How to pay your realtor less

Thanks to new flat-rate realty services, you can cut commissions by $10,000 and still get the services you need.



From the November 2010 issue of the magazine.


After his wife died in 2003, it took Pat O’Sullivan 379 restless nights before he finally worked up the nerve to sell his Calgary townhouse so he could move closer to his son. Once on the market, however, his home only took two days to sell. Pat, 64, was thrilled to get the full list price so quickly—but he couldn’t help but wonder: “What did my realtor do for her $18,250 commission in those 48 hours?”

He’s not the only one asking that question. Canada’s Competition Bureau is currently taking a long, hard look at whether real estate agents are offering good value to consumers. Their conclusion? We’re often being fleeced. Especially when we’re forced to fork out $20,000 for a full suite of services, when all we really want is an ad on the popular Multiple Listing Service (MLS) website.

There is some good news though. After months of debate with the Canadian Real Estate Association, the Bureau is getting some concessions. Consumers will finally be able to purchase some services à la carte. Several large real estate brokerages, such as Royal LePage, say they won’t play ball, but some independents are already switching to the new model. Joe William of Ottawa’s Best Value Real Estate, for instance, will let you post a simple listing on MLS for just $109. Other innovative payment models are also becoming popular.

If you want to save a few thousand bucks the next time you sell a house, read on. Here are three strategies you can use right now:

Sell it yourself
One radical option is to completely omit the realtor (and the fee) and opt for the grassroots For-Sale-By-Owner (FSBO) method. The cost of posting a listing on websites such as and ranges from free to just over $2,000. Like the MLS, these dedicated Internet portals allow homeowners to include descriptions, photos, price and contact information.

But be forewarned: While studies show the average sale price of FSBO homes is actually higher than for MLS homes (which is great for the seller), you have to be patient. FSBO homes stay on the market significantly longer—anywhere from 60 to 90 days, compared to 35 to 68 days on MLS. Also, only about 7% of buyers have embraced the FSBO option, which means a smaller pool of potential buyers for your property.

Negotiate a lower fee
Shaving just 1% off the average 6% real estate agent commission could save you $4,000 on the sale of a $400,000 home. Unfortunately, not all realtors are receptive to the idea of dropping their rates.

A 2008 study by Consumer Reports found that only 46% of U.S. sellers attempted to negotiate a lower commission. Of those who did, just 71% succeeded. Here in Canada, realtors may be even less receptive to negotiating. A Vancouverite called Cris recently told me that when he sold his home earlier this year, he called 10 realtors and asked each to lower his or her rates. Half flat-out refused, he says. “They were surprised I even bothered to ask—and even more surprised that other realtors considered discounting their rates.”

Only two of the realtors agreed to drop their rates, but both refused to drop the 3% commission that goes to the buyer’s agent on completion of a sale, calling it “career suicide.” Cris was told that if he offered a lower buyer’s agent commission, agents would steer their clients to other properties. He eventually negotiated a 1% reduction in fees on the seller’s commission—for a $6,000 saving­—but only because he agreed to let the listing agent also act as the buyer’s agent. The experience “forever left a bad taste in my mouth,” he says.

Obviously trying to negotiate the fee down can be a big hassle, but if you can pull it off, the service you get likely won’t suffer. A Boston study found that lowering commissions to 2% had a negligible impact on both sale price and the time-on-the-market—even though the seller could save $10,000 or more in commissions.

Pay a flat fee
When you go the flat fee route, you get an MLS listing, but you do most of the other legwork yourself. The catch is you still have to pay the buyer’s agent commission. “This service is for people who have sold a home before and don’t need the added services provided by a realtor,” says Tony Miele, a 22-year realty veteran, who recently quit a large Ontario brokerage to open Smart Sell Realty in Burlington, Ont.

If you need more help, try the flat rate service option. This is similar to paying a flat fee—you pay an up-front bill for an MLS listing—but you also receive the guidance and expertise of a full-service agent, including marketing, negotiating and market analysis services. Miele charges $1,995 for the whole package. Over the last five weeks, he’s sold 19 homes on a flat-rate basis, he says, saving his clients $128,300 in fees.

Other agents are beginning to pop up with their own variations on this theme, and some of them feel quite strongly that switching to a flat-rate model is the right thing to do. “I want my value to be scientifically determined,” says Bill McMullin, founder of Viewpoint Realty in Nova Scotia, and an outspoken advocate for industry transparency. “When clients realize all the work I do, they won’t mind paying my fee.”

