Are cut commissions the way of the future?

by Olivia D'Orazio29 Sep 2014
Realtors don’t want to hear it, but yet another among their ranks is suggesting that the path to future success is paved with low commission rates.

“The business model for the large real estate brokerage is a lot of middle men,” Realtor Don Hewie of Commission Wise tells REP. “In Ottawa, 100 agents could easily service the city. The reason commissions are so high is because they have to feed the herd. So I [achieve] higher volume, but lower commissions and often the same service – MLS listing, signs, lock boxes, phone calls.”

The move is just one more way that agents are working to remain competitive and secure new listings, a telling sign of the state of an industry where several thousand real estate agents work in the Ottawa area alone.

But many Realtors are divided over the idea of cutting commissions – a practice that is quickly gaining traction as sell-by-owner and agent-assisted listings increase in popularity.

Alexandre Alves, a Realtor with Kingsway Real Estate Brokerage, is rooted firmly in the full service-full commission camp. He says that those looking to buy or sell a home will get the type of service they pay for.

“It is what it is,” he tells REP. “If I’m charging the full five per cent, [the client] is getting all my effort. If other Realtors want to cut commission and just let the property sit on MLS, that’s fine.”

In the end, Alves says he’s not worried about losing his business to real estate agents like Hewie, who can often save sellers thousands of dollars.

“I work strictly on a referral basis,” he says. “I haven’t had [the issue of cut commissions] affect me.”


  • by 9/29/2014 11:40:06 AM

    Cutting your commission is fine if all you're doing is putting the property on the MLS and hoping someone bites. REAL agents do much more than that and deserve a FULL commission.

  • by nar 9/29/2014 11:42:13 AM

    if service verses dollars are concerned then how come brokerages are hiring agents at $75/month and $275 /deal, how do they provide services to their sales team, just think, we all are creating this group of **discount ** brokerages and sales rep, when brokers dont care and just want to hire and hire thats the kind of discount group sales rep they leave in market, i am sorry but i think this kind of concept exists at your brokerage , pl sit and discuss with your broker of record, because we do get this kind of solicitation emails from your brokerage on regular basis, we all have to do our diligence to protect our business and livelyhood, but good topic to discuss.

  • by Eric Putoto Platinum Real Estate Team 9/29/2014 11:48:50 AM

    Somewhere along the way our industry has dropped the ball big time, for people like the ones commenting in this article and their company's to exist within it. I suppose some of the blame needs to fall at the feet of the "Competition Act." That glorious act which was, we were led to believe, enacted to protect the consumers..... Well the dummies that created the act forgot about the charlatans' the act ,in many ways, has given birth too. These supposed well meaning folk who run around telling home selling consumers they can save thousands by hiring them only because they will be paying lower commission rates. My question for all of you, and to some of you this question may appear more like a riddle than a question, is how does paying less commission equate to saving money?? The answer: it doesn't.
    If you don't understand why then you, "yes you savior of thousands" are a fraud. If you are confused I suggest you take an economics class at your nearest University.

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