Ever raise an eyebrow over real estate commissions?
In BC, the unofficial-but-standard percentage is 7% on the first $100,000 (ie. $7,000) plus 3.25% on the rest of the home, according to Barry Allen, a founder of ClickRealty.ca
So for your very basic Vancouver condo, priced at, say, $300,000, you’d pay:
$100,000 x 7% $7000
$200,000 x 3.25% $6,500
Total Commission: $13,500
One option is to go the For Sale By Owner route, but that has a few drawbacks. For one thing, the seller benefits but not the buyer (unless the seller drops the price to factor that in). For another thing, realtors may not show the home to prospective buyers if the realtor isn’t going to get anything for their effort.
A handful of folks thought they could do better than that.
They formed a new real estate company that takes full advantage of the internet. By scaling back on old-style marketing (such as adverts on bus stops) and creating an efficient behind-the-scenes database engine, they can provide the same service as most real estate agencies at a lower cost.
And they pass that savings on to the buyer and/or the seller. Specifically, they return 50% of their commission to their client.
Here’s how it works.
Say I wanted to sell my $300,000 (ish) condo (I don’t for the record! Never will! But I’m always looking for good, long-term tenants …) ANYWAY, say I was looking to sell.
If I list it with ClickRealty.ca, they will provide me all the usual supports – help me price it correctly (the #1 value realtors provide sellers), send a photographer over, recommend a paint job or what have you, and then list it for me. From then on, the process is essentially the same as traditional agencies (less an open house, unless that’s genuinely in my best interest).
But once it’s sold, they would return 50% of what they, as a seller’s agent , would usually keep. In my case, that would be $3,375. They keep the other 50% of the seller’s portion and the buyer’s agent gets their full portion.
Say I wanted to buy a $800,000 home in Strathcona (some day I will).
Click’s site provides a beautiful window (it is very nicely done, including one of the most user-friendly mortgage calculators I’ve seen) to all the same properties as I would see anywhere else. Barry points out that it’s faster than usual, as they don’t hold back any MLS listings for a realtors-only peek, apparently a common practice. They would then provide the typical services, such as arranging for me to go check out the place, helping me to compare it to others).
The total commission on this home would be $29,750. Half goes to the buyer’s agent and half goes to the seller’s agent. In this case, Click is the buyer’s agent so their portion would be $14,875. They give me back 50% of their portion, that is, $7,437.50 Hello trip to Restoration Hardware!
Currently, ClickRealty is available in BC’s lower mainland. It will soon expand to the Calgary and Toronto markets.
I think it’s a bit of a game-changer, assuming it rocks the online space as a core piece of the process (thus enabling their lowered commissions).
Bonus: Live in the lower mainland? Tweet a link to this post and cc. [email protected] and on Wed., Sept 7, there will be a draw for a basket from Liberty Wine Merchants.
Disclosure: I was invited to do this review but it is not a paid review. I am always interested in ways for folks to be “frugal” and think this new biz is worth consideration when buying or selling.
Any questions? Leave them in a comment below and I’ll pass them along to the business owners for response!
Photo credit: Imuttoo