31 comments on “How to pay your realtor less

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  2. In BC, REALTOR® commissions are usually closer to 3% (declining with higher sales prices). In reality, buyers are savvy and will often "price in" the savings the seller has reduced the commission by to determine their offer price and their bottom line. Remember, with traditional REALTORS®, you don't pay anything if your property does not sell whereas with some flat-rate outfits you will pay up front regardless of whether or not there is a sale.

  3. The interesting thing that nobody seems to be discussing is liability. If a realtor lists a property for $100 what are you really getting? Should a buyer feel that the listing realtor has done his/her homework? I'm going to bet that they haven't. I would bet that they never even went into the house or even in the neighbourhood.
    As for the comment in the article that says the home sold in 2 days and the seller wondered what did he get for that? He had a quick sale, which is great, he didn't stress that he would have to take months to sell his property, he only had a few days inconvenience for the showings, it was quick and painless. What if it took longer and he had to reduce his price by 5 or 10% would he have been happy then?

    • Joey, I think that they were quite clear in the article that what you get for your $109 is a listing on the mls, nothing more. If you want help with the paperwork, you have to pay ~$2000. If you want your realtor to do all of the work, then you have to pay the whole shebang.

    • Or gee perhaps the realtor priced the house too low.

    • Thank you Joey…well said!

  4. However I wonder, how many realtors did he interview? All realtors have the ability in Canada to set their own fees, so stating that realtors charge a flat fee of 6% or 3% is misleading. Some realtors negotiate and some don't – neither way is bad, just different. Realtors are running a business and charge accordingly for the services they offer.
    All I can say is the old phrase Buyer Beware if you are buying through one of these discount services. You get what you pay for.
    The new changes with CREA and the competition burea have actually changed the way realtors do business by such a small miniscule amount, that I doubt most people would even notice….

  5. I am a realtor for over 35 years in GTA – Please note the following: 1) Average annual income of a realtor is in the range of $30000-$40000 annually and not more than average 6 transactions a year(although there are few hundreds of agents who writes hundreds of transaction as a team. (These team members must be paid handsomely by the primary agent)-2) If the house is sold in 48 hours in good market ,in a low market thousands of listings are unsold and they expire.-therefore the example given is not correct in normal market.3) Location of a house and asking price make a lot off difference-normally marketing for a 120 day listing consists of advertising,promotion,open housing,arranging showings-digital promotions,reporting etc -actually a lot of work in a low market-(Contd)

    • The average Realtor may only make 30 to 40k but there are a lot that shouldn't be in the business because they have a Realtors license just to make a few extra $ and drag down the average. The system to me is very flawed, in Alberta the rates are 7% of the first 100k and 3% after. If a house is worth $500k why should a Realtor get $7K on the first $100? Any dim wit can sell a $500k house for $100k, It should be 15% on the $400 to 500k mark and 25% over that which then gives a Realtor some skin in the game. I have see Realtors take in offers $20k less then they should be then try to get the home owner to agree; they want the sale because they are giving up only $300 if they are doing one side or $600 if double ending it and have already made the bulk of their money and the home owner gets the $19,400 shaft.

  6. 4) The amount of hours I spend to get 6-10 transactions a year includes all week and week ends at any hour, no family life, constant phone calls and constant work to make the owner happy.(Of course some house sell in 48 hours in a good market,but it takes a constant work for 90 days in average market ,in not so good market)5) I refuse any listing below 5% and 2.5%,if I sell it myself (dual agent)and will continue to so so-if you need a good and efficient lawyer or good doctor in USA, you have to pay his substantial fees-if you need a real good realtor who protects your interests you have to pay-if not any house owner has the option pick any $199 listing agent or sell it himself- but if he needs my services, where I go all out to service him/her to help him get the highest price and protect seller's interests at every step, I need my 2.5%% for myself as a selling/listing agent. -market will take its own course itself,as long as every quality agent protects his client's interests and provides high level of service and not only think about his commission. People will pay.

    • Get another job! and stop complaining.

