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Fivewalls: Is 1% Commission Worth it Compared to Full Service?

Have you ever come across real estate agents offering a 1% commission and thought it could be a great deal? The idea of saving money while selling your house is definitely appealing. But before you...

Have you ever come across real estate agents offering a 1% commission and thought it could be a great deal? The idea of saving money while selling your house is definitely appealing. But before you jump to conclusions, let's delve deeper into what 1% commission really means and whether it's the right choice for you.

What Does 1% Commission Even Mean?

In Ontario, the average commission split between the seller and the buyer's agent is 5% of the home's sale price. Each party typically receives 2.5% of the profit. So, if you're paying your real estate agent 1%, the buyer's agent will still receive their 2.5% share. This means that you're actually paying a total commission of 3.25%. For instance, if your house sells for $600,000, your agent and the buyer's agent will receive $19,500, while a 5% commission would amount to $30,000. The apparent savings with a 1% agent could be substantial. However, there are other factors to consider.

How Are Real Estate Agents Paying to Market Your Home?

1% Commission Vs. Full Service One way real estate agents market your home effectively is through professional photography.

If you opt for a 1% agent, you might wonder how they can afford to market and advertise your home adequately. While they will make an effort to attract buyers, their limited budget might prevent your home from gaining as much exposure as it would through a full-service agent. Full-service agents have more resources available to them for marketing on platforms like social media, newspapers, magazines, and more. They even hire professional stagers and photographers to make your home stand out. These additional marketing expenses might explain why some 1% agents may ask for 2% commission instead, bringing the total commission percentage back up to 4.5%. Additionally, don't forget about the HST you'll have to pay as the seller.

Does Your Agent Have Time for You?

How Does 1% Commission Really Work? Discount agents might have limited availability due to handling multiple clients.

Discount agents who offer 1% commission often aim to sell as many properties as possible to compete with other real estate companies. While this might sound advantageous, it could mean that they won't have as much time to dedicate to each client. With a larger client base, it becomes challenging to schedule meetings and receive timely responses to your inquiries. Selling your home is a significant transaction, so having a full-service agent who prioritizes customer satisfaction can make the process smoother. These agents work with a limited number of clients to ensure they can provide the attention and service you deserve.

How to Decide What's Best for You

If your goal is to sell your home for the highest price possible, think about the resources that will best meet your needs. Consider the following questions:

  • Do you want a 360° virtual tour along with professionally taken photos that showcase your home's full potential?
  • Would having a professional stager enhance the appeal to potential buyers?
  • Do you want your house advertised in magazines, newspapers, and various websites?
  • Can you rely on your agent to promptly answer your questions via email, phone, or face-to-face meetings?
  • Is your potential full-service agent an excellent negotiator who can potentially secure a higher sale price?
  • Does your full-service agent have experience and a strong understanding of the local real estate market?
  • Will they excel at open houses, highlighting the key attributes of your home based on their previous success selling similar properties in the area?

As the saying goes, "you get what you pay for." Selling your house doesn't have to be a hassle, but it's crucial to do your research and carefully analyze the fine print before making a decision.

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