View Single Post
Old 05-13-2018, 05:30 PM   #4
First Line Centre
Hackey's Avatar
Join Date: Jan 2014

Originally Posted by Realtor 1 View Post
A high percentage of my client base initially worked with a different brokerage/brokerage model and I will leave them to post their own thoughts.

1) There is no standard commission. Many are aware of the 7 & 3 model, however, there is no standard. Depending on the situation, I have charged less than and more than 7 & 3.

2) Before one of my listings hits the market I can easily spend $2,000 - $3,000 on marketing. Using your example of $19,000 in commissions which works out to $9,500 for each realtor. Take off a few thousand for taxes, another few thousand for marketing and then whatever you want to value on time invested. All said and done, I will make a few thousand dollars.
If I don't sell the house or the seller decides to take it off the market, I am out several thousand dollars in marketing/time.
Based on annual transactions and total Realtors, the average Realtor at the Calgary Real Estate Board has 8 deals per year.

3) When you are selling your home, how much marketing and networking do you want from your realtor? If you pay the listing realtor X amount then you can expect X in marketing. I could sell your home for $1,000 if you wish but I will require you to supply me with insured measurements, floor plan, video, photos, lockbox, sign, digital marketing, print marketing, social media campaigns, virtual staging, etc.

4) If person X and person Y have the exact same house on different streets in the same community and person X decides to spend $10,000 on marketing while person Y decides to spend $1,000 on marketing. They both advertise their home for sale on the same day and allow buyers through right away. Will they receive the same amount of buyers visiting their home? Does a higher marketing budget lead to more buyers visiting and more buyers leads to higher offer odds and therefore a quicker sale time with a higher sale price? Does the higher marketing budget sell your home in 60 days for $490,000 while the $1,000 marketing budget brings you $480,000 after 90 days? All said and done, the $9,000 saved on commission cost you $10,000 + an extra mortgage payment.

5) If I have invested thousands of dollars in selling your home, you can go to sleep at night knowing that I am doing everything possible to sell the home so that I get my investment back with a return. The last thing I want is for the contract to expire and you go elsewhere and leave me out thousands of dollars. The ultimate win would be if you paid me in advance... I would take $1,000 in advance and regardless of whether the house sells or not I got paid. You pay for your own marketing and do most of the leg work and I am out looking for the next guy to pay me $1,000 as I have no incentive for your home to actually sell. Perhaps we negotiate commissions and you get me down to $2,000 but not until the property sells however any extras above being on the MLS is your responsibility. I don't know if I would do this but I am sure some people would. I want to be heavily invested in my listings. If I were making $2,000 a listing minus taxes, brokerage and CREB fees, the only way I could survive is by going for quantity. I would need 10 listings a month. What many do not see is the constant hurdles that come up throughout the transaction. Once you receive an offer, the real headaches start and it is the Realtors job to keep things moving. 1 missed document or an inexperienced lender or an incorrect inspection or an overly tight insurer can collapse the deal. When I am all in (financially) on a property, I am finding out why financing didn't go through or what the inspection concerns were and in many cases, am able to have the file stay alive given a small mistake on the other end. If I was set to make $1,300 on a sale I might be more inclined to push for 2-3 new listings than spend days getting to the bottom of a current pending issue.

Disclaimer.... none of the above is putting down any specific brokerage model. I am not aware of the specifics of different brokerage models and their commission structures. I am trying to share my own thoughts on what my response would be if someone asked me to do my job for a certain dollar figure.
I definitely realize the commission paid compared to what you put in your pocket is drastically different but the money out of my pocket for example doesn't change. If you pocket $4,000 out of $10,000 I still have to pay $10,000. That is kind of the hurdle I'm trying to understand.

Not sure if you are willing to say here or not but where exactly do you spend thousands of dollars marketing the property? I imagine pretty much everyone these days searches for homes either online through various websites and/or has their realtor send them properties. What types of marketing can drastically increase the eyes on your property? While I do see the benefit of using a realtor I'm also asking myself is it worth $10,000+?
Hackey is offline   Reply With Quote