By Ross Wilson

A former client called to say they wanted to list their home for sale. Since I’d served them nearly 30 years ago and had faithfully stayed in touch, I happily accepted their invitation. During the initial phone chat, while I gathered details about their situation, motivation and property, they inferred they’d be listing immediately. Consequently, I prepared a detailed CMA and to save them time, prepared most of the listing documentation in advance. When I arrived at their front door with lockbox and camera in hand, I noticed the property’s rather unkempt condition. That first impression was immediately confirmed upon entering the foyer. With the exception of a new roof, they acknowledged that little effort had been made to improve the place. Even the mechanicals were being coaxed well past their designed obsolescence dates.



After I’d finished my presentation and offered a candid considered opinion, they dropped the first shoe. To my dismay, they’d already sought the opinions of several other agents. Well, I’m accustomed to forthrightness from the outset and to my good fortune, unaccustomed to direct competition, particularly in the case of former clients. Either out of ignorance or anxiousness, my esteemed colleagues had apparently unanimously opined a much higher market value.

Then the second shoe made its debut; how short of a listing term would I accept? And yes, there was a third shoe; what would be my fee? They understood and agreed regarding the merits of offering a competitive commission rate to the buyer brokerage, but objected to my own fee. When they said all the other agents had promised a lower rate, I tried to justify my fee, but all they saw were dollar signs.

Our meeting ended abruptly when they said they had to think about it. While packing up to leave, I summarized their expectations by asking if they felt it reasonable to expect a highly experienced broker who is confident in his self-worth and truly cares about his clients, to accept an over-priced, minimum term listing of a sub-standard property owned by someone who doesn’t seem to value loyalty or expertise, and with a heavily discounted commission rate. Significantly, they laughed it off and refused to answer.

Later that day, I was not surprised to receive their call to thank me for my time, but they had chosen to list with another brokerage. I was sure that without a significant price reduction, their property would not be sold any time soon. Hence, I felt I’d lost nothing but a few hours of my time and a troublesome seller. I candidly said that perhaps, to be fair, they should have disclosed during our first phone conversation that I was to be competing on price and commission rate because, honestly, I’d have respectfully declined the invitation. I cheerfully wished them luck. By the way, after more than three long months in prime market conditions, with dreadful marketing, amateur photos and several price reductions, it finally sold by a co-operating brokerage for an even lower price than what I had predicted.

For some time, it’s been a common but unwise practice for property owners to hire a listing brokerage based on the highest asking price. But it’s becoming more prevalent in recent years for that choice, which of course is their right, to be based on commission rate. But be forewarned; a client who is obsessed with the fee usually has little respect for you, your services or our profession.

They need you, but out of fear, refuse to be fair. How desperate are you? Do you rationalize competing on fee by convincing yourself that a piece of the pie is better than none? It’s your choice whether or not to accept an agency. Whenever I succumbed to a seller’s demand for a fee reduction (extremely rare), they ironically and almost consistently proved very unreasonable, sometimes downright obnoxious. They could not be pleased.

Or after I’d invested a lot of time, effort and expense, they’d spontaneously change their minds about selling. Suffice it to say that if – a big if – someone like this later refers anyone, the referred party will likely expect the same full service at a discounted rate. Birds of a feather flock together.

Many agents charge a popular local competitive rate. (I’m not supposed to imply this, but let’s be real.) However, in a strong seller’s market when demand exceeds supply, a seller could expect to negotiate a rate, especially for high-demand property. When supply and demand are more in equilibrium, or when supply exceeds demand, to attract more attention, a seller should offer a higher commission rate – not a lower one. Plus they should provide you with sufficient incentive to invest your time and effort on their behalf. They can’t realistically expect you to work for less and spend tons of money advertising it. It simply wouldn’t be fair, nor under those circumstances, would it make good business sense to accept the listing. Thus, if a seller demands a discount, they should expect discount service.

Over the past few years our fees have been a hot topic, and the controversy has been irrevocably altering our traditional business model. Media articles have intimated that, considering our services, we’re grossly over-paid. But either by design or gross ineptitude, to grab readers’ attention, columnists often neglect to get all the facts. And what draws that attention and its often affiliated ire more than reader’s pocket-books? The adverse effect of such stories on public attitude is palpable.

Have you ever noticed sympathetic stories about our industry? Agents are often depicted as bungling, greedy, narcissistic egomaniacs taking advantage of innocent people. Have you seen any impartial articles stating, for example, that buyer services are normally free, or that most registrants generate a mere handful of sales annually – or none, even though constantly on duty? On average, agents earn about the same as a typical office worker who gets a relatively secure regular paycheque with no business expenses and critically works with significantly lower risk and weekends and holidays off! If we’re all so exorbitantly paid, why do legions fail after a few struggling years? You’ll not likely see such articles because truthfully depicting our members serving satisfied clients without drama would not be entertaining.

Okay, okay – I’ll stop ranting now, but I’m a little sensitive to unfair and usually unanswered criticism of our industry. In this new series, I address the topical issue of fee for service, including how to surmount a demand for a discount. So, stay tuned.

  • Looking forward to the elimination of LTD and the implementation of mandatory EBA soon in British Columbia as I believe both will do a world of good to raise the bar on best practices in our industry.

    • Since I`m not a west-coaster, Mark, can you explain to us `middle-easteners`what LTD and EBA represent? Whatever they stand for, I think it sounds like good news.

      • LTD = Limited Dual Agency (Double Ending) and EBA = Exclusive Buyers Agency (BRA, Buyer Representation Agreement back East)

  • Carolyne L

    Ross to Shawn 8 days ago – cannot post at the disqus reply button… again … So posting here. Hope this derivative education comment helps some to think a little deeper.
    [derivative defined at google]: “A derivative is a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset.”

    ===
    Re your comment about industry education, I submit:

    I highly recommend that part of real estate education should be course material in time-management studies, and costing analysis as it relates to widgets and manufacturing processes. And basic math, and basic bookkeeping, and the English language as it applies to real estate law in particular. Very useful for those beginning a whole new career, regardless of age or gender, or prior career.

    And proof of those basics ought to be had before any fundamental real estate courses are considered. No one needs to know how to perform heart surgery, although a basic psychology course would come in handy. But you can’t teach ethics, or responsibility, or empathy. And just like there’s no handbook that parents should be required to read before endeavouring to have children (a responsibility to be had for at least a twenty year commitment), there is no recipe or guideline that says what kind of education or background will produce a top notch agent, (not just a top producer in the numbers’ game of sales).

    It is so basic it’s downright scary that no one applies this COGS and widgets philosophy to the world of real estate. Yet agents have the honour of representing the public in some of the most critical awareness business environment participation the pubic will ever be involved in.

    It’s simply not rocket science. You can have a Harvard or Yale education, you can have a degree in science, the arts, or medicine, as an example: but that won’t help make you a good or better real estate agent. And it doesn’t put you in a position to be able to advise others, or run a business, any business, especially a real estate business. A carpenter’s and a seamstress’ rule: measure twice cut once, is really just common sense. But no one offers a degree in common sense. There’s a lot of common sense needed in the real estate industry. But it’s sorely lacking in many practitioners.

    Someone manufactures the widgets, (what are they made of? Were molds and patents and prototypes required?) the widgets being anything from aeronautical or electrical parts and pieces, to patterns and designs in fine jewelry, or even chemistries in the world of fertilizer. Here or anywhere else in the world. But in our industry the widgets are the innards of helping people selling and buying properties; a sacred trust. How much do the widgets cost to buy?

    In real estate, you are literally buying the widget, the right to (borrow) list someone’s home in order to market it so you can earn a return on “your” investment – money you spend to turn it (the widget) into your ROI as well as do a substantially good job for your clients’ bottom line.

    COGS (cost of goods sold). The concept applies anywhere and everywhere, in all businesses. The material costs to make the widgets is one thing, but the man hours have to be accounted for in the cost analysis, too. And allotments for downtime, sick time, errors and omissions, holiday schedules, bad manufacturing issues, misfits, weather, storage, worldwide shipping, special large contract orders, taxation intervention, sales numbers, natural attrition. And of course, salaries or some method of paying management and all the related underlings. Economic life, planned obsolescence. What was once considered 20-year economic life is often now 5-8 years. Indeed, planned obsolescence. A make work project. Speaking of make work projects, has anyone noticed how often home owners take out a line of credit, do sometimes massive renovations, and then put the house on the market? Keep your eyes on people renovating as good prospects, perhaps.

    One experience of note re a seller of mine who built a beautiful screened gazebo, with cable and heat hook up to watch the game(s) outside, a nice interlock driveway, and added a beautiful inground pool on the edge of the amazing gazebo.

    The exact cost figure escapes me, but none of it was on the cheap; it was long ago. He had had an initial appraisal in order to get approved for his bank credit line. Now a current appraisal netted him only an increase in price point of an additional 38k for the improvements, nothing like the triple or quadruple amount he had spent for top of line materials and workmanship only months before. Over-improved for the location the new appraisal said. He was confused, indeed. His business was suffering so he needed to sell for top dollar. In a down market. I managed to saved his skin with the help of a generous commission to a co-op MLS rep.

    The COGS and widget philosophy all applies to real estate, too, working away behind the scenes. (And usually never talked about or even thought about in such terms.)

    If agents were taught the basics of such and figured out what each listing (pretend it’s a widget) cost to, first, get and then maintain not just in marketing and advertising, but in man hours including staff, vehicle, phones, computers and all tech equipment to name a few, and related costs, this basic analysis alone, undoubtedly, they would be shocked out of their socks in many instances.

    No wonder the net income after tax, for real estate salespeople on average is less than that of a local bus driver.

    It seems no one knows or applies the thinking cost-process to real estate or even cares. I’ve taken courses in cost analysis and in time management where the near craziness in one project was literally tracking a sample day in fifteen minute segments of an hour, for a 24-hour period to test the validity of time wasting.

    We’re talking time control accounting for washroom breaks, time for brushing teeth, how long it takes to make a sandwich, and how long to eat it. Talk about a learning curve in overkill. Try it. You won’t soon forget the test run. It could change your outlook on the real estate business. It could literally change your life.

    Analyze everything from how many contacts you need to meet up with before you even need to start working for any specific client, in real terms. Take into consideration how many minutes you drive each way to each and every destination (when all you are doing is paying attention to stop signs and speed limits, but the clock is still ticking). Who is paying you for that half hour each way or even for ten minutes? Who pays to put the gas in your car? Certainly not your office manager, or the brokerage.

    For people who work a 9-5 job day, it’s earth shattering to learn how much real work gets done (not) in a day. Do a practice 15-minute segment allotment for a general work day as a test, perhaps. Be honest. And calculate what that days’ work costs an employer in real time. Everything from smoke or washroom breaks to the cost of the company Christmas party. Costs are passed on to the consumer, automatically accounted for (and it’s also part of analyzing discount commissions, too), so there is something left for the company to call ROI at the end of a corporate year, too.

    The robot plans it all. And the robot is completely out of control. Sometimes sellers prefer the DIY or DM (discount-method) only to find out that the buyer was the only one who saved.

