29 October 2010 ~ 0 Comments

Hey Mike we want to sell our home (part 2)


So to continue we pick back up with me meeting with my clients to discuss the selling of their home. From the moment I arrived at their house I could sense although they were really happy to see me (we had remained in touch through email and phone conversations but we haven’t seen each other in a couple of years) their was some obvious tension on their behalf.

Being first time sellers they had a lot of questions about how the selling process worked and whether they should buy first or sell first since they would be needing another home. As I answered their questions I could feel the tension from the onset disappear and become replaced with a level of confidence and relaxation. When the conversation turned to what it would cost to sell their home the tension started to come back. They admitted to me at this point that being first time sellers they didn’t know what to expect cost wise and that with all of the recent media attention with regards to the Canadian Real Estate Association they had heard that selling your home and the costs involved had now dramatically changed.

So I went in to explaining to them that yes there have been some changes made with regards to selling your home with the main point being now flat fee and discount brokerage companies would have the opportunity to place a consumers home for sale on the MLS systems used by Realtors if requested by a seller, and to choose from a menu type of services (such as MLS placement alone where the seller handles all or some other facets of the sale process). Fees would vary for the services chosen being offered by these companies and the minimum commission offered to a co-operating broker would have to be $1 (one dollar) minimum. The seller could offer more and in most situations would most likely do so to ensure another agent would bring a buyer to see their home. Afterall no body works free. Not even our government or the Pope I added! And the consumer would still have to use a licensed Realtor for the placement and access to the MLS system as that hasn’t changed.

We then went on to discuss the impacts (both positive and negative) that might occur under these new rules and what the future impact on the home buying and home selling experience would be. Now it’s truly to early to tell what the full impact will be to the organized real estate industry but I shared very openingly with them my thoughts and opinions.

First and foremost I think the new rules will be a good thing overall. I vehemently oppose the opening up of the Realtor MLS and subsequent Realtor owned public advertising website realtor.ca to all and any parties. The main reason being the integrity of the system and what the ninety percent of consumers who year in and year out have come to expect when choosing the services of a licensed real estate professional. The competition bureau (read government a.k.a. Big Brother) thought it only fair to take a successful business model that had been developed, maintained and paid for by decades of active real estate agents across Canada (some good ones and some bad ones) and to allow other business models already in place as alternative options to selling your home (yes you never had to choose a Realtor to sell your home as there are plenty of other options, ninety percent of consumers just choose to do so because they see value in the results of using qualified professionals.) What will this mean for these alternative options (FSBO.com; propertyguys.com?) time will also only tell but I would suspect they will be put out to pasture once licensed Realtor operated companies take over serving the small piece of the market that choose this option in the past now put in place by the government. Hmmm this unfair bullying might come back to backfire…?

The areas I do think it will be good for all is that

  1. it will hopefully drive out the segment of real estate agents who never committed full time to the complex and ever changing career real estate assisting buyers and sellers with the biggest financial decision of their lives. This group of agents does more harm then people realize but due to anti-competition regulations reputable brokerages have had an almost impossible task in discriminating against hiring the part timer agent. And then there are some brokerages (and I think to a point almost all are guilty at some time) who have also played a hand in just hiring any-agent-with-a-pulse. It’s a well know fact that the survival (read failure) rate of an agent in the first five years of real estate is about 70% give or take. And you wonder why there are sellers and buyers that are pissed off with real estate agents! Chances are for a variety of reasons (and trust me many people have short term memory loss when it comes to taking responsibility for the choice in agent THEY made to help them buy or sell). But if there is a strong likelihood that the agent who did a mediocre or below average (or plain shitty) job in selling your house might not even be in the business in five years there needs to be some accountability somewhere!! This point alone could go on for another two pages as the blame could spread equally between provincial real estate organizations, real estate brokers and consumers themself.
  2. expose the weaker real estate agents from the more professionally focused agents who invest countless time and money in education, skill development, service commitment and standards. I can honestly tell you I have never felt sorry when someone tells me they had a bad experience in the past with a real estate agent when after poking around I find out that: they choose the one agent who told them their house was worth way more than any competent agent said it was; or they had a “friend, family member, school teacher, police man, insert whatever else here” who just got their license; ANY part time agent (I still can’t believe people even consider this option! Think about this…if they were any good at selling real estate why wouldn’t they do it full time?); the agent who gave them the cheapest commission rate (people WE all get what we pay for one way or another).

I think by addressing these two points the real estate profession overall would raise its image and the level of unsatisfied consumers would be lower. I will also point out that the recent changes came about not by any consumers being unhappy with the way the system worked but purely by an over zealous Lawyer turned Realtor (guess he wasn’t too good at being a Lawyer huh)? This person had a real estate company business model that failed because of merit but found a way to exploit a loophole and involve the competition bureau. I personally had the pleasure of working with some clients who tried this gentleman’s company first because it sounded like a no brain scenario. Buy a house, they give you a large portion of the money back being offered as a commission and everybody is happy. Well guess what? Everybody wasn’t happy! They quickly learned that they were stuck using an unqualified, unmotivated sales person who only wanted to sell them anything and then move on to the next person quickly. Of course they had to operate this way because it was all about volume and quick and fast. Now who does this scenario benefit the most? And once again we wonder why people are upset with the professionalism level offered by real estate agents. Oh yeah, the company still feels the buyer benefited because they got a portion of the commission given to them. Sounds like hush money to me! Better yet, I hear they are going to try this flawed business model again!

See part 3

Leave a Reply