Agents must prove their value more than ever

by Olivia D'Orazio01 Dec 2014
Arguments around cutting commissions are usually centred on the impact on the agent’s income, but full-service players are increasingly suggesting the practice has a knock-on effect for them.

It’s not a good practice, argue some industry veterans, suggesting it puts pressure on the seller's agent to reduce his or her commission as well.

“We try to conduct the business with integrity and protect the business by charging a certain commission, but agents are cutting the commission to get business,” says agent Farhan Syed. “The value of real estate agents goes down and customers think, ‘What really do agents do?’ And obviously there’s a lot of work involved in selling or helping someone buy a property.”

Now, Syed says, agents are going to find themselves working harder to prove their worth to clients.

“We try to show the value and the results,” he says. “First of all, the results – how many houses we sell, how many houses we work with. Show them we’re in the business, day in and day out, so we know the process.”

Syed also says that a skilled sales rep will be able sell the property for a higher price than an agent who uses commission-cutting tactics to get clients. As a result, the sellers who opt for a knowledgeable agent will save money, regardless of the fact that they’re paying a higher commission.

“Consumers need to look at the bigger picture,” he says, “rather than just [looking] at the commission aspect.”

But one of the greatest misconceptions is that the buying public doesn’t realize the amount of work – or the amount of money – that goes into properly marketing a property.

“Obviously they don’t know the cost involved and the marketing expenses to prepare a property for sale,” Syed says. “There are certain expenditures that maybe the [agents who cut commissions] don’t know. Long term, you see the successful agents, the ones who stand by their business [and charge a full commission], are the ones who do well.”


  • by Wayne Ryan 12/1/2014 1:46:16 PM

    Commission based pay is always going to be contentious because there will always be those times or deals where we really don't actually earn that 'specific' commission. You know the one, where the house sells in a day or so or the buyer buys the first house you show them. The problem of course, that those clients rarely know about the many many hours of 'unpaid' work Realtors do. The buyers who spend several weeks looking for a house and then decide not to buy or to buy in a different area. The seller who change their mind and take the property off the market, the phone calls from appraisers, tax authorities, the general public, the educational and training courses and the list goes on. There is no way to avoid this unless Realtors started to bill like lawyers, where every time you make or receive a call or lift a piece of paper, you assign that time to a particular client and there seems to be no real push by Realtors OR the public to go this route. This means that commissions must cover everything a Realtor does, paid or unpaid, from Jan 1 - 31 Dec and when you look at it that way, they really don't seem high at all...

  • by Laura Westgate 12/1/2014 2:42:39 PM

    It would be unfair to state, Wayne, your quote: "there will always be those times or deals where we really don't actually earn that 'specific' commission. You know the one, where the house sells in a day or so or the buyer buys the first house you show them"
    When in fact the reputation and hard work it has taken over the years and dollars in advertising that it took to get a reputation and the knowledge that will allow a house to sell in one day or the clients that you can take out for 1 round of showings before they buy, because you earned that trust and reputation. So do not EVER say, there is not commission that is not truly earned!

  • by 12/1/2014 3:05:47 PM

    Our Real Estate Associations ( or a petition send to a member of parliament) are the channels that should educate & make our government aware that in order to have a professional representation dealing in real estate, it should be mandatory to have the public use a real estate mediator/adviser (from marketing, opinion of value of there property, disclosing, preparing the property for sale, negotiating, the ethics & responsibility that we engage ourselves every time we work with a client , and many other factors for up to the time they are ready to make an educated choice of service. That would help the public understand our position. This service could be given by Real Estate Brokers at a minimal cost with an explanation of his own cost for service base on how the client would like to be represented.
    Any other profession ( insurance brokers, investment brokers, Bankers, and many others are all mandated through our government. This would at least have a base for a long term business opportunity and employment, not to mention avoiding the many bad experience people goes through because of unknown factors in selling or purchasing the most expensive assets in their lives.

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