Private Sale vs. Real Estate AgentBy sedoo
We often receive calls from potential Buyers or Sellers asking for advice or assistance on completing their real estate transactions without using the services of a real estate agent. Although we do provide legal services to draft Agreements of Purchase and Sale (APS), we strongly support the use of a real estate agent and always suggest that they should consider all of the advantages of doing so. Most of the time the real estate agent will add value to the transaction in so many ways.
The concept of a private transaction is attractive mainly for potentially saving thousands of dollars in real estate commissions, however there could also be other factors as well including, maintaining control over all aspects of the sale, and the ability to hold open houses and show the property at a Seller’s own convenience.
The realty is that most potential Buyers are web savvy, aware of private sales websites, and will factor in any commission savings in the offer price.
The advantages of using a real estate agent generally far exceed any perceived disadvantage including the net price after commission that a Seller will receive. Real estate agents know the market and can employ different strategies to take advantage of changes in the market in real time. Real estate agents have access to data to determine price points that will attract offers and the best-selling prices. Real estate agents can advise on any upgrades and staging that will draw Buyers to the property and make it more attractive for offers. Some of the other advantages of using a real estate agent include the included advertising costs, the broad exposure of the property through listing services such as MLS and other print and social media platforms, and the ability to draw up an APS, review an offer, and advise on the negotiations.
If the parties are certain that they want to proceed by way of a private offer, the Buyer and Seller have to determine who is making the initial offer and thereby have their lawyer draft the APS. All lawyers will charge a fee for this service, usually based on a minimum set fee but ultimately based on time spent. Keep in mind that as lawyers we are not and cannot play real estate agent. Lawyers are not going to visit the property or provide an opinion about the true market value.
In order for an APS to be drafted there is a lot of information that will have to be provided to the lawyer including the full legal names of the Buyer(s) and the Seller(s), the legal description and address of the property (with any parking/locker, easement, right of way details), the purchase price, the amount of the deposit and to who it is being paid to (i.e. the Seller’s lawyer, in trust), the party making the offer (Buyer or Seller), the irrevocability date, the closing date, the chattels included and excluded, any excluded fixtures, any rental items to be assumed, the permitted use, conditions (financing, inspection, status certificate review), visitation rights, and details of any tenancies being assumed.
Any conditions will also need to be addressed once they are satisfied or waived by signing further documents.
Although we will accept a retainer to draft a private APS the best practical advice we offer first is to really consider all of the factors as summarized above before proceeding which includes retaining a qualified real estate agent, as more often than not the goals of our clients will be best achieved by using the services of a qualified real estate agent.
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David H. Korman is a Partner at Kormans LLP. His practice areas include residential and commercial real estate transactions, commercial leasing and private and institutional lending. You can reach David at email@example.com.
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