Realtor vs. Private Sale - Is the incremental value justified?

RATEHUB.CA

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Realtor vs. Private Sale - Is the incremental value justified?

The selling process begins with the homeowner selecting a real estate agent they can trust. Traditionally, this real estate agent came attached with a 5% commission rate—2.5% for the listing (selling) agent and 2.5% for the buying agent. For the purposes of this discussion, let’s concentrate on the commission paid to the selling agent.

In Toronto, where the average selling price of a home is close to $400,000, this means the average real estate commission paid to the listing agent is $10,000. Is this the fair market price to sell a house?

Some homeowners will say “no way” while real estate agents insist they work hard to earn every dollar. So who’s right? Will homeowners exercise their right to sell their house privately? Or will they realize all too quickly that their house will sit on the market without the help of a qualified realtor?

To answer this question properly, I wanted to hear both sides of the argument. I started by speaking with some of Toronto’s top agents, like Mark Savel (@SavelSells), and ended my day with PropertyGuys.com franchise owner, Kevin Gaston. This lead to a number of observations and questions – so please share your thoughts below!

The way I understand it, homeowners now have multiple options when it comes time to selling their home:
1. Full service model Real Estate Agents $10,000 (2.5% of selling price)
2. Discount brokerages Ex. Hive Realty $6,000 (1.5% of selling price)
3. Private sale + consulting Ex. PropertyGuys.com $399 – $2,692
4. Private sale Ex. ByTheOwner.com $200 - $500

Question 1: Where are the incremental dollars going?
If I, for example, list with Hive Realty vs. ByTheOwner.com, what is my $5,500 going towards? Will my house sell more quickly? For a higher amount? For less work? For real estate agents out there, what do homeowners need to be aware of if they list their home privately?

Question 2: Will private sales claim a bigger portion of the market?
PropertyGuys.com advertizes ~40,000 listings to date. Since they have been around for 10+ years, this equates to roughly 1% of the listings market over that time. PropertyGuys.com is just one example, but do you think we will start to see private sales claim a bigger stake in the market now that their listings will also make it to MLS?

CALCULATION
PropertyGuys.com listings to date 40,000
Average residential re-sales (2005-2009): 476,474
Length of time 10 years
Share of market 40,000 / (476,474 * 10) = ~1%

Question 3: Where exactly are realtor commissions going today?
A traditional 2.5% commission equates to $10,000 on a $400,000 house. I’ve made an estimate on where these expenses are going, but am curious to hear from agents where these dollars are going.

Brokerage fees $2,000 (Assuming an 80/20 split)
Advertizing costs $500 (Listings in the paper, printing flyers, brochures, etc.)
Admin costs $100 (Cell phones, website, etc.)
Taxes $2,960 (Assumes 40%)

Profit per agent: $4,440

Question 4: Is consolidation inevitable?
I spoke with TREB (Toronto Real Estate Board) today and learned that there are at least 30,000 real estate agents in Toronto alone. With ~87,000 sales in Toronto in 2009, realtors are selling 3 homes per year on average. Is there potential for consolidation in the market? For example average commission per sale goes down, but we see a smaller number of realtors selling higher volumes. Agents still keep total annual commission levels, but are selling a larger number of houses to get there.

Consumers continue to hear about changes in the real estate market but we need the professionals to help us interpret these messages. I would love to hear your thoughts.

Alyssa Richard
Founder of RateHub.ca
@RateHub_Canada

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Canada / General Chit-Chat

RON ALPHONSO

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2 BEST REPLY

The question is should you use a real estate agent and how much should you pay that agent. The answer is it depends!! I buy and sell many properties for myself and my clients. I have used all of the various types of real estate agents including PropertyGuys and many FOR SALE BY OWNER (FSBO) companies.

If you are in a hot market like Toronto you really do not need to pay 30K to 50K to sell your home, list it on Kijiji, it will sell for a good price and you pay no commission. To cover all the bases, I go with a FSBO company and have the property MLS listed. If you are in a slow market area or rural area go with real estate agent.

If you are facing a power of sale or foreclosure go to our website www.mortgagebrokerstore.com and we can you stop the foreclosure.

