How Do We Solve the Discount Broker Challenge?

ObserverX connected some excellent dots in a recent comment. Quoting Coco he wrote: 

“…“The full service agent admitted they do not show One Percent listings unless the client absolutely persists to see a One Percent listing, due to the reduced commission rates.”

So much for “agency” … in the current system, the notion that the RE agent will “look out for the best interests of the client” is a total joke and I don’t know why the RE profession is even allowed to promote itself that way.

Don’t get me wrong, I’m not saying that RE agents don’t provide a valuable service or that they should work for peanuts but let’s call a spade a spade when it comes to the default commission structure. I’m not familiar with agency agreements in other areas but my understanding is that typically they are structured so that the interests of the agent are *aligned* (or at least neutral) with that of the client, not *against*. I suppose it could be argued that the buyers/sellers bring it on themselves for accepting the status quo. If I were retaining a buyer’s agent, I’d say “If the 1% listings aren’t offering the standard commission that you expect, I will top it up so show me everything.” Then I’d simply factor that cost into the price I’d be willing to offer for the given property. Simple.

C’mon realtors, why won’t the RE profession come up a default commission structure that aligns with the intent/responsibilities of “agency”???”

It’s common for consumers to complain that discount brokers are denied access to the MLS and that many Realtors avoid discount brokerage listings.   While the former is factually incorrect (discount brokerges merely have to be members of the Board to get their listings on the MLS, and they are there in quantity), the latter is, unfortunately, true.  What is misunderstood, I think, is the reason that discount brokerage listings are avoided, to what degree they are avoided, what the impact of the avoidance is, how it can be solved and who is responsible for solving it.

The reason that discount brokerage listings are avoided is simply becasue they don’t offer enough commission to the selling Realtor. Real estate is a tough business, and it takes money to stay in business.  Nobody can work for less than it costs them to come to work. 

(Its important to point out that discount brokerage listings do get sold, and to point out why.  In my experience my agents sell them  because I make sure they understand their agency responsibilities and I make sure they discharge them to the best of their abilities, because the buyer tops up the commission, or because the agent makes the seller pay more at offer presentation time.  More often than not, at least in my office,  the selling agent executes his/her agency responsibilities and takes the discount and chalks it up to the cost of doing business.)

 The impact of avoiding showing and selling discount brokerage listings is that Realtors may well be failing to discharge their agency duties, buyers may not find their dream home, and sellers using the MLS on a discount basis may not get full and effective MLS results.  That is a serious failing.  (The problem arises because we live in a free country, and listing Realtors and sellers are free to make whatever deals they want. Personally, I’ll take the freedom to contract as individuals see fit even it it creates a challenge for Realtors and consumers).

The new Real Estate Services Act (RESA) has a requirement that we include a “Schedule A” with all listing contracts.  That means that after we go through all the lawyer fabricated boilerplate that we use to tie sellers up as tightly as we can we have to provide a page, in plain English, setting out what specific services we’ll provide.  Its a matter of fact that we can discharge our legal duty by simply providing a blank Schedule A, but common practice is to provide a standard list of actions.  This is important, because failure to perform the actions amounts to a breach of fiduciary duty to the principal (the seller) in the Realtor-Seller agency relationship.

We do  not yet require written Buyer Agency Agreements, much less Schedule A’s for them, but as ObserverX indicates, its a clear breach of a buyer agency agreement (whether written or verbal) to say “I’ll show you everything on the market” and then not show a buyer discount brokerage listings (or, for that matter, FSBOs).  Some Realtors don’t understand this, and so can’t advise their clients of the potential problem, or the solution.  Clearly, if a Realtor wants to make the business decision to not show properties that don’t pay enough to cover expenses, they must tell their buyers “I’ll show you every available property except…” and then describe the exceptions. 

Its just as clear that once a Realtor tells a buyer that they won’t show discount brokerage listings because they don’t pay enough the Buyer will ask “But what if my dream house is listed by a discount broker”?  The simple solution is to say “Buyer, you pay me an agreed upon commission to act as your agent.  If the seller of the property we eventually buy offers cooperating agents a portion of the selling commission, we’ll deduct that amount from the total that you and I agree that my service is worth”.   This takes away the disincentive of a discount broker’s listing (and, for what its worth, it generally will eat up any perceived savings on the seller’s side).  Further, it is the central ingredient of standard Buyer Agency Agreements around here.

Unfortunately, Buyer Agency Agreements, while more common than in the past, are not widely used. In the first place, many buyers hesitate to sign them, and in the second place, many Realtors don’t feel comfortable selling the value of their services.  There can’t be a default commission structure including numbers, because that would amount to a restriction in trade, and while I’m not a lawyer I don’t think the Board can enforce seperate agency (mandatory agents for both the seller and the buyer).

