Everyone knows how hot the Toronto real estate market has been of late. But unless you’ve been trying to buy something in 2016, you don’t know how truly crazy of late it has become!
Many of my buyer clients can relate to the fast-paced, multiple offer frenzy that has become the norm in most parts of the GTA over the past ten years.
A long time ago, there was moderate civility around the listing of a house or condo, even when an offer date was specified to review offers. Yes, the occasional jackass seller’s agent who would go all cowboy and treat buyers and their agents as pawns with unscrupulous tactics existed (I’ll save this for another post). But for the most part, great Realtors knew the way to a successful sale was by treating everyone with respect, ensuring that not only the property was sold for favorable terms on offer night, but that a smooth closing would be had on title transfer day, and a happy buyer and seller would ride off into the sunset and live happily ever after.
Fast forward to the present. Today, we have many agents who have entered the industry in the past 5-7 years, who have experienced nothing more on the selling side then get a property listed (often way lower in price then what’s realistic for the property), have a boatload of showings that turn into an offer, have a bunch of buyer agents who are inexperienced with the process (training sucks in the real estate industry in almost all companies) show up to present the offer, and then often defy any reasonable logic on price. And then be held out as heroes for a job well done! Yay, you got it! Good for you, rock star!
This is not a supply-demand phenomenon, as the industry would like you to believe. Maybe this is a low supply, high demand and very high amount of inexperienced, fully commissioned sales people on both sides of a home sale transaction doing mostly what they think is right, without really knowing if it truly is?
Are all real estate agents like this? Do all sales in the market play out like the example above? Of course not. It’s fairly easy to distinguish who the experienced professional agents are; they are the ones who ensure that mutual respect is exchanged during the process, which often culminates into a warm embrace or long handshake after the professional negotiation of an offer. It’s out there; you just have to look for it.
So what does all this mean and where does it leave us? What lies ahead? These are serious questions, for sure.
I for one am totally on side with the extreme measures the government has enacted of late. The real estate brokerage side does a very poor job of preparing an agent to run their business and compete in the marketplace. This has been the case for years. It’s entirely left in the hands of the agent to seek training, education, and even guidance. Most agents (approximately 80% according to recent statistics in production) are in what I would call ‘survival mode’. Agents have mortgages to pay and their children’s education costs to fund; the same bills and challenges most people have. Very real and valid concerns, indeed.
I do think that we are going to see many more lawsuits against agents and even possibly the brokerages that the agent works for (I will note that this is highly debatable and the brokerage-realtor relationship is under increased scrutiny by regulators). Is it enough to just shrug and claim, “well, they are independent contractors after all?”
A cooling of the market by any means necessary and you won’t have to worry about the real estate agent influence on the market so much. Previous attempts have been made to cool the market and ensure a soft landing from this long, drawn-out real estate cycle with limited to no effect.
I’m all for a free and open market and I hope for the most part that I’m off base with my observations. I know plenty of hardworking, ethical, professional sales representatives – both experienced and new to the industry. I network with a lot of highly successful agents throughout North America and I can’t help but feel that almost everything our wonderful neighbours to the south went through before the flattening of their housing market looks eerily familiar in some ways to what’s currently happening in Toronto. What do you think? Only time will tell, so plan accordingly.