THIS ISSUE: Establishing Credibility / The Equity Cost Of Using A Realtor ARCHIVES: www.privatelist.com/newsletter.htm ESTABLISHING CREDIBILITY Credibility is a big concern for any private home-seller. Here are a few suggestions (and related PrivateList resources) to help you reassure buyers that you know what you’re doing:
THE EQUITY-COST OF REALTOR FEES How much does it cost to sell through a realtor? Across Canada, the standard realtor commission seems to be 6% these days, plus tax of course. Discounts are often available, particularly if the listing agent also sells the property. Of course, a low fee may also mean that the listing realtor is the only one who will try to sell the property (unless it's just being used a loss-leader to attract buyers)! But whether the fee is 3%, 5% or 7%, you lose a lot more than you might imagine by not selling privately. That money could go towards building EQUITY in your next home - equity that will otherwise have to be slowly accumulated through months of mortgage payments. With the average residential sales price across Canada now somewhere around $160,000, it’s fair to ask: how much in extra mortgage payments would it cost to pay a realtor versus selling privately and putting the saved commission towards a down-payment (instant equity) on your next home? www.privatelist.com/mortgage.htm lets you access several mortgage calculators, such as www.themortgage.com/quickcalc.html, and calculate amortization schedules for various mortgage scenarios. Use it now to answer the question above at different interest rates, or consider this rather conservative example: Realtor sells your last house for: $120,000 Realtor’s fee, at 6% + HST (Nova Scotia) = $8,280. Your next house costs $160,000, with $60,000 down: Monthly payment on your next house: $828 ($100,000 mortgage at 8% over 20 years). Months needed to re-build $8,280 in equity: 42.
Total equity-building cost of $8,280 realtor fees: $34,791! Will you save the entire realtor commission by selling privately? Probably not: you should budget several hundred dollars for classified ads, lawn sign, and internet exposure, and your buyer will expect to share in the saved real-estate fee. Nevertheless, since whatever you DO save will be worth several times as much in mortgage savings, doing what it takes to sell privately and avoid realtor fees makes a lot of sense. FRIENDLY REMINDERS . . . It's important to maintain an active marketing focus until your property is sold. Just an hour every week-end, spent reviewing progress to date and mapping out a response, can pay real dividends. Therefore, each e-mail version of PrivateList PROACTIVE ends with a series of reminders, and links to tips and tools for your on-going campaign. To access these resources, press here.
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