  7. Not too hard to tell which comments are from realtors.
    If there were any $400,000 houses in Vancouver or on the North Shore 6% might be slightly more reasonable – but the average price of a house has been $1,000,000 + here for some years now & realtors have been making $60,000 + commissions, in many cases for houses that sold in under a week.
    On an hourly basis this is more than doctors & lawyers make..
    Definitely time for open competition to bring the price of selling a house down

    • Sue a million dollar sale in Vancouver would cost $29,500.00 plus HST so $33,040.00. Half of that would go the to the buyers' agent and half to the listing agent (less advertising, & office expenses). Realtors are the people who meet you at your convenience, show your house at your convenience. Talk to you at what ever time you call. Present offers to you on demand. Give you the background sales information to arrive at the price you decide your home is worth. Work the buyer that might buy your house..(sometimes showing that buyer hundreds of houses, so they are informed. This alone can take months to years depending on how many other homes the buyer's get beaten out on. Have the liability to ensure their principals' legal interests are looked after. Have a duty to put your interest first.

  8. Well, my heart goes out to the agents who have detailed their little sob stories here…maybe they should get a different career if it's so hard and awful- I hear Starbucks is hiring. I really don't care about your justifications….I;m thrilled with the CREA changes and contrary to what 'Joey' say's MANY hard working honest folks who don't want to be 'fleeced' are definitely taking notice. People won't pay- face reality.

    • the people will pay alright for the lack of due diligence! go ahead feed the lawyers! better make sure those "honest hard-working folks" don't have their names on title or they will be paying for alot more than commissions……..wake up and look at the whole picture

  9. A house that was worth 300k in BC 7 or 8 years ago thats now worth 600K+ (note normal income levels have remained pretty much the same over that period) What is the realtor doing now that justifys almost a doubling of their income? Remember the average Joe during that period has had little or no wage increase during that same period of time.The fact serious change is almost certainly coming should not be a suprise. If the real estate industry had addressed this on there own I doubt a major overhaul of the home purchasing and selling process would have been neccessary.

  10. Your article suggests that The Competition Bereau is interested in lowering Realtor fees, rather they insure that there is no colusion between companies (in any industry) used to keep prices or fees artificially high.
    Most Realtors charge a decreasing fee as the price of the property goes up ( ie 5-7% on the 1st $100 K and 2-3% on the balance) so a home that moves from $200k to $400K would not result in a doubling of fees. Any particular transaction may require sufficient expertise and effort to warrant a fee of $10-20K, the two day sale reflects, at the very least, that the Realtor had sufficient training + expertise to not over-price the listing. To determine if it was under-priced would require the pyschic abilities some of your "non-Realtor" respondents apparently have at their disposal. You may feel that the fees that most Realtors are negotiating are unresonable, but you can probably understand that if you want to negotiate a flat fee $100 – 500 a lower level of service will be the result.
    Canadian society has been blessed, and our families have benifited greatly, by widespread home-ownership over the last century. Hopefully your family will be as well rewarded this century.

  11. Realtors are the biggest scam going. In Ontario you go to get a 4 year degree it is $50,000 here a person can become a realtor in a few months for less than $5000 on line for most of it. Liability is a load of crap – how many people sue a Realtor. All people who were in multiple offers and were told to "remove home inspection and finance and get the house" should sue for iditotic advice and $50,000 commision cheques. Lawyers, Doctors, Accountants etc are more educated then Realtors and they are on billable hours. 48hrs for 18000 wow drug dealers make that kinda of cash – realtors are not running a business they are loan sharking. It is a legislative industry so since they govern them themselves are price fixing and in collution. It is a shame the Competition bureau did not really dig in to the real issues. Finally a few thousand to fill in paper work!

    • hey, bring on the billable hours……you'd be surprised! as for idiotic advice, the decisions are yours, not the Realtors

    • If Realtors were to ask for an hourly rate, say $25 / hour, for the work they do set specifically to each home…then maybe the consumer might be able to grasp how many hours we can spend (plus how many dollars we can spend) trying to get that house sold. Great, so the home took 2 days to sell! – if the agent only shows 5 hours work, then only pay 5 hours pay! Sound good??

  12. As a realtor with 20 years exp in a small town not a big market I want to say a couple of things. 1. I I only collect a fee if the job gets done unlike the other professionals involved like the lawyer and home inspector 2. I have had less than 10 listings sell in less than 10 days and less than 100 in competing offers…media reports on large market data really distort the process that most consumers experience 3. Most of my passed clients have had a great experience working with me and I have never had one say I did not earn my commission and many have used my services repeatedly 4. My insurance deductable is $2500 and as it is still my ultimate responsibility to ensure the accuracy of all information posted on the mls system according to my code and mls rules so I will be not be taking that risk for $100 The article mentions a more significant fee. 5. Will the flat fee user be paying additional fees each time the listing needs extending and price ect
    Whenyou pay less you usually get less! I will be interested to see how this will work…I personally like the thought of a guaranteed pay check so if my clients want to pay me up front for doing a lot less work and not being on call all the time I will seriously consider it!

