Real estate agents in Canada and across the world are constantly at battle to achieve the 6% commission that for a long time was the average commission received upon the sale of a home.
However, buyers and sellers have become much smarter and with the world at our finger tips, consumers are much more educated on how to reduce their realtor’s commission. Consumers have access to online selling and buying sites and can access the Multiple Listing Service (MLS) and as a result, can skip the middle man. With this said, commissions have fallen in recent years to an average of 5.1% nationwide.
In a typical home sale, agents are willing to take a lower commission of around 2.5% to 3%. The challenge is that most real estate agents are fighting for a piece of the pie and if you aren’t willing to drop your commission rate, then there are probably ten others who will.
The real estate market is very volatile, and changes constantly increasing the unpredictability of sales, meaning real estate agents have to drop commission to ensure an income. It is evident that the market is changing dramatically both for agents and for consumers. Buyers and sellers now have many opportunities to go through the process alone and not pay out any commission.
In this case, real estate agents have to be more aggressive by offering more competitive rates in Canada and around the world if they want to secure more clients. Some real estate agents now focus their energy on the higher valued homes, assuming they can outweigh the lower commission by applying it to a higher sales price.
Real estate agents are now turning to companies for advances on commissions to minimize the impact that these lower commissions have on their monthly and annual income. With lower return, real estate agents want to secure their income and hopefully multiply the amount of homes they sell. If they are going to remain competitive, they will have to continually offer competitive rates both in Canada and around the world and prove to buyers and sellers that their services are worth a higher percentage of commission.
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