CARY CHAPNICK

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Alyssa,
HiveRealty offers the same services as a full Service Model. Prior to starting HiveRealty I worked 10+ years at one of Toronto's top boutique full service brokerage houses. ( Slavens and Associates).
We have streamlined our processes and offer everything marketing and service wise that you will find at a full service shop but we have kept our overhead costs down thus allowing the consumer to save on commission dollars.
There is no comparison to listing privately or employing a full service realtor/brokerage to sell your home....the pros outweigh the cons by a landslide in my opinon but then again I am biased.
Let me know what else you would like to know about our service offering. Asides from a full web/social media presence ( www.85bloor.com is an example of our dedicated domain per listing), we offer Sellers full tracking of all showings, agent presence at all showings, help with negotation and setting of the house price, an agent present for all buyer visits and pre-close home inspections, full signage on the property.
This is just a sampling but i have taken what i learned at the full service boutique and have been packaging it that way at a lower cost to consumers by not running a large scale office with huge overhead that many brokerage have been operating under for years.
Looking forward to helping you find out more!
Cary Chapnick
Broker of Record
Hive Realty Corp.
www.hiverealty.ca

CARY CHAPNICK

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also we spend way more than $500 per listing,....that is a cost split at HIve Realty by the agent/brokerage.....we offer a full internet package with high res photos , domain name etc.
Also we flyer an entire neighborhood with high gloss double sided post cards advertising a listing debut, open houses.
As well we will take ads in the globe, national post, star etc....
Its hard to "estimate" how much profit an agent makes per listing as there are often hours spent at the property getting the package/property primed for listing, sitting thru open houses, attendance at home inspections, showings.
Responding to emails.
The agents who bust their ass should be compensated for their time as they are commissioned salespeople and would you as a house seller want to have the person you are hiring to sell your house make not much money for what could end up being 50-75 hours of time prepping and selling the house.
When you break the hours spent even with your example above at 50 hours the "Agents profit" of $4,440 pre-tax which would ammount to way less post tax dollars....say it becomes $3,000 by 50 hours its about $60 an hour.
I often say you get what you pay for in the business as I have seen many agents who put in zero work and no time and those houses then sit....but often times those agents arent being compensated properly for their time thus the lack of incentive to sell hurts the vendor. The agents in this case are just happy with the free advertising that comes with having your name on a lawn in a neighborhood that might lead to more listings.
I personally feel that the incentive should be there for the agent to sell the house and again I am always willing ( as are my HiveAgents) to discuss commission and come up with a package that satisfies all parties.
Obviously a million dollar listing might require more of a budget and time that a bachelor condo in Liberty Village but we always asses each situation to its own to keep the consumers satisfied.

MARTHA LEE

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I like the fact that we, as consumers, now have choices. I am also a firm believer in `you get what you pay for' and I won't pay for services that I am not 100% satisfied with. A realtor performs a great deal of services for their clients, which go far beyond marketing. Many of us turn to our realtors for investment advice, and considering the size of the investment we are making, that advice is worth its weight in gold!
I hired a Colour Consultant before hiring a painter for the same reason - what good is the paint job if you can't stand the colour??
Real estate agents also perform a tremendous amount of paper work, due diligence and administrative and secretarial duties. I heard that a good selling point is asking a client if they are comfortable with a group of strangers coming to view your home while your wife and kids are home..
What is that worth?

CARY CHAPNICK

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Martha
Well stated -- I have had a client who wanted me present at all showings when he was unable to be there as he was a lawyer and wasnt going to be home till late. For the most part I accomodated this request and the clients were satisfied as hell with the services.....in the end every package is negotiable and the fact that choices exist is great for everyone.
I am a firm believer that you can have a "full service" realtor for less than 2.5% but its hard to expect "Full service" from an agent being paid half a point commission.....
Cary Chapnik
Broker of Record
Hive Realty Corp Brokerage

NATHAN DAUTOVICH

NewBee

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Good discussion. With all the new options out there, it can be confusing for some consumers, and as a PropertyGuys.com associate, I get asked these questions every day. Something to remember when working with any discount brokerage - there will always be a 2.5% commission paid to the buyers agent. They can advertise a no commission deal under certain circumstances, but do your research, find out how many of their deals pay less than 2.5% to the buyers rep, talk to people who have done so. There are lots of costs associated with being a realtor, and it has all been built on the 5% commission model. If they are offering a complete sale of a home for a few hundred dollars, they will probably lose money. Something has to give, and usually if the deal seems too good to be true, it probably is.

