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Realtors must lower commission rates to compete: Re/Max Realtor

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guest | 13 Jul 2011, 03:23 PM Agree 0

The two companies didn’t mince words in their press release and media appearances last week, saying that their merger represented a direct challenge to the status quo by offering consumers lower rate services and more choice. Although many Realtors have lowered their commission rates to attract money-conscious customers, Lee Redwood, a Realtor with Re/Max Garden City Realty in Burlington, Ont., says it’s now more important than ever to make sure that they properly communicate that to consumers. “It’s really up to Realtors to communicate to consumers,” he told CRE Online. “They can’t sit there at the full commission and think that this isn’t going to change for them. But I think those Realtors in a few years will have a rude awakening.” Still, that doesn’t mean there won’t be room for high-quality Realtors, making better commission rates, since many buyers prioritize representation over price, he says. Think of the difference between a high-end and a low-end car buyers, he says. Mercedes customers make their purchase because they “expect a heightened level of service and product,” he says, while Hyundai customers base their decision on primarily on affordability. No one would ever think of comparing a Mercedes to a Hyundai and the same is true for the difference between Realtors and Realtysellers. “So I think it’s the Realtor’s responsibility right now to say, ‘Hey, guys. We can negotiate too. You don’t have to go to these companies and get less service and representation.’ ”
  • Marianne Glover | 14 Jul 2011, 07:28 PM Agree 0
    I believe that full -service, highly professional real estate brokers and their sales people have nothing to worry about from discouont brokerages. The public have always had choices when it comes to their real estate preferences. My sister was with Help U Sell back in the 80's for heaven's sake. It is nothing new - they come and go . Mostly they go...
    I know how hard I work for my clients and they appreciate it- that's why I get repeat business. Building trust and relationships by providing excellent service!
    Marianne
  • Marianne Glover | 14 Jul 2011, 08:28 PM Agree 0
    I believe that full -service, highly professional real estate brokers and their sales people have nothing to worry about from discouont brokerages. The public have always had choices when it comes to their real estate preferences. My sister was with Help U Sell back in the 80's for heaven's sake. It is nothing new - they come and go . Mostly they go...
    I know how hard I work for my clients and they appreciate it- that's why I get repeat business. Building trust and relationships by providing excellent service!
    Marianne
  • Michael Shuster | 19 Jul 2011, 02:02 AM Agree 0
    You say it's the realtors responsibility to now negotiate. Dropping your professional fee is not negotiating ... it's turning yourself into a worthless commodity. It's true you get what you pay for, and you can't compare a mercedes to a hyundai. But when you're selling your most valuable asset worth hundreds of thousands of dollars (or more) ... or buying the same, do you want some yahoo that knows how to fill out paperwork, or do you want a professional that knows how to put money in your pocket? In the past 12 months I have not taken a listing for less than 5%. And in a Seller's market I have negotiated lower purchase price (than asking price) in all purchases for my buyers. And in all listings I've sold I have not sold any for less than 100% of asking. The key to charging 5% fees is to keep more than 5% in the client's pocket. If you sell a house for $500,000 and you hire an agent for 4% instead of 5% you might save 1% ($5,000), but what if a professional negotiator could have gotten you $10,000 more than the discount agent who simply takes the first offer that comes? The answer: You would pay 5% but end up with $5,000 MORE in your pocket. The moral here is not to focus on the commission you pay, but which agent can put more money in your pocket. If you were arrested for a crime you didn't commit and were facing jail time, would you hire a legal aid lawyer because he's cheaper, or Eddie Greenspan for $1000/hr. Its obvious (because your life is on the line). Then why not use the same care when hiring the person to sell/buy your most valuable asset?
  • Michael Shuster | 19 Jul 2011, 03:02 AM Agree 0
    You say it's the realtors responsibility to now negotiate. Dropping your professional fee is not negotiating ... it's turning yourself into a worthless commodity. It's true you get what you pay for, and you can't compare a mercedes to a hyundai. But when you're selling your most valuable asset worth hundreds of thousands of dollars (or more) ... or buying the same, do you want some yahoo that knows how to fill out paperwork, or do you want a professional that knows how to put money in your pocket? In the past 12 months I have not taken a listing for less than 5%. And in a Seller's market I have negotiated lower purchase price (than asking price) in all purchases for my buyers. And in all listings I've sold I have not sold any for less than 100% of asking. The key to charging 5% fees is to keep more than 5% in the client's pocket. If you sell a house for $500,000 and you hire an agent for 4% instead of 5% you might save 1% ($5,000), but what if a professional negotiator could have gotten you $10,000 more than the discount agent who simply takes the first offer that comes? The answer: You would pay 5% but end up with $5,000 MORE in your pocket. The moral here is not to focus on the commission you pay, but which agent can put more money in your pocket. If you were arrested for a crime you didn't commit and were facing jail time, would you hire a legal aid lawyer because he's cheaper, or Eddie Greenspan for $1000/hr. Its obvious (because your life is on the line). Then why not use the same care when hiring the person to sell/buy your most valuable asset?
  • Dave Chomitz CRS, E-Pro | 10 Aug 2011, 12:21 PM Agree 0
    These changes will only force Realtors to better communicate their value. Which is not to say that all Realtors are equal in that area. Simply having a licence is not entitlement to a high commission, you first have to be able to provide a better service to the market, and then be able to demonstrate that service and show it's value. It only raises the bar, making us more professional.
  • Dave Chomitz CRS, E-Pro | 10 Aug 2011, 01:21 PM Agree 0
    These changes will only force Realtors to better communicate their value. Which is not to say that all Realtors are equal in that area. Simply having a licence is not entitlement to a high commission, you first have to be able to provide a better service to the market, and then be able to demonstrate that service and show it's value. It only raises the bar, making us more professional.
  • Glenn @ Bahamas Luxury Real Estate | 24 Aug 2011, 06:00 PM Agree 0
    I feel it is a mistake for agents to start competing on a commission basis and that this move should rather encourage us to better differentiate ourselves based on the service we provide and to communicate that more effectively to our clients.

