Should you cut your commission rate?

by Jamie Henry20 Oct 2014
Competition is tough, clients are haggling and you want more market share – should you be cutting your commission rate?
 
“Commissions are always negotiable, but if you’re giving good value and you have experience, I think people are fine with your rate,” says Bob Grant, an agent with Re/Max Ultimate Realty, who says he never advocates for full-service agents to cut their commissions, but acknowledges the wide array of discount brokerages that offer lower commission rates.
 
“There is lots of opportunity to get an agent for less commission,” he tells REP. “But people who are serious, want to deal with someone who has been successful, someone they’ve heard about. If that’s the case, [negotiating] commissions aren’t on the table.”
 
Bill Johnston, the manager and legal counsel for Bosley Real Estate, says commissions were far less negotiable in the 1980s, though he, too, argues in favour of value-driven commission rates. For example, agents who have proven success rates often come with higher commissions than the average sales rep.
 
“Commission rates are all over the map, from zero to, well, pick a number,” he says. “But that’s an issue of negotiation between the seller and broker.”
 
In the end, Grant says agents can take up more of the marketplace in a variety of ways – none of which involve lower commissions.
 
“Lack of inventory affects business to a degree, so you might push your boundaries a bit more to pick up more inventory,” he says.
 

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