By Debbie Hanlon

When I started in real estate as a young, inexperienced woman, I was told by more established agents that my prospects were grim at best. Not enough houses, too many agents and a poor market were all cited as reasons why my fledging career was doomed from the start. I was advised that the only way I could hope to make it in real estate was to cut my commissions and steal business from more established agents. It was all well-meant and sound advice from the weathered veterans of the industry, but I simply didn’t believe it. I believed that I was worth my six per cent and that I’d work tirelessly to earn it. It was that belief in myself, more so that my systems I developed later, that acted as the impetus that sent me to No. 1 in Canada.

Today, commission cutting has a face. There are discount realty brokerages everywhere. Back in the day, the same thing was happening behind the scenes. I lost out on a lot of listings simply because a rival agent would offer to cut their commission and I refused to. In fact, I’ve walked away from literally hundreds of listings because I would not budge from the six per cent I felt I was worth.

I also got hundreds of listings because of that stance, because of the value to service I gave each and every client. My belief is, and has always been, that if you cut your commission once, there’s no going back. I’ve seen it happen to too many agents who end up selling themselves short again and again.

If you’ve cut your commissions or are thinking of doing it to compete against discount Realtors, I want you to ask yourself this simple question: how much am I worth? Because of the pressure this business puts on people, because of the uncertainty in the market, because of a dozen other factors, most real estate agents underestimate their own worth. They doubt themselves. They second guess themselves. All of this combined chips away at their self worth until they don’t know anymore how good they are.

Remember when you started in this crazy business – remember how you felt like you could take on the world on any given day? That belief in yourself is still in you. True, it has been buried under the realities you face everyday. It’s been tarnished by the need to pay bills and tainted by the fact that you’re not going to get every listing you go after. But way down inside you that belief in yourself is still there, still waiting for you to believe again.

How do you rekindle that fire? How do you reclaim that sense of your own worth? The first thing I suggest is to write down a list of all the things you want to be. Not the things you want to have or buy or places you want to go – that will all come after – but the things you want to be. I remember my list included, I want to be the No. 1 agent in Canada. I became that because I believed I could be it. I believed I was worth it. Do you? Do you believe you can be the best? Do you believe you’re worth it? You are.

I’m not super woman, I don’t jump tall buildings on my way to work. I’m just like you. The fact that I did it means you can too. You can look a client in the eye when they ask if you’ll cut your commission and say, no, I’m worth my full commission and I’ll prove it to you.

You can be a better real estate agent, you can be the best, but you have to believe it before you can be it.

Debbie Hanlon is the founder of Hanlon Realty and CEO of All Knight Inc. She is a three-time top 50 CEO winner and was named one of the top 100 female entrepreneurs in Canada. She is currently an elected city official in St. John’s, Nfld. and is available for motivational and training seminars. Email [email protected]

Debbie Hanlon is the owner broker and Realtor at Debbie Hanlon Real Estate, a new boutique brokerage in St. John’s, Nfld. She is also a motivational speaker, real estate coach, author, former city councillor and children’s entertainer. She lives in St. John’s with her husband, Oral Mews and her dog Fisher.

56 COMMENTS

  1. In the area we work many of the big real estate teams cut their commissions and they seem to be targeting volume. We have agents in our area who will sell your home for free if you buy from them ! We have to stay competitive by pricing the job at hand. I don’t like the word discount and instead we offer lower fees for people who are both selling and buying and we also support first responders and the armed forces with reduced fees.

  2. "DISCOUNT" Brokerage phrase used in this article IMPLIES their is a FIXED rate of commission which of course is Not Legal…. Busted.

    • Kelwin:

      "DISCOUNT": Buy or sell for less than face value. Websters.

      Therefore, 'discount brokerages' are effectively selling their 'perceived' services for less than the 'face value' of conventional brokerages' perceived and/or actual services. 'Face value' is the 'perceived value' in the eyes of some unsophisticated consumers who therefore think that they are getting a 'deal' for otherwise 'actualized conventional services' by hopefully acquiring same with a 'discount brokerage'. They will never know if that was the case when usiing a 'discount brokerage' expecting 'conventional brokerage' services; one cannot undo what has transpired, re-roll the tape so-to-speak, and re-sell with a 'non-discount' brokerage to compare net returns. It is a crap-shoot after all is said and done.

      Therein lies the truth of the matter.

      Empirical knowledge, therefore, rises to the fore vis a vis quality of a Realtor's service in relation to the cost, monetarily speaking, not to mention, psychologically speaking, of gaining said services.

      Apples and oranges Kelwin…apples and oranges.

      Brian

    • Brian I have to disagree with your comments. Do you honestly believe that a seller that pays say 5% gets a better level of service than a seller that pays 4.5%? Most Realtors today are competing for listings so virtual all Realtors are discounting their fees to compete. You cannot convince most sellers you will do a better job by charging higher fees than your competitors. Today your competitors are agents in your office. So why should I as a consumer pay you say 5% when I can find another agent in your office to list my home for say 4% and get the same service. How can you guarantee that paying a higher fee will net me more? Should all agents in your office charge the same fee? Do I have to call every agent in your office to check the different fees and services provided by your brokerage? Why would an informed consumer pay more when they could pay less? Have you done a study that verifies paying more will net you more?

    • Kelwin, maybe you're someone who thinks you can negotiate a purchase and sale on their own.

      Well, you'd be unarmed. If you believe the use of the term carries an illegal connotation then maybe you should take it up with the people who are using it illegally. Here are just two examples with quotes from their sites:

      "Discount real estate agent" http://www.commissioncutter.ca/

      "We provide you full real estate service at a discount commission rate…" http://www.onepercentrealty.com/

    • Hi Consumer cate:

      Good questions on your part.

