any MLS system in Canada today forces Consumers to be mislead and misrepresented with massive financial damage done to every Canadian home buyer purchasing a home today. The damage is immediate and will last their lifetime. Silence that hurts the consumer is simply not right.”

    One of the other many things they we are taught in real estate school, relates to the Law and the prohibition against anyone disparaging title to “real property” In said regard, Duhaime’s Law Dictionary contains the following definition:

    “Slander of title involves slanderous remarks cast upon a person’s property. It is akin to the tort of
    defamation in that it involves a false statement about the plaintiff; however,
    it differs from defamation in that the false words do not reflect upon the
    character of the plaintiff, but on the plaintiff’s property.

    “For slander of title to be actionable the statement, which can be a lien, a certificate of pending
    litigation (“CPL”), or other notices against title, must operate as a cloud
    upon the plaintiff’s rights to the property at issue which makes third parties
    shun and avoid the plaintiff’s property from a commercial point of view….

    “[I] in an action for slander of title the following elements have to be proved: that the defendant
    published words in disparagement of the plaintiff’s property; that such words
    were false; that such words were published with actual malice; (and) that the
    plaintiff sustained special damages as a result.”

    So the question is: would a public statement made in REM (the real estate industries premier publication) especially by someone who holds themselves out to be a Real Estate Expert, not amount to a “…or other notices against title” and or would said statement be “absolute” enough to be specific enough, to be actionable — otherwise, perhaps, the statement needs to be: absolutely correct?

  • David Hodges

    Here’s a link to the MoneySense article the writer, Kim Rempel, mentions at the end of her piece: http://www.moneysense.ca/property/home-alone/

    To be clear, my article was a balanced, objective piece about the pros and cons of using For Sale By Owner. Rempel, however, has cherry-picked a quote from my piece that propels her argument. I find that very dishonest.

    • Alan M.

      David,

      Your article was balanced, really.

      Regarding the following paragraph:

      “Clearly, the biggest incentive for using a FSBO service is the prospect of selling your home without paying commissions to agents. In traditional deals, the home seller signs a contract with a realtor who takes a percentage of the final selling price. (The length of the contact varies, but six months is the usual maximum.) The standard commission is 5%, which is divided equally among your agent, the buyer’s agent, and their respective brokerages. So on the sale of a typical $350,000 home, you’ll pay $17,500 in commissions, of which your agent pockets $4,375.”

      David, not paying commission has zero relevance — unless the homeowner can sell for the same price as a broker can! There isn’t any usual maximum time for a listing, but there is typically a minimum. It is a violation of the Competition Act to claim that a standard commission exists! Commissions aren’t always divided evenly, and you also took the liberty of suggesting what a REALTOR would pocket, as though you are privy to all Registrants or Practitioner’s commission splits!

      David, you also repeated unsubstantiated claims by, at least, one homeowner, that they felt an agent or agents had made appointments to show their home (FSBO) under false pretenses, just to get in the door. The agent (REALTOR) either would’ve brought someone or they wouldn’t have. Many private Seller’s and non-private Seller’s simply have difficulty believing that prospective Buyer’s just don’t like their home.

      David, to be clear, you should be grateful that anyone would refer to your article. Would you like me to comment on your article further, or are you done?

    • PED

      Balanced? Moneysense balanced? I’ve yet to read such an article from that Rogers owned publication. They were always about promoting whatever real estate initiative Rogers was into at the time. Even before that it was cherry-picking certain one-sided freakonomics’ conclusions to proclaim Realtors take longer to sell their own homes and therefore get a higher sales price. Do you see a correlation here?

      Maybe one day Moneysense will actually run an article where they’ve interviewed fsbos who don’t sell rather than just those who do. But then again, not too many admit to eschewing Realtors and failing miserably, yet from the MLS data alone it’s a big percentage. Just imagine how high it really would be if the Property Guys of the world actually had expired data from which the true success rate can be derived.

  • Port Agent

    Trying to make this topic black and white is misguided. Truth is some FSBO’s can competently sell their own home while others can’t. Some FSBO’s leave money on the table (as one I recently looked at did) and others leave themselves open to a world of (legal) pain that may have been avoided if they used an agent. My advice is to let the 10% or so who want to sell it themselves do so – the remaining 90% who see value in my service are the clients I want to work with.

    • Alan M.

