With the Toronto real estate market booming and the average detached home in Toronto or Vancouver selling for more than $1 million, the payout for real estate agents is pretty big these days, especially for the ones charging a five per cent commission.
A seller may well ask “if the market is so hot, why do I have to give five per cent to an agent?” But the answer will depend on who is answering.
“I’m not a huge fan of real estate agents,” said John Andrews, professor of real estate at Queen’s University, “but a good agent does a lot. One of the most important things [they can do is] build a buzz, an excitement about a new listing.”
“If you’re going to go it alone, you have to be prepared to educate yourself and do a considerable amount of legwork. Figuring out how to price [your] home to dealing with offers and counteroffers … I don’t think most people are [willing to do that].”
FeeDuck, a new online service that lets agents bid on listings by lowering their commission rates, could be the answer for some sellers, but agents argue what they do for clients selling their homes is well worth the five per cent commission.
Sharn Kandola, a founder of feeDuck, said the idea for the service came about when she and three of her neighbours in Oakville, Ont., compared commission rates and the prices they paid for their houses. “There should be a better way to find a good agent and to negotiate these commission rates,” she said.
“Most of us in our day jobs aren’t negotiators. We thought there has to be a way to make that process easier.”
FeeDuck, which Kandola refers to as “real estate matchmaking,” vets the prospective agents and keeps their identities anonymous until they’ve won a bid. The agent pays a flat fee of $170 for every listing they win. Started in mid-January in the greater Toronto area, the company has expanded to cover all of Ontario, and has Alberta and British Columbia in its sights.
“Everything is happening online, why not real estate?” Kandola said. “The response we’ve received is phenomenal. We’re in the right place at the right time.”
Agents, however, are skeptical on how successful ventures such as feeDuck can be.
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