Paying less commission may cost you money in the long run

In Century 21 Executives Realty Ltd. in the Okanagan Valley, our company has set minimum rates for commissions. Although there is no standard commission in our marketplace each company can set their own rates. We strive to bring the absolute best in marketing and advertising to sell our customer's homes as fast as possible and for the most money possible. But does it make a difference? Is that just all salesperson fluff or does the extra marketing really make a difference? In our marketplace there seems to be a fairly wide variety of commission opportunities for consumers which is a good thing. There needs to be diversity in the marketplace. IN the North Okanagan, Ok West Realty, 3% Realty and 3% Value Plus Realty typically advertise lesser commission rates while, Century 21, Remax, Royal Lepage and Sutton although they don't advertise it, seem to typically charge more. These days our REALTORS are confronted with the commission question at most listing presentations. We have lots of wonderful dialogues, all oriented around the old adage, "You get what you pay for". In other words we believe that we charge more and we bring more value to the consumer's table. But do we? As a large Real Estate company, if we cannot bring more value to the consumer's table we should not be charging more commission. We can rant and rave all we want about better service, better trained agents and better marketing but if it doesn't make a difference, it's all just smoke and mirrors, correct?  So what is important to people when selling their home? What really matters is:

  • Will my house sell?
  • How fast will it sell?
  • and most importantly "How much will it sell for?" 

If the services and marketing are not creating more money for our clients in th 3 areas, what is the point? Although, the companies that charge lower commissions in our marketplace are relatively new, they have been around long enough to compare the answers to these questions to other companies. So I did a very simple independant study this morning. Today is May 24, 2013 and I started the study at 6:45 AM. I am being this presise because I am sure that this blog will ruffle some feathers. This is the way the information looks today. The information is taken directly out of the local Okanagan Mainline Real Estate Board MLS® system. I used only North Okanagan Residential statistics.I grouped the larger companies in the North Okanagan into 2 groups. Group #1 was companies that typically charged lesser commissions. These companies were 3% Realty, 3% Value plus Realty and OK West Realty. Group #2 was made up of companies that typically charged more commissions. These companies were Century 21, Remax, Royal Lepage and Sutton. Then I took all the Residential listings in the North Okanagan that were listed from January 1, 2012 to present day. Then I simply clicked the sold button to see how many sold in the same period of time. Then I clicked the stats button to see how fast they sold and what the average sale price was. Here are the results...

Group #1 (Typically Lesser Commissions)

Listings Taken 925
Lisrtings Sold 235
Average Sale Price $311,725
Average Days to Sell 97

 

 

 

Group #2 (Typically More Commission)

Listings Taken 2792
Listings Sold 896
Average Sold Price $327,448
Average Days to Sell 90

 

 

 

So what do these statistics say? They say that, for the period of time specified, the 3 companies in town that typically charge lower commission sold 6.7% less of the listings that they took, the listings that did sell took on average 7 days more time to sell and most importantly they sold for on average $15,723 less money.  There could be many reasons for this. Of course, I like to think that the advanced service and advertising dollars that our Realtors spend on marketing makes a difference to our customers. Regardless -  the facts are the facts. The collective efforts our Realtors and our company has created a higher standard of service and marketing excellence that pays off where it really matters most; our customer's bottomline.

Bill Hubbard 

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