Thinking of Skipping the Realtor? Why a “Private Deal” Might Cost You More Than You Think
In the world of real estate, it’s tempting to think that selling to a friend, neighbor, or family
member is a simple way to save on commission. You know the person, you know the
house—how hard could it be?
As a real estate lawyer, I see these “private deals” often. While they are certainly possible, they
come with significant risks that many homeowners don’t realize until they are already deep into the transaction. If you are contemplating a transaction without professional guidance, here is what you
need to know to protect your investment.
The Value of a Realtor
Some people view realtors simply as “salespeople,” but in a complex transaction, they provide a
layer of protection that is hard to replicate. When you forego a realtor, you lose out on:
● Market Precision: Realtors have access to comprehensive databases of local sales, giving
them a much more accurate understanding of property value than the average
homeowner.
● Structural Expertise: They know how a deal should be structured, including the specific
language required in purchase agreements and reasonable timelines for closing and “title requisition”
dates.
● Risk Mitigation: Their experience allows them to anticipate problems before they happen,
ensuring the contract reflects the realities of the current market.
The “Internet Template” Trap
One of the biggest mistakes I see in private deals is the “Google Contract.” To save money,
parties often download a free purchase agreement template online.
Unfortunately, these templates are often from different jurisdictions—like a different U.S. state
or a different province. These documents:
● Use incorrect legal terminology.
● Include concepts that simply don’t apply to Ontario law.
● Fail to include necessary protections for the buyer or seller.
Using the wrong form doesn’t just make the process messy; it dramatically increases the legal
risk for everyone involved.
How to Reduce Your Risk
If you insist on proceeding without a realtor, you must ensure your legal paperwork is ironclad.
While a real estate lawyer will charge a small fee to draft a proper purchase agreement, it is a
minor investment compared to the total value of your home.
A lawyer-drafted agreement ensures:
- Ontario-Specific Language: The contract will use terms and concepts that are legally
recognized in our province. - Proper Timelines: The closing dates and conditions will actually make sense for a
standard Ontario transaction. - Reduced Liability: While it doesn’t eliminate all the risks of not having a realtor, it ensures
you are at least starting on the right foot with a valid legal document.
The Bottom Line
While it is highly, highly recommended to use a realtor for their wealth of knowledge, I understand that
some circumstances lead people toward private sales. If you find yourself in that position, don’t
rely on a random template from the internet. Reach out to a real estate lawyer with the
details of your transaction. We can draft a proper purchase agreement that protects your
interests and helps ensure a smooth closing.
Disclaimer: This post does not constitute legal advice. Every transaction and personal situation is unique.