    And to apply the concepts to a day in the life of a professional real estate agent might come as a real shock to many. I had worked freelance company contracts for nearly two decades, and had to account for every hour, even when quoting a whole job project. Logistics entered the picture because I often was working overlapping projects, and often worked 69-80-hour weeks. Fortuitously I had the physical stamina to ride the midnight waves.

    A deadline was a deadline and there just wasn’t room for errors. Heads would roll. Couldn’t hold up those union presses, hundreds and sometimes thousands of dollars an hour to run. Precision was called for. But no one is perfect. Life happens often when you least expect.

    But you do have to start out with the attitude of aiming for perfection. Aim
    your arrows, point them in the right direction. Marksmanship. Bullseye. It’s often mostly about attitude, but the follow through is equally important. And only you can control your attitude, keeping stress to a minimum, and how you handle the stress that accompanies any business, but particularly so in the real estate field.

    It certainly was good (unknown at the time) training for a, in my case, later in life real estate career. Someone said if you want to predict somebody’s future look at their past. And when you really want top notch service give the job to a really busy (organized) person who will never let you down.

    It’s so hard to go where you haven’t been. But you have to figure out where the missing piece to the real estate puzzle is. And then work it like there’s no tomorrow, because there might not be a tomorrow. And somehow fit in personal and or family time, for medical appointments, auto service, time to shop, to cook and time to eat. Who said there’s only 24 hours in a day. Surely a REALTOR’s(r) day must have more hours?

    Every item and issue, including life limits, has what I like to call human tensile strength. Test yours.

    Wikipedia: “Tensile strength is a measurement of the force required to pull something such as rope, wire, or a structural beam to the point where it breaks. The tensile strength of a material is the maximum amount of tensile stress that it can take before failure, for example breaking.”

    We each have our personal limits, strengths, and areas of expertise. Figure out yours and work around the real estate obstacle course that is often a maize that looks like there is no way out. (Think Irrevocable deadlines; where time IS of the essence.) The past 24 hours will never be seen again. People who have been told they likely have only five years to live, that means only 60 months. A literal “dead” line.

    Figure out how to ride the wave. Market conditions represents only part of the picture, commissions another part. You can find the missing piece to the puzzle, not unlike the premise discussed in the old title worth reading: “Acres of Diamonds.”

    There’s a whole lot more to our industry than the psychology of selling. And there’s only so many hours in a given day. Make each one count. Success is your net result. NIBT.

    Carolyne L 🍁

    • Once again, thanks for your comments, Carolyne. Sadly, though, I suspect those who could benefit from reading your remarks won’t read it. Why? Because the reading material of the vast majority of people in general is limited to restaurant menus and street signs. This view is based upon a reading study performed in the USA a few years ago. I happen to agree with you. But to involve more business education in the real estate course curriculum would require at least 2-3 years of study. Having said this, it’s not a bad idea. It would certainly separate the wheat from the chaff.

  • Don McMillan

    A full service agent is really a “full-commission” agent. The full service agent will not negotiate or discount their fees. Discount agents negotiate their fees saving home-sellers money while offering the same or better level of service.
    To imply a full service agent is better than a Discount Agent is like saying an apple you purchased at Wholefoods for more money, is better than one purchased at the Farmers Market for less. How do you know the two weren’t from the same tree?

    • Thanks for your input, Don. My comments were painted by a broad brush. Obviously, individual sales rep may have differing policies. I will say, however, that unless a “discount” agent enjoys a considerable volume of business, considering the rising fees and associated costs of our industry, that discounter probably won’t enjoy a long career. It is, after all, a business for profit.

    • Alan M.

      Don,

      Discount brokerages don’t negotiate their fees, they charge less so that they can avoid the time they would otherwise spend prospecting. However, they still have a tendency to do less because they are volume business models that tend to have more clients to service and consequently the devision of time is a reality that reduces the available amount of time to commit to service. It’s pretty basic math that can’t be blurred by some corny analogies. However, some nuts can be from the same tree.

      In any event, service isn’t interchangeable with competence — you have to be the latter before you can offer the former, and the topic of commission levels is just a diversion away from the question of competence!

    • We all know the type of client discount brokerages attract. Most of the offers I have written to present to a discount listing fail… not because of the broker but because of the client.

  • Carolyne L

    In reply to – Shawn wrote, in part, on March 10: “. . . when literally one deal at 5-6%(even if it’s their own damn home) puts them in the black as a business.”
    ===

    My first broker manager said that nearly every new agent could be convinced to put their own home on the market to attract clients when they didn’t yet have any. And considering how many new agents arrive on a roster each year, all those newbie residences on the market would attract and bring area business to the corporation because that’s largely what For Sale signs do.

    And he let it be known he felt that was just good “corporate strategy.” The more signs, the more anticipated business to be had. Even if only spin-off business generated by sign calls or ad calls.

    That part is true. I always was aware my own signs often produced multiple progeny; twins and sometimes triplets. Within days of submitting a new listing I would have additional calls inviting me to a listing presentation.

    Or would-be buyers would connect, and one of my first communication questions always was: “Do you have an idea of what the value of your own home, currently, is? Because that’s the first place to start. No point getting all excited, falling in love, only to find out it might not be possible to make all the numbers line up. You don’t want to go through that.”

    (Slow down. Speak slowly, calmly, and distinctly. Stand, don’t sit, ideally. It gives your diaphragm a chance to work for you. Give the caller a chance to respond. Mirror his behaviour, his voice pattern. That’s totally different than mimicking him.)

    This particular point of reference is something newbies (and perhaps some seasoned reps as well) need to give serious consideration to. Building and developing rapport at the first point of contact so as to not waste valuable time… the agent’s time as well as the public contact’s time.

    Suggest: Would you like me to just drop off a general current market analysis based on your local area activity? (Of course subject to a proper interior inspection.) This would give you an overview and you could tell me which one is most like yours. Then we could set up a “specifics” discussion at your convenience.

    I could courier the package to you and you would have it tomorrow, (no threat) or I could hand-deliver it; your choice. After you have evaluated the information, if you like we can book a specific time to meet up to discuss and fine tune a follow-up. (Or you have provided the caller with a full opportunity to graciously decline, letting you know up front, perhaps, how serious they are, or reveal that they already have an agent or friend in the business saving your time for someone else.) If there is any waste of time it is only the time spent on the phone call, building business for the future. Because short of having their own agent you can bet no other agent treated them this professionally on a mere sign call or ad call.

    If I managed to learn they had an agent, I always invited callers to have their contact agent person call me, direct, and or have the agent book an appointment to view my listing with their own support system, assuring the caller I would be cooperative (of course, that’s what MLS is all about, but the public surprisingly doesn’t always know that). Answer sometimes was: “I didn’t want to bother my agent.” (But it was okay to bother me?) Sometimes that is annoying to hear. Next.

    Of course I leaned in on the “tell 20” system, the idea offered up by one of the trainers (I bought all the books, too.) Tell 5 neighbours on either side of a new listing and 10 across the street about the new listing. Except I sent out personalized promo “Just Listed,” followed by “Just Sold” cards, (repetition marketing) “2500” units at a time, times two.

    Later versions: sometimes the rectangular cards had a perforated pull-off business card attached. Or gel-spotted in place. Or a list of often needed local phone numbers. I customized all my marketing materials. I didn’t pay someone else to do it. But not being a purist graphics person, only an idea person, I paid substantial money to hire professionals to prepare the top notch camera-ready artwork.

    At that point in time not many agents invested in such marketing. But, truly, it paid for itself time and time again. Quality marketing materials acted as a pro forma of solid related service to come; a projection of sorts.

    In a really cold US east coast winter, a colleague shared a picture on line of a life size igloo someone in their town had built. As soon as I saw the pictures, I suggested they put their Re/Max for sale or sold sign up against it and take pictures and use the pictures in their marketing. It was an opportunity not to be missed for them, indicating all sorts of innuendo, buying and selling all sorts of properties in any kind of weather. That was years ago and I see they still use those pictures in their marketing.

    Years ago we could do target marketing in my market area, eliminating apartment condos and townhouses back then, sending direct mail to only detached homes specifically. It was a wonderful system, supporting the farming concept.

    I wasn’t interested in marketing to first time buyers coming out of rental bldgs or the condo lifestyle unless they found me by referral. It often was just too long a training process and there were dozens of agents who enjoyed that market. First time sellers were doable much more easily, though.

    I put a private support system into play that spun off specific listed property marketing, inviting call to action suggestions such as cross-over marketing, telling callers to: “drive by and take a brochure from the sign box for all the details.” (And often noted a cross-reference list of other current listings in all price ranges, as noted in a prior post, was in the “Take One” sign box.)

    Another spin on the REM Cheers branding article (everyone knows your name). People visiting a particular property would often take home my marketing piece. And keep it indefinitely. Sometimes months later when I would get a call to do a listing presentation they would pull out some of my old marketing pieces to show me they had saved them. I recall one family who had a shoebox with three years’ worth of my specific area promo, and then they called me to list.

    Other owners had bought my listing and their agent never stayed in contact. They kept track of my general marketing in the area and when they relocated, they called me, reminding me they had saved the marketing piece from when the house they bought, was for sale. They now wanted theirs to be marketed the same way, seeing as it was “in my farm.” I never had them on my Christmas card list or such. No direct marketing to them.

    But speaking of such, I learned another lesson. When I left my first brokerage I learned that immediately the office secretary was instructed to pull out all my deal files and assign “those people” to an agent in the office to connect with and call them their own new point of contact. Interesting. Because I sent out a specific piece of correspondence, too, letting them know where to find “me.” That’s how I discovered what the manager had done. Clever.

    I recall people often calling, sometimes a little annoyed, and saying: “but you didn’t say in an ad, how many bedrooms the house has. (Or if it has air conditioning)…

    “RIGHT! But you called me to find out” (that made the phone ring). Response in a non-threatening manner, just gently taking control of the conversation, sometimes even laughing a little, to add a little levity, explaining why I didn’t include that information: “How many bedrooms do you need?” (Redirect the conversation by supporting the caller’s needs.)

    Question from caller: does it have a large lot? Answer: Do you want a large lot? … please define large, what is large to you may not be large to someone else. (Build the conversation.)

    It’s okay to ask how many “people” will be living in the house they want to buy, to try to involve the caller in gentle further conversation, but NEVER EVER ask: how many children do you have?

    MANY women in particular find that an offensive question, and some men are sensitive, too. Maybe they have difficulty getting pregnant, or had lost a child, and find the question invasive. Loads of reasons not to ask the question exactly that way.

    On a referral I sent out one time, to a great agent, that very question disturbed the would be relocating buyer so much, she called me to let me know she was declining to work with the referral agent as she thought the agent to be insensitive to her needs. Of course the agent had no way of knowing the caller’s personal disastrous history. Up till then, neither did I.

    Yes. Some people are particularly sensitive. And WE must be equally sensitive, in return, to their needs and think carefully before we speak.