What we've found so far is that more than ever buyers are searching for homes online on MLS and sites like PropertyGuys.com. Buyers are also more willing than ever to speak directly to the seller. Unlike most discount brokerage listings, the new MLS listings offered through a partnership with PropertyGuys.com give sellers the option to pay no commission at all, and these are the types of deals we encourage. Everything is clear up front, there are no hidden costs, fees, etc, and our clients like that they know exactly what they are paying for and where their money is going. Our web traffic on our listings in Toronto has tripled since we announced the MLS partnership, and our properties are selling faster than ever, so it must be working!

Nathan Dautovich
PropertyGuys.com

MARK TUBIS

NewBee

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Alyssa said:

Profit per agent: $4,440

This number makes sense as a per-close figure, except it doesn't take into account the operating expenses a Realtor has as part of the daily job. Brokerage fees exist regardless of sales, as well as client relations and promotional expenses. Although negligible as far as the overall commission, a lot of Realtors also use us to give back to the client in the form of a closing gift.

I wouldn't be surprised if the average profit was substantially less per close. It's true there are Realtors who don't look after their clients and probably don't sell many homes, but the ones who do bust their butts.

RATEHUB.CA

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"Our web traffic on our listings in Toronto has tripled since we announced the MLS partnership, and our properties are selling faster than ever, so it must be working!"
Nathan do you have any statistics on average days until sale, average selling price vs. listing, for private sales vs. realtor? Those numbers would be very interesting for individuals looking at different options.

CONDO CHICKS

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Wow what a great topic!

Like the old adage says “You get what you pay for”. The obvious point is that Realtors are experienced. This is our job. We do this for a living so we know what it takes to sell a home.

Another point to mention is that Realtors on a full service are paid only after the sale is complete. We put in the work and spend the money before we are compensated. If the home doesn’t sell, we don’t get paid or reimbursed for our costs. Many times Realtors will spend money on advertising and put in many hours showing and holding open houses only for the owner to decide they want to take the home off the market. With the pay per service option, the seller pays upfront for the services regardless of if the home sells.

There have always been discount brokerages and private sales going on in Toronto so the idea of this isn’t new. Choosing which option to go for depends on the seller and their needs but I think the majority of sellers see the value of hiring a professional to sell their property.

I like the idea of having choice and I think even full service agents are willing to customize their services to accommodate seller’s needs. Like all industries there are the good and the bad. I think finding a good realtor who truly cares about their client is really at the heart of the issue.

www.condochicks.com

NATHAN DAUTOVICH

NewBee

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Alyssa said:
"Our web traffic on our listings in Toronto has tripled since we announced the MLS partnership, and our properties are selling faster than ever, so it must be working!"

Nathan do you have any statistics on average days until sale, average selling price vs. listing, for private sales vs. realtor? Those numbers would be very interesting for individuals looking at different options.

We really do a lot to make sure our properties sell at market value, including giving all our clients market data, and working with a licensed appraiser to determine the market value of a home. Then when buyers come in and see professional advertising, ads in the Toronto Star, direct mail campaigns, and MLS access, of course they are willing to pay full market value, because if they don't then someone else will! For these reasons our sale prices match very closely to what realtors do.

Time on market and success rates are the same - since now our clients can get more exposure than they would using an agent, of course they are just as successful and since they target the same group of buyers, it takes just as long.

Some of the comments are interesting about having a "professional" to handle your sale. Please remember that PropertyGuys.com has professionals too! We are with you every step of the way until you sell. I represent just one of over 110 franchises across Canada, but my clients have already sold well over 100 properties in the last year and a half, and every month we are setting new records for selling and listing properties. You get that local expertise and the professional exposure you need to sell with PropertyGuys.com, all at a fair price.