      What you are doing, as do most uninitiated consumers regarding gauging the worth of a Realtor, is lumping all Realtors in the same basket of experience, qualifications, character and drive. No two Realtors are alike. Therein lies the hidden argument for each charging what each knows one's self to be worth on the open market. One cannot market one's self as a Realtor strictly on a fixed percentage basis, be it 5%, 5.5%, 4%, or less or more. Realtors are not inanimate objects that have been spat out of an automatic Realtor production machine, as many would like to think. Thus, the superior Realtor, who knows that he/she has a leg up on the common run of Realtors, can command more for his/her services on the open market, provided that he/she can convince sellers of his/her value before the fact of proving same.

      So-called "discounters' simply belie their inherent intrinsic value to potential sellers with their offers to work cheap. All have to pay the same local board dues, OREA (Ontario) provincial dues, CREA national dues, E. and O. insurance premiums, office expenses, technological expenses, advertising expenses etc., etc. Willingly undercuting one's own net income up front as a negotiating strategy to secure business that one might not otherwise secure sends a message to the potential seller that said Realtor may be desparate, incompetent (certainly as a negotiator), or otherwise less effective as an advocate for then seller's fiduciary interests. It all boils down to the psychology of negotiating, and thereafter to expected results on the part of the Realtor hired thereby.

      As I said before, it's all about comparing apples and oranges. Not all Realtors are apples, or oranges (to use the old phraseology), or any other manifestation of a clearly definable, identifyable service providor. We are all different.

      The best should be paid the most for the best services provided, and not on a pre-determined sliding scale of so-called acceptable percentages.

      Look at the history of success, or the lack thereof, of individual Realtors, before jumping on the bandwagon of mass condemnation of individuals who singularly form only part of the group.

      If you still believe in the myth that all Realtors are the same, then continue on with your cheaper-is-just-as-good search for the cheapest Realtor out there to reprersent your fiduciary interests, and cross your fingers, even if you are not superstitious.

      Sorry to appear to be so curt with my remarks, but my own experiences with commissioned sales people bears out the foregoing statements as being true.

      Brian

  3. Long ago I read a statement that I have repeated numerous times to numerous sellers when the discussion of reduced commission comes up……….the statement: If I cannot negotiate for my own paycheck what makes you think I will be able to negotiate to get you the most money for your house? ……………….say it and then sit back and wait for the comments from the Sellers……….if they can't see the logic in that statement then you are in for a hellish ride if you take the listing because it should be quite evident that these are Sellers who do not appreciate one iota any action you will take to sell their house. And mark my words……they are the Sellers that will call you daily demanding to know why their house is not sold. That is…….if you took the listing.

    On another note: Some time ago a local alternative commission structured brokerage was placing the following ad on the back end of the local transit buses………." Friends don't let friends pay 7%"……..now…..if I am correct in my thinking if I placed an ad similiar to that but replaced the "7" with the number that that brokerage advertised as their commission I would be in the crosshairs of the Competition Bureau before I even paid the bill for the ad. When I brought this to the attention of my local Board I was told that there was nothing that could be done about those ads because to complain about them would consitute a potential accusation of disparigaring a fellow agent, etc. I shake my head. How was this ad not Competition Bureau fodder?

    Somtimes I think we agents are the dumbest people around to allow this to be acceptable……….while the foresaid advertiser laughs and thumbs their nose at the entire industry………isn't that disparaging a fellow agent?

  4. All worthy comments; based on a 1.1 % vacancy rate and a 3 day average days on market.

    Will that come to an end?
    Will Sellers come back for help marketing, packaging, presenting and negotiating when the average days outstanding is 75 or 80?

    Some markets are still @ 6%

  5. The argument about 'discounters" versus "non discounters" is old and seriously missunderstood. There is no standard commission therefore how does one discount a non standard commission?. There are Brokerages that charge less than the "traditional 5 or 6%' yet do nothing more than one with a lower fee. Are we "realtors" so stupid as to not understand the concept of overhead? Someone has to pay for those useless billboards and tv spots that do nothing to sell homes…they are for the image of the Brokerage and individual featured on the billboards. These costs are passed to the seller. A brokerage using these advertising methods will use the old "you've seen our tv ads or billboards everywhere…of course we will get you better exposure" fraud statement, basically preying on sellers too daft to understand what's going on. perhaps if Realtors had been more flexible in the past, rather than sticking to "old" concepts, we wouldn't have the $1 structures that are cheapening our industry. Don't blame your neighbour for the stink coming out of your garbage can.

  6. Shane.. You comment that real estate is a unethical biz yet you brag about
    consciously wasting 3 strangers time one or all of whom could be ethical
    hardworking individuals with a family to provide for ?
    Try reading up on what ethics really means . i.e not on google
    I welcome your thoughts on the real estate biz as you have stimulated thought and challenged the status quo .. all good

    Alan well said as below … lurkers motives identities should always be considered !!!

    Jim S.
    http//www.straughan.ca
    Alan M. says:
    March 27, 2012 at 1:34 PM
    Hi Brian M.,
    It strikes me as peculiar, when those not directly involved in professional Real Estate take it upon themselves and their time to make generalized derogatory statements about this industry.
    So, the question becomes, are such posters just people with too much time on their hands or are they pursuing an agenda? The posters that might have nothing better to do tend to make comments that aren’t so structured, while there are others who tend to try and structure an argument so that the uninformed might think they’re getting an informed perspective – when they really aren’t. This latter category of poster have an agenda, and in some cases it may only be theirs, but in other cases we need to contemplate who or what any remarks might benefit. I think that there is something of a benefit to the Competition Bureau when someone holds themselves out as a consumer and refers to some of the more traditional brokerage models with distain, and furthermore to our industry, in general, as unethical.
    If a poster really is a consumer that’s had a bad experience with professional Real Estate, why aren’t we simply reading an anecdote about that bad experience? It just doesn’t make sense that someone has an axe to grind, but no real storey to tell.

  7. This website is mostly visited by Realtors so of course the post that are pro discount will not be liked as much, but that being said I have to say that Realtors everywhere in Canada realize that discount real estate is here to stay now. About 8 years ago in the Vancouver area was taken over by discount realtors and now the movement is even making its way into Ontario where people still cough up 6% commission.

