Properly offers a faster, easier way to buy and sell your home in Canada. Properly will make a cash offer on your home within a matter of days, and gives you the flexibility to move out of your home when it’s convenient for you.
However, with its inflated fees and misaligned incentive structure, we believe Properly is a poor choice for most Canadians. We strongly recommend working with a knowledgeable realtor instead.
What Is Properly?
Properly is an institutional home buyer. Institutional buying (also known as “iBuying”) has become popular in the United States over the past few years, but it’s still relatively new to Canada. Institutional buyers purchase homes as-is without the need for repairs or upgrades. As one of the first institutional buyers in Canada, Properly has been designed to make buying and selling homes faster and easier.
Properly uses algorithms to determine the price of your home. If you’re curious about your home’s value, you can use Properly’s home valuation tool (link here) to get an instant valuation. Properly will ask you a series of questions to determine your home’s value. Some of the questions include:
- Your home’s street address
- Your home’s building type (Detached / Semi Detached / Row or Townhouse / Apartment)
- Number of storeys
- Number of bedrooms
- Number of above-ground bedrooms
- Whether the master bedroom has its own bathroom
- Number of bathrooms
- Number of bathrooms with a tub or shower
- Construction year
However, Properly doesn’t work with all homes. For example, when I went through the questionnaire for a home in Calgary, I received this message:
The main catch is that your home needs to be within one of Properly’s coverage areas, which brings us to the next point…
Properly only operates in Calgary and Ottawa. If you live outside of Calgary or Ottawa, you can’t work with Properly yet. They’re planning to enter the Toronto market soon, but as for now, Calgary and Ottawa are the only options.
How Does Properly Work?
Here’s how the process of selling your home with Properly works:
- Receive a cash offer on your home. Complete Properly’s home valuation tool (link here) to get an instant valuation on your home. If Properly is interested in buying it, they’ll get in touch with you within 2 business days.
- Review and accept your offer. Properly’s offer covers all of the fees associated with selling your house, including the home inspection, legal fees, cleaning fees, and everything else. Your offer is valid for just 3 days.
- Complete the free home inspection. After you accept your offer, Properly will send a home inspector to your home to see if any repairs need to be made. If there are repairs that need to be made, Properly will deduct the cost of the repairs from their offer to you. I really don’t like the way Properly does this—they commit to buying your house at a certain price, but reserve the right to give you less than that price. Home inspectors almost always find something that needs to be fixed/renewed/replaced, which can mean thousands of dollars out of your pocket. Properly even mentions on its site that most people spend $1,500 – $30,000 upfront for “clean, prep, and repairs”, so even if Properly has given you a firm commitment on a price, you shouldn’t be surprised if they pay you $1,500 – $30,000 less than that commitment.
- Choose your close date. You can choose your close date anywhere from 5-60 days out. Properly will pay you for your house on the close date, so you may want to choose a closer date if you need the cash quickly.
If you’re also buying your new home with Properly, there are two additional steps:
- Go house shopping. Properly will match you with a realtor based on your needs, and you’ll go house shopping together. The realtor will do everything a typical realtor does: recommending, touring, inspecting, and negotiating homes with you.
- Make an offer on your new home. When you find the home you want, you’ll make an offer on it using Properly’s network of inspectors, lawyers and other service providers (at no extra cost to you).
My Experience Using Properly
I haven’t actually sold a home through Properly (it will become clear why below), but I have completed their home valuation tool multiple times, and I know their process well. Here are the main advantages and disadvantages of selling your home with Properly.
Advantages of Properly
There’s no doubt that selling your home with Properly is convenient. They take care of all of the little things that many sellers forget about: the nitty gritty things that come with inspections, cleaning, listing, and more. Selling with Properly is a seamless process, and that’s the number one thing their past customers mention in reviews.
Selling your home to Properly can be significantly quicker than selling the typical way. This is because Properly buys your home directly without first showing it to buyers, so they can make you an offer as quickly as within a couple of days. The typical Canadian home sale takes several months to close, so this can be a game-changer if you need to liquidate your home fast.
Disadvantages of Properly
Properly compares itself to the “traditional way” of selling a home, which it quotes as costing 4-5%. But many real estate agents today are undercutting the entire market by offering listings for just 1%. Of course, our natural instincts tell us that these 1% realtors must be offering an inferior service: that they won’t show your home to buyers, or that their service isn’t top-notch. But the reality is that they often offer even more. I personally know 1% realtors who offer all of the services of full-fee realtors plus extras like 3D virtual home tours shot on 4K Matterport 3D cameras. And all that for ⅛ of what you’d pay Properly.
