“Commissions have always been negotiable – they’re not set in stone,” Andrew Mitchell, a chartered real estate broker with Vistacor Realty Group in Montreal told CREW.
“There have been different realty business models, such as flat fee or service packages, around for a long time.”
For agents to think that clients should treat selling their home as they would finding a ride or a renting a house in San Francisco is short-sighted.
“When the comparison is made to Uber and Airbnb, you have to keep in mind that these kinds of services are being used over and over and over again. Saving money on small transactions make sense, but this model hasn’t translated to real estate because people have to be able to trust this person with the most valuable asset they have.
“Do [agents] want clients to rely on a website for that or do they want to rely on being recommended by friends and family for whom they’ve worked?”
Mitchell says that while lower agent commissions might be a strategy used by brand-new agents in hot markets like Vancouver and Toronto where homes sell quickly, this type of discount model hasn’t survived in the past.
“In most markets there’s a reason 20 per cent of the agents do 80 per cent of the business,” he says, adding that, “most savvy sellers interview several agents and generally they go with recommendations and track record and they will have that discussion about commission.”
Mitchell also questioned the efforts of agents earning very low commission, suggesting a minimum price may translate to a minimum effort to sell your home.
“Say the client saves one or two per cent on the commission price, but when the agent isn’t able to negotiate the price and loses five per cent on the final sale price because they are not as skilled as an agent who charges more for their services how does that benefit the client?”
Real estate agents who look to gain clients by being lowest bidder when it comes to their commission rates are not going to see an appreciable rise in business, says one real estate broker in response to a growing trend in the industry.