Transacting Real Estate in Ontario has evolved over the years. There was once a time when only one agent was involved in a transaction, being the listing agents. Prospective buyers would go to an office and see what listings a brokerage had for sale at any given time, and if a property interested them enough to make an offer, they would work with the agent and brokerage who had said listing to mediate a negotiation with the seller. From there, a “co-operating agent” or “buyer’s agent” was introduced, to allow representation to be had for the buyer and a separate representative to work on behalf of the seller.
Nowadays, that’s the most common way to transact real estate. When it comes to buying or selling a home, most people turn to real estate agents for their expertise and guidance. However, in December of 2023, new legislation was introduced which simplified the process of self representation, and this year many more buyers and sellers have chosen to go at it alone as self-represented parties. In doing so, they are opting to handle the transaction without professional assistance. While this path might seem appealing for its potential cost savings, it often leads to significant challenges and risks. Let’s explore what those potential costs and benefits can look like, and why it might not be the right choice for someone entering or reengaging with the market.
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What Tasks You Take On as Self-Represented Party in Real Estate
As established, a self-represented party in real estate is in essence a buyer or seller who chooses to manage all aspects of the transaction independently. This includes:
- Pricing the Property: Sellers must determine a competitive and realistic asking price, while buyers must assess the fair market value of properties they are interested in.
- Marketing and Advertising: Sellers handle the listing process, whether on platforms like FSBO (For Sale by Owner) websites or through social media, while also managing property showings.
- Negotiating Terms: For a deal to be reached, a self-represented buyer or seller must advocate and negotiate on behalf of themselves when presented with or presenting an offer.
- Legal and Financial Risks: TRESA has heightened the emphasis on transparency and trust. Without guidance, self-represented parties may inadvertently miss disclosures, fail to meet deadlines, or misunderstand contract terms. Such errors can lead to legal disputes or financial losses.
If you’re not ready to sell your home by yourself, what about hiring a friend or family member? Read why that might be a bad idea right here.
Challenges of Representing Yourself in a Real Estate Transaction
All of these can provide potential challenges. An untrained self-representative may have difficulty pricing the property, from the perspective of a buyer and a seller. It’s human nature to overvalue something one already owns, it’s a cognitive bias known as the endowment effect. Anyone who plays fantasy football has seen this concept countless times in efforts to negotiate a trade. Similarly, the inverse occurs when trying to value someone a party doesn’t already own, and this can prove particularly challenging when navigating a competitive market like Toronto real estate, especially when listings are often aggressively underpriced, which leads people to anchor their offer to the initial listing price rather than a pragmatic assessment of the “fair market value”.
You May Not Have the Same Marketing Prowess
Similarly, real estate brokers have immense knowledge of effective ways to market a property, to ensure the most efficient and quick sale, as well as ensuring a sale for the highest price. Besides the experience they have doing so, most brokers also have access to a skilled in-house marketing team, as well as platforms online such as the MLS to ensure the listing is viewed quickly and succinctly by the largest number of qualified, prospective buyers.
Do you have more questions about selling your home? Here are some more posts you might find helpful:
- What’s Negotiable When Selling Your Home in Ontario
- Do You Need an Open House to Sell Your Home?
- Should I Get a Pre-Listing Home Inspection
Are You Familiar with Real Estate Paperwork?
Writing or receiving an offer, and then effectively negotiating from there, also provides a significant challenge. Offer paperwork in Ontario is thorough, and robust in its legalese to protect all parties in a transaction. There are countless negotiable terms, including closing date, conditions, deposit amount and structure, and irrevocable (expiry) of the offer. While many self-represented parties focus almost entirely on the price of the offer, effectively managing the various levers, both independently and in conjunction, requires a deft touch and skillful negotiation, and failing to do so effectively can ultimately cost time, money, and result in a less-than-ideal terms for a deal.
Are You Risk-Averse?
Finally, self-representation opens parties to significant legal and financial risk. As highlighted, the paperwork involved with a home transaction is thorough and complex. Even the best agents spend significant time ensuring that the paperwork is done correctly, and no small detail is missed or overlooked. However, it’s feasible to consider a scenario where even then a mistake is made. While realtors have mandatory errors and omissions insurance to offset the risk in these cases, a self-represented party opens themselves up personally to these legal and financial risks and are forfeiting the opportunity to seek reparations from an agent if a mistake is made. It’s a significant responsibility to take on.
What if you’re working with a real estate agent and it’s not working out? Read about firing your agent right here.
Ever Heard of the Dunning-Kruger Effect?
The Dunning-Kruger outlines the challenge plainly. It is a cognitive bias that occurs when someone overestimates their knowledge or abilities in a particular area. Plainly, it’s hard to know what you don’t know. A lack of self-awareness and a failure to understand the breadth of the task can lead to someone to an inability to accurately assess their own skills. On Toronto Realty Blog, I recently wrote about an experience I had dealing with a self-represented seller in Hamilton, and how I believe that it cost the seller time and money in the end.
Do you have more unanswered selling questions? Read these posts next:
- Should I Renovate My Home Before Selling?
- How Much Work is It to Sell a Home in Toronto?
- Do I Really Need Staging to Sell My Home
How Much Time Do You Have?
Which leads me to my final point – the time and effort associated with self-representing. The real estate process involves extensive time and effort, it’s a full-time job in of itself. For those without the experience or bandwidth to handle these tasks, the process can become overwhelming and can result in compromising the quality of work done on the property, or spending too much time on selling real estate could impact one’s ability to perform at their best and be the most present at other aspects of their lives.
Personally, if my car broke down on the side of the highway, I wouldn’t try to fix it myself to save money. I’d allocate my resources to ensure the job was done correctly and allow me to spend my time doing what I do best, and what I like to do. While that may not be the case for everyone, it certainly rings true for me.
At the End of the Day…
Ultimately, the decision to represent yourself in a real estate transaction may seem cost-effective at first glance. However, in a market as competitive and complex as Toronto’s, the risks usually outweigh the rewards. With TRESA in effect, the stakes are higher, and mistakes can be more costly.
If you’re considering buying or selling a property in Ontario, think twice before going it alone. As the Hamilton example shows, professional representation can make all the difference—ensuring you not only avoid pitfalls but also achieve the best possible outcome.
A knowledgeable real estate professional isn’t just a guide; they’re an advocate for your success in one of life’s most significant financial decisions. Don’t leave that to chance.
Looking for more selling insights? Give us a call at 416.642.2660 or email admin@torontorealtygroup.com or fill out the form on this page to get in touch.
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