Will this new technology kill commissions?

by Jamie Henry14 Nov 2014
It’s being billed as an innovative transformation of the online brokerage, but buyers’ agents may struggle to accept – let alone embrace – the terms that come with it.

Launched by a Redfin co-founder, the online brokerage Surefield claims to have simplified the selling process by asking potential buyers to view in-depth virtual tours before requesting in-person showings – a move the Seattle-based player says cuts down showing requests to serious buyers. As a result, Surefield collects a modest 1 per cent commission on the sale, with the buyer’s agent collecting a flat fee of $2,000.

That’s not likely to entice buying agents. Still, Surefield is hoping it will win widespread interest among buyers complaining about standard commissions.

 “The U.S. real estate industry has been operating as a quasi-cartel for far too many years — just look at the high commission rates as proof of tacit collusion,” Surefield CEO David Eraker told Inman News. “Surefield’s goal is to deliver the same level of transactional efficiency to U.S. consumers that is found in other developed countries.”

But agents in the REP forum have already voiced their opinions on the matter of cut commissions.

“Commission is not a liability or an expense, it's a marketing tool,” writes one anonymous commenter. “Commission can be like a powerful magnet or irresistible lure that attracts the most agents, the most showings, and the best and highest offers...or...it can be like a spray can of repellant that drives agents who have potential buyers away. Offering little or no commission will cost sellers money, not make them money. Offering the right commission will in fact make them money. Which is more important, how much commission you offer or how much money you net?”
 
Would you show a house that offered a low flat-rate commission?
 

COMMENTS

  • by Jeffrey Joseph, Broker 11/14/2014 11:50:05 AM

    Having been a Realtor since 1968, I have seen my fair share of commission issues. One that stands
    out in my mind, is the Seller who listed with someone else because of probably a 1% lower commission
    rate. In my opinion, the Seller left more than 5 times the amount of money on the table, because I know
    the Realtor will not spend the time to negotiate hard enough, and most likely because of the reduced
    amount of the listing end of a commission.

    The Sellers saved 1% = $13,000, but didn't get $75,000 they deserved. Quality representation is worth
    something extra.

    Jeffrey Joseph, Broker
    Harvey Kalles Real Estate Ltd., Brokerage
    Toronto

  • by Jaycee 11/14/2014 12:04:54 PM

    Been in this industry for over 30 years. Ever since I got my real estate license I began reading and hearing complaints about 'high commissions' in this industry. Since then, I've seen hundreds of companies offering alternatives come and go.

    Most of the newcomers bent on saving the public from this "outdated fee structure" have never had a real estate license, and consequently have not worked with sellers or buyers on a regular basis.

    Real estate agents get paid for providing a yet to be improved MLS system, for their localized knowledge and mostly for being able to able to deal with highly emotional and often irrational buyers and sellers.

    Lawyers could have easily taken over the industry. Appraisers, home designers, mortgage specialists, banks, home inspectors and professional stagers have the tools and knowledge to create a service that would put all real estate agents out of work in no time at all.

    Why haven't they?

    One simple answer; they are not willing to put up with those "highly emotional and often irrational buyers and sellers" on a daily basis. "Ideas are a dime dozen, but those willing to put them into practice are priceless", Joe Gandolfo PhD.

  • by Frieda Nagel 11/14/2014 12:13:50 PM

    I work as a deal secretary for a brokerage. You may hear chatter about the commission BUT on my street there have been 3 recent listings - 2 with brokerages the other went with Property Guys. Cool. Thing is the tow brokerage listings sold in around a week while Property guys listing has now moved to a brokerage.
    That says alot

Poll

Is a Toronto foreign sales tax a good idea?