    I agree with Marianne, its all about "building trust and relationship by providing excellent service."

    And that what we at Bahamas Luxury Real Estate provide.
  • Glenn @ Bahamas Luxury Real Estate | 24 Aug 2011, 07:00 PM Agree 0
    I feel it is a mistake for agents to start competing on a commission basis and that this move should rather encourage us to better differentiate ourselves based on the service we provide and to communicate that more effectively to our clients.

    I agree with Marianne, its all about "building trust and relationship by providing excellent service."

    And that what we at Bahamas Luxury Real Estate provide.
  • Jack Renoud | 23 Sep 2011, 12:54 PM Agree 0
    It sure sounds like a bunch of overpriced agents are commenting here. I've have dealt with a number of agents who , for the most part, were constantly focused on themselves and not me as a customer. All the good deals that they touted , were highly beneficial to them and not me. I had to bend over and they stood there getting their commision rate of 5%. People, 5% is 5% no matter what anyone says.One agent was engaged with gaming me for years .She tried to tell me my property was worth $500,000.00 less than I finally got for it. I changed my agent to fellow who wasn't gaming me and got that much more for it. Sold it in one week. and had mulitple offers to boot. People watch all agents like a hawk . They are almost always out for themselves.
  • Jack Renoud | 23 Sep 2011, 01:54 PM Agree 0
    It sure sounds like a bunch of overpriced agents are commenting here. I've have dealt with a number of agents who , for the most part, were constantly focused on themselves and not me as a customer. All the good deals that they touted , were highly beneficial to them and not me. I had to bend over and they stood there getting their commision rate of 5%. People, 5% is 5% no matter what anyone says.One agent was engaged with gaming me for years .She tried to tell me my property was worth $500,000.00 less than I finally got for it. I changed my agent to fellow who wasn't gaming me and got that much more for it. Sold it in one week. and had mulitple offers to boot. People watch all agents like a hawk . They are almost always out for themselves.
  • Rachel Vanderveen | 23 Sep 2011, 07:52 PM Agree 0
    Competition is always a healthy thing! It keeps everyone on their toes. I, personally, believe that full-service, professional agents have nothing to fear at all. There are always people out there looking to save a buck and do more of the work themselves. That's never changed. If they want to try and do it themselves and save some money, then go for it! It's not easy being an agent, and it takes A LOT of time and skill to get top dollar for properties. I, personally, cut my own kids' hair, because I can half decently wield a pair of scissors, and it's cheaper. Now, you can't point to a photo in a magazine and expect me to be able to do that cut. They get one kind of cut because that's all I know how to do. I'm not a trained hairstylist. But I'm saving money, and no one should begrudge me that!
  • Rachel Vanderveen | 23 Sep 2011, 08:52 PM Agree 0
    Competition is always a healthy thing! It keeps everyone on their toes. I, personally, believe that full-service, professional agents have nothing to fear at all. There are always people out there looking to save a buck and do more of the work themselves. That's never changed. If they want to try and do it themselves and save some money, then go for it! It's not easy being an agent, and it takes A LOT of time and skill to get top dollar for properties. I, personally, cut my own kids' hair, because I can half decently wield a pair of scissors, and it's cheaper. Now, you can't point to a photo in a magazine and expect me to be able to do that cut. They get one kind of cut because that's all I know how to do. I'm not a trained hairstylist. But I'm saving money, and no one should begrudge me that!
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