    Personally I had learned about such inquiry no-no’s during a training session (we paid for all our own training) and there were always little snippets of items such as this. And, being sensitive, myself, to other people’s needs, I never forgot it. I was always careful how I posed my inquiring lead-in questions.

    I ran this situation by a couple of colleagues whose response was: “Get OVER it, it’s a question needing asked.” (Yes. Of course. But in a more delicate way.)

    Sensitive? Or having empathy… Perhaps always best to err on the side of caution. And I was a little shocked at the colleague reactions. But that series of conversations supports some of the comments Brian has made on REM.

    Carolyne L 🍁

    • Nice business policies. And nice column, Carolyne. :-)

  • Alan M.

    “Discounted commissions changing the real estate industry”

    By my count it’s been at least fifteen years since the first Franchise discount brokerage showed up, and managed to stick around. For my time in the industry any of the smaller non-franchised brokerages were always free to charge whatever they liked. The larger franchised brokerages each had their own commission rate that they liked to set. I don’t believe that there was ever any collusion, it was more a case of a true full service brokerage usually being able to generate, more or less, the kind of value added that was usually equal to the commission rate that they sought to charge, and the higher commissions, in part, contributed to the value added results. The title for this article is out of date, because the subject is past tense, and it was really the discount brokerages that changed the industry — mostly because they’ve been free to say almost anything they’ve wanted to and leverage off of consumer ignorance!

    The idea that the author of the subject article is in a position to generally council industry members on the proper approach to maintaining a commission level that wouldn’t be construed as discounted is ridiculous, because no two practitioners are able to generate exactly the same level of “value added” to offer their clients. In many cases there will be practitioners who simply can’t offer any value added or very little. Furthermore, there can be no “benchmark” commission level because there is no clear standard of performance that can be associated with a REALTOR’s duties — notwithstanding identified breaches in the standards of business practice etc.. There also can’t be a benchmark commission level because the existence of same could imply collusion.

    Consider what Ross Wilson has said in the subject article that he must feel reinforced his value argument: “…Consequently, I prepared a detailed CMA and to save them time, prepared most of the listing documentation in advance.” Ross prepared a detailed CMA in regards to a home that he hadn’t stepped foot in since: “…nearly 30 years ago”!
    Ross continued with what he must regard as more of his value argument with: “…I summarized their expectations by asking if they felt it reasonable to expect a highly experienced broker who is confident in his self-worth and truly cares about his clients, to accept an over-priced, minimum term listing of a sub-standard property owned by someone who doesn’t seem to value loyalty or expertise, and with a heavily discounted commission rate.” Instead of explaining what expertise he had and how that would translate into a higher net return for these seller’s, he basically became indignant at the thought that they would entertain even the opinions of other industry members. It also appears as though Ross was the last REALTOR that these seller’s called in, so he had a chance to close the deal (sign the listing up) had he made clear value added arguments.

    What is a discount broker really? Is it not a brokerage that holds itself out as being as great as can be, while at the same time offering more value added than some conventional brokerages — all the while even charging a lower commission rate? The discount brokerage doesn’t have to prove their value added argument beyond the lower commission rate; a conventional brokerage does have to be clear about their value added argument otherwise the result is: “…Later that day, I was not surprised to receive their call to thank me for my time, but they had chosen to list with another brokerage.”

    The industry continues to suffer: over membership, incompetence and poor ethics — at unhealthy levels. Discount brokerages have changed the industry somewhat, but I don’t believe that consumers will necessarily be calling the discount broker back for a cameo, as Ross’ past clients did for for him!

    • Brian Martindale

      Alan et al:
      Speaking from the standpoint of a former real estate appraiser (2000 to 2006) affiliated with the Appraisal Institute of Canada, I can tell you that a C.M.A. (as produced by a registrant) is nothing more than a so-called “desktop” opinion of value comparable to what was then produced by me. Simply stated, a desktop valuation (most often requested of appraisers by lending institutions–they are cheaper– when a current mortgagor wished to use his/her home as an A.T.M., and the total value of the property as expressed by the homeowner did not exceed 125% of the Ontario M.P.A.C. valuation) is nothing more than a registrant’s C.M.A. wherein recent sales in the subject property area may be strategically ‘chosen’ by the appraiser to be used as comparables to reflect the desired valuation of the mortgagor. Ergo, the lending institutions are able to sell more money. My boss always told me to find comparables that would support the valuation figures as proposed by the mortgagors and/or the lenders, even though I would never set foot on either the subject properties nor the comparables’ sites. I was therefore at those times simply a bureaucratic desk jockey.
      Subjectively contrived C.M.A.s are often used by unethical registrants to justify a selling price that a registrant thinks will serve as an aid toward the quick sale of a potential listing. It was my arguments with my appraiser boss/company owner over these and other unethical behaviours that he practiced, and demanded that I practice (“We are here to make money”, he always said) that ultimately led to my demise with his business and my then appraisal career. His goal for me was to hurriedly complete six appraisals per day (inspected and the final reports emailed to the lenders that same day). The appraisal business appeared to me to be rife with these same said bad behaviours by the way. It is a closed system that sometimes operates on pre conceived subjective value decisions on the appraisers’ parts. I was told more than once by Appraisal Institute of Canada instructors that the end appraisal document result (the final valuation) did not matter that much, that only the ‘process’ mattered, because that process, if done correctly, would be our best defense in a lawsuit.
      Now we know why there are real estate bubbles.
      Consumers don’t know what they don’t know, unfortunately. The first thing about real estate that consumers need to know is how to spot an unethical registrant and/or an unethical appraiser.
      I’m glad to be out of it all. I feel clean again.
      RECO/Appraisal Institute of Canada: Take note.

      • Carolyne L

        That’s why relo departments would often insist when acting for the buyer, to insert a clause in the APS: “Subject to property appraising for not less than XYZ dollars $CAD, failing which …” So, automatically that appraiser knew what was expected of him.

        I never had a buyer relo contract rejected on price, even when buyer offered top dollar; behind the scenes relo wanted to keep their relo client employee happy, and out of their hair, as part of his family relo pkg,

        Many agents never put the pieces of the puzzle together; and in the long run what matters? It’s always: next. Shove that paperwork in the drawer, never having read it, exactly as you say, Brian.

        Just one of the reasons I eventually rejected relo accts; the paper load became unmanageable with outrageous time constraints, and the relo referral portions of earned commissions kept getting bigger and bigger.

        We had an onus to perform our duty and continuously get paid less and less with more responsibility. Knowing no one rarely read the dozen page repetitive reports was a real downer; and then people you had dealt with for years suddenly were no longer there, and the new person had their own connections and new ways of doing things.

        The old expression comes to mind: new broom sweeps clean; not worth building new relationships often with people who had no idea what they were doing, even. A new breed of cat.

        Telling us what we could and couldn’t do, even if their instruction was maybe even illegal, or borderline. Not going there! No disclosures were allowed; no agency agreements were permitted; no warranties, no SPIS, etc. WAY too dangerous. But a good deal for agents who are movers and shakers who work the same way: hurry up and sign here, there are other clients / customers waiting.

        Carolyne L 🍁

    • Sorry, Alan, but once again, you seem to have misunderstood the point of the article. I never implied that there is an industry “benchmark”, or that collusion is ever right, only that each individual sales rep and brokerage should have their own personal standard rate to charged for services to be rendered. And that fee should be based upon not only what they can do for the client, but also upon the trust level of the relationship. For example, even though I rarely discounted my rate, I never cut it for friends or family. Why? Because they knew that they could trust me completely, so could rely completely on my advice. (By the way, I never feel indignant; obviously, that’s your attempt to project an emotion onto me.)

      My efforts to prepare for the subject listing appointment, and my expectation of a listing, was simply based upon the fact that virtually every listing I accepted during my career was with a trusting homeowner. Such trust had developed due to previous experiences with them, or during the presentation itself. Call it confident manifestation. I never “bought” a listing by promising a higher price than what was realistic, with the intention to return a few weeks later for a price reduction. Even you must know that this is a common (unethical, unprofessional) practice in the business.

      Also, as always, there’s the risk factor to be considered. If there’s even the slimmest possibility that the seller might change their plans and not sell after a period of time on the market, and after the agent has expended much time, effort and expense, then I feel that the rate should be higher to compensate for the risk. I differentiate sellers in that some are committed and others are conditional; the former will sell for market value, whatever that turns out to be, and the latter will only sell if they obtain their minimum price. In my view, the latter group should pay a higher commission rate. It just makes good business sense.

      Discount brokerages have certainly contributed to the evolution of the industry, and so did a certain international brand when it arrived north of the 49th in the late 1970’s. But the entity that arguably altered the business the most was the government.

      Alan, when it’s boiled down to the basics, every registrant performs the same fundamental services. They evaluate, advise, install a sign, upload to various websites, advertise and negotiate offers. That’s pretty much it. So, if we’re all on the same playing field in this regard, what makes the difference is whether or not the homeowner likes and trusts the agent. With some people, the relationship is the critical factor, while with others, it’s all about the money. Fortunately, I was blessed with mostly people from the former group.

      • Alan M.

        Ross,

        Regarding your following statement:
        “, and the latter will only sell if they obtain their minimum price. In my view, the latter group should pay a higher commission rate. It just makes good business sense.”
        Ross, unless you take an over-priced listing there is only one category of seller. By charging a higher level of commission to someone whom you describe in the aforesaid quote, you would make it more difficult for them to achieve their net, and if the property doesn’t sell anyway, the amount of commission that you’ve stipulated to is a moot point!

        Ross, industry members may all be on the same playing field, as far as the basics, but like a professional sport the talent levels are varied. You seem to use the word trust as though it is interchangeable with competence, and in the the adult world of business it is not!

        Ross, I find your perception of how the industry works in a business sense to be more emotional than rational!

        • We are emotional creatures, Alan. There’s no denying it. And it’s your personal interpretation, which humans are wont to do, of what I sad that equates emotion with competence. Obviously, they are not. Nevertheless, trust does indeed play an integral part in a homeowner’s choice of representation.

          • Carolyne L

            The old expression often applies: “it’s not what’s said that matters, it’s what the hearer heard that counts.”
            Loosely translated…

            Respectfully – some people hear what they want to hear, Ross.

            Carolyne L 🍁

  • Tom Coolen

    Hi Ross. Thanks for your recent column. I know that we all face similar challenges but to see this in print lets me know that I am not alone.
    The sad part of the “reduced” rates is that too often agents that use this to get the listing AND also offer a “low/reduced” rate to agents representing the buyer. If the listing client is looking to then buy another home this agent is first in line trying to buy our listings that just happen to have a “non-reduced” rate for the buyers agent.Such a practice, in my opinion, is effectively “eating the host” and over time will hurt us all.
    In my fantasy land agents that submarine the commission being offered on the street are not allowed to accept any commission higher than what they offer.
    Have a great day.

    • You’re welcome, Tom. The ability to charge lower commission rates, once granted by the boards and brokerages, is having its inevitable effect on the industry. But that was the government’s plan in the first place – to create another element for competition.

      Though the public is reaping an immediate benefit with lower selling expenses during our current hot seller market conditions, I feel it’s also having a deleterious effect on the industry in that services and profitability are probably in decline. The business is definitely changing, and not necessarily for the better for those of us who’ve been around awhile.

