The 1% Commission ‘Full Service’ Lie

The 1% Commission ‘Full Service’ Lie

There are many Real Estate services out there that offer a 1% ‘full service’ to sell your home.

The problem with this is that a 1% full service is almost impossible. 

Usually, someone who is offering this is likely to either give you half service or no service at all – since the numbers don’t add up otherwise.

We’ll show you exactly how.

Defining Full Service

We are Real Estate Agents ourselves, and we also work with the best Real Estate Agents in Toronto – we have a lot of experience in this industry, and we wanted to define what we consider full service.

Remember this is full service – so absolutely every kind of service possible for selling a home. 

Here is what we consider full service:

• Professional photography
• Home staging
• Magazine and newspaper ads
• Online ads – Google, Facebook and Instagram
• Online banner and retargeting ads
• Virtual tour and video
• Drone photography
• Website and email marketing
• Signage
• Press and media outreach
• Toll-free information hotline
• Home inspection and report

In addition to these, there are other services that Real Estate Agents pay for – including licensing, desk fees, insurance and other expenses, such as marketing. 

In addition to this, the majority of Agents pay a commission to their Brokerage on any sale – so they wouldn’t even get to keep the full 1%.

How Much Does ‘Full Service’ Cost

The problem with offering 1% at full service is that there is no way to cover the costs involved. 

Here is an estimate showing the low end and high end of the range of costs of a full service for selling your home.

Item	Low Estimate	High Estimate
Professional photography	$400	$900
Home staging	$450	$1,650
Magazine and newspaper ads	$350	$950
Online ads - Google and Facebook	$750	$1,250
Online banner and retargeting ads	4$50	$750
Virtual tour and video	$250	$550
Website	$50	$350
Signage	$50	$200
Press and media outreach	$300	$900
Toll-free information hotline	$90	$150
Home inspection and report	$400	$750
TREB, real estate office fees, licensing and insurance	$400	$500
Totals	$3,940	$8,900

As you can see, by our calculations full service costs around $3,940 to $8,900 – depending on the house size and professionals used.

What kind of sales price would it take to cover these costs?

When you factor in the commission paid to their Real Estate Brokerage (we are assuming an 80-20% split) and other fees, you would have to sell a home for a minimum of around $500,000 to $1.1M or you’d be losing money at 1% commission – based on the above list of ‘full service’ costs.

The average of these 2 numbers is just over $800,000.

So a Real Estate Agent would be losing money – on average – for every deal under $800,000 that they sold in the GTA – if they were offering the full service listed above at 1% commission.

And that’s just to break even! 

They’d make no money – on average – for a $800,000 sale, they’d just be covering their costs.

Would you sell a home for $800,000 and not make any money on it? 

Of course not.  Neither would these 1% Agents.

So how can they make money?  The answer is simple: they don’t really offer full service.

A More Typical Illustration Of The Service You Get From 1% Realtors

Since a Realtor only charging 1% has to cut corners and reduce costs to make money, here is a table showing a more likely illustration of the service you’ll get and the costs involved:

Item	Amount Spent
Total	$550
Realtor takes their own photos (often on their phone!)	$0
Realtor tries to stage the home themselves	$0
No magazine, newspaper or online ads	$0
Realtor attempts to do virtual tour and video themselves	$0
Basic website and signage	$150
No home inspection report or anything else	$0
TREB, real estate office fees and insurance	$400

As you can see, you are getting absolutely nothing near full service – instead you are getting a completely basic listing service.

At this price, with this level of service you might as well sell the home yourself.

Put another way: in the GTA we believe it is simply too expensive for a Real Estate Agent to offer full service and only charge 1%.

But, Do You Actually Need Full Service?

I’m sure many people reading this are considering whether or not they need all the services listed above. 

That is a legitimate question.  

Let’s take a look at the data and facts around some of the things involved in the full service table listed above – you can then decide if they are things that you should be doing for your home:

• Professional photography – studies have shown that professional photography leads to 50% more people viewing your listing, which can lead to more potential buyers and a higher sales price.
• Home staging – A study has shown that staging can increase your sale price by an average of 6.3%.  Staging pays for itself – every good Agent knows this.
• Magazine, newspaper and online ads – advertising drives more buyers to your listing and getting more buyers viewing your home is how you get a higher price.
• Home inspection and report – the home inspection is a crucial piece of selling a home and can also help you avoid legal issues further down the line.  If you don’t get a home inspection done,  so many things can go wrong: you can price the home wrong because of issues you don’t know about, you give the buyer an excuse to pull their offer down the line or you could get sued after the deal by the buyer – who could even get the deal overturned in court if they can prove you were hiding material issues about the home.

Put another way: if a good Real Estate Agent is actually offering proper full service, there is a very good chance that they’d be able to sell your home for 5% more than someone not offering full service – and therefore pay for themselves!

In Conclusion – The 1% Full Service Myth

It is easy to jump on an offer like 1% full service and focus on the dollars. 

The line ‘full service’ at 1% also seems great: you get all the things but don’t have to pay for them!

However, like many things in life – if something seems too good to be true, then it probably is.

The math on someone offering ‘full service’ at 1% commission simply doesn’t work in the GTA – as we illustrated above. 

In fact, rather than paying someone 1% you might be better off just to sell your home yourself – such is the limited service you’re probably going to get.

You need to think about the value you’re getting and if it’s worth it at all. 

It’s also easy to take your car to a cheap mechanic or go to a cheap dentist – but ultimately down the line you can pay the price later.

In addition to this, if you get full service from a good Real Estate Agent it is highly likely you will sell your home for more – and the Agent will pay for themselves. 

It just takes a very small increase in the sales price for a proper full service Real Estate Agent to pay for themselves and bring you more money on the sale – even after factoring in commission.

Ultimately the decision is yours but I would make it clear that you are not likely to get ‘full service’ at this price – but some kind of reduced service.

The 1% Commission ‘Full Service’ Lie first appeared on:
GTA Real Estate Pros
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