NATHAN DAUTOVICH

NewBee

3

One more note, in the original article you list full service realtors at 2.5% and discount realtors at 1.5%. Where is the buyers commission!? These totals should really be 5% and 4%, because there is always 2.5% going to the buyers agent on the other end. It is only companies who target private buyers like PropertyGuys.com where this 2.5% to the buyers agent doesn't necessarily exist.

ROY BHANDARI

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I'm not in a position where I can speak for everyone, but I can certainly speak for myself.
It's already been said "You get what you pay for", and the original question of "where does that incremental money go" is a very good question. You cannot put a blanket across here and say "listing with a Realtor will get you $x more" or "listing with a Private service will get you $x less" because it's not that cut and dry, I'm afraid.
Here is what I know:
The average agent:
List-to-sell percentage: 97.8%
Average Days on Market: 31
MY NUMBERS (How many agents do you know that not only track their numbers, but also track their numbers against industry averages? I work in an office of approx 100 agents, and I am one of 2 agents who do this).
List-to-sell percentage: 99.3%
Average Days on Market: 23
On average, if you list with me vs. an "average Realtor", I will get you 1.5% more for your home and sell it 8 days quicker.
I'm a firm believer of "number's don't lie" - number's don't have an agenda. Is it luck that my numbers consistently beat out the averages year after year? I don't think so - I am extremely picky about what goes on MLS in terms of images (digital imagery is extremely important), I have a full marketing plan that I FOLLOW THROUGH ON - nothing is left to chance. I am not running around trying to get everything done at the last minute - my business runs like a machine - I put the listing in on one end and on the other end comes out a full marketing plan. I am not running around at the last minute trying to create feature sheets and decide when I am doing open houses - all that is pre-done and ready to go.
Not only that, but I have an excellent team of people working around me. I have a homestager that is amazing, I have a mortgage broker who can get the job done, and a lawyer that I can rely on if the going gets tough.
Do I earn my commission? I work 12-14 hour days, 7 days a week. My last "day off" was over two months ago. I work harder than any 9-5er I know. I wake up thinking about real estate, I go to bed thinking about real estate. When I walk into your door and make things look easy - it's because I've spent countless hours working on my craft, whether that is working on the buyer side with pre-construction (having a database of knowledge that I can spout off about the various projects throughout the city comes with time that I have spent learning about this stuff...) or working on getting your home/condo sold.
This post was not meant for me to come off as "salesmanish" because I never run my business like that, however, when people start questioning my commissions I get defensive :)

RATEHUB.CA

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Hi Roy,
You don't come of ass "salesmanish" (which if officially my fav. word of the day) you come off as passionate! My post was truly to encourage some solid discussion, backed up by numbers and facts. I appreciate you sharing yours with the forum.
I have meet a lot of very hard working passionate realtors since engaging with the market over the past few months. There is no doubt about that. I also think that the need for realtors (people knowledgeable in the industry, understand neighbourhoods, market trends etc.) will not go away. The power of the internet does change the game and I am interested in hearing your thoughts on what value can be brought to the real estate industry. With such a competitive realtor industry, it seems to make sense that value can come through consolidation. If realtors are able to spend less time marketing, and acquiring clients, they can sell more homes.

Your thoughts?

CARY CHAPNICK

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Roy
On average, if you list with me vs. an "average Realtor", I will get you 1.5% more for your home and sell it 8 days quicker.
This is a bit of a jingled statement. First of all list price and sell price are so skewed in a market where prices are rapidly changing and many properties are underpriced. You haven't factored in if you hold back offers etc.
We all know you are an excellent agent but those stats are sort of pointless in my opinion as they do not disclose a full picture.
There is no doubt I'd love to have you on the Hive Realty Sales Team but your statement of listing with you vs. the average realtor is totally unquantified in my opinion as stats can be played with and I am sure we all have taken listings where the Seller wanted $10,000-$30,000 more than you suggested but you took the listing and got the price reduction several weeks in.
You have to be careful though when you claim you can sell a house 8 days quicker and 1.5% higher than an average realtor.
This is the kind of statements that get you in trouble from RECO.
I know this as i was just audited for Hive's first new brokerage inspection

ROY BHANDARI

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^ I completely agree with what you said and in hindsight, the comment "I will get you 1.5% more on average" is an over exaggeration of Brad Lamb proportions. I didn't mean it quite like it read, and the purpose isn't to solicit anyone on this forum but to have a discussion.