Who then, has the power and responsibility to solve this problem? The government, of course, can simply change the law and require that people use agents to both buy and sell real estate, that the agents be different individual people, and that the buyer and the seller each pay their own agents.  I’m not sure that would be welcomed by a wide slice of society.

Realtors can become more educated and more professional, and sell the value of their services more effectively.  This would make it easier to adopt written Buyer Agency Agreements, and those agreements would clearly set out the Realtor’s responsibilities.

And of course, there is a role for the consumer.  A smart buyer should request a Buyer Agency Agreement (I have never seen that happen).  Yes, it is a contract, and yes, it does bind the buyer to a certain extent, but on balance the advantages make it worthwhile. 

ObserverX stated that he wasn’t as clear as he’d like to be on agency agreements, and I’m sure he’s not alone.  In my opinion agency is the single most important aspect of professional real estate.  Because of that I have a link on this site to the Blue Agency Brochure.  Click on it, skip the crap about privacy and personal information (at least for the time being) and review the 5 agency duties that a Realtor owes his principal.  Anyone conducting real estate business in BC, whether a buyer or seller, should be completely clear on the contents of this brochure. You may find it a little dry, but its essential reading.



Filed under agency

45 responses to “How Do We Solve the Discount Broker Challenge?

  1. I think it comes down to the fact that Realtors are in business, not in public service.

    Ultimately, the buyer wants his dream home cheap as possible, the seller wants top price for his home, and the agent(s) wants to get as much commission as possible.

    I think if you can meet all three goals reasonably, you’ll have very few complaints from any party.

    If these goals can be met while side-stepping certain listings, or not having to get a higher commission Realtor, nobody cares how it gets done.

    I think the best bet is to educate consumers about the whole real estate process, rather than introduce any sort of government regulation.

    It’s not that I don’t see value in that plan, I just think that everyone should be more educated. We create government regulations too often, with the masses not understanding their purpose…and that’s just not good. 🙂

  2. mike

    The solution is dead simple.

    The buyer agent charges an upfront fee for showing listings with partial commission.

    Basically – “I will show you this listing for 100$ or this other listing for free.”

  3. mike

    Realtors, like lawyers or any other ‘profession’, should be paid an hourly wage.

    I am tired of paying overblown commissions because I don’t waste realtors time and someone else does.

  4. Iggy_12


    You said: “There can’t be a default commission structure including numbers, because that would amount to a restriction in trade”

    Why is that? Many professionals have a “price list” that spells out what the cost of a specific service will be.

  5. macchiato

    Rob said:
    I’d say “If the 1% listings aren’t offering the standard commission that you expect, I will top it up so show me everything.” Then I’d simply factor that cost into the price I’d be willing to offer for the given property. Simple.

    All things being equal, why not say, “why the hell do I have to pay the commission you state, can`t you meet or come closer to the competitor prices, sharpen your pencil, please“

    This is the problem, the commissions should not be considered part of the price for the property, it is a service apart. Have buyer`s pay directly and I believe we`d see a more demanding public.

    Side note, my sibling picked an agent to buy a couple years ago in Port Moody and the Realtor had them come pick him up fo showing as the agent didn’t have a car. Same guy recently sold my the same place and fear mongered my sibling saying that if he went with 1% realty, no one would come to view. Because of the fantastic renos and a good market my sibling did the place sold within a week and the realtors split 11K.

    In the end, my sibling felt like it was a cartel and he had no choice as full commission agents were protectionary and controlling the system.

  6. coco

    There is all sorts of monkey business going on although realtor’s ethics state it should be otherwise. Blackballing discount agencies because of reduced commissions, avoiding listings from out of area realtors who have listings in your area, pushing other realtors homes for sale, pushing the agencies own listings over other companies, asking who your home inspector is before you even purchase a house, recommending certain home inspectors, etc.

    These types of incidents are quite common and are some of the reasons why a lot of people have had bad experiences with some realtors. The general public is more concerned about selling and buying homes than a realtors actions. Most are unaware that a realtor has a code of ethics to follow.

    I’m sure most of the monkey business would stop if the realtor’s code of ethics was handed out to each buyer and seller right from the start.

  7. coco

    Plus….who you complain to if a realtor is violating ethics. Right now, everything is just too vague.

  8. Anonymous

    The solution is simple. I think 1 % should do more marketing and capture more market shares. In that way, if more listings are on 1%, the regular commission structure will be seen as a premium service. It’s just a matter of time.