      PA,

      ” let the 10% or so who want to sell it themselves do so -..”? Everyone is free to sell their own home privately — it has nothing really to do with us. The point is that their inherent freedom to sell privately wasn’t enough, and their increased exposure with the advent of the internet still wasn’t enough. We were pressured into allowing them to pay to use our (CREA) trademark entities (mere postings) — which, among other things, clouds to subject of REALTOR value, going forward.

      Failed FSBO’s had an important role in establishing REALTOR value when subsequently listed on the MLS and sold successfully — particularly because the results could be tied to a specific transaction or property, in the real or common market. The research paper that was linked herein, that I’ve already commented on, took a simple discussion and mangled it into a complicated paper. An MLS listing has a total amount of commission that is divided into two parts: listing and selling — the brokerages involved each receive their portions upon a successful sale and the monetary cost of their contributions or involvement could be so proportioned. The amount that the failed FSBO attempted to gain for their property could be used as the FSBO benchmark number, and the difference between this price and the price obtained by selling through a real estate Broker would represent “value added”. When the “value added” exceeds the total commission charged, the Seller has not only actually completed what they set out to do, they have netted more money.

  • Madeleine Huven

    Evan, the link you provide to the UNBIASED STUDY by a team at Cambridge University needs a couple of qualifications: 1) The study examines only successfully completed sales, without reference to any effort by FSBO sellers and/or realtors that did not result in a sale. Adding professional services to a sale that is already agreed to between buyer and seller, as this study suggests, never costs the percentage fee mentioned in that study, which is, in any case, way higher than the standard fees charged on this continent for a clean, successful transaction from start to finish. 2) Buyers and sellers are aware that by working with a realtor they are receiving a service which must be paid. If both of them are prepared to do the necessary work themselves, obviously they earn that fee. In either case the fee is not part of the market value of the property.
    Market value is flexible, as we all know. Even professional appraisers are not always precise.
    Apart from that, your personal analysis that FSBO sellers may receive higher prices because they “are willing to stick it out for longer” can apply only in a rising market. If you have ever seen a stable, or falling market, you know the opposite is true.

    • Alan M.

      Madeleine,

      Regarding you following statement: ” If both of them are prepared to do the necessary work themselves, obviously they earn that fee. In either case the fee is not part of the market value of the property. ”

      The purpose of the study was to break out REALTOR brokerage value, as distinct from the value that would relate to the MLS exposure element. When I was asked over the years for a CMA based on avoiding MLS exposure, I declined because I knew there wasn’t sufficient data, and I was confident of 100% or more value added, at 5%. When a REALTOR provides “value added” it does form part of the “market value”; when a REALTOR doesn’t provide “value added” it represents a pure “fee” and as such is only an expense. Most Registrants who have never listed failed FSBO’s don’t seem to grasp the concept, and of course, CREA has never articulated it either — as “value added” isn’t guaranteed!

      When someone believes in “fees” they should also believe that it doesn’t matter who you hire to sell your home, as the price result should always be more or less the same. There is also “value added” just by virtue of the fact we have “errors and omissions insurance” and a broad ass to kick!

      If FSBO’s understood “value added” and knew where to get it, they wouldn’t waste any time selling privately. If your perception was correct everyone should sell privately, and we should all fold up our tents and send everyone over to Ross’ shop to enjoy his rebirth.

  • Evan

    Very flawed article with many outright lies. The stats seem to show that buyers are willing to pay equal prices regardless of whether it is a private sale or not. In many cases, private sellers make even more on the sale price of their house, just because they are willing to stick it out for longer. Your also referencing an article written by a Realtor? Seems a little biased. Should I also believe the Oil Company Reps that are telling us they do no damage to the environment? Come on. Here’s an UNBIASED study that was done by Cambridge University, which concludes that private sale on average is much more lucrative for the home seller. In regards to legal issues, I think I’ll just hire a lawyer for that. http://www.nber.org/papers/w13796

    • Kim Rempel

      I’m not sure you could identify “many outright lies”. I sure can’t find any.

      The reference to a realtor, like any other reference in the article, was used to illustrate a point. His client’s experience illustrated well one of the dangers of buying and selling unprotected. I would have used such an example from a DIY selling company very gladly, but I didn’t come across any…

    • Alan M.

      Evan,

      Perhaps you should take the time read your own link — assuming that you can comprehend the paper. The “Private Sales” in question weren’t your typical private sales. The following was taken from your linked material:

      “NBER working papers are circulated for discussion and comment purposes. They have not been peer reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.”

      “© 2008 by B. Douglas Bernheim and Jonathan Meer. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.”