  13. WOW! There are alot of very uninformed consumers out there, and when someone tries to inform they close their ears so they don't become informed. I understand that there are a number of realtors out there that have affected these opinions, but they are not the norm. Most realtors work hard for what is an average wage….and they are educated, and have to keep on being educated to stay on top of things.

  14. There has always been the option to sell your home yourself, you have never been FORCED to sell your home with a realtor. I agree some realtors aren't worth the cost but many others are worth every penny. Selling a property is marketing, marketing and marketing not good or bad markets…market knowledge/experience and good salesmanship is what your paying for with a realtor not a website or sign on your lawn. If you wanted that tehre have been discount services available for years. MLS is a Multiple Listing System that has been around for many years it was created to notify property listings between brokerages before the wide access of internet real estate offices literally printed flyers and sent them to other real restate offices to promote and advertise properties to other realtors who could then tell there clients. Remember when you would sit in a realtors office and they had a binder with all the listings and you would turn through them page by page by page looking at the one front exterior picture and listing info. If you think being able to put your house on MLS and not pay a realtor fee is going to improve your chances of selling your mistaken. And remember one critical reason many people who understand the legality and fiduciary responsibility of representing a property for sale use realtors, it sucks to be sued.

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  16. For the majority of Canadians, their home represents the greatest accumulation of life savings. The gain over the years and when it is sold is also tax free money. It's hard to believe that over the years, so many have relinquished on average 5% of pretty well their life savings to a so called real estate professional, to "list" their house and waite for somebody to show up to buy it. The average $20,000.00 real estate commision is actually $40,000.00 if you had to go out and make it and pay Rev. Can. Thankfully this hay ride is finally coming to an end. It is not brain surgury, like the real estate people try to make you believe ,to sell a home. It comes down to price, location, and the quality of the product. The homeowner has all the responsibility of carrying the house, and getting it cleaned and ready to show. The owners lawyer is the person that oversees the legal part of it .
    Why do these realators think they deserve to make more per hour than heart surgeons ! Wake up Canada.

    • How much do they earn per hour Dan? How much, per hour, did the Agent earn who marketed a home for 4 months? (estimate a cost of $1000 for that) – the home sold for say $350,000 and the agent selling fee was 3% of the first $100k + 1.25% of the balance. I'm just talking about the listing agent fee here. So, that's 4 months with a 6 day work week as a good example. That's about 100 days right? Ok, he didn't work 8 hours a day just on that one house, obviously, but lets say on average, 1.5 hours every day, for roughly 100 days…less the marketing cost.
      Commission earned = $6,125 less marketing = $5,125. Divided by 150 = $34/hour.

  17. For those "realtors" who are telling you all how much they have to be careful to get all the measurements accurate when they post a listing, note that they also put on every listing sheet the following text:

    "All information displayed is believed to be accurate but is not guaranteed and should be independently verified. No warranties or representations are made of any kind. "

    That doesn't sound like they actually accept any liability for writing down 10-ft 9-inches instead of 9-ft 10-inches, or other such mistakes.

  18. Realtors do provide a service and should be reasonably paid. However, the commission structure bears no relation to the quantum or difficulty of the work that they do. The forming of cartels (and the consequent abuse, or should I say rape, of the public) in this and other businesses is as Canadian as maple syrup and white collar scams.

    The telephone, cable, internet providers, energy brokers, gasoline retailing oil companies, highway 407, tae kwon do / fitness clubs, garbage collection, exclusive unionised contracting to the government, MPPS and regional councillors with conflicts of interest etc. are examples of these rotten-to-the-core cartels that promote dim wittedness, price gouging, and general pauperization of the population that pays too much for everything. Comment continues……

  19. And TOP OF THE HEAP OF CORRUPTED SYSTEMS is the building code that was written for and by the house building cartels. Nowhere in the world but Canada does anyone pour a basement floor only 2" thick with no rebar or BRC reinforcement to prevent cracking. Nowhere else do people pour basement walls with arbitrary pieces of steel rebar randomly thrown into the concrete. Only in Canada is cracked up floor and wall concrete a normal thng. Nowhere else do they put microwaves, toasters and kettle outlets on the same electrical 15 amp circuit! It is a miracle that houses don't crack up and collapse or burn to a crisp by electrical fires.

    I hope the breaking of the real estate cartel is the beginning of the destruction of all these government protected extortionist cartels.

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