Lorraine Brownrigg says she has helped homeowners sell more than 3,000 properties in and around Ottawa in the past three years. It's anyone's guess how much she has saved them in real estate commissions, but it's probably many millions of dollars.
Working from home, she is owner of Grape Vine Home Marketing Consultants, which helps homeowners sell their properties without the services of a real estate agent.
Her service appeals equally to homeowners in all price ranges, she says. "Just like real estate agents, we have people wishing to sell expensive and inexpensive homes."
Hers is among the businesses that have boomed thanks to the Internet. Prior to the days of the Internet, she says, real estate agents had the field mostly to themselves – thanks to their multiple-listing service, or MLS.
This service, run by the Canadian Real Estate Association and local real estate boards, enables buyers – with the assistance of a real estate agent – to check among thousands of homes on the market for ones in their price range that meet their needs.
For buyers, the MLS remains the best and most comprehensive source for obtaining information about homes that are for sale. But for sellers, services such as Grape Vine are a low-cost alternative to enlisting a real estate agent.
With services such as Grape Vine, sellers have to make arrangements directly with buyers to visit the home for an inspection. And the sellers have to do their own negotiating. So do the buyers, unless they have an agent to do it for them. Still, the rewards can be substantial – for both sellers and buyers.
Typically, real estate agents in Ottawa charge five per cent of the purchase price if they sell a home. On an average Ottawa home selling for $250,000, that's $12,500 that goes in real estate fees. The selling agent may pocket less than half that sum. First, the agent for the seller has all the expenses of marketing the home. Then the agent may have to split the commission if another agent acts for the buyer.
How can sellers be sure of getting the highest possible price for the home if they don't have a real estate agent? Answer: They can't. But then they also cannot be sure if they hire a real estate agent (who may also be acting for the buyer).
On a home listed for $250,000, owners who sells without the services of a real estate agent can afford to come down in price by $12,500 during negotiations and still pocket as much as they would if they had been assisted by a sales agent.
Conversely, the seller and buyer could agree to split the $12,500 that would have been paid in commission. That way, each would save $6,250.
The most important service offered by a business such as Grape Vine is a listing of the property on its website, says Ms. Brownrigg. "Our site has been getting over 100,000 hits per month over the past year."
Grape Vine is a marketing company, its owner says. The cost of listing a home with Grape Vine ranges from $175 to $695, plus GST, depending on the level of service. All services include listing the home for six months on Grape Vine's website. The top-of-the-line package includes a 90-minute in-home consultation with a licensed real estate broker.
Ms. Brownrigg says she has no way of knowing how close – or how far – her customers come from getting their asking price. She says she often does not learn what a house sold for through the Grape Vine.
Ron Levine says the seller who choses to pay a commission fee for the services of a professional realtor gets a lot for the money. "If you're selling, your realtor can provide a range of marketing and selling services to help you sell your property as quickly as possible, at the best possible price," says the head of the Ottawa Real Estate Board.
"A realtor can provide up-to-date information about market conditions, pricing, and similar properties. A realtor will know when, where and how to market your property to other realtors and the public." And, he adds: "Your realtor will help you determine how to handle 'showings?' or visits to your property, and will help you objectively evaluate every proposal from a buyer."
While the typical real estate commission is five per cent, there is no fixed rate. Agents may charge more or less. Among those who charge less is John Pritchard, who operates Just Imagine Realty in Manotick. He says his commission is four per cent for selling a home on MLS. If another agent brings the buyer to the deal, Mr. Pritchard says he turns over 2.5 per cent of the sale price to the buyer's agent, and keeps 1.5 per cent for himself.
With the Grape Vine's services, customers have a choice of inviting real estate agents to contact them if they think they have a buyer. Some of the Grape Vine's listings now include this sentence: "Agents with qualified buyers welcome at 2.5 per cent." This means that, if an agent finds a buyer, the agent gets the usual finder's half of the real estate commission. The Grape Vine customer still saves 2.5 per cent in commission by not having enlisted the services of a selling agent.
It comes down to choice. And whether selling or buying a home, the more work you do yourself, the greater the potential savings.
By Michael Prentice
Special to the Ottawa Business Journal