      • Realtor Guy

        I agree Ross. Soon it won’t be worth it for large franchise owners to continue owning their offices due to lack of revenue. Realtors are demanding lower fees due to their lowering commissions being received. At that point, offices will have to convert their system to one similar to what discount Realtors are offering, low fees but low service.

        • Hence the recent growth of the large independent brands who offer super-low fees to agents and maximum commission splits, sometimes 100%. As I said, the industry continues to evolve. Thanks for your input, Realtor Guy.

  • Carolyne L

    Can’t post at ‘REPLY ‘ so posting here. Guess the allotted string is full.

    To Shawn’s post, March 15, he wrote (in reference to his buyer’s helper rep):

    “He doesn’t list any homes at all and works graciously for whatever is offered on any transaction by the co-op brokerage.”

    WHOOPS! Oh, my! Not criticizing you or your model, Shawn (to each his own); just forewarned is forearmed, maybe.

    Perhaps, Shawn, refer to my post 5 days ago at Ross’ article herein, in reply to *Your Buddy Tom’s comment* – relating the 1$ CAD paycheque situation, wherein that is what the selling agent got paid as offered by the listing agent (’cause apparently unknowingly that’s what he agreed to, following the same premise you just described).

    There’s no way, apparently to make a REM direct link to send you my prior noted point of reference comment, only to the whole string. Hopefully you can locate it, using the 5 days ago trigger point.

    Respectfully

    Carolyne L 🍁

  • Chantal Vaillancourt

    I really like Mike Ferry’s prequalification script. Would have saved you the shoe ambush (or the wasted time). Cheers!

    • Thanks Chantal. Though I know of Ferry, I’m unfamiliar with this script. Early in my career, I shunned any and all scripts, preferring instead to be completely natural in my approaches. Such practice did prove successful for me. But after a few years, I began to realize that I’d inadvertently developed my own scripts. Since I was always honest with people, I naively expected them to be the same in return. I delve into my methods in my book, The Happy Agent. Thanks again for your comments.

  • Carolyne L

    To Andrew’s post re 5-8% profit…
    5-8% ? If publicly traded, what would shareholders have to say? Many brokerages express the term “profit-margin,” NIBT but also fail to note “before” the broker/owner, president and such if incorporated, gets paid a penny; then when that portion is allocated, whether on the Balance Sheet or in some fashion, it changes the whole picture yet again.

    Again, I refer to the REM Alberta recent story where the broker explained how he contributed his own money to keep the brokerage afloat as best as possible, and ultimately felt compelled to use Gross Income (containing commission dollars owed to the agents and possibly co-brokes) to support the business, in the end to have it bite him. It reads as though he really tried but ultimately caved to the opportunity, perhaps thinking in the end he could turn it around. It’s such as sad situation.

    When the industry is booming in some large cities and even smaller locations, no one thinks about these sorts of situations looming, as Ross points out, in the ultimate market turnaround. When I opened my own boutique company in 1991, before unheard of in our area, and gobsmacked at the temerity (how audacious, what chutzpah) of calling the company by my own name, just my first name, and the same people said: “What’s the matter with you, don’t you know we are in a recession?”
    Difficult in any market, but to open in a recession?

    Some gave me weeks to survive it, others, months. And I was more than once invited back to my prior affiliated corporation. I loved the folks at head office so much, it was very tempting. But once I got my feet wet, I had to keep moving forward.

    The industry had always said I worked in an unconventional manner, never having to have anyone check my work. But I never could get them to define the moniker. As I have often expressed, I just did what I did as I had always done in prior business environment. One thing I truly believe cannot be taught, and that is “customer service.” It’s a personality thing. A gene perhaps.

    Whatever it is, by definition, one is born with or without it. If you’ve got it, use it. Add it to all you have been taught.There will always be struggles in this world, but nothing is gained by putting other people down. We only pass this way once. To each his own.

    Carolyne L 🍁

    • I remember when you opened your independent brokerage, Carolyne. I also recall how I felt at the time, that you would likely succeed due to your network and previous success. Yes, you had it as a relatively small percentage of our industry’s membership have it.

      • Carolyne L

        Thank you, Ross. 28 years ago, Feb 1991. Smack-dab in the recession, but I didn’t know that, either.

        I speak the truth in dumbness, back in 1980… I really had thought that everyone did what I did, and more so, really didn’t pay much attention. First six months I wrote 150k, and had no idea what I had done, except to dot i’s, and cross t’s, It truthfully never dawned on me to compare my production to others.’ It simply never occurred to me; didn’t matter.

        Although I kept graphs and charts and absolute records of my own career, it never occurred to me that others didn’t do the same kind of record-keeping, have the same ratio of success. I never questioned how much or how little others produced.

        Until one day, a couple of years into the business, in the office a man perhaps in his mid 50’s, in a turban (don’t misunderstand, I’m not a racist, but I do acknowledge that different cultures do have different ways of expressing things) stopped by my desk, and told me I needed to “go home,” where I belonged, not be in the real estate business, it was no place for successful women, that my success was taking food from his family’s mouth, business belonged to the man of the family. That I had a husband to support me.

        Today, more than 30 years later, I can still hear him, and now I would handle that remark differently. At the time I almost felt like apologizing. I nearly felt guilty. I didn’t even know that jealousy was the root of his remark.

        He only did a few transactions a year, but I had never realized that, and it wouldn’t have mattered to me if he did double the business I did. Not something discussed in the normal doing of things. I said nothing, but the shock must have been evident on my face.

        He never mentioned it again, but I later learned he was party to some inside office destructive things going on (deal files going missing, etc. and another agent who had a similar thing happen after I left can verify), with a group of perhaps five or six people people intent on messing about. If they had concentrated their time on doing business, never can tell how successful they could have been.

        Many outsiders and insiders said I was being fed by management. I never ever was. And I developed my own corporate accounts, one of which I had from 1981, (oddly enough met an initial buyer coming in from the States’ Head Office, at an open house), until the corporation left Canada in 1998. I moved all their head office people, directors, VP,s in and out, all over the world. There was never a commission discussion. I owe that Director and his wife a lot. I was only in the business about a year. They highly recommended me to the entire corporate structure. The corporate in-house lawyer told me everyone was aware their business was to go to me. He didn’t like being told that.

        I do understand your references to visualizing, though, Ross. It’s true. It works. I came to the industry already successful, and didn’t expect anything less in my new career. I was already 38, (making a career change at nearly 40 was taking a big chance), and as a seasoned business professional, I never looked back.

        In a few weeks I will celebrate birthday number 75 (b.1942). Time truly does fly. And definitely… The world, she is a-changin’… one day at a time. And it’s important to know that no one is promised tomorrow. And the person looking back at us in the mirror knows exactly who we are.

        Cordially
        Carolyne L 🍁

        • Brian Martindale

          Hi Carolyne:
          Yes, the person looking back at us in the mirror knows exactly who we are, but, I wonder how many of us actually do look at ourselves in a mirror with a view to taking the time to consider what kind of person is looking back…and if so…to how many does it matter? Only self aware people seriously look inward and take stock, often only after some sort of failure has occurred within their lives which causes them to question themselves and their motives for being in the first place. I believe that few of us reach the apex point on Maslow’s Hierarchy of Needs, known as Self Actualization. I think that you have.

          • Well said, Brian. I actually address such issues in The Happy Agent. If you read it, I’d really appreciate your expert feedback.

          • Carolyne L

            I am humbled by your thought provoking post, Brian.

            I sometimes think of Maslow’s triangle or loaded pyramid in terms of the psychopathy of an upside down pyramid, Brian, with instead, the widest point being supported at the top by the finest tiny point at the bottom of the inverted pyramid.

            To wit: a typical bullpen office of 26 agents where only 20% or less of the agents carries the whole office load, being 5.2 agents while the others scratch their heads and wonder why it is so. Of course the same ratio applies in an office of 350 agents on the roster. Just multiples.

            And then there’s “learned helplessness.” The reference to the starving “Pike syndrome.” And another: the process of training an elephant never to escape by merely encasing a foot in a tiny useless string. Yet the great big elephant will never try to escape.

            Dr. Furnham’s “Sideways View” (link below in Psychology Today) presents an interesting review on the topic of self-actualization… for those readers perhaps not familiar with the term, your point of reference, Brian.

            https://www.psychologytoday.com/blog/sideways-view/201602/self-actualization-what-does-it-mean

            And then there’s the old German expression that roughly translates: “old too soon, smart too late.”

            REALTOR(r) mega millionaire Barbara Corcoran was recently interviewed in a success documentary wherein she revealed her elementary school difficulties. She couldn’t read and no one could figure out why. They just labelled her; told her she was stupid.

            She often was told, repeatedly, she never would amount to anything. It was later discovered she had/has dyslexia.

            How many adults suffered as children through the (non) observations of irresponsible adults, especially bad teachers? Of course we know there are wonderful teachers. People come in all shapes, sizes and colours, married to multiple career paths. But all bleed red. REALTORS(r), not unlike other professionals, have no special world standing. No mother ever gave birth to a doctor, a lawyer, or a real estate agent.

            Henry Ford said, at one time: “if you think you can or you think you can’t, you’re right.”

            Respectfully
            Carolyne L 🍁

        • We do indeed get out of life what we expect. If we each were to devote the energy wasted in attacking, envying or criticizing others into solid productive, optimistic action, we would each succeed in achieving our goals. But unfortunately, many people live in fear of not having enough. And that fear attracts more negative energy, resulting in inevitable failure.

          Throughout my career, I always believed that my family and I would always have enough. And so we did, and still do. You might appreciate the story in my book, The Happy Agent, available at several board stores or via my website http://www.realty-voice.com. I’d love to have your comments after the read. Be well. R

  • Alan M.

    Ross,

    Regarding your following statement:
    “I candidly said that perhaps, to be fair, they should have disclosed during our first phone conversation that I was to be competing on price and commission rate because, honestly, I’d have respectfully declined the invitation.”

    Ross, if I’m not mistaken, you’re on the REM record as stating that you don’t feel the need to disclose or tell your seller’s your primary motivation for conducting open houses, yet you feel that when the shoe is on the other foot, so to speak, that potential seller’s have an obligation to tell you whether or not you’re competing! Ross, the seller’s whom you referred to in your anecdote, had absolutely no obligation to tell you that they were talking to other REALTOR’s. Ross, a truly “Happy Agent” wouldn’t need to be reminded of the aforesaid fact!

