Comox Valley real estate services rendered by a professional real estate agent are generally compensated through a commission structure. Every business that provides goods or services to a customer or client expects to be compensated. The fee structures used by those that provide services are as varied as the businesses themselves. Flat fees, service fees, contingent fees, hourly fees, surcharges, deposits, and retainers are among the many models.
Let’s briefly examine the traditional percentage-of-sale Comox Valley residential real estate brokerage commission structure model. While it is not my intention to delve into the history of this topic – those readers wanting a challenge might take that on – I will highlight some considerations that may not be obvious to most readers.
Comox Valley Realtors ® who are employed in the real estate industry expect to be compensated for services rendered, but does this expectation always materialize in practice? The short answer is no. This traditional brokerage commission structure places REALTORS at risk of providing services and not receiving any compensation in some instances. For example, a REALTOR ® may spend considerable time, effort and money marketing a home. If it does not sell within the listing period and the listing is not extended by the owner, the REALTOR ® not only does not get paid, they will incur a loss. Similarly, a REALTOR ® who spends considerable time, effort and money driving clients around and showing them houses will also suffer a loss if the clients do not purchase a home.
What happens when Crown Isle luxuriously appointed homes for sale do sell and the sale completes? A commission is paid for the sale of the home related to the two ends – buying and selling – of the Comox Valley real estate transaction. In practice this commission is generally split between the listing and buying brokerages. The agent then receives a portion of the applicable end from their respective brokerage(s). With this they must pay a portion of their overall real estate expenses (of which there are many) and all expenses related to this specific transaction (including any referral fees that may apply to the transaction). Then, of course, like everyone else, they must deduct the requisite income tax and send it in to the government. The individual agent on one end of the transaction is among a number of people who receives a share of the overall commission.
Let’s now turn away from the topic of compensation and focus on the service provided by the licensed real estate professional. The service provided can, and often does, vary considerably among Comox Valley real estate professionals, even when they work for the same brokerage.
First, let’s touch on the type of service provided. Ask for a list of services offered by the real estate professional. How extensive is the list of the types of services? Is the list best described as a full-service list, specified services list, or limited services list? What happens when a service is required to deal with a situation that is not on the list? When the services are being offered through a contract, read and understand the contract before agreeing to it. For example, let’s consider the following hypothetical example. What if a “discount commission” brokerage stipulated in their contract that they would refer you, the owner who is trying to sell their home, to a full service brokerage if they could not sell your home? Would you not want to know why this language was in the contract?
What if it was because they would receive a significant referral fee from the full service Comox Valley brokerage for the referral? The bottom line is to know exactly what services are being offered to you and whether or not additional services will be provided to cover unforeseen or unusual circumstances.
Second, are the types of services being offered on a full-time or part-time basis and what is meant by each of these two descriptions? If you hire someone and then find out that they do not work after 5 pm or on weekends would this be of any concern? Perhaps they only work on selected days of the work. Will they be there when you need them? Equally importantly, how busy are they? Will they have time for you and will they be able to provide you with personalized attention?
Third, even when two real estate professionals offer exactly the same type of services, the level at which they are provided may vary considerably. One may offer first-class service while another may offer economy class service. With economy class, extras cost extra. Which one are you expecting and willing to pay for? If you are planning to buy a high end home from the Courtenay real estate market, what kind of service do you expect? What about oceanfront homes with a view?
Fourth is the issue of compensation. When you pay discount rates for real estate services you may find out that you are also getting discount service – either because of the type or level or services being provided or because of the time, attention and level of effort directed your way by the person who is providing the service.
While the old adage You Get What You Pay For is often applicable in the service industry, ensure that you know exactly what you are getting to avoid surprises down the road. For example, I recently saw an ad on the internet that said ” We think it’s time for change in real estate – our commission rate is only 2.95% *. The asterisk was connected to a statement that mentioned that several things, including advertising, were additional fees. Those people in business will understand how expensive advertising can be. How much are the additional fees? How do you know what you are getting for what price when not everything is included?
I will always remember a few of the golden nuggets that my parents taught me when I was very young. They included If it sounds too good to be true it probably is, You rarely get anything for nothing, and You get what you pay for. The key in hiring a real estate professional is to know exactly what you are being offered for the commission being expected in terms of the type and level of service being offered and the time that will be devoted to meet your real estate needs. If you are looking for real estate services that go Above & Beyond in the Comox Valley, contact Brett Cairns of RE/MAX Ocean Pacific Realty in Comox BC.
by Brett Cairns