Cary said:
This is a bit of a jingled statement. First of all list price and sell price are so skewed in a market where prices are rapidly changing and many properties are underpriced. You haven't factored in if you hold back offers etc.

Consider the following scenario. There are two students - over the course of a year one of them has an average grade of "A" and the other has an average grade of "B". Based on the grades, you would say that the student with an "A" is smarter. However, there are hundreds of reasons behind the second students lower grade - illness, missing a test with "real" reason etc etc etc. Is it unfair to say that the student who got an A is smarter than the student who got the B? Now let's assume that over the course of 4 years, the student who got an A consistently gets a full grade higher than the student who got the B - is it now safe to assume that the first student is a full "grade" smarter? If I continuously out-perform industry averages (not once, not twice, but consistently) is it not safe to say that my results should speak for themselves? Should I be condemned for letting clients know about these numbers? Numbers don't like, number's have no agenda.
My point is that there are ways of seeing which agents are "better" than others, and I believe the secret is in the numbers and not the fancy marketing packages that get put together. A great analogy that one of my Real Estate coaches (Richard Robbins) uses is - if you require brain surgery, and you go to a doctor who has performed hundreds of successful operations - are you more concerned about what he DOES to ensure a successful surgery or just that he gets the job done?
Similarly, in my business, if my marketing plan consistently gets results, are you concerned with what I DO (open houses, flyers etc.) or that I can get the job done? The marketing plan, if it generates consistent results is irrelevant.
Certain agents do consistently out perform the industry averages, and yes there are always stories behind the numbers (underprice/price reduction etc.) but understanding markets, pricing etc etc is all part of the expertise behind what we do. I can't speak for other agents, but I am extremely protective of my numbers because they define who I am as an agent. If all you are paying your REALTOR to do is create pretty flyers, you're concentrating on the wrong aspects.
If I come off as rambling and none of my stuff makes sense, please be kind -- It's been a long day :)
If you're not already connecting with us check us out at www.twitter.com/talkcondo and check out our new site pending launch in January www.talkcondo.com :)

CARY CHAPNICK

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Roy - Im connecting with you and want to see you buzz over to the Hive!
I get what you are saying....ive been at this 12+ years and i have seen many come and go.
I agree with much about what you are saying except for "your numbers".
As we know its more than a numbers game and numbers can be construed in a variety of ways to sell/prove certain points.
I am too zonked to discuss more but we'll keep the dialogue flowing.
Cary Chapnick
Broker of Record
Hive Realty Corp., Brokerage
www.hiverealty.ca

CARY CHAPNICK

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Also Roy this talkcondo site....just a heads up -- lots of RECO issues....im sure your Broker of Record will tell you....great site but could get you guys a slap or two on the wrist.
If you need info/help feel free to connect

ROY BHANDARI

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Thanks Cary!
I am aware of all the RECO issues. My main goal right now is to get the content finished up - since the site isn't fully launched (only advertising it to people in the industry to get feedback), all of the RECO stuff will be taken care of by the time we launch in Jan.

CARY CHAPNICK

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k just a friendly heads up -- they will come knocking occaisionally.....you have a very nice site!!
lets all pray the condo market stays healthy and vibrant!

MICHAEL WINESTONE

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Hey Guys.....just my two cents here...

As a realtor, I can see why people are turning to alternative models for their home sales. The majority of agents are not aware that the current system was created during the industrial age, and was based on factors that put agents as one of the few sources of information and assistance with such a large transaction. We are now in the information age, where computers and the free flow of information has really changed the game for many industries. The problem with real estate is that agents can't seem to grasp idea that transparency is a big part of the new world we live in, and that the days were information and freedom of choice can be locked down are now long gone. This opening up of the MLS to "mere posting" clients is just grease in the pan considering the internet is stilll so young (15 years old) and there is so much more potential for it.