    The current commission is way over blown and need to withstand the challenge of compeitive business model. Right now, the commission structure is like, if you want to buy/sell a house, you will have to buy your agent a BMW.

  9. The Original Joshua

    We seem to have more than one Joshua on this board…

    OK, a question, in all seriousness – is it really THAT hard, as a buyer, in the age of the Interweb, and all that, to find a listing, whether it be from a discount agent or not?

    If I am about to plunk down a million dollars on a house, I would most likely spend an hour on the computer to find all the listings in my target area, pick out my faves and present them to my agent – “show me these”. If they refused, because one or more was from a discount agency, I’d get a new agent.

  10. 1% Realtor

    – 1% does the largest number of sales of any brokerage in BC and continues to gain market share.
    – 1% listings sell faster than the average on the Vancouver Real Estate Board.
    – 1% cooperates with all Realtors and 75% of the time 1% listings are sold by cooperating Realtors. That is the same average as the total RE Board membership. If Realtors are apparently avoiding 1% why then does it only “double end” its listings 25% of the time????

  11. 1% Realtor

    By the way… my schedule A of service is more extensive than most full commission Realtors.

    1% is a full service brokerage that offers discounted commission.

    I do everything the same as when I was a Re/max agent, but for a much lower cost to the seller. Sellers love us!

  12. coco

    1% Realtor,

    According to what people are saying on the blog the problem exists in the Fraser Valley, not in Vancouver.

  13. robchipman

    Original Joshua:

    If your agent refused to show you a listing that wouldn’t compensate him for his time, what other agent would?

    Would you use the same approach with a doctor? (Ïf you can’t do my brain surgery for $1000 I’ll find someone who will!”)

    With a mechanic? (“If you can’t change my oil for $10.00 I’ll find someone who will!”)

    With the newspaper seller? (“If you won’t give me a National Post for free I’ll get a copy of 24 Hours or Dose or the Georgia Straight!”)

    In other words, you get what you pay for. A good Realtor will either show you the discount listing at no extra charge, or they’ll make you pay. Its a simple business decision. However, assuming that a business should provide a service at a price point determined by a competitor isn’t always wise.


    The challenge with capturing market share is that you need an effective business model. Discount brokerages have been around for decades. They can’t capture more than marginal market charge because they don’t charge enough to keep the system working. In a very real sense they often free ride. They have free ridden on my agents more than once.

    In terms of spending on marketing, its kind of a self fulfilling negative prophecy, isn’t it? I’ll charge you less to sell, because I’ll be more efficient/cut costs/cut service, but that will leave me with less money to spend on marketing to capture market share.


    If you think someone is violating ethics, complain to the Real Estate Board, the Real Estate Council, or forward your complaint to me for my comments (just delete the names and addresses).

    Using the term “blackballing”, in regard to discount brokerages is an interesting phenomenon. Answer this: if the seller isn’t willing to pay what the buyer agent wants to be paid, and the buyer isn’t willing to pay what the buyer’s agent wants to be paid, why should the buyer’s agent be forced to work for less than he wants to earn? How is the decision of a self employed person to only work for what he considers a fair wage termed “blackballing” anyone or anything? If Vancouver civic workers go on strike this week, will we say that they’re blackballing City Hall?

    There’s nothing wrong with asking who your home inspector, mortgage broker or conveyancer will be early in the game. I’ve even collected deposits from buyers before they even see the property they’re going to buy. Why not? All these things need to be dealt with, right?

    That said, recommending inspectors/financers and so forth is dicey. Not showing listings, for any reason, should be out in the open and on your Schedule A in your buyer agreement. If you aren’t using a Buyer Agreement, shame on you, right?


    You have the right, in a market system, to ask me why I can’t meet my competitor’s price. You can’t force me to sharpen my pencil. I can advise you that a discount broker isn’t actually my competition (I sure don’t see them that way). I could tell you that you are in competition with other buyers or sellers for both my services and a prime property or sale. I could sell the value of my service, in other words. Again, the question I come back to is: if I choose not to work for someone because of the payrate, how is that wrong? If I’m not violating agency duties, what’s the problem?

    If the buyers paid for the buy end directly, would we see a better system? Perhaps. We’d certainly see a more informed buyer. That said, upon entering this business 20 years ago I started hearing that it was critical for a Realtor to make sure his principal understood how the Realtor got paid (a practice honoured more in the breach than in the observance).