    I under stand how it made sense for realtors to charge what ever they liked back in the 70's-80's when the Realtors were the only ones who had the MLS books. Back then the Realtor had all the power because if you wanted to know about homes for sale you had to deal directly through a Realtor.

    Then with Realtor.ca coming along the vast majority of homes being viewed were homes that the buyers emailed thier realtors saying "hey we want to see this one". Yes we still offer clients our daily email updates of homes that fit thier desires, but we all know that the power has gone to the other side now.

    The latest nail was with our leaders at CREA to give in and let home owners post listings on Realtor.ca

    I myself am a discount Realtor because I actually want to educate home owners that there is a better way to sell their home. 6% across the board for commission is just plain silly. Anyone that still pays that to a Realtor is just not Real Estate savvy. I only recommend that other Realtors not focus too much on the Realtors like myself who offer alternative commission structures but rather focus on themselves and how they can keep or grab as much of a base and hold on to that base as tight as possible.

    • Michael i strongly disagree with you. To be honest with you the discount business model is the stupidest i have seen yet, reason being is because you haven't been in the industry enough to understand or your attracting "underwater" clients thats all. I will bet you, your business model will be failing soon. Jsut like discount stockbrokers (ie; some stupid computer) clients get what they pay for.

      I am laughing at your comment because you really think you are educating your client because "there is a better way to sell your home." is no more than a joke. There is a "norm" when i was slowly evolving in the business and in commission business in general it's called the "Law of Compensation" .. you should understand that … you will undrstand why!

  8. Hi Jim:

    Within my March 30th, 1:57 P.M. ("Shane, Shane, Shane" reply)…

    "5%" should be "95%" at beginning of reply. I screwed that one up.

    Brian

  9. Jeff,

    You have watched 5 years of Sellers market one that has actually gone on for 12 years (which is way too long from a historical perspective). After you go through your first Buyers market your viewpoint will probably be different as will your view on your profession

    Canadians have increasingly acknowledged the value in using a REALTOR, as they have in fact willingly INCREASED commission amounts too almost double what they paid in 2000. (Yes, pressure on a commission calculation based on percentage of selling price, may have happened but it is far outweighed by the increase in actual selling price.)

    Actually the only one's to get less in 2012 than they did in 2000 is the FSBO companies or discounters. The highly educated Canadian Consumer have failed to accept the discount business model forcing them to continually reduce their fees to try and compete.

    In 1988 a successful (their term) FSBO site called GrapeVine was established. They charged $499. Now you can get a similar service in 2012 for $99.
    In 1989 a discount brokerage operated in my MLS jurisdiction and charged $1499. Now you can get a similar in service in 2012 for $1.

    So, let's be sure when we talk about commission and the success of one business model over another, we talk dollars first and semantics second.

  10. To Start, I have been in real estate for 5 years and have seen many different companies start up, fail and stay around and become very strong competition for Realtors, even companies that are not licensed realtors.

    Discount is here to stay as many Canadian home owner are not willing to pay 5% and 6% anymore. We have seen this happen in the USA and the discount firms have more then 50% market share in most markets in less then 5 years.

    This is a very different market place right now. It is full of change. As realtors we need to change with it. We need to show the home sellers the value in the service we provide as realtors and do what you say your going to do.

    Lastly, we need to continue to educate the public, buyers, sellers. For all the different business models out there, this a customer for everyone.

    P.S. Dave has the right idea here. If everything is free, were is the value for the service. Media headlines should say: Realtors here to stay!

    Dave says:

    March 26, 2012 at 9:24 AM

    Getting three REALTORS to give an opinion of value is a wise decision. However, it is time that agents providing the opinions be paid for their services. Agents need to STOP advertising that they provide FREE market evaluations. It probably takes somewhere between 3-5 hours (including preparation, travel time and presentation) or more to do a FREE market evaluation. If the seller gets 3 agents that is 3 x 5 = 15 hours of FREE service. In the end one agent wins and two lose. Often the seller knows which agent they are going to list with right from the start so they are just using the expertise of 2 agents before listing with their friend. Charging a modest fee of say $150 – $200 or more for your time is smart. Why work for peanuts!

    • Hi Jeff:

      Actually, according to the latest N.A.R. statistics, as noted by more than one poster herein recently, the average real estate commission rate in the U.S.A. has increased from about 5% to 5.4%, or thereabout.

      The reason why the so-called 'discounters' have business right now is because so many sales of homes are in the unfortunate position of being under water (the mortgage amounts owing thereon are higher than what the current market values are, or, to put it another way, the mortgage amounts owing are higher than what one can reasonable expect to get when one sells said property (ies).

      It is the lenders involved which are left holding the bags (which said lenders loaned out the dollars in the first place willy-nilly to anyone with a pulse) which are using the non-services of the so-called discounters, thus skewing the numbers in favour of the discounters during hard economic times (for the lenders as well as for the former mortgagors with pulses).

      Still, the average U.S. commission ratio sits at around 5% or more.

      Who cares…they aren't selling.

      Brian

    • Dave,
      Getting Agents to charge for CMA's is a good idea, but how many will change their ways? Why? Because they do not feel they provide enough VALUE into their services. If consumers felt as a whole that Realtors bring unquestionable value to every transaction, then we would not have Discounters and others that do not provide the utmost in service.
      CREA has to educate the public about the value and Professionalism we bring to each transaction.