Properly charges a fee of 7.9% of the price they pay for your home, which can add up quickly. On a $500,000 home, that’s $39,500, vs. $5,000 you’d pay to a 1% realtor. On a $1 million home, it’s a difference of $69,000. When you factor in the sales tax you have to pay on those fees, the difference jumps even more. If you’re in Ontario paying 13% HST, that’s another $8,970 out of your pocket ($1,300 for a 1% realtor), which brings the difference to well over $75,000 on a $1 million home.
If you both sell your home and buy your new home with Properly, they’ll charge you 5.9% on both transactions, not 7.9% on one.
I wish the problem with Properly’s pricing structure ended there, but it doesn’t. Here’s why.
If Properly is able to sell your home for more than it buys it for, it will split the extra profits with you 50/50. This sounds great in theory, but what it creates is a perverse set of incentives where Properly is highly incentivized to give you a lowball offer for your home, and then sell it on the market for a much higher price, since 50% of the difference is profit in its pocket. Put another way, Properly’s earnings are 7.9% on every dollar they pay you to buy your home, but 50% on every dollar they don’t. An example makes this more clear.
Suppose you’re selling a 3-bedroom home in suburban Ottawa, and that Properly assesses the value of your home to be $500,000. If you agree to sell your house to Properly at that price, you’ll receive $500,000 minus $39,500 (7.9% of $500,000), or $460,500, with Properly taking the $39,500 as its fee. If your house actually sells on the market for $500,000, then no additional money changes hands, and you’re left with your $460,500. But in most cases, the house is going to sell for more than $500,000—this is Properly’s business model, after all. So if the house actually sells for $520,000, you’ll get an additional $10,000 (50% of the extra $20,000), and end up with $470,500. Properly will take the other $10,000 and end up with $49,500.
But wait a second—why bother selling to Properly at all? If you had sold your house on the market directly, you would’ve earned $520,000 minus realtor fees. If you used a 1% realtor, those fees would come to $5,200, leaving you with $514,800—$44,300 more than the $470,500 you got by selling with Properly.
This table shows how strongly Properly is incentivized to underpay you for your house:
|Price Properly Buys Your House For||Price Properly Sells Your House For||Your Earnings||Properly’s Earnings|
As you can see, Properly’s relative earnings increase tremendously as the gap between what they pay you and what your house actually sells for increases. Your relative earnings are significantly diminished over that same span, a textbook example of misaligned incentives.
This table shows how much you’re overpaying by selling your house with Properly, assuming they buy your house for $500,000:
|Price Your House Sells For||What You’d Earn With Properly||What You’d Earn With A 1% Realtor||Loss Due To Selling With Properly|
As you can see, due to Properly’s high fees and misaligned incentives, you can end up losing over $50,000 on the sale of your home by working with them.
Why Would Anyone Accept A Lower Price For Their House?
If you’re like most people, you’re probably thinking to yourself: “This might be true for some people, but I would never accept such a low offer for my house! I’ll have multiple appraisers find the true value, and I won’t accept anything less.”
This sounds nice, but the reality is that Properly has other mechanisms at its disposal that make many sellers want to accept their offer—mechanisms that are nice to have, but seriously cut down on how much you earn from selling your house. Here are some of them:
- No Listings Or Showings: As an institutional buyer, Properly will buy your house without ever showing it to the end buyers (eg. another family), so you skip the open houses and listing process altogether.
- Choose Your Move Date: Again, because Properly is an institutional buyer, they’re able to offer you more flexibility on when you move. You get to choose your move-out date yourself, so you can line it up perfectly with the move-in date on your new home.
- Paid In Cash: Properly will pay you for your house in cash.
These benefits are worth real money to most people, and rightfully so—if you don’t have to spend your Saturdays giving open houses, that’s a good amount of time and headache saved. The question is: how much are these benefits worth to you?
As we showed in the example above, you might end up paying Properly $50,000 or more in additional fees just for these conveniences. So you need to honestly ask yourself: are a couple of Saturdays really worth $50,000 to you?
Properly is a decent option for selling your house if you live in Calgary or Ottawa. They provide a professional done-for-you service that makes the selling process easy and quick. However, Properly has been designed from the ground up to maximize convenience, not your earnings, and you’re paying a hefty sum—tens of thousands of dollars—for it.
If you’re willing to pay $25,000-$50,000 for the convenience of skipping the listing process and choosing your own move date, Properly is a good option for you. If not, though, you’re overpaying. For that reason, we recommend choosing an experienced realtor instead.