So what exactly is a “hybrid” broker?
We are adopting the term, “hybrid” broker as a way of categorizing the growing number of smaller, nimble real estate brokerages that offer a middle of the road option for sellers to consider. These kinds of brokerages may offer a mix of services and specialties and often offer lower cost listing fee options than the typically higher priced corporate brand name brokerages. Sellers also can go to the other end of the spectrum and choose a for-sale-by-owner (FSBO) company, but that too has its drawbacks.
So a hybrid broker might be one that provides a middle of the road option between the large, franchise broker and the FSBO option.
How many real estate brokerages can you name?
Most consumers will be aware of a half a dozen major brand name brokerage brands and perhaps a few independents. (particularly those that spend a lot on company advertising or radio shows) These same folks might be surprised to know that there are 176 brokerage members in the Ottawa Real Estate Board. That’s a lot of choice and a lot of talent, almost all of whom are very experienced and have simply taken the next step in running their own independent businesses. We are entering our 13th year, as Oasis Realty Brokerage on April 24th.
Why do large brokerages have to charge so much?
In defense of our larger broker brethren, we suggest that even 5% is not a huge sales cost, relative to just about any other product or service one could think of marketing. So while the dollar cost is large, (and compounded by HST on those services, land transfer taxes and other costs) our current MLS® system in organized real estate, is a very good deal even at 5%.
As most will be aware, real estate commissions are typically split 50/50 between the listing salesperson/brokerage and the buyer representative and brokerage, with both parts most often totalling 5% in commission. These fees are paid by the seller out of the sale proceeds at time of closing. (so indirectly, the buyer is paying for all the commission in the price of the house, even though the sellers’ lawyer is writing the cheque.)
Larger brokerages have a significantly higher overhead than most hybrid brokerages including bricks and mortar expense, corporate payments, management and administration. They also have a major focus on recruiting and training salespeople. Sales people working for these large organizations have to pay for this and these fees can be quite significant. Thus, the need to stick to the higher 5% type of listing fees.
Many smaller, independent brokerages avoid this corporate administration and overhead and are therefore able to offer equal to or better than services levels at a drastically reduced cost. In our own case, we are able to do this and pass these savings on our to our clients in a range of 20% to 50% of the fees charged by 5% Realtors!
So why not just call them “discount” brokerages?
Not all hybrid brokerages offer discounts but may have a different sort of focus or speciality. Though “discount” brokerage is probably an accurate title and is well accepted as a descriptor for many other businesses (ie discount stock brokerage, discount store, discount airline etc.) the larger organizations in real estate have demonized the term (and quite frankly in an anti-competitive way) in real estate parlance. The discount brokerage is bad mouthed every day in large brokerage training rooms and sales meetings with these messages repeated to consumers across kitchen or dining room tables in an attempt to portray the service offered by firms like ours as inferior to their own.
Much fear-uncertainly and doubt (FUD) has been spread by so many big company Realtors for so long, that many consumers actually believe it is true. Typical assertions sound like this:
-you get what you pay for
-these small, fly by night or part time Realtors don’t last long
-they don’t advertise your property and don’t properly support your listing
-other agents won’t show their listings
yadda, yadda, yadda….
Service and savings! (or other specialties)
Realtors give a tremendous service level and ours is no different. The difference however, will be seen directly on the amount of equity you have to take with you out of your sale proceeds! The average residential selling price in Ottawa at time of writing is $451,422 which translates in to average savings of over $10,000 for our sellers (vs 5% fees/commissions)! That’s a lot of extra cash to put in to your next property!
Sorry for the rant but we just felt that there is clearly an interest from consumers in paying less and still getting quality services and for too long, the only apparent or acceptable avenues are to go from one extreme to other. ie a FSBO or a 5%-er. So please consider “shopping local” and using one of the 120 (or more) smaller hybrid brokerages who are not constrained by a franchise or corporate management or policy framework.
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 613-371-9691 Mobile/text
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