For Sale by Owner real estate Calgary - calgarydiscountrealestate

Why are typical real estate commissions so high?

It's not necessarily because of the work an agent does for a client. It is due in large part to the hours invested in performing services for buyers and sellers alike for which agents are not paid. Realtors also spend much of their time seeking out and soliciting business. Thus it's little wonder that many agents feel that half their job is done the night they list your property for sale; but this is contrary to the seller's belief that when the property is listed the agent's job has just begun. In a typical market, as much as 50%, or more, of the listings will not sell, and there are a variety of obvious reasons for this. Ergo, when a sale is closed, an agent wants to be well compensated for that particular transaction.

Consumer distaste for high commissions motivates many sellers to embrace the challenge of selling on their own. Let's take a moment to compare compensation. Not that I wish to single out a trade, but the lowest rate I can find for a plumber in June of 2009 is $65.per hour. Assuming a 40 hour work week, that amounts to $2600 gross income weekly. That's a pretty fair wage, even for Calgary. Considering that most Realtors invest 40 hours or more in their business in a week, often with nothing to show for it, the criticism of excessive fees and commissions is not always justified. It's worth noting that much of the blame for disproportionate compensation can be laid at the feet of organized real estate. Nothing has changed in the compensation department over the past 27 years I have been a Realtor.

What irks many consumers is that commission rates are typically a percentage of property values. Personally, I haven't found that it costs much more, if anything more, to market housing with price differences of $ 50,000 to $100,000. Advertising costs are often given as the reason but few in the industry will admit that much of print advertising is used to attract sellers. The exception to that would be luxury or high priced estate property. But there's a solution to that as well.

My full service discount fees reflect my cost of doing business

At Realty 5000, we have eliminated the high overhead. We work efficiently with Internet technology, recognizing how powerful a tool it is, especially in this field. Realtor.ca (formerly MLS.ca) has the highest traffic of any website exclusively real estate in Canada. FSBO and discount programs are appealing to clients, and because of that, I am not spending my time seeking out business.Our fees though do not reflect less service. I reduce only fees, not services.

Over 85% of buyers use the Internet to search for property and agents, and of those, 94% search for properties first on the web. Good real estate 'priced right' sells, and buyers have enough information to find the right real estate.

Some consumers may be misled by FSBO companies

Many of these companies would lead you to believe that the majority of their listings do sell. But there's no reason to believe that the list to sell ratio is much different than the market as a whole; actually, some US research suggests that as few as 10% of the private listings actually sell, but I seriously doubt that's the case. We do know that a portion of the listings sold are sold by 'buyer agents', but again, there are no stats disclosed. Unfortunately, statistics are hard to come by in North America, and it is becoming increasingly difficult to define a FSBO. There is nothing cut and dried about the stats that FSBO companies allude to either.

FSBO companies exaggerate their claims of 'millions saved in commissions'

It's a matter of semantics and marketing. 'Savings' denotes that in a transaction, there is a gain that is achieved by one party. 'Savings' is also an appealing marketing term. Let's take a look at two properties valued at $300,000 here in Calgary (two properties are rarely valued the same). Assume that the first owner sells the home himself at $287,000 and no commission is paid to an agent. In the second instance, the owner pays a commission of $13,000 on a sale price of $300,000 and nets $287,000. In the first case, the owner might be justified in saying he saved a commission as much as $13,000. In the second case, had the owner contracted with me, he might have said he 'saved $7350 in commissions by using my services (instead of one who charges 7 and 3%) and netted $294,350.

It is fair to say a private seller 'saves' a commission when selling as he chooses not to 'pay' a commission, but it is irrational to quote a savings figure. The National Association of Realtors in the USA suggests that agent listed property sells for 10% more or better than privately sold property. They don't produce the stats to back it up, so the debate rages on.

There is no exact price for real estate

Market value includes commissions; commissions and fees are variable, they are not supposed to be fixed. It is noteworthy that FSBOS and FSBO companies do not disclose selling prices. Oh, there is the odd exception when a selling price equals a list price - it's a talking point. In the above example, the FSBO theoretically worked for nothing, and did not gain anything - nothing, zero. He managed the transaction himself, and gained nothing compared to his neighbor two blocks over, and did it not entirely without risk (generally speaking). We do know the FSBO companies in Calgary compute the savings at 7% on the first $100,000 and 3% on the balance. I doubt they deduct the fees they charge.

There is 'truth in advertising' legislation in both the US and Canada, but that seems to be lost on the industry, the legal community, and the legislators.

The winner - buyer or seller - in the real estate sales 'game' is usually the one who does the most due diligence, has the most patience, or is the best represented. The FSBO has but one property to sell; the buyer has many to choose from. Common sense usually prevails, but not always. Investors have but one reason to buy privately, and rest assured, the seller will never know he's dealing with one.