Options are good, but are they bad for business?

by Olivia D'Orazio09 Feb 2015
Alternative payment structures are the latest trend commanding the real estate industry’s attention, but some agents say offering services at too low a cost is simply bad for business.

“It’s not a cheap business to be in,” says Bob Wamsley, an agent in Saskatoon. “There are a lot of expenses that you incur in the day-to-day operation.”

Still, there are agents who insist that the home buying and selling public deserves a wide array of options when it comes to real estate payment structures – and they’re keen to provide them with those choices.

“I wanted to move off the standard, almost price-fixing throughout Ontario. There seems to be a small range of fees, between four and six per cent. There are different rates, but the basic system is very closed,” says Tom Goebel, an agent in Windsor, Ont. “I think the consumers should have more choice, so I offer hourly rates and flat fees.”

Scott Simmons, an agent on Salt Spring Island, B.C., says the seemingly recent shift to flat fees and hourly rates is simply a reaction to what the consumer market has been demanding.

“Having more choice and selection is good for the consumer,” he says. “You can’t just be stuck in the old days [of charging commission]. It’s up to the consumer to pay what they want to pay. And some consumers are happy to pay for it.”

The situation is less about what the consumer wants to pay and more about the actual cost of buying or selling a home, Wamsley argues, pointing to the insurance agents pay on each transaction.

“You can’t make a living [by charging low flat fees],” he says. “If you’re doing a fee for service, what are you going to have to charge to cover yourself?”

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