Options are good, but are they bad for business?

by Olivia D'Orazio09 Feb 2015
Alternative payment structures are the latest trend commanding the real estate industry’s attention, but some agents say offering services at too low a cost is simply bad for business.

“It’s not a cheap business to be in,” says Bob Wamsley, an agent in Saskatoon. “There are a lot of expenses that you incur in the day-to-day operation.”

Still, there are agents who insist that the home buying and selling public deserves a wide array of options when it comes to real estate payment structures – and they’re keen to provide them with those choices.

“I wanted to move off the standard, almost price-fixing throughout Ontario. There seems to be a small range of fees, between four and six per cent. There are different rates, but the basic system is very closed,” says Tom Goebel, an agent in Windsor, Ont. “I think the consumers should have more choice, so I offer hourly rates and flat fees.”

Scott Simmons, an agent on Salt Spring Island, B.C., says the seemingly recent shift to flat fees and hourly rates is simply a reaction to what the consumer market has been demanding.

“Having more choice and selection is good for the consumer,” he says. “You can’t just be stuck in the old days [of charging commission]. It’s up to the consumer to pay what they want to pay. And some consumers are happy to pay for it.”

The situation is less about what the consumer wants to pay and more about the actual cost of buying or selling a home, Wamsley argues, pointing to the insurance agents pay on each transaction.

“You can’t make a living [by charging low flat fees],” he says. “If you’re doing a fee for service, what are you going to have to charge to cover yourself?”


  • by Erik 2/9/2015 11:46:00 AM

    I believe in different pricing options but
    Hourly! Lmao
    How does that work as realtors don't have 9-5 jobs but rather are on duty 24-7?
    Why not bill by the minute?
    How about $300 for a cma!
    The real cheap clients are usually the most demanding/worst in my opinion.

  • by Mal 2/9/2015 12:02:14 PM

    Here's the problem charging a hourly rate. Unless everybody is on board it's not justifiable unless you charge buyer's an hourly rate as well. Then you can make a living. As for a flat fee, sure as long as it is high enough to make a living. If you think charging someone a couple thousand dollars to sell their house is sufficient, well good luck and I'll see you on the unemployment line.
    And as for price fixing because we charge a commission, how do all dentist and lawyers and the guy that fixes your car, that's right book value.
    They charge by what there chart or out dated book says for that procedure or problem, no matter how fast they can do the job.

  • by Scott Simmons 2/9/2015 1:35:37 PM

    It all depends on the client and the actual deal. I had one client looking at a 100 million dollar island and I was willing to work on a flat fee of 250k. Do you really think he would pay 6%? Client was uber rich and uber cheap real estate mogul which seems to go hand in hand sometimes. Would I do a CMA for $300? No. Clients want choice and I see nothing wrong with offering them options. Sometimes they do not care other times they really care. One has to be flexible if one wants to be successful. One model for all may work for some.


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