Commission alternative to stave off time-wasters

by Olivia D'Orazio24 Oct 2014
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.

“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!


  • by Rocketman 10/24/2014 7:04:12 PM

    I have been a Realtor for 20 + years and I think the mindset of many realtors is so ridiculous. Fee for Service. Like when I go look at a pair of shoes x 7 pairs and walk out and don't buy any do I give the staff a fee for helping me, or even worse buy a pair after trying on 7 pairs and then return it next week do I give the staff money for that. You can look at many industries and have similar scenarios.
    Hey I know how about this: when a realtor shows a customers 2 homes and they buy one then why not give the client half or even 2/3 their commission because they didn't waste the Realtors precious time by having them look at 25 houses. With the price of homes nowadays a Realtor can sell 10 property's a year and should be able to make a decent living.

  • by Blake 3/18/2015 4:56:10 PM

    Rocketman, something tells me your not a realtor and lack the industry knowledge. Theres way to much competition out their, anyone can find a realtor. That being said, go drive around with clients who don't know how to make a decision, better yet "the flakes". You'll realize after they waste hours and days of your time (not buying anything, but just lousy deadbeats) you wished you charged a fee.
    Otherwise, an experienced realtor would know to pre-qualify a serious buyer.

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