We often hear “no commission real estate” or “zero commission real estate” in relation to the real estate market. Commission free real estate is another term often used by the industry. There are different types of brokerages or businesses that promote Zero Commission as either an a al carte offering or as their main product offering at nominal fee. A REALTOR® refer to this type of listing as a mere posting. Many sellers who are tempted by the low fee, need to understand the true cost of a mere posting. Does this option even make sense for the consumer or is it another gimmick that has no true value in today's market. It may helpful to compare 0% Commission real estate to the more traditional methods of selling a home.
What is No or Zero Commission Real Estate
There is nothing complex about Zero Commission which essentially means that no there will be no commission paid to any parties to a real estate transaction. Traditionally, this would occur when a homeowner does all the work themselves as “For Sale By Owner”. An MLS listing that does not cooperate with other agents or brokerages or offer commission is normally referred to as a Mere posting. With recent changes to the industry as a result of the competition tribunal, Mere postings are appearing on the MLS more often. If there is no commission involved in an MLS transaction, the only way for an agent or brokerage to earn any revenue would be to take a flat fee up front in lieu of commission. Essentially, if your listing goes on the MLS, then you are paying something to someone. Whether it’s in the form of commission or an upfront fee, it is still money out of your pocket.
Many of these sellers hope to at least save money by not offering money to the buyer agent, known as the cooperating commission. The reality is that many of these transactions eventually involve a commission arrangement with a buyer agent. This would be an interesting topic for further to discussion as this is the reality that sellers don’t understand which can have implications that leads to them not meeting their objective. It would be important for a seller to understand the true cost of selling their home in an active market without offering commission to REALTORs who bring the buyers that will eventually buy the home. In summary, to achieve zero commission, a seller would need to sell their home privately, without using the MLS®, since even paying a flat fee of $500 to list your home on the MLS® is a form of commission, just a different word.
Who Would Offer a "No Commission" Service?
There are different types of brokerages or private businesses that offer 0% Commission services to those looking to sell their home. Individual REALTORs may also on occasion offer commission free packages on their advertising . Usually, these realtors belong to independent or “no name” brokerages that offer discount services rather than a reputable brokerage who normally do not allow their sales representatives to list properties that do not fully cooperate with other brokerages at the industry average, for fear of being blacklisted. It is more common to find a marketing company with a brokerage license that exclusively focuses on this type of business rather than a full service offering. Don’t be naive though, as you can definitely expect the commission to be replaced by upfront fees that may increase as additional services are included.
Does No Commission Actually Cost You More?
You would assume that 0% Commission would be the cheapest option available when selling your home. In fact, it can be argued that it may cost more overall even when compared to a full price REALTOR® charging 5% commission. The commission offered on a listing has a very important role in selling your home because it motivates cooperating agents to find a buyer for your home for which they will be rewarded. When you remove this factor from the equation, the sales process is greatly damaged by reducing the number of potential buyers that might potentially make an offer on your home. You will be left with bottom feeders who are only looking for a deal because they know you will not be paying commission.
Evusto Compared to Zero Commission
Evusto is a much better option than Zero Commission or other Commission Free real estate services on the market. People are often mislead by these services to believe that they can sell their home without paying anything when in fact these commission free services would not be around unless they were making money from you. This is why you pay upfront rather than when your home is sold, because it is unlikely your home will sell at market value using this method. Even worse, for whatever amount you do pay, you don’t get much in return except an MLS listing which does not have much value on its own.
Evusto provides you with an experienced REALTOR® who will use their market knowledge to effectively sell your home, and they will do this at a much lower cost than traditional real estate. A commission free service will charge you an upfront fee before they even list your home. If your home does not sell, you still pay for the service. An Evusto agent only gets paid when your home sells at a price you have agreed to.
Commission free services usually do not offer premium services with their flat fee. We include professional photography, multiple board listings and more which all contribute to getting more buyers to consider your home. Also, if the buyer is unrepresented or we find your buyer, then you only pay our flat listing fee, saving you even more. At least with our service, you had a choice that allowed you to consider the most amount of potential offers, because you would have been exposed to more buyers willing to view your home.
It is important to find the balance of low commission combined with a level of service that will help sellers achieve the best possible sales price for their home. This is where Commission Free services fail in offering home sellers a cheaper option when selling their home in today’s market. Remember, it’s not how much you pay in commission, it’s how much you net after all your expenses (REALTOR® fees, lawyer fees, etc…) which determines whether or not you had a profitable transaction.
