Saying that the current remuneration system for realtors is flawed, a Vancouver realtor has launched a new service that allows listing realtors to be paid on a retainer basis instead of on commission.
Instead of paying a commission to a listing realtor upon the sale of their properties, Realtor by Retainer allows sellers to choose from one of three prepaid marketing plans and one of three prepaid retainer packages.
The marketing plans cost $2,000, $2,500 or $3,500, and the retainer packages are for either 10 hours ($2,500), 20 hours ($5,000) or 30 hours ($7,500) of a realtor’s time. (Realtor by Retainer recommends homeowners pay buyers’ agents the average Vancouver area commission.)
A shift in payment structure
“The industry hasn’t really delivered for the people who make it up,” says Realtor by Retainer co-founder Cameron Tsoi-A-Sue. “To me, that speaks to the failure of the business model to provide a level of efficiency.”
Tsoi-A-Sue has been in the industry for more than a decade and is responsible for training and agent onboarding at a brokerage in Surrey, B.C.
Tapping into the inefficiency
Realtor by Retainer stems from research by Tsoi-A-Sue that found 35 per cent of the 20,614 realtors in Metro Vancouver (comprising the Real Estate Board of Greater Vancouver and Fraser Valley Real Estate Board) did not sell a home in 2022 and earned zero income. “That’s a lot,” he says of the 7,100 realtors with no transactions.
On average, a Vancouver area realtor completes 4.3 transactions per year and earns $65,386 per year, despite an earning model that is linked to the housing price index.
While the top 10 per cent of realtors earned an average of $372,000, the average income of the bottom 90 per cent is just under $30,000, Tsoi-A-Sue says.
It’s not uncommon to see many realtors having strong months where they close multiple deals and have tens of thousands of dollars coming in, followed by months of dry spells with no cash flow.
Many “really intelligent, talented people” are struggling, he says. “Their careers are not the glamorous type of things that the industry promotes.”
Tsoi-A-Sue notes Realtor by Retainer takes the risk of the transaction out of the hands of the realtor. Whether or not the home sells, the realtor gets paid for his hours.
“We’re not a brokerage. What we are providing is infrastructure.”
– Cameron Tsoi-A-Sue, co-founder, Realtor by Retainer
Meanwhile, for consumers, there are “significant savings.”
“There’s more than one way for consumers to pay (realtors) and still get quality service,” he adds, noting the service has nothing to do with discount brokerages which give “discounted service.”
Realtors who participate in Realtor by Retainer remain with their brokerages, says Tsoi-A-Sue. “We’re not a brokerage. What we are providing is infrastructure.”
So far, six or seven realtors in the Vancouver area have agreed to participate. Realtors who’ve signed up have between a few years and seven or eight years of experience. “We want to see that the realtor is doing at least six transactions a year on average,” Tsoi-A-Sue says. “We want to see that they have some documented success.”
To date, Realtor by Retainer has processed about a dozen transactions.
Tsoi-A-Sue says Realtor by Retainer is currently looking at finding builder-developer clients and is in conversation with a handful. Builder developers are “a good entry point to the market.”
Positive reception
The fact that Realtor by Retainer takes care of billable hours and provides administrative support to realtors is an attraction to Allister Carrington, who has joined forces with the service.
Carrington, a B.C. realtor with seven years of experience, extols the ability of Realtor by Retainer to provide him with the help of an assistant on an hourly basis.
He says experienced realtors should have some sort of help, and Realtor by Retainer provides realtors “an assistant at an affordable cost” that handles all the paperwork. “It saves me at least a minimum of two to four hours of my day,” he says, allowing him to better spend his time with clients.
“I 100 per cent believe (Realtor by Retainer) will be a successful,” Carrington says. “It fills that void of what everybody needs, which is an assistant, but it’s different because it’s on an hourly basis. I honestly think it’s one of the most valuable things that I’ve seen come out in my seven years of doing this.”
Plans for expansion
Tsoi-A-Sue says Realtor by Retainer is “trying to be very intentional” on having a smooth rollout “so that the industry doesn’t have a huge blowback on this, that it’s going to fit in with agents (and) that it’s going to fit in with brokerages.”
