Should you cut your commission rate?

by Jamie Henry20 Oct 2014
Competition is tough, clients are haggling and you want more market share – should you be cutting your commission rate?
 
“Commissions are always negotiable, but if you’re giving good value and you have experience, I think people are fine with your rate,” says Bob Grant, an agent with Re/Max Ultimate Realty, who says he never advocates for full-service agents to cut their commissions, but acknowledges the wide array of discount brokerages that offer lower commission rates.
 
“There is lots of opportunity to get an agent for less commission,” he tells REP. “But people who are serious, want to deal with someone who has been successful, someone they’ve heard about. If that’s the case, [negotiating] commissions aren’t on the table.”
 
Bill Johnston, the manager and legal counsel for Bosley Real Estate, says commissions were far less negotiable in the 1980s, though he, too, argues in favour of value-driven commission rates. For example, agents who have proven success rates often come with higher commissions than the average sales rep.
 
“Commission rates are all over the map, from zero to, well, pick a number,” he says. “But that’s an issue of negotiation between the seller and broker.”
 
In the end, Grant says agents can take up more of the marketplace in a variety of ways – none of which involve lower commissions.
 
“Lack of inventory affects business to a degree, so you might push your boundaries a bit more to pick up more inventory,” he says.
 

COMMENTS

  • by 10/20/2014 1:36:19 PM

    Quick answer is not likely - if you have a quality product (you, your brand, your knowledge, your time) don't discount. That's why Rolex and Rolls Royce don't have fire sales. If your product belongs in a discount mall - go ahead

  • by Scott Simmons 10/20/2014 1:58:54 PM

    It's not just a matter of cutting your commission but actually looking at how the process has changed in the last decade or so. Now the buyers and sellers are doing half the work themselves and the cost of business has dropped considerably. In this day and age most buyer are plugged in like never before and gather all the info on what they want long before they need the services of a Realtor.

    My advise is not to cut your rates and keep charging what you have always charged and sit back and watch the business pass you by. Technology is going to force so many agents out of the business that it really wont matter what you do. Just look at your own web sites and see if you are adding value or not. My guess is 99% of agent add very little value to the process for the fees charged. Seems as if most agents are caught in a time warp of the 1990s era hording all the info not giving on fear that they will not receive.

    Just wait until trula, zillow, redfine and the likes wash up on our shores. Are you really willing to say I wont change? Good luck with that.

    Cheers Scott Simmons One Percent Realty Salt Spring Island BC.

  • by Angela 10/20/2014 2:21:12 PM

    Very Very useless article.

    To cut or not to cut?! It’s always depends on many circumstances. Rolls Royce doesn’t have any sales because they produce limited amount of car. You have to stay in line to get one, more than one year. In case you are not a member of the club you most likely can’t even choose a color for your car.

    While we increase number of agents (even part-time agents); always will be somebody who can cut commission.

    As realtors we can’t even keep our MLS system closed, we are losing each court case with competition…

    That means don’t even discuss: to cut or not to cut.

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