    • Brian Martindale

      Alan:
      Athough you and I have disagreed on many points in the past, I must say that recently I have agreed with your position on this matter as well as with your position on the recent ‘deposit’ related story as previously presented on this site. As you know, I am a real stickler when it comes to full disclosure. When I first became a Realtor waaayy back in 1980, I was a wet-behind-the-ears former tradesman eager-beaver wannabe hot-shot salesman who bought into every ‘how-to’ book that taught all of the psychological tricks to get to that magical “yes” vis a vis influencing prospects to sign on the proverbial dotted line. I believe that virtually all newbies are saddled with this all encompassing desire. It was only after eighteen months of being a very good salesman (religiously using the psychological knowledge on my prospects that I had gained through studying psychology/human behaviour) that I realized that I was fooling myself when I rationalized that I was working for my clients’ best interests ‘first and foremost’. I was in fact working for them, but, I was working initially for my sales numbers…as most commissioned salespeople are wont to do. When that uncomfortable self realization epiphany hit home (read the first letter I submitted to REM back in March 2008) I quit the business and enrolled in university wherein I completed a degree in politics with psychology being a secondary field of study. I next practiced even more learned psychological knowledge as a conciliator, but it really as practiced for the benefit of my clients first and foremost and not for my own bottom line. I was paid on a salary basis; I had no vested interest. Hence, my noted distaste for learned psychological strategies as practiced by commissioned sales people of all stripes in all industries has been a mainstay of some of my posts herein. But I digress.
      Your point that Ross stated previously (in a previous story) that he did not feel the need to disclose his primary (or secondary) motivation for conducting open houses to his clients, yet he then said that potential clients who hopefully would list with him ought to disclose that they had, or would have, other Realtors in to discuss listing issues, aka competitors, reveals the true inner workings of a commissioned sales person’s mindset. There is simply no getting around the fact that far too many commissioned sales people cannot be trusted to be totally honest with their prospects/clients when there is a commission at stake, especially when times are tough. When times are good, then of course it is easier to let a deal go; starvation is not just around the corner and/or that next payment on the upscale car, etc., is not imminently due. I am not saying that Ross is a bad guy; I am simply saying that with commissioned sales comes a cultural ideology that manifests itself within each sales person’s personality, if it is not there already at the git-go. Commissioned sales vocations attract a certain personality type for the most part, and big box vocations (real estate sales) attract personalities that can look the other way all too easily when full disclosure can mean a big pay-cheque…or not.
      I expect to be roundly booed on this opinion, and likely I will simply be ignored. Don’t care. Either way, the public knows what I am talking about, and as has been submitted herein by others, the public ‘does’ read REM.

      • Alan M.

        Brian,

        It’s true that sales can attract the kind of personalities that are given to aggressive and manipulative techniques to achieve the end goal, as well as the kind of egos that can grow to immeasurable sizes, but there are also those, in sales, who thrive on the one on one interaction with others of our species.

        Greed is everywhere: its in big box stores that tend not to offer service, per se’; it’s in men’s clothing stores that don’t have someone who can measure you for a suit anymore; it’s in coffee shops where we pay ten times what many of the beverages are really worth; it’s apparent in the imported clothes that we buy that fall apart at the seams after we’ve worn them for a few months, and of course recent media attention has shone a bright light into the dark corners of a prominent Canadian chartered bank!

        The real estate industry can be, perhaps, more forgiven for some of its shortcomings that other industries. The Provinces have failed to Regulate the industry, while pretending to Regulate it, and the excessive membership numbers combined with low admission barriers have always been a prescription for disastor.

        I have had interactions with the legal profession and it’s minders that have been as scandalous as anything that has ever occurred within the halls of organized real estate!

        • Brian Martindale

          Alan:
          Yes, most other vocations are populated with less-than-desirable operators, but the relative numbers of naïve wannabes who are initially attracted to real estate far exceeds those who are attracted to other ventures, and that is the fault of the OREcrats who do the attracting. The pot of gold at the end of the ever elusive rainbow always appeals to the said naïve…and to the calculating greed masters. RECO, ORE et all need to flesh out these types before allowing just anyone with a few weeks on their hands and a few bucks to gamble away to attend real estate university. That would demand an investment in professional head hunting procedures, which I don’t see happening soon. There are indeed folks available for the job with the right stuff, but they often tend to look upon becoming a Realtor with disdain, much the same way that many qualified people look upon running for public office do. But I think that internal ORE attitudes are finally starting to shift…slowly. Change, real change, takes time.

      • Brian Martindale

        Correction:
        First paragraph, fifth-last line: “…but it really as practiced for the benefit of…” should read “…but it really was practiced for the benefit of…”

      • Hi Brian: I always welcome your comments. Frankly, I tent to agree with you in that our sales commission-based business attracts a lot of a certain ilk. And regrettably, one doesn’t have to be intelligent or ethical to enter our business.

        I have always clearly placed my client’s interests ahead of my own, knowing that the commissions would likely follow if I performed well. That’s why I was able to create a business that was based primarily on returning clients and their referrals.

        I’ve lost count of the number of occasions wherein I actively attempted to convince a buyer client to walk away from a competition because I felt the prices were entering the stratosphere. Or my seller to accept a cooperating brokerage’s offer over my own, even though the difference in dollars was negligible, but still measurable. In other words, my integrity and ethics gained the trust of my clients.

        For our industry to survive unscathed, we need more agents who exhibit such qualities.

    • Hi Alan: Welcome back. So, you want to re-open that previous discussion even though I believe it’s not applicable here? I agree that the public has no legal requirement to disclose anything, except, of course, latent defects when selling. And they should also disclose such things to any agent they intend to hire so that the agent can properly represent them.

      What I was referring to in this passage is about fairness or forthrightness, not legal disclosure. Sorry, but I thought that rather obvious. When I invite a contractor to my home to discuss an estimate for a job, I inform them up front that they’re competing. Frankly, though, I have found that they usually expect such rational behaviour on a potential customer’s part. Forgive me, Alan, but I feel your point is simply unnecessary nitpicking.

      • Alan M.

        Ross,

        So then, what you’re saying is that you feel that it is unfair for you to have to compete, unknowingly — because, I already got that from your initial lament. Ross, it was childish of you to question their ethics, there was never a question of legal disclosure, as that would be beyond silly! Ross, I feel that you probably just irritated your past clients (in your anecdote) with your proclivity towards being pretentious!.

        • Well, as usual, Alan, we disagree. I happen to believe in honest and fair relationships, including disclosure of intent. It’s how I am, and I expect, maybe naively, that everyone else should exhibit the same behaviour.

          I believe that our world would be a far better place if people were to be open and honest up front. And childish? Now, that’s truly funny. I have found that children generally behave more honestly than adults. And that’s refreshing. I always invite constructive criticism, Alan, but you’re now bordering on destructive, which helps no one, including you.

          You may not believe or appreciate this policy, but I have declined to work with many people over the years. Why? Because I just didn’t appreciate their questionable behaviour, motivation or whatever. If I felt (not thought) that we wouldn’t get along, I’d refuse to associate with them. It’s our choice with whom we associate in this life. And I have regularly followed that policy.

  • Realtor Guy

    Let’s talk about commissions…as a Realtor who has been in this business 25 years (having started right out of high school) and consistently sold over 75+ deals a year in a large major city, I feel I am able to speak soundly on this issue. I’ve attended all the trainers, Ferry, Proctor, Ferry#2, Buffini,etc,etc. I’m kind of tired of the weak and mediocre agents (those doing 0-20 deals a year, or earning $100,000 or less) saying ‘I’m worth the 5% I charge”…you are?? Says who??? A rookie or a less skilled hockey player doesn’t get the same salary as the franchise player…a new actor doesn’t get paid the same as Tom Cruise and a new singer isn’t getting Adele’s yearly income, and why is that?? They’ve proven themselves MULTIPLE TIMES in a year, year after year. And does it really make sense for a new Realtor to charge the same as I do, just because they work for the same franchise brand or just because we’re in the same office?? NO! They want the higher commission to make up for the lack of deals they do. We Realtors have become victims of our own egos and unfortunately many don’t see it, however the public does. And that’s why the discounters are growing FAST! I’m glad for them, I hope they grow and succeed and kick out the weak, the part-time, the ‘I don’t need to make much because my spouse has a job’, the ‘I like doing a few deals a year’ Realtors out of this business. And I hope it also makes a lot of franchisees wake up and take notice too. When I started in the business, Remax was just starting up and they shook up the industry. Everyone had to change their splits to compete. I see this happening again now thanks to discounters and low cost offices. That’s the direction we’re going folks, adapt or get out! As a Broker of Record, I can honestly tell you that my fellow BOR’s don’t want to change because that’s how most of them make money – desk fees. They wouldn’t want to have to go back to selling. And they know they likely don’t have the office deal volume to sustain a deal fee concept or lessen the office fees. It’s going to happen. And when the public can get AND understand the information faster and better than a Realtor, where’s the value? I am always hearing Realtors say ‘I’m good at what I do” or “I’m a leader in my industry” yet they email me offers using a Hotmail or a Gmail account and don’t even have a website. Ugh. I love this business, it’s been my career and provided a great life for me. But I think we need this change to occur to ‘drain the swamp’ of some in our industry, which I truly believe will increase the image the public has of us. HAPPY SELLING! And read “The Happy Agent!”

    • Shawn

      Great contribution here. You seem very level headed about this and are using your 25+ years experience to embrace change as it happens and adapt to the economic environment. I’m in my 7th year with a discount brand and work in a city of 100k and do around 100 deals a year with 1 buyers agent helping. I’m not the top agent in town but I am certainly full-time. If the commissions come down, we will see more part-timers giving up their licenses. As it stands right now, the barrier to entry is way too low. Way too many people get licensed, but can you blame them when literally one deal at 5-6%(even if it’s their own damn home) puts them in the black as a business. Get the fees lower and the part-timers will begin to disappear. I wish that our industry went the way of financial services where you have to deem yourself full-time and can’t work another job.
      PS – I wouldn’t worry about gmail or hotmail. Some of us have 30-40 email addresses forwarding from different servers(multiple websites and landing pages to track leads) and then just send out from gmail. 😉

      • Thanks Shawn. I’m glad you’re doing well. I agree that entry standards are too low, and there are far too many registrants. The next market correction will certainly rectify that problem. You’re too new in the business to remember what happened in the early 1990’s when TREB lost about a third of its membership, both sales reps and brokerages. It’s not a question of if it will happen, but just a matter of when.

      • Realtor Guy

        100 deals a year? You must not be here in TREBS market because I don’t know any discounter doing a 100 deals in this market. I’m curious on getting a ‘discounters’ opinion on things…why are you a discounter? And if it’s because you want to save people money, what do you do on the buyers side? TOO MANY discounters tout their horn as being ‘for the people’ but what they really are is about using their low fee to get listings which equate to getting buyers. If you work at a discount company because you fee fees are too high, do you do the same on the buyer side? Do you say ‘sorry Mr.Buyer, I’m going to give you most of the commission because I believe Realtors are paid too much’ or do you say ‘thanks listing Realtor for the 2.5%, I’m going to use your commission to finance my life’. Do you basically live off the skills of listing Realtors to finance 60% (listing side)of your business? If so, do you feel that is fair of you? …just curious.

