Changing the Real Estate Industry: Flat fee vs. Discount Brokerages

John Pasalis and Urmi Desai in Toronto Real Estate News

We heard from a lot of agents following John’s recent discussion of the settlement between the Canadian Real Estate Association (CREA) and the federal Competition Bureau on TVO’s The Agenda with Steve Paikin. Many are understandably worried, but many also agreed with John’s progressive views and wanted to see pro-consumer change in the industry.

Since there is so much to discuss, we'll being doing a series of posts. Today, we'll start with agents who are critical of discount options.

 J’Accuse: You’re Not a Flat Fee Brokerage!

We did receive a few emotional emails from agents who wanted to remain anonymous. One agent felt we were not being straight: “Why are you advocating for discount brokerages when Realosophy isn’t one?” Many agents criticize discount brokerages, but it's really flat fee brokerages they have a problem with - because the model doesn't provide the expert advice (in the form of agent services) that most sellers value.

We believe in offering consumers more options, not less - so we don't believe flat fee is the only or best approach. In fact, the flat fee option doesn’t solve the problems that most sellers share with us: not knowing which agent they can trust and not feeling confident they will get the best price possible for their home.

Most consumers would like help selling their home, but they are asking for more transparent value - and discount options are part of this mix. Our approach at Realosophy has been to examine how we can best add value to the real estate transaction and to ensure that we do this through a sustainable business model. It’s an approach that admittedly takes some time (and trial and error). But the results have been very promising. It’s why we invest in neighbourhood analytics as a brokerage so our agents can provide consumers with superior analysis backed up by real numbers. And it’s why we’ll be expanding our scope in the New Year to offer home sellers a choice of cutting-edge service bundles at a great price.

Why Change? They like me, they really, really like me.

Another anonymous agent wrote to tell us that maybe things are different in Toronto because her clients are happy with her and are happy paying 5%. Why should she change? Just to be clear, Realosophy isn’t evoking a state of emergency in order to ram through restructuring plans, IMF-style. CREA is doing that by making anti-competitive moves to ensure things stay the same. The Competition Bureau is doing that by responding. And consumers are doing that by seeking out new options. If you are an agent providing superior service, an option that consumers love, you don’t need gate-keeping MLS rules to protect you.

Up next: agents who would like to see pro-consumer change in the industry, but wonder about some of the key obstacles (like we do!)

John Pasalis is the Broker Owner of Realosophy Realty Inc in Toronto. Realosophy focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions. Email John

Urmi Desai is editor of the Move Smartly blog and is responsible for Realosophy’s business development and marketing. Realosophy Realty Inc. Brokerage focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisionsEmail Urmi

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