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Commission Rates and the Truth

You will see some Agents advertise "maximum 2.5%" or "all this for 2.5%" or "2.5% commission paid" or sometimes you will see signs that show "1% commission".  I've even seen some agents actually advertising "0% commission", etc.  Can you really believe these claims?  The reality is this.  You must read the fine print of the advertisement very carefully and consider what service level you will receive in lieu of a lower commission rate.  These ads are often misleading and sometimes even false.

The facts are this: There are two sides to the real estate commission, the portion that the listing agent charges you (the listing agent is the one who puts the sign on your property) and the portion paid to the selling agent (the selling agent is the one who brings the offer on your home from a buyer).  

In our trading area, you will often see on most mls listings that 2.5% that is 'normally' paid to the selling agent.  There is also the listing agent commission of 2.5% that is 'normally' paid to the listing agent, which makes your total commission 'normally' payable 5%.  This is the bottom line truth in most real estate transactions in our trading area.

I say "normally", because these figures can and do vary.  There is flexibility in the 2.5% figure and I am referring to my immediate trading area, other areas of the GTA may be different.  The commission rate is never carved in stone. 

Some companies offer discounts and try to be a Full Service Discount Real Estate Broker at the same time, how can that be?  Read the Ads very carefully.  Are Commissions Negotiable?  Click here to find out.  Back to my guarantees when selling

My personal philosophy in real estate and for life in general is this:

"The long-term pain of receiving poor service and selling your home for a lower price than it should have originally sold for, will last much longer than the short-term gain of a small savings in the commission rate."  Think about it.

all my marketing for 2.5%

Mark's Guarantee is this - 2.5% commission paid to selling broker on all transactions and MLS listings

PLUS, you get

All My Marketing, Experience and Internet Exposure for 2.5%2.5% commission rate (paid to selling broker)

Are Commissions Negotiable?

In most geographic areas there is a percentage of the sale price that is charged for full MLS services.  Usually, in our trading area, it is about five to six percent of the final sale price.  In some areas it can be as high as seven percent.  However, just like anything else in real estate, the commission amount is negotiable and it can be lower than 5%.  When completing the listing agreement, we can discuss and come to an agreement on the amount of the real estate commission depending upon the services that you require.

Cut-Rate Listing Commissions

With the advent of the web, some agents are offering "cut-rate" commissions.  Sometimes, lower commission rates equate to a lower level of service by your listing agent.  If all you want is to be listed on the Multiple Listing Service with a sign in the front yard and no other marketing or promotional services, then a cut-rate commission company may be right for you.  There are a few discount Brokers that offer different levels of service for a lower fee or there are companies that charge a 'typically normal' commission and perform the functions of a Full Service Discount Real Estate Broker.

If you want an agent who will actively promote your property to other agents, spend time and money on marketing and extensively promoting your property, has made a long term commitment on the internet and marketing your property locally, then you probably are not going to get that level of service with a reduced commission rate.

Another common practice when you see an advertisement for a reduced commission is that the compensation is lowered only when you agree to buy your next home through the same agent or broker (maybe you want or have already purchased a new home) or you must buy one of their own listings (less choice for you) or the listing broker must list and also sell your home to a buyer themselves (not too frequent) or you must take out a new mortgage with the lender that the agent refers you to (this usually means: higher interest rate to compensate for cash back) or else no discounts apply.  Be careful and read all the fine print.

Sometimes, the reduced commission is not really being offered on the sale of your existing home but on the purchase of your next one.  Unfortunately, the advertisements are often unclear or vague regarding these items. 

You may also see ads that proclaim 'maximum 2.5% commission', and again, reading the fine print of the ad is advisable, you will see that this is usually only one half of the total commission that is being charged, so in reality there is no discount on the commission at all!  Again, be careful and read the fine print and look for those nasty asterisk marks **

 

Another 'real life' example

I understand that you feel the commission rate issue is of great importance to you and I want you to know that my commission rate is absolutely negotiable.  I've had many past clients that have felt the same way as you do and ask the same questions you are asking. 