        • Shawn

          I understand what you’re saying. I’m not in Ontario. It’s not really the case for me as I Am mostly a listing agent. I typically only work with sellers. Most of which are not re-buys. However, my buyers agent works with buyers. He doesn’t list any homes at all and works graciously for whatever is offered on any transaction by the co-op brokerage. He does pickup direct buyers due to our decent size listing inventory. That’s jut a marketing advantage we have due to inventory size. When a co-op agent sells one of my listings it’s about a 55/45 split. When my buyers agent sells another agents listing, it’s often a 55/45 split. We’re seeing commissions all over the map out west. We only use non-exclusive buyers brokerage agreements that assures the buyer we will never request more money than what is offered by the seller or sellers brokerage and that they are not obligated to work with us if they don’t want to. So far, so good. The point is, we fully expect that we are leading the way in our market to the future and commissions will begin to come down. We’re just getting ahead of the curve by establishing the largest presence in our market as the first to market a reduced rate model. There are already others that are competing now and I think that’s a good thing for consumers.

          • Realtor Guy

            Well, when you start receiving more reduced commissions on buyer ends due to the ‘others that are competing now’, you’ll quickly realize that your model won’t benefit you as financially as you think. Your buyers agent will also realize that he isn’t making money and will soon want skilled realtors to list homes so he can get paid more…it’s a race to the bottom. The thing about discount Realtors is they’re all the same, no difference in the eyes of the public.

    • Thanks, Realtor Guy, for your contribution here. I tend to agree with you in that more experienced agents can more easily justify higher fees, at least they should be able to do so. But, sadly, consumers oft disagree. They want more service for lower fees and generally seem to care not a spit for how long someone has been in the business. Hence, the growth of discounting sales reps and brokerages.

      I also agree that the traditional business model that’s been around since the desk fee companies landed here (which replaced the former predominant 50/50 60/40 model) is now becoming outdated. Whereas we witness the rapid growth of franchised brokerages, we’re now finding that independents are growing at significant rates.

      Where I feel we disagree is in worth or perceived value. In that highly experienced veterans can more easily demand higher fees, volume shouldn’t necessarily be the determining factor, though it is certainly relative. As a consumer myself, I’d much prefer to do business with a confident, competent, quiet spoken and trustworthy sales rep who can maybe count a few dozen transactions to their credit than one who doesn’t know how to stop boasting to listen. Now, since you and I do not know each other, I’m not suggesting for a moment that you are of the latter ilk. Nevertheless, I prefer to work with a good listener who is easily reached, and without having to deal with a team member or junior partner. But that’s just me.

      Having said all this, I also believe that our industry desperately needs a sweep, not necessarily of low producers, but of the unethical amongst us who are solely responsible for the public’s general low opinion of our members.

      And thanks for the Happy Agent plug. :-)

  • HeyHiHola

    There is clearly a lot to unpack in Ross’ article above and I’m going to go in a different direction. In my 12th year of organized real estate my current market is in transition / turmoil. Sellers continue to have unrealistic expectations, lack loyalty and are less “coachable” than in the past. I LOVE how our new standard exclusive seller agreements actually have a clause that says that if the seller changes their mind about selling the property then they must reimburse the associate for “reasonable expenses”. You then must go on to specifically list these expenses (in detail). I recently had a client decide to rent after several months on the market. Feedback from the few showings, and the 100 people I met at about 10 open houses, was all the same but the client would not accept reality and go to where the market is. She decided to rent after “testing the market” and end our agreement early (even though she said I will get the listing next year when the lease expires). Well, that’s nice but a lot can happen between now and then so I explained that I would send the termination and the listing expenses invoice. I sent her a detailed invoice of these listing expenses, with back up for all line items, to the tune of nearly $700. She paid it and the whole thing feels very comfortable. Will she contact me next year? Who knows / cares? These are not the types of clients I want anyway. A complete time suck and service hogs to boot all while they do NOT listen to what ACTUAL buyers are telling them again and again. (I spent HOURS hounding showing agents for feedback and probing/engaging open house atendees like crazy). I encourage all assoicates to please use this clause or insert your own into the contract. It is time that Sellers had some skin in the game and stop using us and our money to “test the market”. So I haven’t had to test this out in small claims court if someone didn’t pay up, but believe me I would go for it a second. *Ideally* it would be better to get a $500 non-refundable retainer up front on every selelr agreement signed (that would be applied against final commission if the property sells), especially when seller motivation and/or loyalty is low. IMAGINE if we ALL did this as standard practice…how much of this BS would go away!? It would entirely raise the bar AND our value in the eyes of the public at the same time. Same goes for Buyers in the form of a retainer. Our value would go up immensely but there will always to be those “pop-up” associates who will serve the tire kickers and sleazeball-types (if you throw enough **** at the wall…) who just want to use you.

    On discounting…I DO discount for repeat clients and/or if they have given me a referral that buys or sells. Call me crazy, but that’s just good business in my opinion and shows you value the relationship. The amount varies and I ask them to respect the confidentiality of our arrangement on this.

  • Teresa

    I believe that what you charge is directly related to YOUR self worth and clients will pay what THEY think you are worth….discount brokerages have been around forever and they come and go but about 20% of realtors can prove their value and will be long time service providers getting paid what THEY and THEIR CLIENTS think they are worth.

  • Teresa

    Exactly my sentiments! I don’t usually have an issue with my long time 30 year clients but I do get some resistance when I get referrals …they do not know my value….that is my job to express that and also show that I can do a better job than the next realtor. It is up to me to do the very best job and then have my clients sell me to their friends and family…that is why i have a 99.8% return on my service. Treat all clients as they are gold so that you can just wait on the phone to ring from new clients or referrals in the future….works like a charm!

    • It seems, Terese, that you and I are cut from the same cloth. Congrats to you. May you continue to be a Happy Agent!

  • Ian

    Interestingly your article seemed to focus on you and not your client. Perhaps it was naive of you to assume that because you had faithfully kept in touch with them for 30 years that they would be equally faithful to you…..why should they be? After all, business is business. Yes, staying in touch is important, and giving value while they are home owners, not just buyers or sellers, does help to build trusting relationships, but, there are probably at least 7 other people that they know who are Realtors, who can do just as good job as you. Your differential has to be to do it better! The biggest problem that we face in our industry is NOT commissions, its perception of value. Most agents cannot communicate the value that they bring to the proposition and as a result end up discounting commissions. Indeed, many agents don’t even believe their value themselves!!!!

    • True enough, Ian. I agree that many agents lack the ability to sell themselves. Arguably, it’s probably because they don’t believe in themselves. So, why should anyone else?

      We all walk on the shoulders of those wiser who waled before us. The intention behind writing my book, The Happy Agent, and subsequently this column, was to help people in the business do it better. I hope that by reading my work, they will be happier people, followed by better business.

      I built my business practice on trusting relationships. And that’s why the vast majority of my former clients returned to me when in need of service. Not because I did it better (which in many cases, was probably true), but because they trusted me to take good care of them.

  • Andrew Crook

    We charge 2.75% total commission, we provide some of the best photos in the industry with our in-house team.

    We also sell homes 9 days faster and for 1% more then the board average. We also sell 80% of our listings vs 56% (plus we charge only 2.75%) Based on PC275 vs LSTAR 2016.

    Times have changed.

    • Your Buddy Tom

      Andrew, enlighten us: why do you not ask for 5%?

      • Andrew Crook

        Hey Tom,

        Sure I’ll share my insight on our commission structure. I need to know something first though. Why do you do not ask for 6%?

        • Your Buddy Tom

          What makes you think I don’t?

      • Excellent question, Tom. To generate a profit, I suggest that Andrew depends on volume. But having owned, operated and managed several brokerages, I’m familiar with operating costs. And without either high volume or high fees, profit is less likely. As I have said, when markets evolve, brokerages and sale reps must evolve with it – or fail.

        • Andrew Crook

          Indeed, a typical brokerage operates on a 5-8% profit margin (if that). The race to the bottom by brokerages discounting their value and service is what the current era of real estate business model has turned into.

          Most brokerages have built their business around the 1980’s re/max desk fee model, basically offload most overhead and costs onto agents and collect fees. Instead of building a better more efficient business, brokerages scrap over sales representatives offering them a few more dollars or a couple % points. It’s just moving the chairs around the deck of the Titanic at this point.

          The discount brokerage model is at the end of the line. We will need a new way to organize brokerages that provide greater value to consumers (buyers/sellers), clients (realtors), and their owners. That’s what we have done and that’s what we will continue to improve and share. Our trained agents charge less and act more professionally and provide a more consistent/polished product then a typical brokerage’s sales force because we are a solid economic unit instead of a mercenary company of solo players waving the same flag.

          That’s going to be the future of our industry. Level up professionalism to the max while providing more reward and riches to the people building the business. Want more info? Join.PC275.com 😊

          • Your Buddy Tom

            Too many words and no direct answer.
            I think you are too busy promoting your Brokerage on here.

          • I agree in part with you Andrew. The old model is no longer appropriate for today’s market, just like the business model that predominated before the arrival of the so-called desk fee plan. And discount brokerages come and go with changing market conditions. Discounters typically proliferate in seller’s markets, only to fade away when balance arrives.

            I’ll also add here (at the unintended risk of offending franchise owners) that the high desk fees of typical franchise companies have enjoyed a long sunny period. But even that is changing with the growth of large independent brokerages.

            The upcoming market correction will definitely separate the wheat from the chafe, as such changes always do. And the survivors will be responsible for changing their business model in a changing industry, or fail.

          • Andrew Crook

            Totally agree with you. The discount brokerage model of slashing fees and services will ultimately result in the ruin of the discount/fee based brokerage model. Sadly they have become a farm for mediocrity.

            The businesses that are able to build a successful business around successful agents are the ones that will survive any downturn (and grab more market share).

    • Glad to hear your business model is working, Andrew. But will it continue to function profitably after the market corrects and evolves into a balanced or buyer’s market? It will happen, and I advise you to prepare for that eventuality. Times have definitely changed, and will continue to do so.

      • Andrew Crook

        Absolutely Ross, I look forward to that market correction. We’ve designed our system to work even better in a downturn market. PC275 isn’t a cheap alternative. it’s a Cadillac with all the bells and whistles. When the market shifts and Sellers are squeezed. They will look for cost cutting alternatives without losing any value. That’s our niche. Everything you would expect from the best the industry can offer at an amazing price.

        Also, our agents make more net income per deal then a competing agent charging an average of 2% per end (listing and buyer) at a typical brokerage because of our systems, economy of scale and efficient leverage of human talent. I would direct you to join.PC275.com for more answers :)

        • Alan M.

          Andrew,

          In previous conversations that I’ve had with you on REM, you indicated that your brokerage doesn’t typically do open houses — unless, it was a situation where your REALTOR could benefit personally from a high traffic flow. Discount brokerages usually avoid doing open houses because they simply don’t have the manpower.

          Andrew you’ve thrown out some brokerage statistics that lack sufficient foundation to have any real meaning. And performance claims are something that are regulated within the real estate industry. So, I would wonder why would you expect readers to generally bless you with the benefit of the doubt, when you can’t even spout complete and specific statistics on REM magazine? Performance claims require the following: a clear reference to a specific period of time — if it is a year, say which calendar year; if it is all property types then you must state that your claim relates to all property types; if it is in regard to all the geographic MLS Districts under a particular Board or Association, then that must be stated. In short your claim must be clear enough so that it could be either independently verified or disproven.

