A Cautionary Tale.
My final post this week is going to be a bit of a departure from my usual analysis. Instead, I’d like to bring a real-life event to your attention – something which occurred just this past week at my own brokerage, and it’s a situation that highlights just how valuable proper representation in the real estate world can be.
I know many folks will already be familiar with the real estate ‘brokerage’, Purplebricks. Just a few years ago, Purple Bricks acquired the Canadian network of Comfree and assumed the latter’s business model of offering fixed-rate packages for listing and marketing your home without a commission payable to an established brokerage. Listing with Purplebricks provides limited phone-in guidance on the day-to-day handling of marketing and showings, and remote support in handing offers on your property.
It’s understandable that that many people outside the industry are convinced by these sales tactics – after all, who wouldn’t want to save themselves 4% on the sale of their home? And I’m well aware that it’s in every real estate brokerage’s interest to promote their services above a self-serve model which cuts them out of the equation. But what’s important to keep in mind is not only the legal protections that operating under the umbrella of an insured brokerage provides, but also the real value that a professional with years of experience in operating in local markets offers to their clients.
Case in point. This past week, one of our agents represented the purchaser of a detached home in a desirable east Waterloo neighbourhood. Since this fall, average sale prices in this area have shot through the roof – as has been the case in most of Waterloo Region. The seller in this transaction had opted to use the services offered by Purplebricks and was representing themselves with limited remote assistance.
Since January 1st, the average sale price for properties akin to the one in question in East Waterloo approached $1.1M – an easy increase of over 20% since the same time last year. Our agent utilized their knowledge of the market and expertise to negotiate a final sale price of more than $100,000 under what similar homes have been selling for in this neighbourhood in 2021. For those of you who are keeping score, that’s over an 11% discount from current market value – all because the seller chose to eschew professional advice and represent themselves for a nominal discount on payable commission.
In retrospect, that 4% discount the seller initially saved on commissions pales in comparison to the 11% they’ve lost in the inherent value of their property. As with nearly everything else, you get what you pay for. In this case, that’s a loss of about $75,000.
