Real Estate

Lower your Listing/Selling Fees - Use Flat Rate MLS

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Penalty Box
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Aug 19, 2008
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professor24 wrote:
May 31st, 2014 11:04 pm
I see nothing wrong with a listing agent charging 5% (2.5%+2.5%) if they provide services for their clients. By services I mean Cleaning,moving,garbage disposal,staging etc. These are things that cost money/time and most likely will need to be delegated to someone else. If the agent is just going to list the property and offer nothing else. Then no....they do not deserve it.

I understand if you feel Realtor's are overpaid. Everyone is allowed to have their opinion. I would actually encourage you to pick it up as a career if you think its easy money.

Captain Ron is a very successful Realtor in Victoria. Excellent. Happy for him. His business model works there and I would encourage him to keep doing what he is doing. The same model he is working in his home town, does not work in Toronto. There are literally tens of thousands of agents in the GTA alone. Of these 30,000 or so, I would say 10% of them are doing 90% of the business. The top tier Realtor's literally spend a fortune on marketing because with so many agents around they need to stand out and keep the business coming. Captain Ron's business model would be instantly suffocated in such a competitive market due to the fact that their are thousands doing the same thing he is.

So in conclusion. The most productive and successful Realtor is the one who best markets themselves. Their big marketing budgets do not come from thin air either. They have clients eager to do business with them and pay full pop for their services due to their visibility,Rolodex of past clients and their reputation. While the Realtor's working for nothing are the ones doing nothing.

Low commission is not the enemy. Getting no value for the equity in your home is the enemy.

Excellent comments and you're exactly right - - it's all about value proposition. Competing on price is the simplest thing you can do. Anyone can drop their price to the point where they're listing a property for $799 or $499 or even $99. But I know of very few realtors who come from the renovation/construction industry with the ability/contacts to go in and raise the value of the property by putting in some work.

"Telling" a seller they need to have the wallpaper removed and repaint the whole house, change the kitchen cabinetry and countertops, rip out the old carpeting, change out all the lighting and then fully stage the property is not a value add. Going in and actually doing all of that is. And that's how I'm able to justify a listing commission of 4%-5% or more. Because I raise the value of the property. I always welcome the seller to call around and get their own quotes because I know they're not going to find any T&M that's cheaper and certainly not anything that will defer payment until the property closes.

You're absolutely right about the number of GTA realtors offering the low margin high volume approach. Larry Dale's flat rate concept at RealtySellers was supposed to revolutionize the industry with mere postings but it was a colossal failure and is now out of business. Why did he fail? Because there's so many other low margin high volume realtors offering to list properties for $99 upfront flat rate.
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Donnie740 wrote:
Jun 1st, 2014 12:05 pm
Excellent comments and you're exactly right - - it's all about value proposition. Competing on price is the simplest thing you can do. Anyone can drop their price to the point where they're listing a property for $799 or $499 or even $99. But I know of very few realtors who come from the renovation/construction industry with the ability/contacts to go in and raise the value of the property by putting in some work.

"Telling" a seller they need to have the wallpaper removed and repaint the whole house, change the kitchen cabinetry and countertops, rip out the old carpeting, change out all the lighting and then fully stage the property is not a value add. Going in and actually doing all of that is. And that's how I'm able to justify a listing commission of 4%-5% or more. Because I raise the value of the property. I always welcome the seller to call around and get their own quotes because I know they're not going to find any T&M that's cheaper and certainly not anything that will defer payment until the property closes.

You're absolutely right about the number of GTA realtors offering the low margin high volume approach. Larry Dale's flat rate concept at RealtySellers was supposed to revolutionize the industry with mere postings but it was a colossal failure and is now out of business. Why did he fail? Because there's so many other low margin high volume realtors offering to list properties for $99 upfront flat rate.
I know and have met most of the top agents in my area. None of them come from the renovation/construction industry so obviously you're blowing smoke again. What most people do and all that is needed to be done is cosmetic changes, ie 'fairy-dusting', ie a coat of paint, possibly a tiny bit of landscaping in the front to create curb appeal and - most important - proper staging. And if they need a contractor that's what they should hire, not someone who can't figure out if he is a contractor or a real-estate agent.