          Of course Andrew, there is also the possibility that as a discount brokerage you cherry-pick your listings, because you know that you can’t afford the time to see a more difficult listing through to the end, and ergo, therein lies the real nucleus of your business model!

          Andrew, when the industry actually becomes truly regulated, and only then, will it be clear which brokerages are the Cadillacs, and which ones are actually the clunkers — the latter, of course, will go to the junkyard where they belong !

          • I agree, Alan. This is definitely not the forum for blatant recruiting attempts.

          • Andrew Crook

            Hey Ross are we not professional marketers? What’s wrong with marking our opportunity? Perhaps that is part of the problem of the old guard. They have forgotten that 1/2 their business is dependent upon reaching out and touching people. That may work for someone who has a large list of people, but what about new people or people looking to expand their business beyond their SOI?

            We don’t expect people to stick to their same lawyer, doctor, accountant… Why is it different for agents?

            We need to be competitive and reach out all the time. When I see an opportunity to share our company I’m going to take it, no apologies. You know, REM moderated and approved my comment so they believe their website is a good forum to share as well.

            Ross, I’m sorry you lost an appointment to an agent who charged less then you. That doesn’t mean all lower priced options are worse. Many things from cell phones, to cars to online services cost lest then they did in the past but the quality has improved. That is what we have done. Raised quality lowered prices. Because of new systems and processes and by reorganizing how the money flows we have found new ways and increased margins that the traditional brokerage model (that I grew up in btw) doesn’t have.

            I wish you the best in your business and I hope you can continue to deliverer great value to your clients. Ultimately, I believe professional agents and brokerages that deliver a great service and product at a desirable price will find a future in our industry.

          • Thanks Andrew, for your good wishes. However, I’m not interested in building my practice any further. Why? Well, after 43 years, I’m nearing retirement. And I earn enough – as I always have.

            It has always been my belief that I would always generate enough business to meet my needs. After a summer off with my young daughters, when they returned to school, my phone simply began to ring again. How could this be, you ask? Because I manifested it. I invite you to check out my book, The Happy Agent, available at several real estate board stores and via my website http://www.realty-voice.com.

            I also wish you much happiness and success.

          • Andrew Crook

            Great looking book;

        • Ernie Alsace

          This shouldn’t be the forum for blatant recruiting without full and complete disclosure and stats to back up your claims. A quick look at the Hamilton/Niagara sales activity for 2016/2017 shows your local office to date listed and sold a total of 7 properties with a total value of about $2.4M. Buyer sales and currently active listings not included. If I do the math, at 0.75% to the listing rep, this would be less than $20k GCI- not even minimum wage for a full time practitioner, especially once all the fees are paid. In my humble opinion, this is hardly a successful business model nor one that is readily accepted by the Consumer.

          • I agree, Ernie. If a contributor takes the risk of making performance claims on this forum, with the obvious purpose to recruit, they should certainly be prepared to substantiate those claims – or don’t take the risk

          • Andrew Crook

            If you look at my post you will see I state LSTAR. Which is where our my stats come from :) I’m happy to give you more details. Let’s sit down for a coffee. Speaking of Hamilton, our new office is launching this spring! Check out or FB page for an update http://www.Facebook.com/PC275

            It will be a state of the art facility to provide our team a home to spread our concept and save our sellers millions while providing our agents the opportunity to build a real business with ownership. What you see currently is a is a few deals by our expansion/scout team that are getting the market ready. Working out the kinks of RAHB and laying the foundation. Don’t worry, you’ll know all about us in the coming months. If you want to learn how you can take advantage of the opportunity to build a better business. Reach out!

            I’m reminded of a quote from one of my favorite game changers.

            “First the ignore you, then they laugh you, then they fight you, then you win.” -Gandhi

          • Andrew Crook

            Hey Ernie, check out my response below. Covers your points :)

          • Alan M.

            Andrew,

            Should the Provincial Registrar come knocking at your door over your half-baked statististics, do you suppose that you can likewise engage in more subterfuge in an attempt to placate him with an invitation to coffee, instead of coming clean — because it just doesn’t work that way in the adult world! Andrew man-up and give us the complete statistics, or shut up!

        • I hope it works for you, Andrew. You might recall that in the early 1990’s, average prices dropped by about a third. And TREB also lost about a third of its membership, including brokerages. I wish you well.

  • Shawn

    To be brutally honest, Old business models are dinosaurs that will soon be extinct. The world is changing. Lower fees with more service is the new M.O. – Find a way to compete or realize that someone else will do it faster, better, and with more efficiency, for less. Expert marketers with strong technology backgrounds are entering the industry daily. Sure, Overpriced is overpriced when it comes to a listing. But a home that is priced right, that is on the local board and MLS®, with good pictures and a well written description, will sell no matter what the commission is because the extent of the marketing that is done automatically with the internet. #JustSayin

    • Fahim Safi

      Excellent point Shawn. Hat off to agents who still charge 5 or 6% but the reality is that agents have to compete for business. New generation of agents are much better at marketing and handling sales…

    • Your Buddy Tom

      So what’s stopping those “expert marketers” from charging 5% and actually making money?
      Noticeable percentage of listings do not even comply with TREB MLS rules. The “expert marketers” don’t know the basic rules! There is an epidemic of mediocrity out there!

      • Shawn

        Any non-compliance issues will always work themselves out, one way or another. Companies can charge whatever they want, but the consumers are demanding lower rates. In any business, you have to see the trends and where the consumer is going, and adjust accordingly. Access to information has changed the game. 80’s: agents had all the info. 90’s: Internet was there but was highly unorganized. 2000’s: more organization but many older home owners not as adaptive to technology and not that many data sharing ageeements with CREA. 2010-present: Data sharing becoming a bigger component. Power shifting to consumers who are now demanding lower rates. No big deal. Just need to adapt.

        • Your Buddy Tom

          Are you a Realtor or a consumer?
          It is not access to information Realtors change commissions for. Commissions are paid for interpretation of that information aka the expertise.
          General public can have access to all the information. But should they misinterpret, they will lose time, money or both.
          There is abundance of information on health matters out there. But doctors are double booked.

          • Agreed. If someone could rely upon their own skills and experience to perform operations on themselves, they’d not need surgeons. The laws of the land are readily available to everyone, but usually, a lawyer is needed to interpret them. Many people can perform their own home renovations, but no doubt, may of us have seen the results of sloppy workmanship. And did those properties sell for the higher of the market value range available? In later columns in this series, I discuss the art of negotiation and mediation, which is what we essentially are. We’re not true sales people.

        • Agreed, Shawn. But adapt wisely so that profit remains a probability. Otherwise, why be in this increasingly risky and expensive business?

      • Carolyne L

        For newbies and oldies who had no interest in buyer broker contracts, and still don’t believe in using them:

        It is the absolute promotion of agents saying: “mostly it costs the buyer nothing in commission” that gets the whole system off on a bad bent.

        Here is an example from the mid 90’s, when BORs had to rewrite their rules and regs regarding dominating the topic of what agents “must” charge and how the total commission was to be allocated and divided, failing which agents could, and would, be taken to task. All was a quasi legal apparatus within Board structures. Of course buyer brokerage was pretty much the end of sub-agency in our trading area.

        So, along came buyer brokerage with all its implications and protection devices for all concerned. And here is the story of what allegedly happened in one local office.

        An agent who hadn’t kept up to speed with the new Board rules and regs, sold an MLS listing and indicated on a buyer contract made the day of the offer, that he would accept and be paid “whatever the allotment co-op fee was,” noted on the MLS listing, as designated on whatever the listing his buyer chose to purchase.

        So it was that his office administration invoiced the listing company: for one dollar, as that was what was offered as the co-op fee on the MLS listing. Nothing was questioned or queried by anyone, and most offices did not include office staff in meetings make office staff privy to any changes in the industry. The agent for the buyer just assumed he would be paid half the (old standard six pts) 6%, obviously 3%. He simply moved on.

        He went on about his business selling other properties. Then came payday. And his office broker cheque arrived. WHOOPS! What’s wrong with this cheque? A few thousand dollars missing? Went to office administrator to complain. Pulled files: said he would accept whatever was offered as co-op, loud and clear, on the MLS listing. And what was offered was ONE DOLLAR! Only.

        He couldn’t sue anyone for commission. He literally lost thousands of dollars. Couldn’t collect from the buyer due to how he drew his contract that said no cost to the buyer; he and his office were to be paid whatever was stated on the MLS listing co-op. BIG WHOOPS!

        His broker owner allegedly called the broker of the listing company to try to negotiate on behalf of his company and his sales rep, and the story was that the conversation went something like this: C’mon, you know we sell lots of your company’s listings, for all these years. Are you really only going to pay us ONLY one dollar CAD 1$?

        Obviously that selling office broker owner also was not up to speed re the new rules and regs. The topic had only been covered at an office meeting in the broadest of terms, with more to come. But of course the particular agent didn’t attend office meetings. And the selling brokerage did not belong to the local BOR. But the changes encompassed the whole trading area.

        How many agents still believe there are no costs to their buyer for commission and state such on their buyer agency contacts? Even today, more than twenty years after buyer broker agency contracts came into being.

        From day one, when notified of buyer Agency being the new way of operating, I signed ALL my buyer agency contracts stating that the buyer would pay any deficiency amounts relative to what was offered on a co-op designation, to bring my commission amount to what was my fee – xyz. The amount I had put in place as a corporate fee structure, based on what was determined to run a successful brokerage for more than 25 years. (To wit: the REM recent Alberta brokerage owner story explained) I only ever had one buyer “discuss” the variable amount, then (subsequently) sent me a letter describing how his purchase and his sale more than met his expectations), as billed as an adjustment through his lawyer.

        He had forgot to bring his chequebook on closing day, to pay my extra commission adjustment, as arranged through his lawyer. Went to collect his keys from the law office who sent him home to get his cheque for the variable amount, (about $2500.), failing which, no keys handed over. It pays to have a good working relationship with local real estate lawyer’s offices. It was nearly five o’clock in a Friday. Don’t want to think about the what-if’s. His moving van was waiting. Later he wrote: Carolyne is expensive but well worth every penny. They will never move again. More than ALL their expectations were met. But I had to be very politely firm throughout the whole process.

        I still remember a CBC TV piece in recent years, where Wendy Mesley was interviewing the then real estate registrar on the topic of agents charging too much and insisted he answer when “HE was going to put a stop to that nonsense, along with stopping multiple offer contrivances.”

        Probably every agent has a matching past client story to share. Mine here was another long prior past client referred to me by the buyer’s local friend I had represented, initially. Buyer friend coming in from out of town. Sold them a nice townhouse near their local friend. They stayed there for several years and one day called me to find them a nice detached. (Prior to buyer agency). They lived there for more than ten years, then called to say they were moving back to their originating city several hours away.

