Home buyers and sellers in the GTA have been left with the same model for decades, one that is costing customers thousands of dollars.
In just a decade, home prices have increased dramatically, meaning that agent commissions have also increased. Yet, if anything, technology and access to online information have made buying and selling homes easier than ever.
As it stands, someone selling a home for $1 million is paying out $50,000 in commissions. That’s more than a year’s salary for some people.
Fortunately, a number of fresh alternatives are emerging. In recent weeks, a deluge of new players have entered the GTA residential real estate market, promising changes to the industry.
But not all disruptors are created equal, and consumers need to pay close attention to what is being offered in order to ensure they make the right choice to suit their needs.
All inclusive services and fair, transparent fees
Justo Inc., Brokerage is the first to disrupt the industry with a focus on fairness and transparency. The Canadian-owned company offers low listing fees for sellers and large cashback for buyers.
Sellers working with a Justo agent pay only 50% of the standard listing fee (typically 2.5%) taken by most brokers. When Justo represents a buyer, they split their commission (paid by the seller) 50/50, giving a buyer thousands in cashback.
“We feel Canadians deserve great service and reasonable fees, and we’ve clearly hit on something with our new model, because demand is even stronger than we anticipated,” said Daphne de Groot, CEO and co-founder of Justo. “It’s only a matter of time before the rest of the industry starts to adjust their pricing, but those getting into the market now should really consider what we’re offering. Otherwise, they’re just losing a lot of money.”
Justo also bundles in many extra services at no additional cost. Sellers get free staging or virtual staging, 3D virtual tours, professional photography and enhanced advertising for their listings, while buyers receive free home inspections and lawyer services. Best of all, Justo customers are under no obligation and can change agents at any time.
Justo has recently launched a new program for those seeking to purchase new construction condominiums, beginning with an arrangement with CentreCourt Developments on its Transit City 4 project. Following its huge success with the resale market, Justo is now applying its cashback model to the new construction space: As with resale homes, they are splitting their commission (typically 4% of the unit cost) with their buyers 50/50.
Justo’s website lets visitors view all MLS listings and immediately see the amount of cashback they can expect for each property.
The most recent entry into the Canadian market is US-run Redfin, which offers low listing rates for sellers — between 1% and 1.5%, depending on the market – and some cashback incentive for buyers.
Like Justo, Redfin agents are compensated in part based on client satisfaction, ensuring superior customer service throughout the transaction process.
UK-based Purplebricks is an option for sellers seeking to list on their own, offering assistance and guidance for an upfront, flat fee, usually around $3,000.
There is also good news in the mortgage space. Startups like Homewise make saving money on a mortgage easier than ever. They offer a simple online application, then negotiate for clients to provide several options.
New options are putting customers first
These new players are flipping the traditional client-agent relationship on its head. Buyers and sellers are getting better customer service than ever before.
There’s a lot to learn about these new options. As with other companies who’ve disrupted their markets, like Amazon or Uber, there will be some who embrace this new trend, and others who will take some time to adjust. But, as a result of so many great new options, early adopters in the residential real estate market now have more power in their hands than ever before.