The fact you keep harping on the fact you were a contractor is laughable. Yes I am sure there is a tiny % of people that you find that use your services. Let them pay your 4-5%. But, almost no one wants to embark on a big renovation project in order to sell their home. Please.

And again, Larry Dale only went out of business because TREB/MLS made it impossible for him to operate. They were so incredibly scared of his successful model that they forced him out of business and that's why the industry ended up being taken to court by the Competition Bureau and forced to open up MLS listings. You conveniently never mention that.

Larry Dale was incredibly successful and is the reason we have flat-rate MLS listings today. We should all thank him. Thanks Larry Dale!

:)
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May 7, 2014
188 posts
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Westmount, QC
eonibm wrote:
Jun 1st, 2014 12:19 pm
..
And again, Larry Dale only went out of business because TREB/MLS made it impossible for him to operate. They were so incredibly scared of his model they forced him out of business and that's why the industry ended up being taken to court by the Competition Bureau and forced to open up MLS listings. If his model was such a failure why did was TREB/MLS so scared of the flat-rate listings that he made possible?

Larry Dale was incredibly successful and is the reason we have flat-rate MLS listings today. We should all thank him. Thanks Larry Dale!

:)
Apparently thanks to Larry Dale there is a lot of info about sales in Toronto. Thanks Larry Dale!
Penalty Box
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Aug 19, 2008
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eonibm wrote:
Jun 1st, 2014 11:27 am
You are conveniently sweeping under the rug the fact that Donnie740, apparently a seasoned real estate agent at the time, told Captain_Ron5 in April 2010 on his Ask me Anything... I am a Real Estate Agent thread that his business plan would not work anywhere! So much for you or him knowing what works and what doesn't.

Let's take a look at the original comments...let me know where I stated his business model would not work."Giving away commission to attract business is known as "buying" your clients" . Do you disagree with that statement?

But just for fun let's take a look back at Marko's original business model, starting with the proposal of giving away "70% minimum" . Minimum? So was he going to consider giving away 80% or 90%? That sure didn't work out as planned. Now the give away is limited to an amount "up to 50%" cashback. Why the change? Because it was too successful or because it didn't work financially?

Then there was the listing commission...$2000 upfront flat fee PLUS 2.5% C/B commission. Now it's been reduced to $799 upfront flat fee or 2.5% (1% + 1.5%) "full service". Again, why the change? Could only compete on price and not on actual value proposition?


Captain_Ron5 wrote:
Apr 4th, 2010 8:20 pm

This is what my business plan will be once I obtain my license later this month:

For Buyers

- 70% cash back of my commission minimum.

Example (Ontario commission structure):
$600,000 x 2.5% to buyer's agent = $12,500 x 0.70 = $8750 back to buyer. (you can use this to buy new furniture for your place, go on vacation, or increase the offer on the home you really want by $8750.)

For Sellers

- $2000 flat fee for my services, we keep the buyer's agent commission at 2.5%, this way real estate agents will not avoid brining their clients to your home.

im-real-estate-agent-ask-me-anything-87 ... st10601345
Donnie740 wrote:
Apr 6th, 2010 11:38 am
Seems like you've got things all figured out, Marko.

Just a couple words of caution, if I may. Giving away commission to attract business is known as "buying" your clients. There's always people who look for the cheapest product/service available, but in the end you generally get what you pay for.

Building a business that relys on low margins and high volume might work if you're selling cars, but trying to do the same in real estate means you'll be treating it as a commodity rather than a service. And being treated as a commodity is not something that always goes over well with people.

All the best in your endeavors.
im-real-estate-agent-ask-me-anything-874105/6/
Penalty Box
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eonibm wrote:
Jun 1st, 2014 12:19 pm
I know and have met most of the top agents in my area. None of them come from the renovation/construction industry so obviously you're blowing smoke again.
I'm in Toronto all the time, why don't we meet up sometime? You can bring your "partnership" along too and I'll even show you a couple of listings that would be flips. Just let me know when and where you'd like to meet.


eonibm wrote:
Jun 1st, 2014 12:19 pm
And again, Larry Dale only went out of business because TREB/MLS made it impossible for him to operate. They were so incredibly scared of his successful model that they forced him out of business and that's why the industry ended up being taken to court by the Competition Bureau and forced to open up MLS listings. You conveniently never mention that.