    If your sibling had such a great product and his agent was not important, why did he go with him? Why didn’t he go with a discount broker? Its a funny thing about real estate. The seller asks for a good price, a quick sale and a minimum of inconvenice. If you provide that to him in spades, he might conclude “Hey, I got everything I asked for. I was robbed!”:-)


    The Federal Competition Bureau is very concerned about Real Estate Boards fixing prices, either through restircting access to MLS or through other means. Other groups may not labour under this burden, and if so I have no comment. Real Estate Boards (generally through CREA) face the challenge on an ongoing basis. We can’t run afoul of the Competition Bureau and it influences many of our rules and rule changes. The starting point is “Commissions are completely negotiable…”


    You highlight an important point. In real estate the sales pay for the non-sales. In that sense you pay for service that other people receive, provided you are involved in a successful transaction and they are not.

    In terms of hourly rates or flat fees, we’ve had the discussion before. You can do that. All you need is a Realtor who will work for a price that you’re willing to pay. If you don’t get any takers for your proposal you have to ask: is the proposal screwy, or is the price simply too low, or am I, as a consumer, not able to effectively sell the benefits of my payment plan to my real estate service provider? My guess it that the latter two areas are where you’ll face the challnge. The proposal itself seems fine to me.


    Traditionay there are three seller goals: best price in the shortest time with a minimum of inconvenience. What if you just found out you had a terminal illness and wanted a quick, no hassle sale so you could take the cruise around the world? Highest price isn’t the key. Conversely, what if you worked out of town 2 weeks of every month, and could let your Realtor have full access to the house while you were away, and weren’t concerned about how quickly you sold? In that case best price would be paramount.

    Same thing for buyers: best property, shortest time, minimum of inconvenience, at the best price. FTBs and investors often stress best price. Trade up buyers may stress best property.

    I agree with you that consumer education is the best solution.

  14. robchipman


    I’d agree (and have said) that discount brokerages generally aren’t avoided anywhere near as much as people claim, and that they do have full access to the MLS, despite consumer claims to the contrary.

    If you can provide the same or better service as any other Realtor for less money, great for the consumer. More power to you. That said, its been a common occurrence for my agents to write offers on discount broker listings and discover that the listing broker doesn’t even attend the offer presentation. I’m not sure that’s good agency representation. I’m not saying you do that, but it is common.

    Last question: why not post your real name? I don’t mind giving you some free ink, and frankly, I think the blog would benefit from frank and open input from other Realtors.

  15. 1% Realtor

    I don’t understand how the listing agent is not present for the offer presentation. Is the offer made directly to the Seller? How is that possible?

    Please understand that 1% Realty is not a discount brokerage. 1% Realty is a full service brokerage offering discounted commission.

  16. Touché Rob!

    PS – The Original Joshua, take note of my name change 🙂 and continue using yours!

  17. robchipman

    1% – The way the listing agent is available is that it isn’t worth his time or effort. Its common. Its reprehensible. Its free-riding.

    Discount brokerage and full service company offering discount commissions is the same thing. Let’s not split hairs. And seriously, identify yourself. More choice for the consumer is great, and I am happy to facilitate that.

  18. Used a discount brokerage firm. No good. So how did I solve the discount broker challenge? I sold the place privately. The savings will sustain me for a whole year.

  19. 1% Realtor

    I perform a comparative market analysis to suggest listing price, I write the listing contract, I take pictures, I take measurements, I order all strata documents and ensure accurate listing info, I write detailed descriptions, I attend all showings (including the ones where Realtors want to show their clients), I do all sales contracts representing my client, I collect lawyer info, I collect keys at the end from the Seller and give them to the Buyer or their agent, I do after sale service, etc, etc.

    I probably forgot a lot as you know how much work we do as Realtors.

  20. notbearnobull

    Long time reader, first time poster…good job so far Rob.

    How do you solve discount brokerage challenge…easy, just let FREE market forces do its thing. Over time, competition is always good for consumers & choice is good.

    Discount & full service stock brokerages have co-existed
    Full service realtors will just have to work “that much harder/smarter/better service” to justify their higher commissions.

    On a side note, above poster saying realtors & other professions should be paid hourly is ridiculous…that is so NDP like thinking. Working on 100% commissions means nothing is guaranteed, sales come easy, sale come hard that why you can make the big bucks or starve.

    At the end of the day you abilities/education/talent should justify what you are worth in income…just like a hockey player who signs a multi-million dollar contract…if you think they get paid too much, quit your job & try do what they do.


  21. The Original Joshua

    Hmm, I kinda like the name Original Joshua… I think I’ll keep it.

    Rob: I think you are using a bit of hyperbole to make your point, and negate mine…

    “Would you use the same approach with a doctor? (Ïf you can’t do my brain surgery for $1000 I’ll find someone who will!”)”