  11. JM as per your request

    Introductory Meeting-1 to 2 hours (minimum $200)
    Professional Appraisal Completion- 3 to 5 hours (minimum $400)
    Listing Presentation-1 to 2 hours (minimum $200)
    Professional Staging and Pre-List Preparation-1 to 3 hours (minimum $200)
    Listing Data Verification and Signing-1 hour (minimum $100)
    Listing Copyrighting and MLS uploading-2 to 3 hours (minimum $300 includes the mls processing fee)
    Professional Listing Photography with Copyrights attached-1 hour(minimum $100)
    Professional Photography Editing-1 to 2 hours (minimum $100)
    Professional Feature Sheet Composition-1 to 2 hours (minimum $150)
    Feature Sheet Production- one set of 25 (minimum $100)
    Sign Placement- includes board and frame and disposable corner markers (minimum $50)
    Professional Virtual Tour Production- 2 hours (minimum $200)
    Website Upload- 2 hours (minimum $200)
    Professional Agent Open House- 3 hours (minimum $300) (note actual value assuming 20 agents attend is $2000 not included)
    Professional Public Open House-4 hours (minimum $400)
    Professional Offer Negotiations- 4 hours ( minimum $400)
    Conditional Follow Ups- 2 hours (minimum $200)
    Lawyer and Closing Follow Up-2 hours (minimum $200)
    Additional incured upon each Offer Presentation= $800
    Brokerage or Brand Open House- 3 hours (minimum $300)
    Follow Up and Leads- 2 hours per week (minimum $200 per week)
    Additional Public Open House- 4 hours (minimum $400 per Open House)
    Advertisments in print- (Canadian average $300 per ad per week)
    Magazine Advertising (varies with property value and reach of magazine)

    Please note the above billing rate is only $100/hr. This rate is all inclusive covering non-variable hard operating expenses (about $60,000 per year) spread over a 2000 hrs per year allocation and labour.

    • Ross K's' itemization was well thought out, and it is an excellent reminder of just how involved our work can be.

      What Ross has presented here should be the kind of Public Relations work that CREA should've been doing on our behalf all along! Had CREA been doing a proper job with our PR – instead of building a national website -, a REALTOR should never feel motivated to respond to many of the prods in this publication – including this one from Mr or Ms JM.

      Perhaps JM having received that which was requested will now respond with a mailing address, so that Ross can send along an invoice.

    • Alan M:

      Yes, Ross K does tell it like it is, which, as you so correctly tell it (query it like it should be queried) like it is, where was/is CREA then/now?

      Not where it/they should be…gone.

      Brian

    • Ross, the future of real estate might very well be based on the number of hours that an agent works to sell an individual property. Based on the present system of percentage fees why should a seller with say a $500,000 house pay more than a seller with a $400,000 if both properties took the same amount of time / work to sell. Keeping track of your time and costs (fees for service) seems like a fair way to determine what sellers should pay for for real estate services. Of course the seller would be required to pay for your services even if their property doesn't sell. Unfortunately, the existing system will probably remain in place for many more years because today there are just too many agents to feed off the system. Most brokers could easily reduce their agents by 60% to 70% and still sell the same # properties and the income for career Realtors would be better. However, the "rent a desk" brokers today make their profit based on the volume of agents and charging a small monthly fee. Many of these agents are part time and may very well be happy to sell one or two properties a year to subsidize their other other job. $400,000 x 4% = $16000 if sold by agent or $8000 if buyer's agent involved. You can see that selling as few as 2 homes can add from $16000 – $32000 to their incomes – less their costs. Only the brokers can decide how to change the way real estate will be sold in the future. Change is good.

    • Hey Dave,

      First, I fully support the "rent a desk" model and the "50/50 model variants equally. In a competitive industry both models can survive and the market will determine the winner. Since the broker owner suffers any negative consequences for his associates actions, I will leave it to them how best to operate their businesses. RECO is a very powerful and no excuse based policing system. As consumers become more and more aware of RECO, you will see the natural reductions in numbers take place.

      I think we all must be aware that with options from $1 to $15,000 or more for a home owner looking to sell, the consumer always is right.

      I personally have never understood why someone would pay $15,000 to a friend or cousin or full time bartender, to sell their home but the consumer makes this choice each and every day.

      and… we hear today City of Toronto employees who are cleaners get over $37/hour plus benefits. Lawyers now are commonly over $200 with the best over $600/hr per client. There is no way to fulfill my business model on the itemized list above, with the competence and professionalism I offer for under $100/hr. The time frames mentioned above are only achievable with an experienced and tech savvy professional who has immense levels of expertise in the areas referenced.

      So even a lesser skilled professional who charged $75/hr but took twice the time to accomplish the task, would realistically charge the consumer more. $100/hr x 2 hours=$200 or $75/hr x 4 hours=$300. I believe the consumer will always prefer my $100/hr rate.

  12. Commission Cutting (price discrimination) is illegal in Canada and the sooner REALTORS start explaining that to consumers the better. A REALTOR cannot offer a set service to one consumer at one price and then offer the same service to another at a lower price, without FULLY disclosing to the higher paying consumer that this set service may be and has been supplied to others at a lesser cost. ( I understand that this is not common practice in our profession and it can be argued that each sale creates unique pricing variables but we should tell consumers that we can't legally charge one person less than another).

    "Full Service" is an ambiguous and misleading term better used by FSBO companies who are not subject to the advertising standards established by any province of by the provincial regulator. In the same way as there is no such thing as "Common Commission" (actually an illegal concept in Canada) so too is there no such thing as "full service". Let's leave that term to gas stations.

    My personal business definition of Full Service is completely different to the one that appears on any of the "discount" brokerages websites. My Top level of listing and marketing services costs over $7000 to implement if a listing is carried for 3 months and increases in expense each week after that 3 month period. My profit margins increase the quicker a sale takes place which in this profession also benefits our clients.
    The Buyers side is equally expensive and the expense actually increases during a sellers market because time becomes so sensitive in the search process.

    Now of course if you give your time away for FREE…..

    • Hi JM,

      Let me share an example, not on Ross's behalf, but just one example that is easy to understand… here is a link to a promo that cost over 6k, just for the print material for one property (front and back page got repeated as a just listed, just sold postcard) the copyright design as noted is mine, not the graphic artist's, as is the text; make sure you always include that in your contract as "work for hire." Otherwise they will take your unique design and sell it to other agents. Nip that in the bud. http://www.carolyne.com/bramptonhomes/62hillside….

      followed by a link that cost 20k divided into a couple of properties included, along with general promo: http://www.carolyne.com/history.html —- it's old news but to give you an understanding of where the money goes…

      and old property promo that went out quarterly at the time; cost 10k each time. Scroll down the page till you see the house promo brochures: Doesn't take long to add up: http://www.carolyne.com/memories.html

      Add to this, other general promo: postcards for just listed, postcards for just sold, general mailings always promoting houses at the same time: thousands and thousands of dollars.