Larry Dale was incredibly successful and is the reason we have flat-rate MLS listings today. We should all thank him. Thanks Larry Dale!

No, no, no. Entirely misinformed once again.

MLS allowed Larry Dale and other budget brokerages to list upfront flat rate mere postings on MLS back in 2010. He tried it for a few years and then his brokerage went out of business. Do you think he went out of business because his brokerage was so "incredibly successful"?

Thanks Larry, you proved that the flat rate listing model is not viable.
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May 7, 2014
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Donnie740 wrote:
Jun 1st, 2014 12:35 pm
Let's take a look at the original comments...let me know where I stated his business model would not work."Giving away commission to attract business is known as "buying" your clients" . Do you disagree with that statement?

But just for fun let's take a look back at Marko's original business model, starting with the proposal of giving away "70% minimum" . Minimum? So was he going to consider giving away 80% or 90%? That sure didn't work out as planned. Now the give away is limited to an amount "up to 50%" cashback. Why the change? Because it was too successful or because it didn't work financially?

Then there was the listing commission...$2000 upfront flat fee PLUS 2.5% C/B commission. Now it's been reduced to $799 upfront flat fee or 2.5% (1% + 1.5%) "full service". Again, why the change? Could only compete on price and not on actual value proposition?
The business model did not change, just some numbers. Nothing wrong with that.
More like him and you will have to change your business model
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Nov 25, 2011
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licenced wrote:
May 31st, 2014 12:35 pm
I assumed someone would jump to that conclusion.

The study was commissioned by Shridan Scott and the Competition Bureau. It can be found online by doing a search for Self Regulated professions – Balancing competition and regulation.

The very same people that some of the public look to for opening up the MLS system are the very same people responsible for the lowering of the entry requirements which the same public criticizes.

And by the way, if you should read the study and Commissioner Scott's report do note the Copyright requirement. The irony.
This is a constant issue and criticism of many professional bodies, especially those in relatively self-regulated professions. However, opening up entrance requirements can work if pricing follows - the problem with the realty industry is that price has not followed this change. I would imagine this was considered as a potential consequence and actually encouraged - just the realtors themselves were appalled at the idea they should lower their prices to reflect the reduced costs it took them to become a 'professional'.

I can think of no other 'profession' where you can call yourself a licensed professional and charge the level of fees that realtors do with so little training and cost to get there. Heck on a good first day on the job you can literally recover every single penny you put into becoming a professional - try finding any other profession with costs so misaligned to prices as this! This is largely because the industry is obsessed with this 2.5% flat rate pricing model and don't care for changing it even when entry costs changed. In fact, despite the reduced costs, realtors have probably increased their prices with the flat structure, due to the housing boom. Threads like this and the others out there are starting to push people to question this.
Donnie740 wrote:
May 31st, 2014 10:19 pm
And therein lies the problem with trying to compete on price with a low margin high volume business model. You're offering to give away 50% of your earnings now. What happens when "Captain John" comes along offering to give away 60% of his earnings? And then "Captain Shawn" figures he'll go one better and give away 75% of his earnings?
This is how open and competitive markets are meant to work. It's not meant to be that everyone charges the exact same identical rate and then calls out others who do not. The '2.5% for everyone' model is close to how a monopoly would work - not an open competitive market...
[OP]
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Donnie740 wrote:
Jun 1st, 2014 12:35 pm
Let's take a look at the original comments...let me know where I stated his business model would not work."Giving away commission to attract business is known as "buying" your clients" . Do you disagree with that statement?

But just for fun let's take a look back at Marko's original business model, starting with the proposal of giving away "70% minimum" . Minimum? So was he going to consider giving away 80% or 90%? That sure didn't work out as planned. Now the give away is limited to an amount "up to 50%" cashback. Why the change? Because it was too successful or because it didn't work financially?

Then there was the listing commission...$2000 upfront flat fee PLUS 2.5% C/B commission. Now it's been reduced to $799 upfront flat fee or 2.5% (1% + 1.5%) "full service". Again, why the change? Could only compete on price and not on actual value proposition?
The exact % is irrelevant. He's smart to tweak his plan.

