In a sellers market, for sale by owner services promise real estate savings and MLS exposure. But that’s debatable.

It seems that almost daily we get calls from people who are considering the for sale by owner (FSBO) model. They say “I’m searching for a Guelph Realtor, what’s the lowest you’ll charge?”.

We know in reality, sellers mean to say “we want the most money possible at the end of the day.”

They think a discounted commission is the way to do it- and in most cases, it’s not the answer.

A plan that starts off by an agent discounting their service actually does everyone a disservice- and you haven’t even started yet.

Consider the marketing campaigns of two of the big FSBO (for sale by owner) firms, Purplebricks Guelph and Propertyguys Guelph (they aren’t alone, there are more).  You’d think that all of the Guelph real estate market is going to a low commission, high service savings bonanza based on their ads. But that’s not even remotely close to reality. 

In 2020, Propertyguys Guelph made up just over 1% of the total dollar volume in Guelph real estate listings. As context, Beth and Ryan had a larger market share than Propertyguys in Guelph and we’re just two people.

For Purplebricks Guelph, they rarely list their homes in the Guelph MLS board for Realtors to see (which is a whole other issue for those selling within the Guelph market). Would you willingly list your home with someone who doesn’t even list it in their home market?

What is a Realtors Commission? And what’s the reality of what you save with discounters?

The standard commission rate to sell a house in Guelph is 5%. Half of this goes to the agent who lists your home (2.5%), and half goes to the Realtor who has the buyer for the transaction (2.5%). To keep the buying agents interested, even if you were selling your own home, you’d likely want to keep the 2.5% in place. 

So, you’re really only saving the listing commission of 2.5%. On the average Guelph home price, that equates to roughly $17,500

But are you really saving in the end? The data says not really.

Here’s where it gets interesting: on average in 2020, sales in Guelph made through discount services sold for 2% less than the rest of the market, or $14,000 less. And that’s assuming it was listed properly from the start. It also took an extra week to sell.

So, on the average sale price in Guelph in 2020, those who listed through a discount service saved $17,500 in listing commission and gave up $14,000 on sale price. And had to pay the discount service for their materials- let’s estimate $3000. 

So, in this scenario: 

Add $17,500 in savings in listing commission (2.5% at Guelph market average of $750,000)

Deduct $14,000 loss, as discount services generated 2% less return than market average

Deduct $3000 as discount service fee for materials

Net gain: $500

Not factored into this is the value of your time. Is $500 worth it?

Of course, these numbers are not actuals and vary on individual situations, but the point is that the overall savings is not “total commission” at all as marketed. In fact, the fast legalese in Purplebricks radio ads says something to the effect of “actual savings don’t include co-operating (buyers agent) commission”. As a result, it may be cheaper to list with a Realtor in the end.

For sale by owner (FSBO) services meet the needs of some consumers who want to take control of the process of selling a home- and that’s just fine with us! But if you want the full, professional service of a Realtor, we’re here.

Beth and Ryan’s clients just get more

Our commission is inclusive of EVERYTHING. From professional photos, to video, to floorplans and multiple MLS boards. Our strategic marketing is the best in town in our opinion and is tailored to your specific home. There are no additional costs or surprises. 

And we get results! Click here to review our 2020 results, which outpace the market in almost every possible metric. We’ve sold every home we’ve ever listed, to our clients satisfaction!

Contact Beth and Ryan of Home Group Realty more information on how they can help you.