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Are cut commissions the way of the future?

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Real Estate Professional | 29 Sep 2014, 09:20 AM Agree 0
Realtors don’t want to hear it, but yet another among their ranks is suggesting that the path to future success is paved with low commission rates.
  • | 29 Sep 2014, 11:40 AM Agree 0
    Cutting your commission is fine if all you're doing is putting the property on the MLS and hoping someone bites. REAL agents do much more than that and deserve a FULL commission.
  • nar | 29 Sep 2014, 11:42 AM Agree 0
    if service verses dollars are concerned then how come brokerages are hiring agents at $75/month and $275 /deal, how do they provide services to their sales team, just think, we all are creating this group of **discount ** brokerages and sales rep, when brokers dont care and just want to hire and hire thats the kind of discount group sales rep they leave in market, i am sorry but i think this kind of concept exists at your brokerage , pl sit and discuss with your broker of record, because we do get this kind of solicitation emails from your brokerage on regular basis, we all have to do our diligence to protect our business and livelyhood, but good topic to discuss.
    regards
  • Eric Putoto Platinum Real Estate Team | 29 Sep 2014, 11:48 AM Agree 0
    Somewhere along the way our industry has dropped the ball big time, for people like the ones commenting in this article and their company's to exist within it. I suppose some of the blame needs to fall at the feet of the "Competition Act." That glorious act which was, we were led to believe, enacted to protect the consumers..... Well the dummies that created the act forgot about the charlatans' the act ,in many ways, has given birth too. These supposed well meaning folk who run around telling home selling consumers they can save thousands by hiring them only because they will be paying lower commission rates. My question for all of you, and to some of you this question may appear more like a riddle than a question, is how does paying less commission equate to saving money?? The answer: it doesn't.
    If you don't understand why then you, "yes you savior of thousands" are a fraud. If you are confused I suggest you take an economics class at your nearest University.
  • Lyse Freeborn, Sutton-Group Premier Realty, Ottawa | 29 Sep 2014, 12:28 PM Agree 0
    Welcome to the brave new world folks!! Where the internet rules and everyone knows how to do everything. If they don't, they go look it up!
    Let's not forget that the people who first sicked the Comp Bureau on us emerged right out of our own industry. And let's not forget that many other industries have undergone the same transformation as we are facing daily - lawyers were de-regulated years ago, and I can't remember the last time I used a travel agent to book anything!
    So, here's how it goes: when someone asks about my commission on an enquiry phone call, I simply tell them that it will depend on what they expect from me and how much work will be required to sell their home! Once in the appointment, it's very simple to go through the various options and explain them.
    I have never 'merely posted' anything on the MLS, there are people out there who do just that!
    And, yes, we are required from the 'get go' to be very clear about our basic and value-added services. Not such a bad thing. Not all agents are created equal - nor are all properties requiring sales help are either! Just go with that and say this:
    "My expertise and experience to help prep, price, market & sell your home; take you through the negotiation process and removing all conditions is what you're buying."
    Bottom line: the commission only becomes due and payable when I sell your home.
    It's amazing how many people get that and go for full service!
  • | 29 Sep 2014, 12:42 PM Agree 0
    I am also a full service agent. The truth is that there are so many things that come into play with a transaction that people may not appreciate what a full service agent does until they have a difficult transaction.

    I have a friend who didn't seem really understand what a realtor did. And then one day, he purchased a commercial property privately. So he thus had all of the undertaking of managing the entire transaction, from arranging the financing, to dealing with the lawyers, and so on. This may sound easy, but when people aren't responding or they aren't returning documents, then this can be tedious, time consuming and frustrating.

    When he would tell me about all the wrangling of the deal, I would quietly have a chuckle, and he said, "What's so funny?" I replied by saying "Welcome to my world." He was shocked, that what he had experienced was what I did on a daily basis and then had a new appreciation for what I do.

    So as far as cutting commission goes, I know what I bring to the table and there are many people who value their time enough and see my value that they have no problem working with what I charge. There are other people that like to go a different route and that's their own choice and work for less.

    The truth is in many cases, that if agents are willing to drop their commission to get the listing, I often wonder how good they actually are if they can't negotiate a commission for themselves. If they can't, how are they going to negotiate a good price for their seller?
  • 25 year Treb agent | 29 Sep 2014, 03:20 PM Agree 0
    The whiners have been drinking the ReMax koolaid while they write that big cheque to the brokerage and ReMax Ontario plus 5% of your gross. That business model is dying. The business has evolved, 40,000 Treb agents have seen to that. It's simple, adapt or die. Fortunately 80/20 still applies.
  • ether 1 | 29 Sep 2014, 05:04 PM Agree 0
    Commission $5000 - Expenses $5050 hmmmmmmm -- somewhere it doesn't add up ?? Oh Yes, Cut commission and do more ??
    How many clients work for this return ? We're being used folks !!
  • alaadin | 29 Sep 2014, 10:40 PM Agree 0
    Those commenting against the cut must've already felt the pinch of competition with not much options left but to do the same or quit the whole thing
  • Doris Parreno | 01 Oct 2014, 07:21 AM Agree 0
    Boils down to great listing presentation and showing services for value..and knowing how to handle objections, its the buyer that pays the commission...why do people buy mercedes, bmw etc vs kia, hyundai or stay at Ritz ? Vs motel 6
  • Jaycee | 01 Oct 2014, 01:10 PM Agree 0
    Your article says ..."But many Realtors are divided over the idea of cutting commissions – a practice that is quickly gaining traction as sell-by-owner and agent-assisted listings increase in popularity". Does popularity mean that those options work, or that they work as well as using the MLS system?