You clearly told him that cash back would not work because that would be buying clients.

You, a seasoned real estate agent were wrong. He, not even a real estate agent at the time, was right.
[OP]
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Donnie740 wrote:
Jun 1st, 2014 12:43 pm
I'm in Toronto all the time, why don't we meet up sometime? You can bring your "partnership" along too and I'll even show you a couple of listings that would be flips. Just let me know when and where you'd like to meet.
Aside from the fact we do flat-rate listings now and do not pay the ridiculous 2.5% why in the world would I want to meet an agent who makes derogatory comments about people by calling them trolls, clown, twerps and makes jokes about their mothers?

You are the LAST person I would ever want to meet on RFD! You are SO unprofessional! Well you and Licensed.
Donnie740 wrote:
Jun 1st, 2014 12:43 pm
No, no, no. Entirely misinformed once again.

MLS allowed Larry Dale and other budget brokerages to list upfront flat rate mere postings on MLS back in 2010. He tried it for a few years and then his brokerage went out of business. Do you think he went out of business because his brokerage was so "incredibly successful"?

Thanks Larry, you proved that the flat rate listing model is not viable.
Yeah and you are forgetting all of the other things they accused him of that were not true and made it difficult for him to run his business. But as usual you twist things to suit yourself.

If flat rate listings were accepted with open arms by MLS then there would have been no reason for the Competition Bureau to have taken the industry to court about flat-rate listings, now would there?
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May 7, 2014
188 posts
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eonibm wrote:
Jun 1st, 2014 12:47 pm
The exact % is irrelevant. He's smart to tweak his plan.

You clearly told him that cash back would not work because that would be buying clients.

You, a seasoned real estate agent were wrong. He, not even a real estate agent at the time, was right.
+1
Penalty Box
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eonibm wrote:
Jun 1st, 2014 12:53 pm

Aside from the fact we do flat-rate listings now and do not pay the ridiculous 2.5%
Great, I'm always happy to work with FSBOs. Why don't I come and see the latest "project" that you and your "partnership" are currently flipping? Let me know the address and anytime you want me to come by.
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Donnie740 wrote:
Jun 1st, 2014 1:27 pm
Great, I'm always happy to work with FSBOs. Why don't I come and see the latest "project" that you and your "partnership" are currently flipping? Let me know the address and anytime you want me to come by.
I/We have absolutely no interest in having anything to do with you. Thank you for your interest in wanting to work with us. So many do. There are already a line-up of agents wanting to work with us, but that only happens on the buy-side now.

Anyway, this thread is not about me. It's about my post #1 How to lower your Real Estate Agent Transaction Fees
Penalty Box
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eonibm wrote:
Jun 1st, 2014 1:30 pm
I/We have absolutely no interest in having anything to do with you. Thank you for your interest in wanting to work with us. So many do. There are already a line-up of agents wanting to work with us, but that only happens on the buy-side now.

Anyway, this thread is not about me. It's about my post #1 How to lower your Real Estate Agent Transaction Fees

Can't wait to hear about your next "flip in Rosesale". Is PF4Red included in this "partnership"?

Here's a hint - - it'd be far more believable for you to pretend you've finally been hired for an engineering job than it is to pretend you're working on a "flip in Rosesale".
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Donnie740 wrote:
Jun 1st, 2014 2:33 pm
Can't wait to hear about your next "flip in Rosesale". Is PF4Red included in this "partnership"?

Here's a hint - - it'd be far more believable for you to pretend you've finally been hired for an engineering job than it is to pretend you're working on a "flip in Rosesale".
You should spend more time doing your "real job" rather than burning your time around here
You seem to be obsessed and to have this fixed idea that you are surrounded by the ghosts of your nightmares.
[OP]
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Donnie740 wrote:
Jun 1st, 2014 2:33 pm
Can't wait to hear about your next "flip in Rosesale". Is PF4Red included in this "partnership"?

Here's a hint - - it'd be far more believable for you to pretend you've finally been hired for an engineering job than it is to pretend you're working on a "flip in Rosesale".
You don't have to believe anything about me. Really you don't.

And, I am flattered by your interest in me but, again, this thread is not about me but about my post #1 How to lower your Real Estate Agent Transaction Fees

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