      “As with all studies that focus on usefully unusual settings, there is a question of generalizability and external validity. While we would not suggest that our numerical estimates can be applied directly to the general population, there are nevertheless good reasons to think that the Stanford housing market provides a valid laboratory for studying the effects of interest.”

      • Evan

        Thanks for immediately insulting me Alan M. It’s sad that there are so many people out in the world that can’t have an intellectual debate without attacking the person instead of the material. But yes, I have read the article and understand the sample size it is using. I think the debate is that with the right knowledge and tools, you can achieve the same price as any Realtor. Private sellers that fail are usually just over priced or lacking exposure (both of which, can easily be fixed). Your “Typical Private Sale” is the uneducated market that fails. It won’t stay there, it will continue to evolve and educate its consumers. Lol but I see you’ve commented on almost every post so I’ll let you respond, and move on as I am sure you have many more comments to get under your belt. Cheers!

  • Hard Working Realtor

    Ross I tend to agree with you on this. Our industry tends to use fear as a primary means of competing, and as much as there is merit in what Kim says, missing are the success stories of sellers selling at at fair market value without Realtor commissions, and in many cases selling at a price higher than the local Realtors might have recommended. But in our market, a FSBO hotbed, the industry has a dismal success rate likely less than 20%…some of it because of what Kim mentioned. Truth is some sellers are very capable, but numbers prove most are not!

    • Alan M.

      HWR,

      And you personally viewed all those FSBO’s didn’t you — otherwise how would you know what you’re talking about?

      • Hard Working Realtor

        Alan you tell us what qualifies you to chime in on every article REM posts and I tell you how I know what I’m talking about.

    • RossK

      HWR I assume you work in the GTA and are a member of TREB based on your postings. To be clear the monthly Failure Rate of all members of TREB combined is 72%. I know ComFREEs exact Failure Rate and it is worse than TREB’s combined pretty much consistently hovering around 85% throughout 2015.
      Oh and to be clear these are TREBs stats not mine.

  • Moss Moloney

    Commissions have nothing to do with the house value. That is the fee charged for the service provided. So your comments are frankly wrong. I find the article self serving
    It selling a house not launching rockets to Mars.

    • RossK

      Last year clients of REALTORS in Canada lost 1.2 Billion and this year will lose a little more because Commissions are part of the house value. That’s right because Commissions are in fact part of the house value (selling price).

      This is yet another example of the poor poor state of the REALTOR brand because Seller Net sheets have been carefully avoided by CREA and MLS associations for over 30 years.

      Go ahead tell a Buyer who was forced to pay $1500 they otherwise would not if the commission was not part of the appraised value of the home they bought.

      • Alan M.

        Ross,

        Are you your own resource, by any chance, for the 1.2 Billion number, or do you have a citation to share with us?

        You can’t speak for any Associations Ross, with or without a “sock-puppet”. I was taught to use “seller net sheets” from day one.

        Ross, speaking of “net” is the arbitrary $1,500.00, at least net of what you would charge, and by the way, what is it that you would charge, Ross, or are a philanthropic Consultant? Of course, one can’t charge anything if they don’t have a client!

    • Alan M.

      Moss Moloney,

      One of my closest friends on REM likes the expression “Creacrats” — I certainly understand the motivation for its creation. However, when we think of these “Creacrats” most of us would tend to think of them in abstract terms: faceless, nameless, are they even creatures who walk around among us, ordinary, rank and file souls. Needless to say, I’ve found more than a few of the comments on REM to be such that it has caused me to question the mentality and even the integrity of the contributor, and ache for this tortured Industry to think that such an individual could actually be licensed to trade in real estate. Moss, am I not correct in my understanding that you are, in fact, a fairly recent Past Director for the Canadian Real Estate Association?

      Given the fact that CREA has been widely ridiculed for its attempts at promoting REALTOR value — in simple words CREA has sucked at being “self serving” for REALTOR’s — how would any Practitioner, let alone a Past CREA Director, capable of reason, take exception to the subject featured article by saying the following: “I find the article self serving” — when clearly it would be self-destructive for us to reject the basic message of the article? Perhaps CREA should have promoted REALTOR value, with two REALTOR’s in business suits sitting in a rocket that was just about to blast off to Mars, but just before they are about to go with “throttle up” one REALTOR says to the other: wait a minute, “it’s selling a house not launching a rocket to Mars”! Is it possible that the only reason we didn’t see such an advertisement is because it was cost prohibitive?

      Moss, if Commissions had nothing to do with a homes value the banks wouldn’t include them as part of a properties financing.

