Pricing strategies to prove an agent’s value

by Olivia D'Orazio04 Mar 2015
With cut commissions, rebate programs, and other pricing strategies taking over the market, traditional agents are pointing to their intact rates – and happy clientele – as proof of their value-added services.
“A lot of agents were struggling the last couple of years, so they started dropping their commission rates to get more work,” writes Lorne Deschamps in the REP forum. “But what they did was show the public that our profession is not worth the fee. This is completely incorrect; we are educated and have a very big responsibility, taking care of the selling or buying of a new real estate property.”
Indeed, those agents who follow a more traditional commission-based payment structure argued that those sales reps who take their responsibilities seriously are worth the high cost that comes with homeownership.
“Hard-working [agents] will always offer a superior service, justifying their fees,” writes a commentator called Rick in the REP forum. “At the end of the day it will have virtually no impact on the current business model.”
Michael, another partly anonymous commenter in the forum, said his brokerage has been successful for the last 40 years, working largely with repeat and referral customers. He attributes that success to the services he and his agents are able to offer because of their fees.
“I don't have a problem with realtors performing work at lower rates, even at zero commission, if that is what they think their services are worth,” he writes. “When agents are advertising ridiculous low or zero commission, they should also make it clear what their services include or do not include.”


  • by 3/4/2015 1:27:59 PM

    I don't have a problem with the newer business models but am not interested in going that route. Let's face it, if you cut your fees then you need volume. There is only 100 cents in a dollar so I prefer to give really high service and frequently include staging consults, always professional photography etc. Really, is it discount or low service and do seller's know the difference.

  • by Mel 3/4/2015 2:32:34 PM

    I am not sure why we feel other business models exist because they need to discount their commission to get business or its because they are only worth a discount price. Our company offers a "for sale by Owner" program, on top of our traditional model, so that we can offer those clients who want something different than our traditional model an option. It also gives organized real estate the ability to still be in the game and compete with marketing companies versus just walking away from a segment of the market. We won't walk away from a business opportunity...why would anyone want to do that? The fact is real estate agents have been walking away from business for years and that's why other models have come along...there was and is an opportunity for them. To think otherwise is foolish!!!

  • by 3/4/2015 2:44:22 PM

    In Toronto where properties sell in one week, can realtors, hand on heart say the work they did to sell that house is worth $25,000? Or $50,000 for the dubious double end?? (assuming 1 mill selling price) More to the point, does a seller feel he/she got value for the commission. Some market research would provide some more insight in tot matter.
    Don't get me started on the education factor!

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