Many High End Home Sellers Using Low Commission Brokerages to Sell |Hamilton Ontario| MLS REALTOR®| Real Estate Agents|

Many High End Home Sellers Using Low Commission Brokerages to Sell |Hamilton Ontario| MLS REALTOR®| Real Estate Agents|

As prices of homes have increased dramatically over the past decade, a growing number of home sellers have been slowly turning to the services of local REALTORS® who will sell their homes by providing the same services of the traditional commission brokerages but at the same time will charge commission rates that are much lower.

Gone are the days of “one commission rate fits all”. Today, home sellers have choices about the commission rates that they have to pay when selling their homes. Commission rates vary from brokerage to brokerage. And, smart home sellers are taking advantage of the offers that some brokerages are providing. It’s simple to understand why. For example, on a $500,000 home, for every 1% commission rate savings that a seller can achieve on his/her overall total commission, the home seller will save $5,000. And, that’s before an additional 13% of HST which will add another $650 to the savings.

But, why are more and more high end home sellers choosing low commission REALTORS®?

Since the industry usually charges a percentage of the sale price of the home as the commission fee for selling the property, the higher the selling price of the home the more the total commission amount charged. For example, at a 5% commission rate a home seller of a $500,000 home will pay $25,000 in commission fees plus another $3,250 in HST for a total of $28,250. By comparison, a home seller of a property that sells for $200,000 at a 5% commission rate will pay $10,000 in commission plus another $1,300 in HST for a total of $11,300. As the price of the home increases, so does the amount of the total commission paid by the seller to sell the home.

But some math savvy home sellers are starting to rebel. They do not agree with having to share in the market increase in the price of their home over the last decade with the REALTOR® that sells their home. After all, the REALTOR® is not a partner in their home. So, why would the increase in the market value of the home have to be shared with the REALTOR®? If the commission rate paid by the seller is the same as it was a decade ago, the amount of total commission will be increased in the same proportion as the increase in property value. The amount of total commission is most notable with the higher priced homes. And therefore, it is these home sellers that are starting to challenge the commission rates of the traditional commission brokerages.

Many traditional brokerages and their sales representatives like to tell their clients that paying a high commission rate is in their best interest because, “You get what you pay for”. But, if the price of your home has doubled, and you are paying the same commission rate as in the past, that means that the total commission has also doubled. Has the work the REALTOR® needs to do to sell your home actually doubled? Is it twice as hard to sell your home as it was in the past? Hasn’t the internet, smart phones and ipads actually made it easier and more efficient to sell a home with a REALTOR®? Why would the total amount of commission need to have doubled to “get what you pay for”?

So, when a REALTOR® says, “You get what you pay for”, it might be that you're going to “Pay more than you get”.

As a result, we are seeing a trend that doesn’t seem to be reversing. The commission rates that home sellers, especially higher price home sellers, are willing to pay are decreasing. And, those brokerages that are offering the total commission rates that more reasonably reflect the actual work that needs to be done to sell the property, are quickly growing in popularity.

So, shop around. Search the internet for low commission REALTORS® in your local area. Consider their qualifications, experience and whether they are Full-Time or do real estate as a hobby.

REALTORS® in Ontario are all members of the local real estate board or association as well as members of the Ontario Real Estate Association, Canadian Real Estate Association and are all licensed by the Real Estate Council of Ontario.

For information about our brokerage and our commission rates visit www.coronarealty.ca or contact us at (905) 525-3311. Corona Realty Inc., Brokerage.

2013-06-03