Agents need to treat things more like a business and less like churning out deals. Creativity and full transparency is going to win in the future of this game. Old school just wont cut it.

That said.....I still believe there will always be a place for good Realtors. It's just gonna be a different way to play.

Michael

AMIT BHANDARI

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Michael said:
Hey Guys.....just my two cents here...
As a realtor, I can see why people are turning to alternative models for their home sales. The majority of agents are not aware that the current system was created during the industrial age, and was based on factors that put agents as one of the few sources of information and assistance with such a large transaction. We are now in the information age, where computers and the free flow of information has really changed the game for many industries. The problem with real estate is that agents can't seem to grasp idea that transparency is a big part of the new world we live in, and that the days were information and freedom of choice can be locked down are now long gone. This opening up of the MLS to "mere posting" clients is just grease in the pan considering the internet is stilll so young (15 years old) and there is so much more potential for it.
Agents need to treat things more like a business and less like churning out deals. Creativity and full transparency is going to win in the future of this game. Old school just wont cut it.
That said.....I still believe there will always be a place for good Realtors. It's just gonna be a different way to play.
Michael

Spot on, mate. Because of this 'free-flow' and availability of information, you have to respect your customers and clients. You cannot go in their expecting them to know nothing. In-order to show your expertise you must really know something that they didn't know, they know they didn't know, and they realize they need to know it. This is where true 'value' comes into play nowadays and this is what will eventually separate the average from the good, and the good from the exceptional.
The reality is every industry in the world is always evolving and changing and to stick around you have to evolve and adapt with it. With the MLS opening up, we will have to adapt - like in any business, there are obstacles and this is just another obstacle to deal with - I say bring it on - any challenge only makes the exceptional business people better.

STEVE ROBINSON

NewBee

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It keeps getting said "You get what you pay for".....
So if I sell my $400,000 house the total commission I pay (buyer's and seller's agents) is $20,000 (plus HST of course). Tell me where I get $20,000 worth of work? To put this in reference this is $10.99 per hour, 40 hours per week, 52 weeks of the year. That's right this is the annual salary of a full-time person making more than minimum wage. So if i choose to sell my home privately I could take 6 months off work and effectively make $20+ per hour. Not even taking into account if I choose to price it correctly and sell it in a few weeks, days or hours!
What else could my $20,000 be used for?
A 2011 Harley Davidson Road King - http://www.motorcycle.com/specs/harley-davidson/touring/2011/road-king-reg/classic.html
Trip for 6 to Fijiji - http://www.adventurefinder.com/adventure-travel/fiji-adventures/iexplore-fiji-experience-iexplore-tidiexp0382.html
A Vacation Property in Gravenhurst - http://www.realtor.ca/propertyDetails.aspx?propertyId=9801590&PidKey=-272107381
So I don't care how much "experience" you have, marketing "skill" you have or how nice a smile you have there is no way you can give me $20,000 in value by selling my house when I can get the same thing for under $2,000.
Steve Robinson

MICHAEL WINESTONE

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Steve said:
It keeps getting said "You get what you pay for".....

So if I sell my $400,000 house the total commission I pay (buyer's and seller's agents) is $20,000 (plus HST of course). Tell me where I get $20,000 worth of work? To put this in reference this is $10.99 per hour, 40 hours per week, 52 weeks of the year. That's right this is the annual salary of a full-time person making more than minimum wage. So if i choose to sell my home privately I could take 6 months off work and effectively make $20+ per hour. Not even taking into account if I choose to price it correctly and sell it in a few weeks, days or hours!

What else could my $20,000 be used for?
A 2011 Harley Davidson Road King - http://www.motorcycle.com/specs/harley-davidson/touring/2011/road-king-reg/classic.html
Trip for 6 to Fijiji - http://www.adventurefinder.com/adventure-travel/fiji-adventures/iexplore-fiji-experience-iexplore-tidiexp0382.html
A Vacation Property in Gravenhurst - http://www.realtor.ca/propertyDetails.aspx?propertyId=9801590&PidKey=-272107381

So I don't care how much "experience" you have, marketing "skill" you have or how nice a smile you have there is no way you can give me $20,000 in value by selling my house when I can get the same thing for under $2,000.