      Unique products not excluding calendars, custom designed artwork that always followed a pattern. When people saw my items they never had to read them to know where they came from. That's important, and yes it does go to the cost of selling "that house," (any house listed).

      Farm materials that kept people "in the know" as to what was happening locally – then the world of the web came upon us, and the maintenance costs are amazing and add up to many thousands of dollars on a regular basis.

      No one thing sells a house. Continuity so that people know who you are, where you are, what you do, and how you do it (in their faces permanently) brings top dollar and top rewards. But none of it comes for cheap. You can pro-rate the costs at the end of a quarter or at the end of a year and see how it related to each property.

      Hope this helps answer your question that you put to Ross.

      Cordially,
      Carolyne L http://www.Carolyne.com

  13. Hey Dave, Realtors are not allowed to charge for market evaluations because their opinions on market value are not valid for any bank (among other reasons). Since 95% of the time another agent finds the buyer for your listings why would any educated human pay the listing agent 50% of the commissions? Those afraid of competition attack it.

    Brian Martindales idea is absurd, this would promote Realtors suggesting low list prices (below market value) so the house sells quick and at list or above price. Seems like a good idea for a Realtor, not the seller.

    • To (make it simple) Shane:

      Next thing we might hear you say – from the CB who is all about "protecting the public" is that REALTORS(r) are no longer permitted to do "evaluations," but must pay an accredited Appraiser, up front, to provide proof of value before being able to list a house, so that the list price is "correct."

      The CB could hold the listing brokerage "responsible," for proof that this procedure had been authorized and attended to, although they could not force the public to list at a specific price. The REALTOR(r) would have to PROVE beyond a shadow of a doubt that he/she had sought the advice of a "real" expert (the appraiser) before delving into the process of taking a listing. WOW! Can you see it coming?, so that the public was "protected."

      Better hope the appraiser doesn't dislike your face or your home, because many of them +(-) their "opinion of value" based on many things other than "the house." Not nice – but true.

      Just playing the role of the devil's advocate. But think about it. What you stated. The "evaluations" provided by a REALTOR(r)are valueless. If that is true then what is the point in doing them? "Comparisions" for the purpose of deciding on a list price must be banned immediately, based on your assumptions??? That would be "the law" (according to Shane).

      Like we don't have enough responsibility and costs already . . .
      Of course there is nothing to stop a buyer from stating in his offer to purchase that the property must appraise at a minimum value of xyz. (But you can almost be certain the property won't appraise any higher than that figure, because he Appraiser has insider trading apparatuses in place (talk to the Realtor) and will know what is in the offer many times.

      Relo required that stipulation as to appraised value, to be in offers regularly, so that the relo buyer was protected from overpaying.

      What province or territory is your marketing area located in? if you don't mind sharing. We all know that rules and dictates follow the domicile in which the property is located. Just askin' – cause I really truly would like to understand your modus operandi, if you really are a REALTOR(r), as I think someone else queried already.

      Carolyne L http://www.Carolyne.com

    • Shane, Shane, Shane:

      Real estate sales representatives ARE allowed to charge for market evaluations…period. It is only the chartered banks' lending divisions that require all 'appraisals' be completed by a C.R.A (Canadian Residential Appraiser) operating under the umbrella of The Appraisal Institue of Canada. (I used to be an appraiser.)

      Realtors can charge for 'opinions' of 'market values', and consumers can pay for same if they so wish…period.

      Any good realtor can establish an 'opinion' of 'market value', and indeed, often C.R.A.'s routinely call and ask Realtors for their opinions as a baxk-up vis a vis specific properties whilst completing said appraisals.

      Not all Realtors will be accurate, and not all appraisers will be either. For example, I was the sixth appraiser called in by a bank to appraise a property that had just sold for $240,000. or so about five years ago. There was a $35,000 spread amongst the appraisers' appraisals on a 'sale' no less. Guess what happens when some appraisers complete appraisals on properties with no targets to shoot for!

      The bank went with my 'opinion ' of value.

      Re "95% of the time another agent finds the buyer for your listing…" PRECISELY!! Therefore your listing agent negotiates the best deal possible for you against the buyer's agent. C'mon Shane, this is Real Estate 101 stuff! It's known as seller representation at the negotiating table vis a vis the fiduciary duty owed contractually to his/her seller via the listing contract.

      Now you know the answer…the correct one, gleaned not from some know-it-all Realtor-hating-ignoramus who got his/her information via hearsay from another ignoramus, but from me.

      Hit me with another myth.

      Re my 'absurd" idea as you call it…any Realtor wants the property to sell within the time frame as stipulated by the seller…therefore the property must be priced right in order to accomplish that goal, for both the seller's and Realtor's sakes; it is known as a contractual partnership. The seller gets to 'choose' who he/she wants to list with, at what price, under what contractual conditions re commission structure…period.

      No one tries to force anyone to do anything in this business against his/her wishes…except the Competition Bureau.

      Pricing a property to sell within a reasonable time period, thus allowing for sufficient exposure on the MLS, virtually guarantees a good current market value (what two parties 'agree' on) return via the sale. Economics 101 Shane.

      Sellers don't establish market value, as you call it Shane…buyers do. Try to figure that one out for yourself, and if you can't, come on back!

      Shame, Shame ,Shane.

      Brian the Absurd.

    • A seller doesn't have to pay a listing REALTOR 50% of the commissions Shane, no one ties them down, forces a pen into their hands then magically makes their wrist move. Heck, currently, a seller can pay, $0, $99, $199, $299, $399, $499, $699 even higher based on what I've seen to merely LIST a property.

      Yes, emphasis on list, meaning, plop it onto realtor.ca max 30 minutes worth of work to do so after the seller has provided all the information.

      Now I have four questions for you Shane, can you answer all honestly?:

      1) why would any seller who wants to have a mere listing posted to realtor.ca contemplate anything other than the $0?