    Ok, no disrespect to you Rob, but… uh… real estate ain’t brain surgery.

    “With a mechanic? (”If you can’t change my oil for $10.00 I’ll find someone who will!”)”

    Absolutely!! If I thought that I could find a mechanic that would change my oil for less, and I presented this to my mechanic, and he refused to match the price, I’d sure as hell go somewhere else. Or I’d do it myself, which is what I do.

    “With the newspaper seller? (”If you won’t give me a National Post for free I’ll get a copy of 24 Hours or Dose or the Georgia Straight!”)”

    Depends. Do I want the higher quality that the National Post brings? Or do I just want something to read on the bus?

    “In other words, you get what you pay for. A good Realtor will either show you the discount listing at no extra charge, or they’ll make you pay.”

    Exactly. Which was my original point. If an agent won’t show me all the places available, I’ll find a different agent. Why is this a bad thing to say? If they want to charge me to see discount listings, then I’ll consider that at the time – do I need what the agent is proposing, considering the cost? Or can I find someone else to show them to me? How much of this can I do myself?

    From the buyer side of things, I don’t really need much from an agent and would prefer no frills service. Obviously the agent should be compensated for their services, but for the most part, I will do what I can myself and employ an agent for the critical parts. I certainly don’t need an agent to drive me around the city. Some people do… whatever.

  22. robchipman


    Maybe real estate isn’t brain surgery, and maybe you don’t need help, but did you just say you’d pay a guy ten bucks to change your oil because it was cheaper? You’re going to trust him with your $40,000 car but just pay him $10.00? Maybe not so smart. The guy might put tranny fluid in your crankcase.

    You get what you pay for and false savings are false savings. Dose isn’t the National Post. Compete on price alone, consistently, and you’ll get inferior product.


    Great example of what a Realtor should do, and you’re right, its not exhaustive. You and I both know that there are a million other things you need to take care of.

    I notice you didn’t mention the $2,000 per hour work. Whether its negotiation or identifying which properties to negotiate on or which buyers to close, the critical work is knowing. Measuring, picking up docs, etc, is less critical and can be outsourced. The big money comes from the brain work. I can more than earn my commission by getting a client the right property.


    I’m a free market advocate as well, but I think there is a role for consumer education. I dispair that all consumers will become educated, but I’d like to help any that I can. I like dealing with well informed clients. Its easier and more realistic.

  23. The Original Joshua


    There is a vast chasm between an oil change and brain surgery. RE agency is somewhere in between – closer to the brain surgery side than the oil change side. So yes, I will compete on price alone for an oil change. Its dead simple. And if the mechanic gives me tranny fluid, I’ll sue him. For brain surgery, price is not the competetive point (well, in Canada, there IS no competetive point, you get what you get). For RE? Somewhere in between. My POINT was… well, I’m pretty sure we’re saying the same thing, so I’ll stop there. 😉

  24. savagedave

    The simple fact that 1% Realty uses 1% to attract customers when that isn’t what they charge should be a tell tale sign of the ‘honest’ representation you will get.

    Besides that, after you get the ‘discount’ commission. They stick you with a bunch of back door charges for everything from advertising to open houses. At the end of the day you aren’t saving nearly as much as advertised.

    You can however do the Realtor’s job (ex//advertising, open houses, fielding calls, negotiating a firm deal) which begs the question why even have a Realtor? Just to list your property on the MLS? Doesn’t make much sense to still pay a commission to do the work yourself.

  25. robchipman


    We agree that you get what you pay for, but I think you’re unclear on what the service really consists of.

    Give a guy $10 to change your oil, and if he screws up, sue him. Great. Win your case because he can’t even urn up in court and try to re-possess his trailer. Then you find out he doesn’t own the trailer.

    For brain surgery you can either get it for free here, or buy insurance to send you, immediately, to a hospital that will fix you.

    You shouldn’t be under the illusion that selling real estate consists of driving people to houses, walking through them saying obvious things like “This is the kitchen”, and then taking the clients for lunch at Whitespot. If that is what you think you’re paying for then I’m not surprised that you think you’re paying too much, and that you can do some of the work yourself.

    What do you do in the classic discount brokerage situation? You get your guy to show it. At offer time the listing realtor doesn’t even show up. At closing we find that there is a special assessment that has to be paid in full before title can transfer. The Seller thinks you were supposed to pay. You didn’t know anything about it. Your original Realtor asked to be paid to do the complete job, but you found someone cheaper. They didn’t do the job adequately.

    Are you happy to not complete and sue for damages?

    Do you just pay the $10,000 assessment?

