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Buy Lower/Sell Higher www.MoreForMyHouse.com Understand commission choices

Bill Rinehart, Realtor®/Salesperson HomeLife/Kempenfelt-Kelly Realty Ltd, Brokerage  Local 705.436.5111 Toll-free 1.877.436.51111

Quality isn't cheap When you sell a stock on the stock market, the stock price stays the same whether you use a full-service stock broker or a discount stock broker. Houses are different. The Realtor and Broker that you are using DOES affect the final sale price of your house. As Realtors, we are often approached by sellers who have unrealistic expectations of how the real-estate business works, based on the advertising that they have been exposed to. One percent listing commissions? How can anyone believe that that is what they will actually pay? These are some of the ways I and my colleagues explain, in practical terms, why we cannot give sellers the services they expect at the commissions they have been led to believe other people are paying.

Who pays the commission?

YOU HAVE TO SPEND MONEY TO MAKE MONEY When you sell your house, the commission paid to the Realtors will be split between the Brokerage that put your house on the market, and the Brokerage that brought in the buyer. Paying a lower commission limits the money your own Realtor can spend to market your home, it limits the incentive other Realtors have to bring their buyers to your house, and it limits the sympathy your listing Brokerage  has for you selling your home. Paying 1% less in commission can actually translate into your home selling for 3% less or worse. If you want your house sold fast, and want to put more money in your pocket when the deal is done, call a standard-commission Broker first to see what they have to offer.

YOU GET WHAT YOU PAY FOR “Land Agents” have been selling property for landowners  on a commission basis in Canada for over 200 years. Landowners have always supported that system because the commission is the agent’s incentive to try to get more for the seller; the more the property sells for, the more the agent gets. A commissioned agent will urge you to hold out for the best price, so that they make more money too, instead of expecting you to accept the first offer that comes in. When you’re selling your largest asset don’t be fooled by gimmicks and fly-by-night promises.  Stick with a system that has put the most money in the pocket of generations of landowners.

DON’T BITE THE HAND THAT FEEDS YOU The sale price of your house depends more on the Realtors who are working on your deal than any other factor. The commission that you will pay when your house sells will be split between the Brokerage that listed it, and the Brokerage that represented the buyer. A 1% drop in commission for you represents a 40% drop in pay to the listing Realtors. How hard would you work if your boss said he was paying you 40% less than everyone else this month? Don’t let a gimmick keep your house from selling. If you want your house sold fast, and want to put more money in your pocket when the deal is done, call a standard-commission Broker first to see what they have to offer.

DON’T SHOOT YOURSELF IN THE FOOT The Realtors who are working as Buyers' agents are trying to sell houses too. That's how they pay the rent. They will take their buyers to the sellers who are most likely to sell. The commissions being offered to them give them an indication of how serious different sellers are about selling. A low commission plus a high asking price is the telltale sign of a seller who is not serious about selling. A standard commission plus a market-value price is the telltale sign of a seller who is ready to make a deal. The Realtor will take the buyers, and the offers, to the sellers who appear to be serious. Don’t let a gimmick keep your house from selling. If you want your house sold fast, and want to put more money in your pocket when the deal is done, call a standard-commission Broker first to see what they have to offer.

YOU GET WHAT YOU PAY FOR You wouldn’t expect boutique-shop service from a bargain-basement store. There's a sign in Honest Ed's (discount) store in Toronto that says "Don't bother our staff with your questions. They have enough to do." If you expect the highest selling price, the fastest selling time, open houses, free ads, and quick servicing of your needs,  call a standard-commission Realtor first to see what they have to offer. Don’t let a gimmick hamper the sale of your home.

You can’t make a Silk Purse out of a Sow’s Ear If there were 4 farmers selling corn on the roadside, why would one of them price his corn at 40% less than the other 3 farmers?: Only because he knows his is not worth the full price. Why would a Realtor sell his services for 40% less? When you’re hiring a Realtor to sell your largest asset, ask them to explain how they deserve their commission.

My Commission Schedule:

You will find that those low-commission Realtors have qualifying criteria for the advertised rates, or extra charges above the commissions they advertise. Realtors are each independent businesses operating under a Broker's umbrella. We all must make more than we spend in order to survive. One way or another, you're going to pay the piper if you want to hear the tune. I've struggled to find a way to offer lower listing commissions to the good people that I serve, so that I keep them happy but don't go broke at the same time. I've managed to justify the following breakdown to my bookkeeper. If you wish to waive some of the services normally provided, we can negotiate a more favourable rate, otherwise I deal fairly by offering the following options to all of my full-service clients:

Scenario Selling Brokerage HomeLife Me Total I list your house and another Realtor brings in the buyer 2.5 % 1 % 1.5 % 5 % I list your house and also represent the buyer of your house 2.5 % 1 % 0.5 % 4.0 % I list your house and another Realtor brings in the buyer, but I submit a successful offer for you on another property 2.5 % 1 % 0.5 % 4.0 % I list your house and represent its buyer, plus I submit a successful offer for you on another property. 2.5 % 1 % 0.0% 3.5 %

WHO PAYS THE COMMISSION? The buyer usually does not pay commission. When the sellers sign the listing agreement, they agree to pay a certain commission to the Listing Broker. When the house sells, the Listing Broker pays a portion of the commission (usually half) to the Broker that is representing the buyer. There are instances where the buyer agrees in the Buyer-Agency Agreement to pay the buyer's Broker instead. I recommend it when I am representing a buyer on a distressed property (see How to Buy Lower) and I suspect the Seller cannot pay commission at the price we are offering. For more buyer's questions see my First-time Buyer's guide or my FAQ page. Back to top

How to Sell a House for More	What's Your House Worth?
Selling a Country Cottage	Selling an Older House
Nine Costs of Selling Privately	Discount Commissions

Bill Rinehart

436-5111

Toll Free 1-877-436-5111