While grabbing a quick lunch with my business partner (and wife!) at ¨The County General¨, across the street from our office in Riverside, I heard a comment that deeply resonated with me.
Having been there a couple of times before, we briefly engaged in small talk with the gentleman that normally takes our order. This time he had inquired about the Real Estate market and we all discussed lightly our impressions of it. But by the time he had finished taking down our order, he paused, looked at us, then curious and unexpectedly exclaimed with a smile: ¨It sure must be a great time in history to be a real estate agent in Toronto!¨
His expression surely took us both by surprise for its casual and spontaneous tone, but instantly got me thinking, for some time now, about the role that we play as Real Estate agents and how the public perceives the job that we perform.
Someone looking from the outside may think that a Real Estate agent/broker has a fairly easy job. In the consumer’s eyes, it may seem as if we show a couple of properties, get an offer signed and get paid a hefty commission shortly after. Simple!
But although anyone involved in a recent Real Estate transaction may attest to the contrary, let’s keep our role open for discussion. Perhaps there are questions that need to be addressed. Do agents/brokers truly add any value to the Real Estate transaction? Are agents/brokers worth all that they are paid? Can the average consumer just carry on and do without them?
As close to 40,000 licensed agents now ¨roam¨ the GTA, these are valid and fair questions for any potential buyer or seller to ask themselves, before deciding to hire an agent to represent them. I am actually asked questions along these lines quite frequently: ¨Is your commission negotiable?¨ or ¨Do you do buyer cash backs?¨
Even though I´m sure that several agents in the marketplace would rush to answer with a quick ¨ Yes! ¨ in order to get their hands on the potential transaction, I am hesitant to answer that question so lightly, as not all agents are created equal, nor is the value of the services that they provide.
I believe that information empowers users to make better decisions. Access to this information happens in real time, at their fingertips, regardless of where they are or where they go. Yet, many buyer´s and seller´s are strongly lured by the promise of a potential discount in the cost of their future home purchase or sale, in the form of a discounted commission. But is it really an advantage? Is it truly in their best interest?
If the service to be provided would be of optimum quality and high standard, I would agree and say, ¨By all means pay as little a commission as you can negotiate!¨
But here lies the Conundrum. Which takes us back to the idea that not all agents are created equal, nor is the value of the services that they provide.
If we were to identify what matters most to a buyer or a seller when carrying out a Real Estate transaction, we could perhaps determine what they perceive as ¨value¨ in regards to the services provided by the agent they hire.
This may mean different things to different people, but most may agree that some of the traits listed below would enable them to experience a smooth and seamless transaction.
- Are they Full-time agents? How long have they been in business for? How often do they perform this particular task? Are they knowledgeable of current market trends? Are they market experts in your area of interest? Do they have a solid agent network they can reach out to? Can they provide insight and advice you appropriately throughout your decision making? How often do they train and update their skills?
2. Set of Skills:
- How good are they at negotiating? Are they technology friendly? Do they have people skills? Are they pro-active and self-motivated? Are they resourceful and good at problem solving? Will they be able to think outside the box and focus on the solutions, instead of the problems? Are they good at sourcing information and analyzing data? Do they pay attention to detail and strive for quality?
- Will they under promise and over perform? Will they be someone you can trust? Will they have your best interest at heart? Are they responsible and/or accountable? Will they take the time to structure a good deal for you or will they just want to rush to close the transaction and move on to the next deal?
4. Customer Service:
- Will they be available when you need them? Will they help you understand what the process entails and manage your expectations to avoid frustrations? How quickly will they respond to your calls/emails/text? How often will you be provided with updates and/or feedback? Are they available on demand and on short notice, should the situation require so? Do they have systems in place to enable tasks to be carried out in a timely fashion? Do they work with a team of professionals that will help facilitate the transaction (lawyers, lenders, home inspectors, etc)?
5. Track Record:
- How productive are they in their business (Awards, Recognitions)? Have they been recommended to you by a satisfied acquaintance? What do previous clients have to say about them and their service? Do they have any social validation (LinkedIn)? Are they passionate about what they do, or are they just there for the paycheck?
Asking as many questions as possible will help you better understand what the prospective agent has to offer, other than a cheaper commission fee.
Understanding why an agent would reduce their commission can also help you foresee what you can expect as an outcome.
Agents may often discount their commission for three main reasons.
1. They have built their business model based on volume (higher number of transactions).
2. They are making up for their lack of knowledge and/or experience.
3. They do so out of desperation, as they have nothing else to offer that will help them differentiate themselves from other agents.
Without giving it hard thought, it could be logical and safe to say that we could expect different things from each of theses interactions:
1. Poor customer service, if any.
2. Frustration, lack of proper representation and/or potential liabilities.
3. Poor overall service quality due to lack of motivation.
The Real Estate transaction is in itself a major occurrence. It involves important financial, legal and emotional aspects for all parties involved. Well managed, the process can be carried out smoothly and will be an enjoyable experience. But if things go wrong, it can be a traumatic experience and a costly one to mend.
Most full service agents look forward to establishing long term relationships with their clients, which makes them somewhat accountable. Discount agents are mostly in it for the money and may not stick around for long once the deal has closed.
Although a professional and qualified agent will most likely negotiate better conditions and a better price on your home purchase or sale (above and beyond the amount of any discounted commission), this will only be tangible at the end of the transaction, not at the beginning.
It will be up to the consumer to look past the proposed discounted commission and focus on the prospective agent and what they actually bring to the table.
Keep in mind that in the end, you’ll get what you pay for.
Real Estate Sales Representative - RE/MAX Hallmark
647 995 5440
Jose & Claudia
RE/MAX agents since 2001, avid negotiators and passionate for what we do. Buying, selling or renting your home with us has never been easier!