“I think the future [of payment] is fee for service,” says Scott Simmons, an agent on Salt Spring Island in British Columbia, who sits in the commissions-are-too-high camp. “The reason [commissions] are so high is because agents do a lot of work for free and we only charge the people who buy. If you show 25 people homes and only one buys, then that one is paying for the other 24.”
However, even though Tim Bosworth, an agent with Brad Lamb Realty in Toronto, thinks a fee-for-service payment structure would be wonderful, he isn’t counting on it beating out good ol’ fashioned commissions.
“[There is] way too much competition [for a fee-for-service model to work],” Bosworth says. “We provide a service to buyers that… if you’re doing your job as an agent and you’re bringing your buyer the right properties and they purchase, you’ll be remunerated.”
A fee-for-service payment structure would save informed and decisive clients thousands in commissions since they would require fewer services. This a la carte payment model would also save agents time (and money) in working with clients who aren’t actually prepared to buy.
“Buyers who are doing all their own research, they’ll get a deal,” Simmons says. “[Clients who] want to buy this house for this price, why [should they] pay $30,000 in fees? But the person with whom the agent spends the most time and [needs to be] uneducated, they should pay for [that service].”
In the end, Bosworth argues clients will get what they pay for – however they pay for it.
“You can play around with commission as much as you’d like,” he says. “The bottom line is that, as a seller you want to get your property sold. People sometimes tend to focus on the commission they’re paying. You can look at it as lost money or a job well done.”
Fee-for-service or commission? Share your thoughts in the comments!
There is arguably nothing more dear to agents as their commissions, but some industry players argue a fee-for-service payment structure would ward off time-wasting clients – without eating into agent paycheques.