This past week I was contacted by an editor of a Canadian entrepreneur magazine for a story he was writing about discount real estate brokerages.
He was looking for a full-service agent who operates under the “7 and 3” commission system and who could comment on discount brokerages.
Specifically, he wanted to include a viewpoint of someone making the case for the “7 and 3” commissions and full service, i.e., why home sellers and buyers should opt for the “established model” (his words not mine) rather than using a discount brokerage.
Pro-tip: There is no “standard” 7 & 3 commission system. All commission is negotiable.
Unfortunately, I couldn’t really be of much help to him because I don’t think one can make a blanket statement that buyers or sellers should opt for any particular service model.
Every client has different needs & goals and should choose the agent that best suits their particular situation. Discount and full-service brokerages have always been around and will continue going forward. They each have a role to play in the market.
For example, the cost of professional photography and floor plans alone is more than some discount agents charge for a listing.
I’ve found that having great photos with 360° virtual tours and floor plans included in a listing filters out buyers and only the most interested that still like the layout schedule showings. Fewer but “higher quality” showings = less inconvenience for sellers. For some sellers their time is paramount.
For others the utmost importance is the bottom line. They don’t mind if they need to arrange their own showings, or if the agent takes their own photos, spends less on marketing, or perhaps doesn’t return phone calls or emails quite as quickly because they’re volume based and have lots of clients – all that matters is the final dollar figure.
Pro-tip: not all agents are equal. Discount agents can have better customer service than full-service ones, etc. Ask for referrals from family and friends
There are also agents that are willing to do something in between flat fee listings and full service whereby the fees & service level provided can be negotiated to something agreeable to all.
Pro-tip: make sure the listing contract details exactly what you expect your agent to do for you (ie. Open houses, professional photos, floor plans)
As you can see, there is no one correct business model that a client should choose. Once you’ve identified your objectives/wants/needs and spoken with friends and relatives about their past experiences, then you can select the agent that best suits you.