    Sue the Realtor (who pays a $2000 deductible) and then deal with an E&O lawyer?

    Did you really save any money?

    On the sell side we recently sold a property for $71,000 over the appraised value. Do you think we earned the commission?

    A hassle free succesful deal is worth a lot of money. Compare it to the cost of the alternative.

  26. FTB

    Any thoughts on Seems like a good option for those whom would otherwise sell privately.

  27. Carl Jung

    Here we go again, debating whether a discount broker is less than a professional than a full fee broker.
    In my view there is no difference.

    Rob and Aaron are both full fee brokers, can anybody see the difference?

  28. aaronbest

    OJ said”OK, a question, in all seriousness – is it really THAT hard, as a buyer, in the age of the Interweb, and all that, to find a listing, whether it be from a discount agent or not?

    If I am about to plunk down a million dollars on a house, I would most likely spend an hour on the computer to find all the listings in my target area, pick out my faves and present them to my agent – “show me these”. If they refused, because one or more was from a discount agency, I’d get a new agent.”

    That is great that you are hands on. The only problem is you are trying to do your agents job by wasting his time handing him/her old news, when he/she already know that the listing you are handing over are available, sold, expired, good deal or bad deal.

    Use the MLS to educate yourself about approx. values. Don’t waste your agents time by doubling up the work. You hire an agent for their market knowledge. If you want an order taker go to McD’s.

  29. Carl Jung

    Aaron, what level of training and education does one need to sell RE.

    Same as a used car sales ?
    Fitness memberships?

    I rest my case

  30. Carl Jung

    Now let Rob, answer and see how it works.

  31. Carl Jung

    Admittedly, you do show potential. I like the angle you took, with the value proposition, and the subtle injection of fear, but still a little rough.

    It’s a little like this Aaron, you don’t ask a babe if she wants to go to a hotel, you just take her there, and if she asks questions in the parking lot, you just drive on
    I should send you an invoice. But. I’m too classy

  32. robchipman

    Carl/chilli/smart, you’re far from classy. Let’s quit fooling ourselves. You take potshots from the safety of anonymity.

    Sales doesn’t require formal education. It never has.

    That doesn’t mean its easy.

    You may not like Aaron, but the fact is that he has some great skills and has done outstanding jobs for his clients. He just threw out some golden advice and you complained that it was rough and heavy.

  33. The unthinkable"Renter"

    Rob, don’t give me any credit for triggering to start this thread lol, So stupid.

  34. The unthinkable"Renter"

    triggering you I mean

  35. robchipman

    Savage Dave:

    If you can do all the work a Realtor does, and if paying to have it done for you doesn’t make sense, then you should sell on your own. There are a few potholes that the average person might run into, mind you.

    Unthinkable renter:

    Are you talking about this: “You boycotted I don’t think so. But if you led a self proclaimed front that the market has reached it’s top and is over priced and due for a correction………and a CBC news reporter found your blog and mentioned it on the 6 o’clock news. Would that not stir some poo?

    I am sure you well known.:)”

    The first problem is that I don’t know that the market has peaked. People have been making that call for literally years now, and they’ve been wrong. Simply saying that the market will change, somtime, and that we will have some sort of correction, some time, isn’t newsworthy. Everybody already knows it.

    CBC news guys know about my blog already. They found me last year.

  36. aaronbest


    I love your poignant attention! Even if it is ignorant & arrogant at times.

    Used car salesman don’t need formal training or education. I suppose that is why reports say Vancouver is one of the worst places in North America to buy a used car?! As far as I know gyms give out memberships in return for a monthly fee. I don’t know for sure. Go check it out. RV’s? Again, I’m not totally sure, but I think a payment in return for the RV is how that works. Depending on the size, you may need to take some specialized training for a different license class.

    Real Estate pre-licensing is handled by UBC. It is a year long course. The course if offered as a distance ed. course with supplementary lectures on campus. In my opinion this is the best way to weed out who is self motivated enough to finish the course. Anybody who doesn’t finsh the cours in time wouldn’t last long as a Realtor anyways.

    Real Estate is an extremely self motivated career. It costs roughly $700-$1000 per month just to hang your license (on a 100% split). There is no salary to fall back on if you have a slow month.

    Once you have finished your pre-licensing, there is post licensing, which is handled by the Real Estate Board. When you are licensed you must continue your education through the board. This is called the Professional Development Program or PDP.

    I’m not sure what your issue with me is. You haven’t educated anybody on this blog, and your attempts at sarcastic humor are weak at best. What I said about not wasting your agents time with old news, will save everybody time & frustration.

