Do You Need to Hire a Realtor to Invest in Real Estate?

The short answer to this question is no you do not. However, a better answer is no, but in a lot of cases you should anyway. While there are certainly a lot of advantages to working with a competent realtor, there are no legal requirements to do so in Canada. The only professional you will definitely need to hire is a lawyer or notary to handle the final paperwork, conveyancing etc. If you wish to and have the financial means, you can avoid dealing with realtors, appraisers, property inspectors, mortgage brokers etc. 95% of the real estate industry’s professionals can be bypassed if you are determined to do so…but I strongly recommend against this approach.

The high commissions charged by most realtors/brokerages often take a pretty big bite out of the total potential profit of a real estate investing deal. In my experience, the best deals on single family properties are usually so called “off-market” sales. In other words, properties that are “for sale by owner” and not listed on the MLS. Often this is where you will find the most unique and undervalued houses. If you have the time and capability to do so, handling the purchase and especially the sale of a property yourself can let you save tens of thousands of dollars. For example, the typical commission paid by the seller amounts to 5-7% of the total sale price. If you sell a house for $400,000 that represents a saving of 20-28 thousand dollars!

This is the main reason I usually represent myself when selling a property. Keep in mind though that I have the experience and technical education required. Even then, I always, always work with an experienced lawyer that specializes in dealing with real estate matters. A competent lawyer should be part of every real estate investor’s team and network.   It’s important to note that realtors are experts in their local markets and in facilitating real estate transactions. Realtors can bring a lot of value to the table and can be extremely helpful when you are not 100% familiar with the process and/or intricacies of buying and selling real estate. For inexperienced investors or those moving into an unfamiliar region, an experienced realtor is an essential part of the investors team! Also many investors simply don’t have the available time required to consistently find good quality deals, whether off-market or on the MLS. This is where having a good relationship with a realtor really pays dividends. So to summarize my answer; no you absolutely do not have to hire a realtor to buy and sell real estate (in Canada). In fact you can add thousands to your bottom line by not doing so. However, it’s generally not advisable unless you are already a real estate pro and very familiar with the real estate market and legislation in question. The consequences of violating some aspect of contract law when such large amounts of money are involved can be huge and extremely damaging. Anyone considering buying and selling without a realtor should at minimum ensure they have a good lawyer that will draft and review contracts for them and review any offers to purchase for them before they officially accept an offer. The few hundred dollars in extra cost could save you tens of thousands in legal expenses in the future. All content on this website is copyrighted and the sole intellectual property of Matthew Landsborough and Dwell Logic Investing Inc. For permission to use this content please contact matt@dwell-logic.com