As technology makes it easier to research, buy and sell a home, the commissions paid to real estate agents should be coming down. They’re not – though that might be about to change .
Bob Dymont doesn’t sound like a revolutionary. He’s too soft-spoken, too diplomatic, too avuncular. And yet, in real estate, he’s done nothing but overthrow the status quo for the past three decades.
The 66-year-old Vancouver resident played a general’s role in building Remax in the mid to late ’80s, which drastically reshaped the way realtors operate by changing the way they earn commissions. Less than 30 years after it was born, Remax was the top-selling realty firm in the world.
Dymont then took on the role of CEO of Sutton Group, leading that outfit from upstart to the No. 2 spot in Canada by again changing the rules of engagement by tweaking the way realtors are paid.
Such is his reputation as a franchise builder that Dymont has never been short of offers from entrepreneurs who think they’re the next game changer and want him to help them build their business. Yet for the past 13 years, since his last assignment ended – taking the top job at Realty World, a 15,000-agent international firm that he turned around and sold off in parts – he’s turned all these offers down. Until now.
“Everyone else is trying to reinvent the wheel,” he says of the other entreaties he’s received from real estate entrepreneurs. “This is different; this is the future. Our timing is good.”
He’s referring to what he sees as the next seismic shift in residential real estate: the full-service discount realtor. On paper anyway, this model would give agents a lot less and customers a lot more. This time, though, Dymont isn’t betting on a firm that’s already proven its staying power, as Remax and Sutton had when he joined them. He’s betting on a 31-year-old Alberta kid who’s fresh out of the gate and who thinks he’s got the next revolution figured out: using technology to cut the costs of selling a home. This kid, who’s been very successful so far, wants to be a real estate mogul. Dymont thinks he’s going to make it, and that’s a big endorsement.
The would-be mogul in question is Roy Almog, and his mission is to upend the way we buy and sell our homes. He’s not the first entrepreneur to latch on to that lofty and lucrative goal. But he is, so far, one of the more successful of the recent crop. In just over three years, Almog and his firm, 2% Realty, have made a deep mark on the realty industry in Alberta. Now he has his eyes set on B.C., the first step in his aggressive push to build a nationally franchised realty firm. And his biggest coup is lining up the support of a veteran like Dymont, who’s leading the expansion efforts.
The name says it all: 2% Realty sells real estate for a two per cent commission. The typical rate in B.C. is seven per cent on the first $100,000 and three per cent on the rest (that’s standard, but agents can charge whatever they please). The cost of selling an average detached home in Vancouver – based on the Real Estate Board of Greater Vancouver’s benchmark price in December 2010 of $800,000 – is $28,000 using regular commission rates. The cost of selling through 2%, which just opened its doors in Vancouver, is $16,000.
There are other discount options in the B.C. market. ComFree, which stands for “commission free,” has had some success by charging a small fee to list on its website. Other firms have offered discounted full service (meaning an ad on MLS, the multiple listing service, and an agent to show the home and take care of offers). One is Vancouver’s One Percent Realty, which has done well locally (although it usually charges more than one per cent because it imposes a minimum commission of $6,900). And some agents will discount their rates on an ad hoc basis. But by and large, discounters are the exception despite their rapid proliferation.