Want fries with that Realtor?

by John Tenpenny14 Oct 2015
Real estate agents who look to gain clients by being lowest bidder when it comes to their commission rates are not going to see an appreciable rise in business, says one real estate broker in response to a growing trend in the industry.

“Commissions have always been negotiable – they’re not set in stone,” Andrew Mitchell, a chartered real estate broker with Vistacor Realty Group in Montreal told CREW.

“There have been different realty business models, such as flat fee or service packages, around for a long time.”

For agents to think that clients should treat selling their home as they would finding a ride or a renting a house in San Francisco is short-sighted.

“When the comparison is made to Uber and Airbnb, you have to keep in mind that these kinds of services are being used over and over and over again. Saving money on small transactions make sense, but this model hasn’t translated to real estate because people have to be able to trust this person with the most valuable asset they have.

“Do [agents] want clients to rely on a website for that or do they want to rely on being recommended by friends and family for whom they’ve worked?”

Mitchell says that while lower agent commissions might be a strategy used by brand-new agents in hot markets like Vancouver and Toronto where homes sell quickly, this type of discount model hasn’t survived in the past.

“In most markets there’s a reason 20 per cent of the agents do 80 per cent of the business,” he says, adding that, “most savvy sellers interview several agents and generally they go with recommendations and track record and they will have that discussion about commission.”

Mitchell also questioned the efforts of agents earning very low commission, suggesting a minimum price may translate to a minimum effort to sell your home.

“Say the client saves one or two per cent on the commission price, but when the agent isn’t able to negotiate the price and loses five per cent on the final sale price because they are not as skilled as an agent who charges more for their services how does that benefit the client?”


  • by Scott Simmons 10/14/2015 12:29:56 PM

    I'm guessing the 8 years I have spent as a "discount" realtor is just a short time and the services I provide tend to be as much or more than most of my "non discount" colleagues. Most do not have 200 or so pages on their web site with 100s of hrs of podcast and 700 plus videos of the local area. The reason I work as a 1% Realtor is a certain segment of the market needs and or wants a deal on commissions and we offer it. We do not offer less service and or less negotiation skills than other agent. Personally I spent a decade running my own business and negotiated over 200 plus wage packages and millions in procurement. To suggest minimum effort is for minimum commission is rather sweeping. Here is the fact on discount Realtor companies like 1%; what they cut out is the big office with the big board room, you know the place the one with all the leased BMW out in the parking lot. After 8 years with 1% I have only been to the office once. They do not provide office space to hang out in and mostly all the 1% agents I know don't have time to hang out they are too busy writing deals and making sales. If we need to talk to our broker and or office staff they are only a text or email away. 1% is a lean model that seems to work well for our clients and our hundreds agents. The role of the Realtor and role of the broker is changing. So many of the buyers and or sellers and doing so much of what used to be done by agent it's not surprising so many want to pay a little less. When was the last time a client walked into a real estate office and said they wanted to buy or sell a home? Now so many spend so much time and energy on line searching they are looking to team up with agents who can work at their pace and not stuck in a 1993 model. FYI I do plan on being in the top 20% of the Victoria Real Estate Board this years.

  • by Terry Broker in Toronto 10/14/2015 12:36:55 PM

    Hey Scott, charge 2% and get into the top 10%. Some work hard some work smart! Life is short.

  • by Scott Simmons 10/14/2015 1:22:04 PM

    If being in the top 10% was based on number of transactions I sure I might be in the top 10% this year but it's not it based on a gross number. I have had only one home over the mil mark this year it was a stunning south facing low bank waterfront and yes I helped my client negotiated and they got it for 1.8mil from a asking of 2.1mil. So Terry charging 2% would not make much of a difference. I really do not care if the board send me another cheap brass sticker to add on to the cheap wall mounted plaque they sent me years ago. Just looked around my office and do not even see it. To me there is nothing worse than the agent who advertises #1 top producer...gold winning...etc etc.. It's really lame. To me it's really all about making people happy. There is nothing like being there on possession day and seeing a family get their new home. It's really all about putting the client needs first and being there for them and helping them though the process. Helping them find the right home and guiding them away from the wrong homes. To me it's not about the commission and or the money besides my wife gets it all she only give me 100 per week. Dang I need a raise.

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