  37. Skeptic

    Aaron, I don’t agree with your comment on wasting time. In any case, agents can set up criteria to email properties that match agreed parameters to clients directly out of the Mlxchange system. The agent can see and provide some extra detail over and above the MLS system, days on market, price changes, last sale price, etc which is nice.

    I think the real value add for a buyer’s agent is stuff like:

    – knowing the area well and being able to advise on recent comparable sales, school catchments, city zoning restrictions and other problems/benefits of specific areas (obviously you need an agent who knows the area well)
    – knowing the other agents who work in that area well, i.e. what tactics each uses with regards to pricing, negotiating, etc
    – being able to read the selling agent and provide valuable feedback on the seller’s circumstances, reason for selling, soft issues other than price that may appeal in an offer, etc
    – ability to negotiate well on your behalf during the offer/counter offer stages

    A good buyer’s agent can add a lot of value in these areas and earn their commission in my opinion.

    Regarding discount brokerages, I’d prefer my buyers agent was up front and discussed how these would be dealt with, rather than steering me away from them with fabricated reasons. I’d be quite happy to top up my buyer’s agent and subtract that amount off the offer if necessary and I’d respect the agent’s honesty for discussing the subject up front.

  38. Sourgrapes

    Rob, I love your blog, but disagree with some of your comments. You keep trying to justify high commissions by claiming that 1% could be lesser mortals in so many ways.

    If “you get what you pay for” is so important, then how can you guarantee that the full-commission guys will not screw up a deal too?

    It angers me when some realtors have the nerve to admit that “they’ll never settle for making ONLY 1%”, so they avoid those listings by lying to their buyers and claiming that the properties are spoken for. (So much for the ethical part of finding buyers the right property, on which you pride yourself. )Agents like that don’t deserve a single penny, never mind a “lowly” 1%.

    I would immediately fire any agent who tries to jack me for a penny more that the offered commissions of ANY listing. That is just so sleazy. It’s sad that a huge percentage of realtors are slimeballs. But I truly believe that the honest ones will survive any recessions or price-dips.

    Some bloggers seem to feel that 1% business will dry up when the market turns down. BUT, think of this scenario:

    I bought my house for $500k. Value has dipped to $400k. I HAVE to sell, for whatever reason. I am staring a loss of $100k in the face……

    Would you choose to employ a FULL-commission guy at this crisis point, or is it not logical to list with a 1% guy and lessen your pain by cutting your loss by several thousand $$$$$$ in fees?

    Stop making 1% agents look like morons, all of you other full-fee fellows who do that. Most 1%ers offer the same mls exposure plus better service at a huge discount. The ONLY thing that’s less, is the damned fee.

    Realtors are not supposed to be geniuses, you are right….the only criterion is a salesman personality. That’s it. I’ve met many illiterate ones , yet some give fantastic service.

    There are also VERY educated people ( and honest) doing real estate sales, so a healthy mix. But surely, the garbage ones will be forced to find other jobs when the market turns. Good riddance to those.

    Eat little and live long.

  39. LesserApe

    The combination of ideas seems odd to me.

    1. It’s really important to form a trusting bond with your realtor.

    2. If you look on MLS yourself to identify appropriate homes that the realtor might have missed (such as because they’re 1% listings), then you’re probably just wasting the realtor’s time.

    3. A realtor is completely justified in not showing you a home that would suit a client’s criteria perfectly, if it doesn’t offer a big enough commission.

    It makes it really hard for me to get away from the idea that in a conflict of interest situation, the realtor’s needs are more important than the clients.

    If it’s completely disclosed up front, in writing and verbally, then it would be fine, but I wonder how often that is the case. Maybe Rob does, but I bet less than 10% of realtors do.

    In a way, the three factors in combination seem reminiscent of what con men do. First, they say “trust me”, then they strongly discourage the mark from verifying what they say, then put their interests ahead of the mark’s.

    (Not to imply that RE agents are con men. It’s just a congruity that jumped out at me.)

    Rob, I really respect you for broaching this topic, because it’s a really hard one.

  40. CC

    As you suggest Rob, it would clearly be a breach of agency duties for a realtor to not show his client a good candidate property simply because the realtor wouldn’t make enough money on the deal.

    You are correct that the only way this wouldn’t be a conflict is if the agency agreement made it clear that the agent was not under a “normal” agency obligation regarding listings with discount brokerages. This is in my experience, very very rarely done.

    You mislead in stating that “some realtors don’t understand this and…can’t advise their clients of the potential problem…”. Most realors understand this issue very well and choose not to advise their clients because they are acting in self-interest and don’t want to have the difficult task of asking the client for money directly.