      2) why aren't you, as a champion of competition, not attacking the above $0 fees?

      3) would you like realtor.ca available for the general public to upload their own listing?

      4) would you like realtor.ca available for the general public to update their own listing with sale price, closing date and such?

  14. The article is a good one however….. how much you charge has nothing to do with how much you are worth, how much you are worth has everything to do with your net income.

    We seemed to be confused in determining if a Broker is "Discounting and reducing service" or "streamlining and reducing expenses and passing those savings along to the consumer". Theres a big difference

    There seems to be a consistant description within the industry that if any realtor who does not charge 5% or 6% commission then they are labled as a "Discount Broker" and not a "Full Service Broker". Has anyone considered that may be some of them that are charging reduced commission rates are still providing Full Service (yet to be defined by anyone) or even better service than the so called, "Full Service" broker.

    Possibly they have chosen to reduce thier overhead costs by reducing the size and expense of the old school office preferring an boutique style office and a shift to internet branding and marketing, and may be they dont have to pay a franchised brokerage monthly fees, royalty fees, marketing fees and huge commission splits.

    If a company can substantially reduce thier costs while providing the same same or better service, then reducing thier real estate fees really isnt Discounting Service is it.

    • The phrase "discount broker" is one that is more the creation of those brokerages that wish themselves to be seen as such because it is integral to their marketing. As part of their marketing the "discount broker" can always claim to have saved their seller money, by comparing what they charged to a higher percentage that another broker might have charged. Of course, since the hypothetical other broker that would've charged a higher commission doesn't market the home, it's like a boxer claiming how much better a fighter he was than his opponent – who failed to make the weigh-in for their match!

      Full Service is quite simply everything that a REALTOR can and does typically do – including open houses.

      When a "full service" brokerage is asked by their seller: "when are you going to do an open house." they don't respond by asking their seller: "when are you coming over to pick up your open house signs." A "full service" brokerage isn't going to take inside pictures of their sellers home with dirty dishes piled up in the kitchen sink – just to avoid the extra expense of driving back on another occasion when the seller will be expecting the photos to be taken!

      All anyone needs to define "full service" is good ethics, and REALTOR is supposed to be defined by exactly just that – good ethics!

      We in the Industry aren't confused Dave, however you might be.

  15. When we take an honest look at the current typical compensation model based on a percentage of the eventual sale price. That model is flawed at its core, in so far that the successful sales have to pay for all those that do not…..

    We need to (as an industry) revisit the core structure of the compensation model and find an accepted way in which the core operating expenses of services provided to buyers and sellers are paid by all that seek those services, and in addition have some form of success fee compensation (which would be much lower than the current norm).

    That would provide for a much more equitable and appropriate model, that would ensure that the actual costs and expenses are recovered from those that receive service (even if and when they do not buy or sell).

    With less than 50% of properties selling from time to time, the traditional model is clearly not appropriate.

    • Hi Peter. I would certainly love to see our overseers fully endorse a fee for service model. That would certainly take care of many issues. However, the payment based on a sale priced model is not flawed, it is fundamentally no different to any retail store with its built-in losses for spoiled or unsold goods and the cost the latter incurs to order, stock and store on display.

      The closest thing to our compensation model is the insurance brokerage industry which is still very much commission based – from the fees received from the insurances carriers to the compensation paid to their brokers and agents. Most people don't realize it but there is a hefty commission fee paid from our premiums even upon renewal when it just automatically happens without the consumer ever once speaking with their broker or their broker even having to solicit the renewal ( I speak mostly of auto & home here).

      Regardless though of what models prevail, there will always be a horde of REALTORS and brokerages who would be willing to offer their services for a small fraction of the "traditional" amount to get business. Just as it happens within insurance brokerages yet, the commission system is still well entrenched.

  16. You are forgetting a fundamental element of a sale:condition of the property. In many cases the agent advises the seller of what needs to be done to the property to effect a quick sale and maximize the selling price. Usually the seller can't be bothered but still wants to list at top dollar. He just wants the agent to perform some magic and make the buyer ignore the much needed repairs, 25 year old furnace, ugly decor, clutter and junk, orange carpet and rundown appearance. But hey… let's penalize the agent when it take too long to sell.

  17. Hi Brian M.,

    It strikes me as peculiar, when those not directly involved in professional Real Estate take it upon themselves and their time to make generalized derogatory statements about this industry.

    So, the question becomes, are such posters just people with too much time on their hands or are they pursuing an agenda? The posters that might have nothing better to do tend to make comments that aren't so structured, while there are others who tend to try and structure an argument so that the uninformed might think they're getting an informed perspective – when they really aren't. This latter category of poster have an agenda, and in some cases it may only be theirs, but in other cases we need to contemplate who or what any remarks might benefit. I think that there is something of a benefit to the Competition Bureau when someone holds themselves out as a consumer and refers to some of the more traditional brokerage models with distain, and furthermore to our industry, in general, as unethical.

    If a poster really is a consumer that's had a bad experience with professional Real Estate, why aren't we simply reading an anecdote about that bad experience? It just doesn’t make sense that someone has an axe to grind, but no real storey to tell.

  18. In the retail world we have Walmart and Holt Renfrew. The same applies to the real estate business. It's not just a question of good and bad service but also about buying quality. I will go the extra mile for a client and like Debbie I deserve to be paid for my quality service and expertise.

    • Ross, Shane, et al

      Read Katherine Rutherford's post and tell her she is not worth top dollar commission. WOW! how things differ, the domicile variables are just HUGE!

      Talk about representation and the "worth" of a professional REALTOR? She NAILED IT! on the other feed.

      Someone should share THAT information with the press and colleagues across the nation. Price of property is immaterial. And then to have to take on that responsibility where there is ALWAYS likely room for error, and then that too becomes "her" responsibility? The costs involved are high indeed, in nerves and manpower hours and commitment.

      The "VALUE" TO A CONSUMER is "what" ?

      *****PRICELESS***** no matter what the $$$ cost in real terms.

      It PAYS to deal with a pro. She apparently is one. There are many. HIRE A (real) REALTOR! One who will stand with you till the job is done.