If Realtor by Retainer does well in Vancouver, Tsoi-A-Sue is looking to expand to Toronto next, followed by the rest of the country and the U.S. in three to five years.
“Even if we got a one per cent market share of that big market, that would be beyond my wildest dreams.”
Danny Kucharsky is a contributing writer for REM.
I think the realtor by commission idea is excellent. However, successful realtors ( closing 10 or more deals annually) might not like it.
Realtor by retainer? Sounds like another way to say mere posting… The stats about realtors success in selling has never changed 80% of the business is done by 20% of the agents. The business model will be here and gone, To say this business was model is”new” is just wrong. What a cheesy article.
how does “the infrastucture” company earn?
If you work hard and do a good job you get paid. If not you can’t make it in todays Real Estate Market. The number of Realtors that did not make a transaction and made Zero income , should get an other job because they are not suited to be a Realtor. Its a hard- knock life. There maybe other things that need changing in this business. But this is not it! You will just be giving your hard earned reputation. To a person that is useless, lazy, untrained, uncaring, This sounds like a “Lawyer” that come up with this idea! We are not Lawyers. I had a hard time writing this to keep my comments : respectful and refrain from being offensive or inflammatory. Sorry if I failed. I hope you understand: I am very proud of the work I do , I help people and if I do a good job I get paid. It seems like there is a lot of people out there try to make this business easier and get paid more.
A will know person once said ” No one owes you a damn thing. Get off your ass and earn it!
Would you pay an Agent with less than 50 sales in their career
$250/hr with no performance guarantee like a listing contract requires?
Most Agents would happily accept $100/hr cash up front as that would generate $200K a year on a 48 wk 40 hr schedule.
Most Agents would happily accept $100K because as the article indicated that would still be over 3X what 90% of them are making.
So their model should have been launched at $50/hr cash up front but it is 5 times that amount.
I cannot imagine a Broker Owner willing to allow their brokerage to be placed at compliance risk by trusting this non-registrant who clearly has no idea how the business works.
What happens when the Brokerage is painted with the brush of a tainted seller who feels they didn’t get $250/hr level of satisfaction?
We know what is coming next don’t we?
I am confident this won’t appeal to the market, for one reason.
I used to use this alternative when talking to a commission-sensitive seller who almost invariably also had unrealistic price expectations. By the way – it wasn’t just a way of objection handling, I was fully prepared to do it.
I’d propose to work for $150 an hour which I’d take up front with a $4,000 retainer to start and that I’d send an invoice for services rendered plus expenses at the end of each month for any additional hours worked/expenses incurred. Every showing was one billable hour, including set-up time and a post-showing report. A two hour open house was a 3-hour minimum with sign set-up/take down and report.
Every single seller I proposed this to said some version or another of: “No! I don’t want that, you’re not supposed to get paid until it gets sold!” I never did a single service by retainer.
I learned that the consumer expects to pay *NOTHING* out of pocket until they get what they want: a binding sale. This alternative means having to lay out money with possibly no return on investment and then having to go back to the market anyway with a traditional agent.
I’m all for innovation in our business, but I just don’t see the appeal to the penny-pinching consumer who has the alternative of listing for FREE and only paying when satisfactory results have been achieved.
You are proposing to support the under performers of the industry only to really support the brokerage company with a base minimum income for no basis of value for the services provided.
The problem is that most agents have no real skill whatsoever! Why would anyone want to pay for no skilled service?
It is my opinion that there are a number of companies and others like Rogers that had interests in grabbing a piece of the real estate industry that could do a much better job of marketing a home for sale than the average realtor.
You are trying to destroy one of the last remaining true pure capitalistic free market businesses that exist. 100% commission income.
Shame on you. There have been more before you and they have all failed. Sorry, but I hope you do as well.
I have been a realtor for 42 years and counting working as an independent salesperson. There is nothing wrong with the system.
This is a great business for those that want to work and provide real service.
Although I like the idea of charging for a retainer, you cannot standardize the hourly rate. Accountants, Engineers, Planners, Lawyers, etc., do not charge a standard hourly rate. In the end, you get what you pay for!
Realtor by Retainer, timing is impeccable.
Sounds like CREA trademark infringement for the use of Realtor.
After reading the comments, the one sure thing is that the “market” will have a say and ultimately that is who should and will have the last word.