    I have never used a discount broker so I can’t add any information. However, your comments (and Aaron’s) seem (as Carl Jung so indelicately put it) overly defensive, manipulative and again misleading. I have many friends who have used discount brokers and are happy with the service so your generalizations seem ill-supported to me.

    The fact is that during this bull-market properties have essentially been selling themselves in Vancouver and environs. The knowledge to find the appropriate market price is relatively easy to obtain (and can be purchased as a stand-alone service). Purchase and sale agreements are relatively self-explanatory and lawyers, in a couple of hours, can advise on any necessary details.

    From the purchasers side, it is even easier for a remotely intelligent and motivated person. You determine your desired are, investigate the target house and decide what you want to pay (if you want, you can pay for a market analysis and can have a lawyer do a title search or hey, do one yourself!!). You make an offer and see if it flies. Finalizing the contract is little more difficult than buying and selling a car (and most people wouldn’t employ an agent to do that).

    It is trite but true that we live in the information age. Much of the advantage that realtors had (market knowledge, contract details) is gone because the information is readily available. It is quite pathetic that you try to rely on the fact that realtors get the MLS data a few days before it hits the web. First off, this shouldn’t be the case (sales information should be public). Regardless, all you have to do is have a realtor friend or relative who gives you their access number and voila! the justification for the $20,000 salary is gone!

    Recently, three people I know very well purchased properties in West Van privately. Neighbours simply put out the word that they were thinking of selling and the offers rolled in. The houses went for market value. The transaction took a couple of days to complete. And there was over $40,000 more to share. I am truly unable to discern how anyone would have been better off if they had to pay a realtors tithe?

    Finally, Rob, you keep going back, again and again, to the fact that given the average number of transactions per realor (number of transactions divided by number of realtors), justify realtors making make high commissions on each sale. This continues to be entirely specious reasoning. What “should” happen, in a properly functioning market, is that the supply of realtors should decline until they all could survive charging a competitive (rather than colluded) price. 9000+ realtors are not
    “entitled” to make a living in the industry. The good ones will earn such a living. The others should do something else.

  41. coco


    It is not me who has realtor problems, stories I have heard from my landlord, co-workers, friends, etc.

    Some complained to the real estate council and real estate board. Others had no clue who you can even complain to. Things are just too vague when the general public has not read the realtor’s code of ethics or is even informed that such a policy exists.

    Not sure why a realtor would have to know who your home inspector is in advance, when the client is paying for the inspection. It is known that realtors ask who the home inspector is because “certain” home inspectors are known as too thorough. Realtors always seem to have a list of recommended home inspectors and if you choose someone else off their recommended list, some realtors to go into a tizzy. Afterall, a thorough home inspector can kill the deal and it is all about the deal and commission to the realtor.

  42. coco

    And…in case you disbelieve “soft” home inspections never happen in Vancouver there was a news story on City TV about this very problem.

    Here is the video link:

  43. whybuywhenucanrent

    Question for “Rob”, “Aaronbest” and “1% Realtor”:

    Can one of you outline the standard contract for Conventional Realtors and “1% Realtor”?

    If a house is sold for $500K, how much goes to buying and selling agents under each scenario?

    If it’s variable, what’s an example of a rate, i.e. the contract for each of your last three transactions in each category?

    Unless we understand who is saving $, how much, and who is losing $, it’s really a fuzzy argument. RE is numbers and percents, and I haven’t seen any hard numbers in Rob’s post or the first 42 responses.


  44. whybuywhenucanrent

    Mr. 1% Realtor–can you provide the sample breakdowns of commissions for my question here?

    (See original post and responses about 3/4 of the way down the page)


    June 9th, 2007 at 7:07 pm
    So, about commissions. I’m a little fuzzy. Perhaps Rob or Aaron could make this transparent.

    If a house is sold through a standard realtor agreement, what are the commissions for the following scenarios (I’ll start out with an estimate based on the material in Rob’s “transparency” post). (I’ll round the numbers to a 50-50 split between the realtors, rather than the 46.5/53.5 split)

    $100K house?
    * $7,000 total commission
    * 3,500 per Realtor

    $500K house?
    * $17,000 total commission
    * 8,500 per Realtor

    $1M house?
    * $29,500 total commission
    * $14,750 per Realtor

    Is this correct, for the standard arrangement referred to in Rob’s original post (except for the 50-50 rounding?)

    How about the numbers for a house sold through “One Percent Realty?”
    * $100K house
    * $500K house
    * $1M house

    Thanks in advance

  45. Whybuywhenucanrent

    Anyone? Anyone?

    How can people possibly make meaningful comments on this issue if nobody knows what the numbers are?


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