Real Estate: Low Commission Rate – One Percent Commission Rate?  How Much Should You Pay? |Grimsby Ontario| MLS REALTOR|

It’s Negotiable?

A lot of homeowners don’t realize that commissions are negotiable, and hashing out a mutually agreeable rate should be part of the process of choosing who to give the listing to. Commission rates may vary from brokerage to brokerage. Many home sellers are not used to having to negotiate when they are buying services or products. Therefore, if they are negotiating for a commission rate with a REALTOR who negotiates every day for a living, it’s not hard to see which party will normally win these negotiations. These financial negotiations are often not something your average home owner is comfortable doing. Because they are negotiating with someone who is supposed to represent their best interests in the selling process, the home owner does not want to push too much for fear that they may not get the representation they require throughout the rest of the selling process. And so, the negotiations are often not very satisfactory for the home owner.

An increasingly popular alternative are innovative real estate brokerages that have eliminated the sometimes dreaded commission rate negotiations. These low commission brokerages offer and advertise their low commission rates and therefore the home seller does not have to browbeat a REALTOR to lower the total commission. The strategy of these brokerages is to attract those home sellers that want MLS and REALTOR service, but don’t really see the benefit of overpaying for these same services.

Therefore, find a REALTOR who will list for a low commission rate based on your area’s market rates. Before making a final decision, speak to at least three agents to gauge their flexibility, as well as their knowledge of your community. Speak to REALTORS from the largest franchise brokerages in the area and from your area’s low commission brokerage. Ask them about their services, experience, qualifications and whether they are Part-Time REALTORS or Full-Time REALTORS. Then ask them very detailed questions about the Total Commission rates for selling your home on MLS.

Consider also that, in most cases, your agent doesn’t earn a dime until you sell your home. And therefore, this is an excellent incentive for your REALTOR to work hard to market and sell your home. If your low commission REALTOR, or any REALTOR, is asking you to pay up front, non-refundable listing fees to list your home on the MLS, then this incentive may no longer be part of the deal. Upfront fees ensure that the REALTOR has already done his/her job and has already made money listing your home whether you sell your home or not. Yes, the REALTOR may make additional fees if the house sells however, he/she has already made the sale – they’ve sold you a home selling package and the hope of selling your home without paying any additional commission fees. Often, they also advise that you should provide a “fair and comparable” commission rate to the buyer’s agent. Thereby admitting that, more often than not, you will have to enlist the help of a buyer’s REALTOR to sell your home. Even some non –licenced, for sale by owner marketers offer these kinds of packages. So, if you have to pay the buyer’s agent and an upfront non-refundable fee, are there actual commission savings with this concept? You may also have to do a lot of the work that is normally done by your listing REALTOR and pay the fees of a lawyer to review all offers. Make sure to account for these costs and inconveniences when you’re calculating any savings using this approach.

Consider all your options and pick the one that makes the most sense for you. Remember, not every approach is right for every home seller. Some home owners are more knowledgeable and don’t need the unnecessary extras that usually come with the high commission services. Some homes are not as marketable and would generally require more commission to be paid by the home sellers because they require more work to sell than your average home. These may be homes that are in need of a lot of repairs or are in undesirable locations in a town or city. They may be homes that have some unusual and undesired features. And, they may be homes that are improperly priced. The home owners of these types of homes should consider paying a higher commission so that they can get services that are above and beyond those needed to sell a more desirable home. But otherwise, for most homes the sellers should research and consider the services of both the traditional commission brokerages and the low commission brokerages in your area.

For information about our services and commission rates visit www.coronarealty.ca