Giorgio Lupinacci was surprised when he asked his realtor friends for a deal when he wanted to sell a property: Not one was willing to reduce the commission. So he decided to do something about it.
The result is Bidcomhomes.com, a website where realtors bid on commissions to homeowners looking to save some money.
Sellers post their homes online for free, and realtors compete against each other to get the listing. Realtors pay $99.95 to bid on 30 homes, said Lupinacci, who is based in Edmonton. Sellers receive emails from realtors and can respond or not.
Standard commission rates in B.C. are seven per cent on the first $100,000 and 3.5 per cent on the remainder of the sale price. On the purchase of Greater Vancouver’s benchmark, or typical home, priced at $621,000, the standard commission would be $20,025 — not an insignificant amount of money.
In recent years, some real estate companies have started charging a lower percentage, or offering customers a choice of which services they want from a real estate agent. They pay only for what they select.
Several similar websites have begun to pop up since the Canadian Competition Bureau began to open up choices, and possibly break realtors’ monopoly on MLS information, with two applications to the Competition Tribunal.
The first application, which the Canadian Real Estate Association agreed to in October 2010, gives Canadians the ability to choose which services they want from a real estate agent when selling their home, and to pay only for those selected services.
The Competition Bureau has filed a subsequent application, which is still being considered, that would open up the information contained in the MLS database that was previously only available when provided by a realtor.
Meanwhile, two other Canadian companies, Sundaybell and Homazooma, have started websites designed to match homebuyers and sellers with realtors, mortgage brokers and financial planners.
Sundaybell (an anagram of Buy and Sell) is strictly designed to match buyers and sellers with realtors. Potential customers create a profile that says what they’re looking for in a realtor, and realtors can then send them messages through the site. Customers remain anonymous until they choose to send their personal information to the realtor, but are not committed to do so. The company earns revenue because realtors pay $500 to become members; this includes one referral and subsequent referrals are $50.
Company co-founder Andrew Brest said the site is not designed for realtors to bid on potential customers, but that real estate commission fees are often negotiable. He likens his site to a dating site in that the system takes two profiles — that of the buyer or seller and that of the realtor — and provides each with a list of potential partners.
Homazooma is a similar site, but it also provides potential matches to mortgage brokers and financial planners. Co-founders and co-CEOs Donat Plenter and Tracy Thomas said member professionals are all licensed and pay a $100-a-month membership fee for access to potential clients. Those seeking services are all anonymous, unless they choose to provide their personal information.
Homazooma allows potential buyers and sellers to access services, such as getting a current market analysis of their home for free by several realtors, or even to assess their mortgage options without having to reveal their identity. Homazooma also has listings of homes for sale, both by realtors and by owners.
Both are based in Eastern Canada, but can be used anywhere in Canada, and plan to expand their operations in Western Canada.
Meanwhile, Lupinacci said it’s “crazy” how competitive the real estate business has become. “I think we’re going to change how [real estate sales] are done in the future.”
In just a month, 50 Alberta realtors have signed on to Bidcomhomes.com. No B.C. realtors have yet registered, but they certainly could, Lupinacci said. He said there have been bids on the site as low as one per cent, and that even realtors from large companies have signed on.
Vancouver-based realtor Michael Tudorie said he would not be interested in joining a service where realtors bid each other down to get deals.
“Sellers have to realize that they get what they pay for. I pride myself in providing the service clients deserve,” Tudorie said. “There are several ways of selling your home including One Percent Realty, 2% Realty or for sale by owners. If the objective is to save money in the commission, then they could use the above-mentioned services which only minimize their chances of selling and/or getting market value for their home.”
He said Homazooma and Sundaybell seem like fads.
“One cannot replace the relationship built in trust between the realtor and sellers/buyers,” Tudorie said. “Such services seem to diminish the real estate profession in some way or another. All I am saying is that I like to be true to myself and go about my business based on proven principles.”
The application still before the Competition Tribunal seeks to have the Toronto Real Estate Board approve allowing realtors to have a “virtual office” that buyers can use with a user name and password, and that would give them access to information not provided on the MLS at realtor.ca.
Although realtors in B.C. can already give their customers access to a virtual office, the ruling could open up even more information. This could include statistics, such as the number of days a property has been on the market, selling history or even community information, such as the crime rate in the surrounding neighbourhood.
In the U.S., there are many websites, such as Zillow.com, that makes this type of information available without signing in.