Listen to our founder Roy's interview in Canadian Business Quarterly
As Canada’s largest lower commission real estate brand, 3 Percent Realty provides full real estate services dedicated to making the buying and selling of real estate as cost effective as possible, allowing clients to keep more of their investment.
Founding broker Roy Almog started in the real estate business in 2007, having spent tens of thousands of dollars in realtor commissions before recognizing that there was a gap in the market for a full-service real estate brokerage that would offer multiple listing service (MLS) exposure without high-priced commissions. He quickly became licensed and started two firms, 2 Percent Realty and 3 Percent Realty, which now boast 35 locations across Canada, Australia and New Zealand between them, with a move into the US market on the horizon.
Mr Almog spoke to The Canadian Business Quarterly recently about the beginnings of the company, the benefits of low-commission real estate services, and the franchise model that enables quick and easy expansion into new markets.
A low cost solution
“I started the company about twelve years ago,” Mr Almog explains. “It came out of personal need I had in the market, and frustration with the options that were out there. I was trying to sell a property and we [experienced] the two extremes in our market.”
The two options Mr Almog faced were either a ‘for sale by owner’ model, where the owner pays a small amount to be advertised on a website and handles the sale directly, or traditional real estate models which demanded significantly higher commission.
“I just didn’t feel there was a value for the service, for the money that was being paid. At the time I wasn’t licensed, I was working in telecom, I had no real estate experience, but I knew there had to be a better way. I started researching, couldn’t find what I was looking for, and decided to do it myself.”
After deciding that this was the path he wanted to go down, Mr Almog went to real estate school and got licensed. After that he started his business, consisting of two companies, 2 Percent Realty and 3 Percent Realty.
“The big difference [between the companies] is just the market that they serve. We have them split between eastern Canada and western Canada, so the two brands don’t live in the same market. It’s segregated by province, and it’s primarily to do with the average price points in certain markets.”
This understanding of different markets means the individual offices know exactly how much they have to generate per transaction, allowing the company to maximize its profits in any market it moves into.
“In some markets, the average price point is a bit lower. In those markets we have 3 Percent Realty, so it’s a little bit of a lower price point, but they make up for it with a little bit of a higher commission. Where 2 Percent Realty exists, the price points are quite a bit higher, so we can continue to do business because the average transaction price is a bit higher.”
There is no set standard in terms of real estate commission. Realtors, as independent contractors, are free to charge whatever they want. However, the markets served by 2 Percent Realty and 3 Percent Realty tend to be around similar levels.
“A lot of cases we come across where the commission being charged is between 4, 5 or 6 percent, depending on the market, and we’re at 2 or 3 percent. So it ends up being about half of what some of the other rates are.”
The Canadian Real Estate Association (CREA) has clear guidelines surrounding the lack of a standard rate of commission, although there is a lot of repetition in the market. In reality, the level of commission charged often has little bearing on the quality of service given.
“We only have the one MLS system, where 99% of the properties end up posted to realtor.ca. All the listings once they get onto that site looking identical – doesn’t matter how much commission you pay, doesn’t matter which brand you’re with. The rate of commission doesn’t necessarily mean you get a fancier posting on MLS. The exposure’s identical.”