What I have found is yes, commission is important, but your bottom line can be more important by a factor of 10! 

For example, if your listing agent does not aggressively market and promote your property to the agents and public, support your price and position and negotiate solely on your behalf to receive the best possible price and terms it could easily impact your eventual sale price by $10,000 or $20,000  This is the truth and these numbers impact you far more than the total commission.

Generally, (as you probably know) the Real Estate marketplace in Mississauga is very competitive regarding commission rates.  As usual in life, I feel you get what you pay for.  You cannot expect to pay a discounted commission rate and receive the same service I would give you, see here.

What I have found during my 18+ years in the business is that my persistence in fighting for the best possible price and terms for my vendor far exceeds a half of a percent reduction on the commission rate.

This is a real life example of a listing in Erin Mills. 

Recently a vendor who was choosing between myself and another agent, chose the other agent because the agent gave them a 4.5% total commission rate.  The vendor had to reduce his asking price from $279,900 to $264,900 mostly because the marketing by the other agent and support of the vendors price was not there.  The behind the scenes negotiations were not taken care of with much skill or with any consideration for the vendor's position.  Thus, the vendor listed their home with another agent, rather than me, to receive a "perceived" savings of about $2000.  Meanwhile the vendor's were forced to reduce the price of their property and have just lost $15,000!   It is the behind the scenes conversations that is one of the 'secrets' in maximizing your price, read more about it here.

With all of this said, there are often situations where I will reduce the commission once we are dealing with an offer.  When we have an offer on the table and we are very close in price, then certainly I can make a business decision and reduce my commission if the purchaser or you can't move anymore on price and if a reduction in my commission will help to make the sale.

As well, we will list on the MLS at 5% but if I list and sell your home myself (which is quite possible given my expert marketing and promotion) I guarantee will reduce the total commission.  Does this sound fair to you?

Bottom line is this. I list at 5% and I can be flexible if you get into a situation where you are squeezed or if the situation warrants it.  As discussed above, I will make a "business decision" and help you sell if we are very close in price.

I hope this helps. I urge you to make your decision based upon the fact that I will be your trusted advisor, skilled negotiator and use expert marketing and promotion to get you sold at the best possible price and terms for you!

This information is copyrighted by Mark Argentino and is for the sole and exclusive use by only Mark and his clients.  Other real estate agents are warned that they may not use any of the information contained on this page or any other pages on this website.

 

Conclusion

When you see an advertisement or an offer for a lower commission, you should carefully analyze what you are giving up by accepting such an offer.  All the details will probably not be readily apparent in the advertisement and you will have to investigate further and dig deeper to get the truth

Remember this truth in life "you can't get something for nothing" and lower commission rates can indicate a lower level of service, some services may not be offered for the largest sale of anything you will ever own in your lifetime.  So you must ask yourself the question, is it really worth it?

Be sure to ask plenty of questions before you sign anything.  You may seek clarification or confirmation of any representations other agents make to you by contacting me at any time, email me now if you have a question about commissions.

If you have a complaint about an advertisement, flyer or billboard you have recently seen that you feel is false and misleading, then you can easily do something about it.  RECO (Real Estate Council of Ontario) handles complaints and any complaints from the public are taken extremely seriously and are acted upon to a final result.  You may go to the RECO website to see how easy it is to register a complaint.


In this real estate web site you will find information on 2.5% commission rates in Mississauga, Ontario by A. Mark Argentino.  You will also find details about Real Estate listings and homes for sale, virtual tours, homes for sale, secrets to ask agent Realtor, Mississauga, Oakville, Toronto, buying, selling and more in Mississauga.

Whether you are buying or selling
I PROMISE to be Professional, Reliable & Enthusiastic!

A. Mark Argentino!
P.Eng. Broker
(905) 828-3434 Email Mark regarding homes and properties for sale in Mississauga, Oakville, Toronto and surrounding areas : Thank you!  Mark Argentino of RE/MAX welcomes your inquiry.

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