      Cordially,
      Carolyne L http://www.Carolyne.com

  19. The quicker it sells you should get less commission no? Since your costs of advertising, time and marketing have been less…. The best listing contract is one where the house is priced correctly the FIRST time it is listed, so many listings have price drops — that's either the Realtor admitting they "bought" the listing by coming up with an inflated list price (or went with the sellers list price, which is even worse!) or that the Realtor doesn't know the market. RealtySellers, Common Sense Realty (Alberta), 2% Realty, Rhino Realty, SellerInvite, Executive Flat Rate Realty (all from Alberta) — ALL Work perfectly if the house is priced correctly and the seller makes a HIGHER net take home sold price as they have saved thousands in commissions. Cutting commission is the only thing that makes sense to an educated seller, buyers will find their homes, even if their agents don't show the listings which is common in this unethical business.

    A Smart Seller calls in 3 Big shot Realtors for market evaluations and then lists with a discount agency at the median list price suggested and kapow!! House sells and they just saved $10,000!! I have done this 3 times now and works like a charm. Thank you very much for your free market evaluations.

    • "A Smart Seller calls in 3 Big shot Realtors for market evaluations and then lists with a discount agency at the median list price suggested and kapow!! House sells and they just saved $10,000!! I have done this 3 times now and works like a charm. Thank you very much for your free market evaluations."

      Considering you had the opposite intention, your statement is actually an excellent promotion as to where the expertise lies – with the non-discount REALTOR. Call them in for the expert opinion on just one matter (one of lesser importance btw when it comes to selling for highest and best net price), then to skimp, you choose to rely on what can only be the very same REALTORS you obviously don't believe can adequately price your home to market your home since you didn't ask their opinions, and to negotiate for you and protect your best interests.

      Hmm, smart you say?

    • Getting three REALTORS to give an opinion of value is a wise decision. However, it is time that agents providing the opinions be paid for their services. Agents need to STOP advertising that they provide FREE market evaluations. It probably takes somewhere between 3-5 hours (including preparation, travel time and presentation) or more to do a FREE market evaluation. If the seller gets 3 agents that is 3 x 5 = 15 hours of FREE service. In the end one agent wins and two lose. Often the seller knows which agent they are going to list with right from the start so they are just using the expertise of 2 agents before listing with their friend. Charging a modest fee of say $150 – $200 or more for your time is smart. Why work for peanuts!

    • Hi PED:

      Nicely check-mated!

      Shane is just the type of personality that one would NOT want to hire as one's Realtor, but, he is the type one might want to hire as one's opportunistic piggy-back artist of a slippery kind working on others' dimes.

      I don't think that that is a libellous statement, is it?

      Brian

    • Isn't there a western movie about a cowboy named Shane? In any event, this particular Shane wouldn't have cleared leather if this discussion was a gun-fight!

      A REALTOR should get paid less for doing the best job possible – wow, now that's a brilliant business sentiment. Conversley, if a home takes too long to sell the REALTOR should net more. This modern day Shane has an acute understanding of sales that seems to overlook the age old sales concept of financial incentive or bonus for delivering the ideal result that is desired.

      Shane would have a bright future with the Canadian Competition Bureau, but perhaps he already knows this, because he's already there!

    • Hi Alan M:

      You mention the "Shane" is "…already there!" re the Canadian Competiton Bureau. Do you know for a fact that "Shane" does work for the Competition Bureau?

      Thanks,

      Brian

    • Shane don't lump SellerInvite.com into that group. Even with our 599 package we'll go out and and do a full evaluation for sellers to ensure they get out of the gates on the right foot. If they're overly optimistic we tell them straight up so when they don't get the results they want they can react smarter and quicker. As well, we provide ongoing consultation if they have any general questions. As for showing the property, anyone who calls us and wants to see the home, we"ll show it to them.

      We've had a record start to the year and are selling over 80% of everything we list and those homes are selling at almost 99% of asking and most often fetching more than our most experienced competitors. We're proud of these results and we work hard to get them and those posting on here can talk conspiracy and ethics all they want, bottom line is sellers like what we do and they are achieving a level of success they'd not experienced prior. Proof that high fees have zero to do with experience, quality and based on our results, success!

      SellerInvite.com encourage our sellers to fairly compensate our fellow industry members and never reject those asking for more, and the proof is in the pudding with the majority of our homes being sold by other broker members.

      Lastly, I've heard many say we access the MLS for free, truth is I've been a proud member of CREA since 2003 and pay the very same fees as any other member to use the MLS System. I'm proud to call myself a REALTOR and a Broker, proud to work along side my peers and I'm especially proud to have had such a positive impact on the lives of so many…that's what being a REALTOR is all about.

      Rod Thompson, Broker
      SellerInvite.com

  20. "Quality is never an accident; it is always the result of intelligent effort. The bitterness of poor quality lingers long after the sweetness of low price is forgotten."

    John Ruskin

  21. Brian's thoughts are always interesting but I think we've allowed the discount brokerages to distract us from why MLS really works. MLS works for the same basic reason any business does, remuneration. The better you pay someone the more you have their attention. An integral part of the goodwill associated with the MLS system was and is the quality of remuneration. One of the many advantages of having more than less commission to play with is that it potentially gives us more room to negotiate in circumstances where a seller and a buyer have dug in their heels – perhaps in relation to a buyer objection that could be address with $.

    One of the thoughts that came to my mind quite a few years ago, upon the arrival of a new discount brokerage, was I wondered what was said to the seller in relation to the Comparative Market Analysis. In particular, since any market analysis was based on sale precedents using the MLS system, was the seller encouraged to think that similar results might be achievable by not using the MLS system? When a seller asked me what I felt I could sell their home for without using MLS, I told them that I didn't have sufficient data to give them an informed opinion, but I doubt that everyone was as forthright.

