Blogs & Comment

Real-estate agents offer 40% discount

In the mail today I found a postcard from some local real-estate agents offering close to 40% off their commissions to sell a house through the Multiple Listing Service. That would mean almost $10,000 in savings to the owner of a $500,000 home, assuming the standard commission rate of 5% is applied.
To tell you the truth, I never thought I would see this day. When The Real Estate Cartelarticle appeared over two years ago and ranted on about the cartel-like arrangement of the Multiple Listing Service, there was a distinct feeling of tilting at windmills.
But now that the Competition Bureau is putting the pressure on real estate boards to open up, they have my applause. Three cheers for the Bureaus managers.
Now, the companies that have long wanted to enter the industry and provide consumers with more value for their money seem freer to do so (I havent fully checked this out yet). A more efficient allocation of resources can only be a good thing for the Canadian economy and businesses in general.
While a 40% rebate seems like a substantial concession, it is from a very inflated level. Is it enough? The local real estate agent who sells the $500,000 house at this discount still receives approx. $15,000 and gets to keep all of it if they find a buyer themselves (or otherwise shares it with the agent representing the buyer).
In a hot market like now, when buyers abound, it doesnt take too much time and effort to sell a house. I personally would still prefer to sell it myself. I can still give $7,500 to the buyers or their broker, and net another $7,500 for myself.
But if the real-estate brokerage market is truly becoming competitive, I would not be surprised if other agents come forward with deeper discounts to put their price more in line with marginal costs. Then I might be interested in an agent.