A Brokerage that works in a rural area is quite used to the problem.
The traditional commission structure might be set up at 5%, with 2.5% for the Listing Brokerage for their services related to the sale and 2.5% for the Buyer’s Brokerage for their services related to the purchase.
The Listing Brokerage does not want to do the Buyer’s Brokerage’s work. That’s fine and it makes good sense.
Now, we have a potential Buyer. They are located in the City and their real estate agent is also located in the City.
The Buyer will drive up to visit the property, but not necessarily the Buyer’s agent.
What happens if the Buyer’s agent calls the Listing agent and asks whether they will show the property. It could be a 10 minute drive or a 90 minute drive for the Listing agent, but, it’s clearly a 3 and a half hour drive for the Buyer’s agent.
What’s the Listing agent’s response:
- No,
- Yes, if you give me the entire 2.5%
- Yes, if you agree that your 2.5% will be reduced to 1.5%, which will be paid to me
- Yes, if you give me a referral fee of 25% of your 2.5%, or 0.5%
- Yes, if you give me a payment of $100 to $200 for the showing
What is the Seller’s view:
- I totally understand and that makes perfect sense to me, or
- I just expect you to sell the property, if someone is from the City show it to them
The NEW Competition
Starting up a Brokerage in a new rural area can be challenging, so when you get a client you make it quite clear that you will show the property to everyone, no matter what. This pleases the Seller. You focus on the money being paid to you on the “sell side”. You waive goodbye to the money on the “buy side” and look to develop your business.
A Listing agent who does this will be popular among City agents, but unpopular among their competitors in their own market.
In fact, for other potential deals, they may have City agents sending them clients.
Brian Madigan LL.B., Broker