For sale sign hanging in front of house
When Giorgio Lupinacci had an investment property he wanted to unload, he contacted six realtors looking for some wiggle room on how much of the selling price would be hived off in commission.
"None of them wanted to move on the commission," the Edmonton entrepreneur recalled, "[They said] there were costs they couldn't break down for me."
He did some research and found that commission rates are not universal and regulations around the practice are unclear. Commission rates generally ring in around 5 per cent, according to observers, although a common scenario is 7 per cent on the first $100,00 of the sale price, and 3.5 per cent on the remainder.
But things are changing, and the recent softening in the property market may accelerate the process. Lately, entire businesses have been popping up offering would-be sellers ultralow commission rates while other owners have been attempting to navigate the sales process entirely on their own. Those trends have accelerated since 2010, when the federal Competition Bureau forced the Canadian Real Estate Association to open up access to its Multiple Listing Service and allow customers to pay for the selected services of a real estate agent.
Mr. Lupinacci saw an opportunity.
"The idea just hit me: Why can't realtors bid on people's homes?" he said.
He created a Web-based company – www.bidcomhomes.com – designed to help sellers save money by allowing real estate agents to auction their services. Realtors pay $99.95 (plus tax) for 10 bids and compete against each other to list properties. Sellers don't pay a penny to post their residential or commercial properties, and then they can select – or ignore – the bids they receive from realtors.
Launched in Edmonton earlier this year, interest in the site spread to Calgary then British Columbia, Ontario and Saskatchewan as well as the United States. So far, there have been about 150 registered sellers and 75 realtors, though not all have actually made bids.
"I think there's something there for the consumer as well as the real estate agent," Mr. Lupinacci said.
Pam Seran-Wallace, a spokeswoman with the Toronto-based Real Estate Institute of Canada, which offers training to realtors, said while the profession is sometimes seen in a "negative light," realtors offer a high standard of services to clients.
"Generally our members would not enter themselves into a bidding situation when there are so many important variables to consider other than commission when selecting a realtor to sell your home," she said.
Selling isn't a easy job. It requires expertise to select the right listing price, stage the home, or at least declutter it, and negotiate a deal, industry players maintain.
Tracy Sestito, a realtor with RE/MAX Advantage in Edmonton and a 17-year veteran of the industry, soon signed up after reading about the website in a local newspaper. She acknowledges that some realtors will look unfavourably on the concept, but she views it as part of the ever-changing real estate landscape.
"I like to find new innovative ways to increase my business and increase client awareness of myself," she said.
So far, she's made one sale through the website, and now has a second connection with a potential seller. That's two opportunities she wouldn't have had otherwise, she said.
"There's lot of a competition for us in real estate," Ms. Sestito said, "It's not taking away our business – just opening other doors."