        Had already found an agent there who had dealt with a relative, no need to refer out. BUT, I was a little embarrassed, as I, too, had the listing prepared and ready to market, I still had a copy of the survey, the old offer when they bought, just needed the list price to be determined. I had sold several recently in their immediate subdivision and they were well aware. I was certainly front and centre top of mind, brand and name, like the REM “Cheers” recent article.

        That’s when I learned they had interviewed several other agents, already, who had left some of their marketing materials behind. The quoted to be list prices, I thought were actually truly on the low side for a rather special park location. (Location, location, location.)

        But what do I know. I was the dominant agent in that location. It was suddenly all about commission. Up to then I had only had a couple of rate request adjustments, ever, I boldly confess. No one asked. These sellers, my past clients more than once, had been offered everything from 1 point to do for free if buying through rep. (Who hadn’t been made aware the sellers were moving out of town.)

        I offered them “my” special- two choices: what was then a mostly typical in the industry, 6 point contract – or one at 7 points! It was a quiet market. They opted for the 7 points, having explained what they would get for their commission. It was nice, but needed a good scub down and fresh lightbulbs :)

        That house, in a quiet market listed much higher than the other reps suggested, sold in only days with THREE offers. All nearly the same offer price, initially over list. A little negotiating brought them an even higher price with the closing they needed to match the place they had in mind to buy out of town.
        btw – other agents had convinced them before listing they would need to replace the dated ‘solid wood’ kitchen cabinets, and cover the part cedar siding with aluminum siding, as it needed a little exposure mending due to lack of maintenance.

        I told them to leave that for a buyer to decide. Someone might rather replace the cedar or have it treated; the buyer’s choice, who might even ask for a price adjustment to accommodate.

        And I saved them a boatload of money. And on top of it they sold over list price. A very good example of you do often get what you pay for.

        When these people clearly understood buyer brokerage vis a vis protecting a seller contract, the “details,” they clearly made the right choice. But like I noted, I was clearly offended. Such nice people really who had been poorly advised by local friends.

        I had living proof support in my then several current sales in their immediate subdivision, others who had paid 7 points and were rewarded in kind. It works! Every time. And everyone benefits. The extra point, divided at least four ways: listing office, buying office and at least two sales reps often doesn’t add up to a hill of beans… But the proof of the pudding is often in the eating.

        Carolyne L 🍁

        • Thanks, Carolyn, for your submission. Your story is a great example of why sales reps and their brokerages must understand the business, and be exceedingly cautious in performance of their duties. Obviously, the agent involved in the one dollar commission truly failed to cross their T’s and dot their I’s, and was compensated accordingly.

      • Agreed, Tom. Sadly, with the onslaught of technology, human relationship skills are suffering. Communicating digitally, especially with poor grammar skills, may be efficient, but it doesn’t help build a trusting relationships. Ask anyone glued to their “dumb” phone to have an indepth conversation with a live person and they’d probably quiver in fear. What? You want me to speak in sentences? In my book, The Happy Agent, one chapter is devoted to listening skills. Problem is, though, that those who might benefit from reading it don’t read.( No offence intended.)

    • Thanks Shawn. I agree that our industry is evolving into one in which fees are lower. But I think that the fees will be tied to a menu of available services. In later columns in this series, I delve further into this aspect of the business. Having said this, when the market conditions evolve from our current hot seller’s market into a balance or buyer’s market (which is inevitable at some point), sellers will be demanding more attention. And more attention will cost them higher fees. Sales rep who entered the business since the mid 1990’s have no concept of a market that doesn’t favour homeowners. Boy – are they in for a surprise!

  • Fahim Safi

    New generation of home owners / sellers are much more savvy. It is difficult to convince them by simply saying “you get what you pay for”. However with older folks its a different story. It is often the case where they bring up a 5 or 6% commission rate before you do.
    Having said that, agents have different business model…

    • Thanks for your comment, Fahim. I’d add, though, that many homeowners “think” they’re more market savvy, which is quite different than actually “being” more savvy. And that’s a tough client to help because they often refuse to listen, let alone follow, honest professional advice. Yet they fear trading privately, and hire a Realtor at a discounted fee. Nevertheless, the newer generation of realty traders are indeed forcing an evolution of our industry wherein the old models are proving no longer effective. Stay tuned to later columns in this series.

  • Your Buddy Tom

    Realtors are their own enemy.

    • If I understand you correctly, Tom, I tend to agree. If someone believes in themselves, if they are honest, reliable, knowledgeable, ethical and reasonably intellectually and emotionally intelligent, and they apply themselves to the best of their ability, there is no reason why they cannot succeed.

  • I too have experienced a huge change in not only the industry but the people since being in the business -1988. As you stated it used to mostly be the listing price that needed to be dealt with and then the commission started to weigh in when going on a listing appointment. The bottom line for the norm has and will always been $$$. What I find most disturbing is the general change in people’s loyalty, trust level, respect and greed in our society today. Not only in real estate but, in every aspect of life. Birds of a feather do flock together and I am certain that 30 years ago these clients you spoke of were most likely the same then – as they are today. But, today unfortunately they are more in the position to reveal their ‘true colours’. Time changes everything and everyone. The lesson we can all learn from your great article is it’s up to us to change also and start treating every prospect the same – like any other ‘new’ prospect and it’s the first opportunity to meet with them (no matter what source they came from). Qualify, qualify, qualify before making an appointment. AND, like Felix Unger said in The Odd Couple, “When you assume you make an ASS of U and ME.” Thank you for sharing this experience with all of us Ross.

    • Thanks, Jill, for your great submission. For the most part, I agree with your points. I will add, however, that I was blessed during my 43-year career with many loyal, trusting and respectful clients who not only automatically returned to me when in need of realty service, but also recommended my services to their grown progeny. It was always delightful to help young couples whom I’d known since they were tiny tots. And they rarely asked me about my fee. Why? Because they trusted that I’d do my utmost to not only protect their interests, but to generate the absolute best terms possible for their sale and/or purchase.

      Having said this, I agree that money has always been an issue for everyone, but it’s even more so these days. People are afraid of losing and having nothing. We live in a fear-based society perpetuated by a negative main-stream media. Thus, it’s no surprise that sellers and buyers do their best to grind our peers into submission. It’s for this reason that I built my practice based on trusting relationships rather than mass advertising campaigns. Though I was never a so-called super agent, my philosophy always kept me in the top 3-5% of the business that decries a huge attrition rate. And that was enough for me. You can read more about my methodology and philosophies in my book, The Happy Agent.

      • Hi Ross,
        Thank you for your reply. I’m sorry if I implied that these clients do exist. I too built my business on my sphere of influence, past clients and most of referrals. I was blessed to have attended a Joe Stumpf 3 day Main Event after having been in the business for a few years. I always felt like I was a little fish swimming upstream against a swarm of sharks in the business. It was then I learned about the Transactional Agent and the Transitional Agent. Then I had other folks in the business that helped each other grow as the type of agent, it would appear by your reply that you and I both are. It has been an amazing experience for me as well to help family’s generations based on trust and some of their friends and families. The Referral Tree grows with sunlight and water. But I do know that ‘some’ people change and I can honestly say that not 100% of my past clients used me again. I think it’s because they subconsciously realize that they are more the transactional type of person themselves and usually they sell and/or buy with one of the ‘burn ‘em and churn ‘em agents’. I agree it is one of the best gifts in the industry to be known as an honest and trustworthy competent Professional not only by clients but by peers, and all the people on my team like lawyers, home inspectors, mortgage professionals, contractors, plumbers, electricians … the list is endless. I am very grateful to be who I am and I also know many of the agents who are ‘#1 with a huge smile on a billboard’ and spend millions of dollars of letting everyone know how great they are … it’s just not in me.
        All the very best to your continued success,
        Jill

        • Thanks Jill. You might enjoy my book, The Happy Agent. May your days continue to chock full of delight!

  • Don McMillan

    I do concur with your comments but I am also seeing more clients looking for lower commission fees. I think some of this concern has emanated from the hot markets in the larger cities. Homes are selling in days not months and it’s difficult for sellers to comprehend commission fees of $40 or $50k. Again, to your comments sellers are ignorant about how agents make their living and the costs they incur and in some cases without a successful sale. It does require great skill to convince sellers you’re worth the commission when most only see the $$.

    • Dick Brady

      Is it any wonder that some Sales Representatives make very few sales and think they must resort to a lower commission to garner Clients. There are 108,706 licensed Sales Reps in Canada – that is one Agent for every 245 Canadians over the age of 19. For discussion sake, let’s assume that there are two people per couple that give a Sales Rep for every 120 households. Subtract the renters or at least those that will never purchase a property…..not many potential Clients per Sales Rep.

      • Thanks for your input, Dick. I couldn’t agree more. In my opinion, there are far too many registrants in our country. I’ve been quietly promoting a cap on registrations, or advanced education requirements, or higher registration fees, or all of the above, for a very long time. But alas, it is a slow process. In the meantime, I suppose it could be argues that homeowners reap the benefit (maybe) of agents tripping over each other as they race to do more business for less income. It’s a business model that is doomed to fail.

    • I agree, Don. Homeowners typically fail to believe in our value-added contributions to their disposition or acquisition projects. As I delve into in upcoming columns in this series, they typically not only fail to appreciate our knowledge and expertise necessary to successfully ply our trade, but also that a large portion of our fee is justified to compensate us for the risk involved in agreeing to an agency with them. Frankly, I doubt this will ever change, at least as long as sales reps, most of whom are newer due to the huge attrition rate of our industry, behave in an unprofessional and incompetent manner.

    • Carolyne L

      Realtor Costs : Your Costs

      http://www.carolyne.com/costs.html

      Carolyne L 🍁

      • Carolyne L

        We in the industry perhaps take the information in my “Costs” article for granted, and some have even said the finiteness expressed is too fine-tuned, but many dozens asked for reprint rights to carry with them to share with their clients and customers, and brokers with their own agents. A few BORs across country and in the States even reprinted the information.

        The reason for writing such was not to dwell on the itemization, but rather for visitors to my own website, who by and large as members of the public, quite literally, had no idea. I heard time and time again from readers, that they thought agents drove “company cars,” Top producers got to drive “better” or high-end vehicles, sometimes wrapped in company attire. And that those who wore yellow jackets representing their organizations were provided for by the company. Many expressed that they thought agents were salaried. That the commissions went to the company, from which agents were paid a steady salary.

        So for that reason the article more than served its purpose. You will note that there is a subset link titled “Commissions: Where does all the money go.” It applies likewise, and was more than well appreciated, both inside and outside the industry, based on the responses it garnered, also. I am not selling anything, just to point out, but only sharing what I wish someone had shared with me, prior to being licenced 37 years ago.

        Everything I say, write and do is based on personal history and circumstance. Hope it helps someone currently. The public reads REM, it isn’t just an industry magazine.

        Respectfully,

        Carolyne L

    • I agree, Don, that in many situations, sellers are looking for lower fees. And it is indeed likely due to the brevity of the sales period. However, when the market begins to correct, and move toward a balanced or buyer’s market, their tune might change. Having said this, I still believe our industry is evolving away from a commission rate-based model to an optional fixed fee for services model. And such a change will result in far fewer registrants and brokerages.