GTA home buyers and sellers are overpaying by thousands
Home buyers and sellers in the GTA have been stuck with an outdated model for decades, one that is costing customers thousands of unnecessary dollars.
Over the past decade, home prices have increased dramatically, meaning that agent commissions have also increased. Yet an agent’s workload hasn’t increased at all; in fact, new 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—more than a year’s salary for many 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 to shake up a stagnant industry.
But not all disruptors are created equal, and consumers must pay close attention to what’s being offered to ensure they make the right choices to suit their needs.
All inclusive services and fair, transparent fees
Justo Inc., Brokerage was the first to disrupt the housing market with a focus on fairness and transparency. The Canadian-owned company offers low listing fees for sellers and large cashback returns for buyers.
Sellers working with a Justo agent pay only 50 per cent of the standard listing fee (typically 2.5 per cent) taken by most brokers. When Justo represents a buyer, they split the commission paid by the seller 50-50, giving the buyer thousands in cashback.
“We feel Canadians deserve better service and reasonable fees, and we’ve clearly hit on something with our new model, because demand is even stronger than we anticipated,” says 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 its pricing, but those getting into the market now should really consider what we’re offering. Otherwise, they stand to lose a lot of money.”
Justo also bundles in extra services at no additional cost. Sellers get free staging, 3-D 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 also just launched a new program for those seeking to purchase pre-construction condominiums, beginning by partnering with CentreCourt Developments on their Transit City 4 project. Following their success in the resale market, Justo is now applying the same cashback model to new construction homes by splitting their commission (typically 4 per cent of the unit cost) with buyers 50-50.
Justo’s website lets visitors view all MLS listings and immediately see the cashback amount they can expect for each property.
The most recent entry into the Canadian market is U.S.-based Redfin, which offers low listing rates for sellers—between 1 per cent and 1.5 per cent, depending in the market—and some cashback incentives for buyers.
Like with Justo, Redfin agents are compensated in part based on client satisfaction, ensuring superior customer service throughout the transaction process.
U.K.-based Purplebricks is an option for sellers seeking to list on their own, offering assistance and guidance for a flat, upfront fee, usually around $3,000.
There’s also good news in the mortgage space. Start-ups like Homewise are making it easier than ever to save money on a mortgage. They offer a simple online application, then negotiate with clients to provide several options.
Next-generation brokers are putting customers first
These new players are flipping the traditional client-agent relationship on its head, giving buyers and sellers better customer service than big legacy firms.
There’s a lot to learn about these new options. As with other markets that have been disrupted by companies like Amazon or Uber, some consumers will embrace this trend right away, while others will need more time to adjust. But don’t wait too long—early adopters in the residential real estate market now have more power than ever before.