Steve Robinson

Hey Steve,
I don't know if that is 100% true. The $20,000 you paid does not account for what your listing agent makes. $10,000 goes to the agent that brought the buyer, and has probably had some influence on the purchase by educating the buyer as to all the in's and out's of your home, as well as negotiating and all the admin that needs to be done. Thats gotta be worth the $10,000 (minus his brokers cut and taxes). Your agent only recieved $10,000 for setting up the listing, as well as staging, feature sheets, admin, marketing, etc. Of that $10,000, he/she probably has $1000 in expenses of the bat and gives a % to his broker, which in some cases is quite high (like mine). So, he walks away with $6000 lets say......pay's taxes and is left with $4000. In my mind, thats not a lot of money for the time and effort spent.

As for selling privately, that $2000 is not really $2000. Not only is your time worth money, but also buyers are really quite savvy these days. They know you are not paying an agent, so do you not think they will beat you down in price by another $10-15k at least??? I've dealt with many "For Sale By Owners" with my buyers and its a piece of cake to get them down 6-7% on the price by justifying what they are saving by not having an agent. People dont realize that by spending the 5%, you have a much better chance of netting MORE then if you try to sell it yourself. Thats the incentive of a "GOOD" agent.

Michael

MICHAEL WINESTONE

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Oh, by the way......

I still think that the current system will evolve in the next few years and the way agents are paid will change BIG TIME. But, that doesn't mean that agents dont provide value with the current system we have.......

Michael

DUSTIN LONGPRE

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Since I don't have the lattitude to just up and take a leave of absense from my job to sell my house, nor do I have the spare time to devote to marketing it properly or show it or do an open house... nor do I have the knowledge needed to properly market/price/etc my house to get the most out of it... I'd imagine I'd easily lose money trying to sell it myself, as I'd likely get less for it then a top notch realtor plus it'd take me much longer to sell it. I was amazed at how great a realtor can be with the sale of my last house. The amount of effort put forth and dedication was amazing. No way I could have given my house near that much marketing. For me, it's a no brainer. Let the professionals do their job. I'll keep doing mine (not selling houses).

ANONYMOUS

BabbleBee

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Michael said:
Oh, by the way......
I still think that the current system will evolve in the next few years and the way agents are paid will change BIG TIME. But, that doesn't mean that agents dont provide value with the current system we have.......
Michael

How is the way agents are paid going to change?

MICHAEL WINESTONE

Buzzer

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3

Cliff said:
Michael said:
Oh, by the way......

I still think that the current system will evolve in the next few years and the way agents are paid will change BIG TIME. But, that doesn't mean that agents dont provide value with the current system we have.......

Michael

How is the way agents are paid going to change?

The current commission system is a 50+ year old way of doing things, meaning it was put in place during the industrial age when there was no real means of communicating information properly.

With the information age upon us, and the internet growing at a pace that would spin anyones head.....real estate needs will eventually be serviced the same way stocks are now bought and sold. You can still hire a professional broker to give advice and trade on your behalf, which costs more and demands more out of your finance managers (aka accountants, etc). OR, you can capture most of the information you need through online brokers and the information available through the web (which is pretty much anything). Online brokers are 1/4 of the cost (if not less) and allow the client to have more control over what he/she does. Real Estate will eventually head the same route. Will comparible sales information, demographic information, videos and online appt bookings.....its easy to see that the more simple "certain parts" of the transaction gets for the clients, the less the realtor needs to do.....hence the less the paycheque needs to be. Thats the whole principal behind this new 10 year agreement with the compeition bureau. Open up the MLS to those that would like to choose their services, and reduce the price of realtor services.

The resistance from agents has only been because most are old-school and they dont really get technology yet. Agents are also trying to protect their paycheques, which (as an agent) I dont blame them for. Eventually they will have to roll with it all, but it's probably about a 3-5 year transition.

Regardless, there will always be a need for good FULL SERVICE agents too. There likely wont be 29,000 TREB members in the coming years to do the job, so it will probably be a huge benefit for the industry anyway.

Michael

Realtor vs. Private Sale - Is the incremental value justified?

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