When I was in grade six, I had the best teacher a boy could have. Creative, helpful and funny, Mr. Aloma made learning easy. At the end of the year he bought each student a book to read over the summer. Every book was different and inscribed with a personal message. I still have my copy of Huck Finn and the message inside was a simple one liner; Knowledge is power. Big words for a young kid and I probably didn’t understand the full meaning of the words until much later in life. But there they are. Knowledge IS Power.
In real estate sales, the good agents don’t just work hard. They have an understanding of what the driving forces are in their market, they are up to date on policy changes, and are committed to bettering themselves. I see it in our company all the time. Some of the best agents make the time to come to seminars, office meetings, and our inter-office Mastermind sessions. They are not content to rest on their laurels. It’s almost as if they have a physical craving to know more. One of the pillars of our company is to offer many opportunities to learn. It is an expensive and time-consuming proposition but, at the end of the day, a smart agent, is a successful agent who rarely makes mistakes.
Understanding the market is one thing but how much do you actually know about the neighbourhood that you work in? Are you involved? Do you have enough information on upcoming construction projects, schools, libraries, shopping? As they say, being on the street provides you with a different view of the world then those who view it from their desk. The information that you gain is critical for those who want to show clients they are the knowledge source. So if you aren’t already challenging yourself, make the committment today to know everything. Your clients and your brokerage will appreciate it.
Commission discussions are ones that I try to stay away from especially in public forums and blogs. The reality is that despite what the Canadian Competition Bureau has told the press, all commissions are negotiable. There are already lots of different real estate models out there, and for better or worse, more real estate models are born every week. So the point of this blog entry is to not really talking about different rates per se but rather how you, as an agent, justify the rate that you charge.
I have been in the real estate business for many years and if there are a few fundamental truths about commission. First, good, hard-working, successful seasoned agents rarely discount their commissions. Second, agents that discount their commissions ALWAYS discount their commissions. Third, once you become known as a discounter there is no way you can reinvent yourself as a full service agent and fourth, new agents fold easily and cut commissions without a struggle.
You may have already decided that you want to join, what I like to call “The Race for the Bottom”. That is, simply, the agent who sees no value in the work that we do. He or she is happy to make a living a few hundred dollars at a time. In which case you really don’t need to prove anything. You don’t need to hold yourself up to a higher standard, just higher than the next discount agent (or not). You are not interested in higher education or training and you probably don’t care to know if you are breaking the law or not. World financial events mean little, just as long as you get your sign on the lawn. Track record? who cares. Brand? not interested. Client’s best interests? Not so much.
And then there is the alternative. Be dedicated to your craft. Learn, experience, work to be the best you can be. What I always say to new realtors who have made the decision to be full service agents is that they must be disciplined, active and strive to be best in class. Part of that act, the act of being the best, means that you are compensated properly for the work that you do. The most successful agents in our company have perfected their responses to the few who ask for commission breaks. They are consummate professionals who put their clients at ease. They show their value, their plan and their committment. And if all else fails, they can hold their heads up high and tell the potential client that they simply can’t lower their rates. Obviously, new agents are hungry for the deal, and faced with the choice of not getting a listing versus getting a listing at a reduced rate, the new agent takes the road of least resistance so, as a brokerage, our job is to remind and reinforce our value proposition to our agents, new and old. When new agents tell me they lost a listing because of commission, my response is always the same; keep working on your value proposition. If you are new to the business, highlight the track record of your firm (if the firm has one).
In Ontario, most contracts between a real estate agent and a member of the public includes a declaration, signed by the agent, that he or she is fully insured as required by the Real Estate and Business Broker’s Act and Regulations, but do you have an understanding of what that insurance actually covers? Hopefully this post will outline everything for you.Among other licensing requirements such as continuing education credits, all real estate agents, brokers and brokerages must be insured under a group policy. The policy is issued by The Real Estate Council of Ontario and covers three significant points; Errors and omissions, commission protection and consumer deposit.
- Errors and Omissions Insurance covers agents and brokers for up to $1M in respect to any particular claim. The Policy provides protection for an agent who has or is alleged to have committed a negligent act. Coverage is also extended to include theft or damage to customers’ property during an open house while in the care, custody and control of the Insured. This coverage is subject to a limit of $25,000 and a $500 deductible.
- Commission Protection Insurance covers agents and brokers up to $100k in respect to any particular claim. This coverage provides protection for the salesperson/broker to whom a commission is owed, but not paid, due to the insolvency of an Insured or the theft, fraud, misappropriation or wrongful conversion directly or indirectly of moneys or property held by an Insured.
- The Consumer Deposit coverage is for the customer or the client of an Insured. This coverage is designed to protect the consumer but also prevents claims against the Insured who, in the absence of such insurance, would have a claim made against them. Claimants are protected for losses due to the insolvency of an Insured or the theft, fraud, misappropriation, wrongful conversion directly or indirectly of moneys or property held on deposit for the consumer by the salesperson/broker. The insurance protection afforded to a claimant due to an “Occurrence” is $100k
Agents and brokers should fully explain the Declaration of Insurance as part of their contract discussions. Not only do you show your knowledge, but you put the client at ease. For further information about Insurance coverage, please read REBBA 2002 or visit the RECO website.