When you tell them commission is based on the marketing services required to successfully sell their home and it varies from a total commission of 3.5% to 6%.
Some people's response is that "people are charging 1%, what will you do for me?." I'm amazed when I hear this. It feels like Sellers are grouping all Realtors together as a herd of sheep.
Many may not know it is quite easy to get a Realtor's license but takes a lot of work and effort, time and money, investing in education to be a successful one. Since it is easy to get a license naturally we have an abundance of licensed Realtors. Did you know most work part-time and do less than 4 deals a year!
Forget I just said that. Think as a Seller, would you trust a Realtor to represent and market your property and negotiate the best price for you if they can't negotiate a fair commission for themselves?
Sellers, often neglect this fact and lose out at the end when they calculate their "net return" on the sale of their home. For example- Say a 1BR condo is worth 250K. At 1% listing commission you pay 2500 to the Listing Agent's brokerage. After marketing costs, commission splits, the Listing Realtor might be left with $1500 for their time. Now when you want them to cut their commission a further 0.25%, and some desperate Realtors do, after all they do have monthly expenses. This saves you $625 on the listing side and the Realtor ends up taking home $1000.
Now ask yourself, how motivated would you be to negotiate a thousand or two more on the Selling price from the Buyer when it only makes you $10-$20 more on your commission. The focus would be on getting the deal done. Whereas when you pay fair commission, Realtors are motivated to get you the best price and are happy advocating for you.
And when homes are worth $700K then for many Realtors a 1-1.5% listing commission seems quite fair and they'll be determined to work for you. But if they aren't making anything, then truth be known, they won't do anything. That is just human nature. Most people will give back according to their sense of fairness.
From my experience, fair commission is quite frankly determined by the following factors Sellers should give thought to.
1. Location of your property
2. Condition of your property
3. Selling price of your property
4. The cost to market and sell your property
5. The time it takes to sell similar properties
We all know that cheapest isn't the best. We buy items from the "dollar store" knowing we're fine if they break the next day. That is our expectations for the money we spent.
I'm sure, when it comes to our largest asset, we'd prefer to hire, quality, honesty, experience and service. We'd all pay a bit more to a Lawyer and feel a lot more relaxed and confident dealing with one who specializes in real estate then one in family law when closing a real estate deal. Or choose a surgeon with a track record of doing hundreds of successful surgeries than one who has just started.
So if you are planning to SELL. How much commission a Realtor accepts shouldn't be the deciding factor on who you should choose to help you Sell. You want to know the answers to the five factors I mentioned above and then choose a Realtor you can trust, be confident with and who will be there for the entire Selling proccess working on your behalf. Otherwise, you might start off paying less, but end of netting a lot less.
Jas Jagpal, Broker at RE/MAX Dynasty Realty Inc. He has formed 2 teams. One specializing in Investing, primarily in condos and the second helping clients sell their houses in the GTA. No matter what your needs are, contact him if you are looking to buy, sell or invest in the Greater Toronto Area.
Choose Results, Honesty & integrity. Choose Team Jas Jagpal. E: jasjagpal@gmail.com O:905.471.0002
Jess Jagpal, Sales Representative jessjagpal@gmail.com 416.312.9742
Posted via email from Markham Houses : Markham Condos For Sale- Investment, Pre-Construction, Resale
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