      Moss, consider the following paragraph from an active, British Columbia, members real estate marketing website (it may even look familiar), as it relates to the simplicity of what we do, as to say, for example, compared to astronauts:

      “» Getting pre-approved for a mortgage gives you buying power. You can “remove subjects” faster and it gives you leverage in any negotiations. If your offer is already pre-approved and you are ready to move in 15 days sooner than another potential buyer that still needs financing – your offer will most likely win out.”

      Moss, we have an obligation to make sure all our Buyer’s are properly pre-approved for mortgage financing, leverage should be a moot point in the face of standard diligence. The fact that a Buyer may be seen as personally pre-approved, doesn’t mean that an “offer is already pre-approved”. The approval of an individuals credit and the ascertaining of how much they can afford to finance (mortgage), could, in some cases, take less time than it takes the mortgage lender to have a subject property appraised — which is also integral to the overall requirement of approval. In any event, to suggest to a prospective buyer that: “your offer will most likely win out.” because they might be able to close 15 days sooner than someone else is “frankly wrong”, but even more to the point: it’s just plain silly!

      Moss, what I see as the common characteristic in those who tend to underestimate all that is required to professionally represent someone in the buying or selling of real estate, is either: blissful ignorance, or a conflicting agenda!

  • RossK

    Kim, In most provinces the majority of your recommendations would find you in breach of provincial trading legislation. Now that CREA has approved REALTORs offering FSBO services even mentioning what you are suggesting violates the Code of Ethics and if CREA became aware it would be forced to ask the local mls system to deal with it as a code violation.

    There is no recorded statistical report anywhere in Canada that supports any of the comments you mention. Anecdotal only your comments are nothing more than “urban myth” used by REALTORs in the years when FSBO companies could not use the REALTOR trademark and were not corrupting the integrity of MLS systems across Canada.

    The Cone of Silence sales reps are required to put on in order to join any MLS system in Canada today forces Consumers to be mislead and misrepresented with massive financial damage done to every Canadian home buyer purchasing a home today. The damage is immediate and will last their lifetime. Silence that hurts the consumer is simply not right.

    Consumers no longer can even get the truth about FSBOs from a REALTOR because CREA failed to protect their brand.

    • Kim Rempel

      The majority of my recommendations? (Are we talking about the same article?)

      What I’m suggesting is that consumers be aware that DIY sales companies don’t necessarily offer much in the way of legal help in a process that has many legal ramifications. The risk is on the consumer, and they should be aware of that.

      I’m also suggesting that hiring a full-service agent can add that layer of protection because the agent is familiar (or ought to be) with many things that can become legal problems for their client. The agent can use their knowledge to be proactive for their client, and this is to the client’s advantage.

      I didn’t realize alerting people to awareness was a breach of law in this or any other province.

      • RossK

        Kim,
        You are not a REALTOR so you can state (makeup) anything you want but a REALTOR cannot. REALTORS would require evidence that proves your opinions were true before those opinions could appear on their websites or printed material. Of course another problem is that they could not use MLS sourced data for that purpose of course because the rules prevent that from happening.

        Since your comments could be construed as suggesting one member’s services are superior to anothers, that again is not allowed when you are a REALTOR.

        Look Jeff has tons of experience, worked through several market cycles and is probably a better choice than 80% of his competitors but….HE CANNOT TELL ANYONE BECAUSE THAT WOULD EFFECTIVELY SUGGEST OTHER REALTORS OFFER INFERIOR SERVICE AND RESULTS. That is how nutty the REALTOR business is today.

        • Port Agent

          No, “Jeff” would be making a claim that needs to be supported by facts as does all advertising. Is he in the top 20% base on X? If so, he can advertise that. BTW putting your argument in CAPS doesn’t make it more valid – just saying.

      • Alan M.

        Kim,

        Our Ross is absolutely reliable when it comes to referring to ethical and regulatory breaches in the most abstract of ways. Even though he should be most familiar with REBBA, he has seldom ever referred to an actual Article, because to do so brings a measure of accountability that just isn’t consistent with his “huff and puff” theatrical dabating style.

        Every Registrant Practitioner is 100% entitled/ required to explain what they know about the marketing and selling of real estate and what they believe will achieve the best results. In jurisdictions where there are sufficient sales results for listings that weren’t marketed using the full power of MLS, it would also be very professional to compare non-MLS results. When some of the discount brokerages started up offering Exclusive Non-MLS listings, they routinely used MLS sales precedents for their CMA’s without Disclaimers and did so with impunity!