I recently got into a debate (no surprise there) on Facebook (again, no surprise) about the Real Estate profession and my opinion on a particular topic. First off, I should have learned by now that having an opinion is something that is frowned upon, especially if it differs from the norm. Daring to speak up on topics, especially in a small town, can be detrimental to ones' career, despite all the rules governing my profession.
Back in the day when we arrived in Canada, the price of our first detached 3 bed home was $167,500. 5% of that was just over $8300 plus only half the tax one would pay today($415.00). This was in 2001 so some agents could still be charging 6% or maybe even more. At the same time in England, commission for selling your home would be anywhere from 3/4 to 1.5% or possibly 2%. That would be 'Sole Agency' for the lower end, and 'Dual Agency' at the top.
These days, a similar home might sell for $550,000 +/- 5% of this is now $27,500 plus 13% tax $3,575 = $31,075. Not such a hard pill to swallow if you have lived in the home for a long time, have little or no mortgage, and have therefor made quiet a decent profit. However if you have only been there a while, not so easy.
Now, a quote, "Being brought up one way, and trying to see another way is very difficult"...
Since becoming a licenced agent in 2006, and coming from England, where real estate works a little differently, I have always thought that the commissions charged here are high, and did not feel comfortable charging so much. You see I have been an 'employee' and self-employed, and its being the 'employee' that makes me see the other side to the argument. I understand what it is like working for that bi-weekly pay cheque, trying to make it cover the bills, pay all the expenses and then hoping to have something left over to try to enjoy the process... Most Canadians live to work, rather than work to live. Not through choice so much, but through necessity.
I also understand what it is like being self-employed, waiting for the next 'deal' to close, working out a budget, running on the hamster wheel, hoping not to fall off or spin out of control. The Real Estate industry can be feast or famine. There are fixed expenses that agents have to pay. The education courses to start with, then the ongoing yearly insurance, board fees, licence fee, continuing education fees. Then you have your company charges, which are gradually getting more competitive, websites, advertising (which mostly promotes the agent, not the home).
These are all a cost of doing business. I have yet to find a miracle business that does not carry a price, whether it be monetary, emotional, psychological or physical. Is it right that the consumer has to pay for these costs, when it was the Agents choice to become a Realtor? On one hand, yes. If you bank at a main stream bank, you are paying banking charges, overdraft charges, interest, investment charges etc. of which a small amount goes to employees, and the rest to the big dogs (Shareholders). The same can be likened to Real Estate. Yes you are paying the agent, but a portion of their earnings will go to the Brokerage (liken to the Shareholders). Depending on which Brokerage this is, will mean that this amount will vary.
There are new companies emerging like iPro Realty, REX, ZOLO to name a few, that are referred to by some in the industry as 'discount brokerages'. This may give the impression that the commissions charged might be lower, whereas some of the time, it actually means that the company is not charging the agent as much, and so the agent gets to keep more of the commission for themselves.
This change in business model for the Brokerages has forced competition between the Brokerage owners and franchises, and the effect is a reduction in fees to the agent, or perhaps an alternative way to pay dues such as taking a higher amount per deal rather than paying a monthly fee and a lower 'split' to the Brokerage.
The point is, that Real Estate commissions cannot, and should not be fixed. An agent can charge what they choose, they are self-employed for a reason. It is their business to run how they want and see fit. This is frowned upon by some in the industry, who will, despite being bound by a code of ethics, question the integrity of the agent, cast aspersions on that agent when having to compete against them, and when being asked to lower their rate. I know because this has happened to me numerous times. Most recently in the Facebook post I mentioned at the start of this blog.
In a crazy 'feast 'market like the one we have just been through, where houses pretty much sell themselves and the agent is merely a vessel to accommodate the transaction, we see that it does not have to cost a lot to sell a home.
During the famine time, where agents can go for quite a while without a pay cheque, their budgeting prowess comes into the picture. It is very true that you can put in many hours of work selling (or buying) one home, and hardly anything in the next. Is it right, therefore, that one seller should be compensating the agent for another?
Surely there has to be another way? Maybe one day it will come down to 'sole agency' where there is a listing agent and a selling agent, and no multiple representation (another highly debated topic altogether). Maybe it could be a fixed amount to sell your home (as in the Comfree model). Should it not be the consumers right to chose which method they go with, and to not be penalized for doing so?
In my Real Estate business it is not my intention to be in the top of any club. I am not concerned with being 'Number 1 in my area'. I am not driven by receiving awards from my brokerage. My number one priority is doing the best job I can for my client and acting solely in THEIR best interest.
I understand how hard they have worked to pay to keep a roof over their heads, pay the bills, feed their family, clothe their kids and try to have some funds left over for College or University or for a family holiday, or to give their kids the best Christmas that they can afford. This is why I chose to charge less. I still make a reasonable living. Sure I would love to charge more and earn more, who wouldn't? Does that make it right?
I am and always have been guided my conscience. My sense of fairness, of right and wrong. I am not saying that how other agents choose to run their business is wrong, or that my way is right. I am merely wanting to run MY business how I choose to, and not to be dictated to, intimidated by, or discriminated against because of it.
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