    Our acquired fear of the Competition Bureau of Canada has hobbled us from competing with discount brokerages. A number of years ago I prepared a flyer that I circulated into a local neighbourhood. I made the case for the potential cost of market time should a resale home not sell in 30 days, or 60 days or perhaps take 90 days. I added what I believed to be the potential cost of market time to the flat-rate being charged by the discount brokerage, for a listing the wasn't on MLS, and wasn't offering a selling commission. Upon reading my flyer the homeowner demanded that their home be placed on the MLS system, and the listing brokerage made a formal complaint to our Association, regarding my flyer. An investigation was launched and I initially received a letter of reprimand that was subsequently withdrawn, when I fought the circumstances of it. I wonder how many other REALTORS across Canada have also been intimidated from competing with discount brokerages, and if the Competition Bureau is really about Competition, why would anyone be discouraged from making their own argument?

    When a REALTOR completes a Comparative Market Analysis for a seller client he/ she has a clear obligation to make their opinion based on the statistics that are readily available. The compensation element of a sale statistic or an expired listing is something that a REALTOR shouldn't be allowed to ignore, as it is integral to the function and effectiveness of the MLS system, or in other words the goodwill.

    Whether making a case for a lower commission level or a higher commission level our statistics will make the honest argument, when properly included and presented.

    • And typically are you able to develop and show any sort of co-relation to the end price (sale price) vis a vis the co-op offered, as compared to the other local sales?

      It's not hard to establish that quite often, the figure offered to the co-op does in fact show, in capital letters, a higher sale price for the seller, and sometimes a faster sale as well.

      Every seller needs to be aware, as I have stated countless times over the years, that his property has to sell to at least three separate people, not including the buyer.

      First the seller needs to sell his own agent, next, that agent needs to sell his colleagues (read MLS), the buyer agent needs to be able to sell his client on the wants, needs, benefits, etc. And then comes the bank. The appraiser has to be able to be sold on the value that he reports to the bank, for whom he works.

      There are often buyers waiting in the wings, so to speak, who – yes, have a signed buyer agreement with their own agent. This is SUCH A GOOD THING. And one of the most important features of MLS… the ability to SHOW colleagues what is being offered. And the house sells quickly and for more money than other similar properties. WHAT is the common denominator?

      However, if the co-op fee is not sufficient to cover the B/agency agreement, this problem is easily solved. Why do agents have trouble explaining this to their clients? Simple: they pay the differential. They can pay it up front, or at closing. Either way, a paper trail is generated and everyone goes home satisfied. No?

      For those agents who don't or won't take the extra time to learn to understand the process, or educate their clients, they simply give away whatever little profit after txs, that they would have generated. Are they perhaps concentrating on volume of units as opposed to payck per unit? And THIS they truly do not understand in many cases.

      Carolyne L http://www.Carolyne.com

  22. Try this one on for size folks:

    When negotiating a potential listing with a seller, offer this scenario:

    X% (5%?) commission payable upon completion of a sale at a stated sale price via accepted Agreement of Purchase and Sale document arrived at/signed within X (30?) number of days of signing said listing…period…with a 'contractual addendum' to the effect that if the property does not 'sell' under the initially contracted-for, agreed-upon terms, within said time frame, that said contract will become null and void to allow for a second contract at X% (a lesser) commision payable upon completion of a sale…under the exact same conditions as the preceding contract stipulated for another stipulated time frame (30 days?), and so on, contractually, with each new contract superseding/negating the former, until the property is sold. Thus, the Realtor will have to establish a realistic opinion of value up front in order for the property to sell in order to earn the maximum commission payable within the, say, initial 30 day listing time frame. The longer the property takes to sell, the lower the commision…period.

    How can RECO, OREA, CREA, THE C.B. et al , f–k with this scenario?

    Each listing contract is a stand-alone contract, with provisions for one, two or more new contracts built right into same, something like on-going leasing arrangements.

    The seller can refuse to abide by this system of selling via a licensed real estate sales person and his/her Brokerage, right up front, and hire someone else. It will be his/her choice, as usual, when dealing with licensed real estate sales representatives.

    A final end date can be written into this type of galloping contract, say, three months hence.

    This is a common-sense approach to marketing properties for sale; it is legal.

    Lawyers?

    RECO?

    Melanie?

    Anyone else?

    Just an outside-the-box thinkin' kind'a guy.

    Realtycellars et al can't top that for performance for dollars spent…ever.

    They take sellers' monies 'before' anything happens, if at all!

    Brian…Waiting to be told by the powers-that-be that this can't be done.

    • Waiting to see what kinds of replies you get, Brian. Years ago someone wanted to do something similar and the only way it could be implemented was with a side letter (now likely falls under the "Collateral Agreement" philosophy perhaps). Side letters were illegal. Licences were lost over such.

      I recently brought up the topic and someone wrote that side letters are now an okay thing but when I asked for rules and regs proof none was forthcoming.

      As to Collateral Agreements, it is my understanding (someone correct me if I am wrong) collateral agreements must be referenced in a listing commentary, and explained or showed to, shared with, colleagues.

      The issue likely to come up, would be if the listing sold or "firmed up" as to contingencies during the "dead contract" period, while waiting for the new one in place to be "processed" into the system.

      Anxious to see the forthcoming comments. Thanks for sharing.

      Carolyne L

    • Seller who sold became buyer who bought – paid full pop commission to sell, got top dollar, and paid extra over the buyer co-op and got fantastic dream property at miraculous price.

      Didn't understand at first why he would have to do that, because no other agent they worked with even addressed the topic. He merely needed to be educated, is all. Truly, that's what it is all about; no more, no less.

      Then he [they] wrote:
      "[We] are certainly in your debt. We basically made a windfall of 10'S of thousands of $ in one night due to your efforts. You told me that you earn your fees and you were not kidding . . . I sensed that you were for real."

      I treasure that testimony. It really is not about the money. Do a superb job and the paycheque takes care of itself. But you need to know you are worth it (and if you don't think you are, then certainly no one else will think so, that is for sure), and you need to learn how to express it so that you are not misunderstood on that topic. It's not always a short discussion. Thanks for addressing this topic, Debbie.

      Cordially,
      Carolyne L http://www.Carolyne.com

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