    Perhaps the best example that these 'alternative' services work only in theory is that a former Competition Bureau head listed and sold her home through a full service REALTOR, http://goo.gl/ZJZgWr

    This is the same individual who fought tooth and nail in order to have MLS boards accept some of these so called alternative services in order to "remove the grip that the real estate industry" supposedly has on consumers.
  • 33 years of full time service | 04 Oct 2014, 12:41 AM Agree 0
    So "The same service" means nothing but a sign, a lock box, MLS and phone calls !!?? ... Who is he trying to fool? ... Delusional if he actually believes it.
  • vancouverisland | 06 Oct 2014, 10:24 AM Agree 0
    our industry has to adapt to ever changing business model. Big boxes will try to hang on to outdated pricing practices but they will inevitably fail.
    I own a small brokerage and depending on a clients wants I can offer them something that meets their needs. I never do mere postings et al as I feel that is just ridiculous!I always offer agency. Consumers do deserve choice after all. The argument you get what you pay for is just plain assinine. I know lots of horrible full priced agents!LOL
  • Monte Gannon, RE/MAX | 06 Oct 2014, 11:15 AM Agree 0
    I think the whole "reduced commission" thing is such a concoction of smoke and mirrors that most people have no idea of what really happens in the market place. As a "full service" realtor, I have often reduced commissions to achieve the goals of my sellers or my buyers but I do not do that when I list the property. I do not want people to choose me because I offer a lower fee, but rather based on referral and the service on which I have built my business. If all the facts were known ( like how many "comfree" listings are sold by realtors, what the actual payouts are to buyer's agents on top of the discount brokerage fees charged up front etc.), and how long the discount brokerage listings sit on the market versus those listed and paying the full commissions, then the "competition" laws might make some sense. I have no problem with the discount brokerages doing what they do, but time to get the real information out there. I often tell potential clients, that if you think hiring a professional is expensive, give an amateur a try. I can't sell every property in our market so have at it !
  • | 08 Oct 2014, 09:01 AM Agree 0
    I agree with Nar's comment. Discount brokerages that are charging low fees to be a part of their office and provide no support to the agents within create uneducated, non-experienced agents who will easily cut commissions just to get business. New and even seasoned agents need to be in an office environment that nurtures growth. The business is always changing with technology and the times - and it is important for us as agents to keep up. Has anyone ever calculated what is costs per week, month and year of what it costs to be a realtor? Even without active listings there are still many many costs associated with the work we do. Add it all up - where do people think the money for those costs come from? It comes from the work we do. So to cut commission would be to cut down on our ability to do our job the best way we can.
  • Lina Sombrea | 11 Oct 2014, 03:15 PM Agree 0
    Very true. I agree with all your comments. Realtors are professional people and we should act like one.
  • Scott Simmons | 12 Oct 2014, 08:59 PM Agree 0
    I have been a full service discount Realtor with 1% realty for going on 8 years and it has been interesting and rough ride. On one occasion I actually had to swear out a complaint of a death threat by a "full commission Professional Realtor" to the RCMP. I have been sworn at, cursed at and told by so many that they will never show my listings. At the end of the day I have done deals with almost every Realtor in the area. Some are smart and ask for more commission and usually the sellers will grant it with out a problem if the agents are bringing in an offer at the price they want. Why I like the low commission model is not because it's easy to get listings. My business model is not about getting listings personally I like working with buyers. I like it because 1% is an on line company that gives me support via text or email usually 24-7 with no desk fees. I like the freedom of not having to go and work at an office. I see so many agents sitting in the duty room of the local brokerages waiting for clients that never show up, that day is long gone, that boat has left the dock. Now so many clients do all their own searches, most probably know the areas and properties as well as any agents. It's an on line game at this point. I would put my web site and on line information up against any real estate web site (except the Toronto real estate blog and a few others) in the country and I would bet most do not have over 700 videos up on youtube, 100s of hrs of podcast up, 100s of blog post and or web pages. The industry is changing. I'm sure all the full commission stock brokers sat around the water cooler and had the same conversations, "no one will ever trade on line I will never cut my commission". I'm sure Mr Woodward said the same thing to Mr Eatons. In my not so humble opinion the industry should look at cutting internal cost and passing it on. Do we really need all these real estate board? On Vancouver Island we have two? Do we need two? What do they do? I have to pay for any course I take and it's usually a BCREA course. Ask yourself what are you getting out of your desk fees? Do you really think print advertising works in this day and age? So much of what agents do is geared towards getting listing at any cost and not actually selling homes. The game is changing fast some will last some wont. If your digital foot print is a 4 page web site your probably on borrowed time. Cheers Scott Simmons on Salt Spring Island.
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