Radical changes coming for CREA

[JDaley]

QUOTE (caglah @ Oct 1 2010, 11:07 PM) It may end up being more expensive in the new system than before.
I don`t see how this can happen since one of chief complaints of the CB was to provide consumers with the services they wanted and I can`t imagine a seller continuously listing? Keep in mind the realtor won`t disappear in the transaction, and I don`t think this what was intended by the proposed changes, just access to the MLS and a list of services to choose from at sensible rates. Watching the CBC Lang and O’Leary Exchange yesterday evening, I was surprised to see even Kevin O`Leary admit Govt worked this time

Even he can`t stand realtors

And even more funny to listen to Amanda Lang refer to the CREA/real estate business as "the last bastion of thievery". Anyway, this will all be a thing of the past in a short while and the irony of it all is that with all the extra cash available to consumers we may even see an uptick in home prices. Rejoice, this is a good thing.

 

[luckyluciano]

QUOTE (JDaley @ Oct 2 2010, 10:36 AM) I don`t see how this can happen since one of chief complaints of the CB was to provide consumers with the services they wanted and I can`t imagine a seller continuously listing? Keep in mind the realtor won`t disappear in the transaction, and I don`t think this what was intended by the proposed changes, just access to the MLS and a list of services to choose from at sensible rates. Watching the CBC Lang and O`Leary Exchange yesterday evening, I was surprised to see even Kevin O`Leary admit Govt worked this time

Even he can`t stand realtors

And even more funny to listen to Amanda Lang refer to the CREA/real estate business as "the last bastion of thievery". Anyway, this will all be a thing of the past in a short while and the irony of it all is that with all the extra cash available to consumers we may even see an uptick in home prices. Rejoice, this is a good thing.

Let`s not be naïve. This type of ruling has existed in the U.S. For several years....not much has changed.....business as usual. The only persons who truly benefits here are the brokers who want to push their failing business models. Realty sellers who started much of this has a lawsuit at stake. The sold tons of homes at massively discounted commissions and still closed shop because of a lack of something obvious. It`s called PROFIT! Here they get to list you for a fee......take your money for doing nothing....and throw you to the wolves.....the buyers agent working for the buyer. Discount brokers have been listing homes on our MLS for flat fees for years.....only difference is they were resposible and working on your behalf. Now....those that choose the discount route will still pay and receive no service or reprentation for it. Big deal! LOL.

PEOPLE SELL REAL ESTATE NOT WEBSITES. What the CB proposes sounds sweet, until you actually SELL real estate like I do. Then you realize how much time, work, dedication, commitment is involved. Without those characteristics....you fail.

I just lost a listing to a discount broker using the new rules....she unknowingly underpriceced her home by $25,000, offered 1.5% commish to selling broker. She feels she is saving but what she is really doing is listing with a low producing ie: no experience realtor, ie: failing realtor, ie:realtor who has no clue as to the true market value of her home. She`s alienating the better agents with potentially the best buyers by offering less commish, ie: her home is being boycotted by agents (rightly so I may add) so she can delude herself into thinking she saved money. Many more real life stories like this one boys and girls. I`ve sold over 1000 homes and been on over 10,000 appointments so I have a little insight as to how this works. Selling and buying a house is a learning process guided by a competant realtor (even with the experienced seller). REALRORS SELL HOUSES. WEBSITES DO NOT!

 

[Rickson9]

QUOTE (luckyluciano @ Oct 2 2010, 09:46 PM) Let`s not be naïve. This type of ruling has existed in the U.S. For several years....not much has changed.....business as usual. The only persons who truly benefits here are the brokers who want to push their failing business models. Realty sellers who started much of this has a lawsuit at stake. The sold tons of homes at massively discounted commissions and still closed shop because of a lack of something obvious. It`s called PROFIT! Here they get to list you for a fee......take your money for doing nothing....and throw you to the wolves.....the buyers agent working for the buyer. Discount brokers have been listing homes on our MLS for flat fees for years.....only difference is they were resposible and working on your behalf. Now....those that choose the discount route will still pay and receive no service or reprentation for it. Big deal! LOL.

PEOPLE SELL REAL ESTATE NOT WEBSITES. What the CB proposes sounds sweet, until you actually SELL real estate like I do. Then you realize how much time, work, dedication, commitment is involved. Without those characteristics....you fail.

I just lost a listing to a discount broker using the new rules....she unknowingly underpriceced her home by $25,000, offered 1.5% commish to selling broker. She feels she is saving but what she is really doing is listing with a low producing ie: no experience realtor, ie: failing realtor, ie:realtor who has no clue as to the true market value of her home. She`s alienating the better agents with potentially the best buyers by offering less commish, ie: her home is being boycotted by agents (rightly so I may add) so she can delude herself into thinking she saved money. Many more real life stories like this one boys and girls. I`ve sold over 1000 homes and been on over 10,000 appointments so I have a little insight as to how this works. Selling and buying a house is a learning process guided by a competant realtor (even with the experienced seller). REALRORS SELL HOUSES. WEBSITES DO NOT!

If websites don`t sell real estate why are you upset? The changes shouldn`t make any difference to you then.

 

[wealthyboomer]

QUOTE (luckyluciano @ Oct 2 2010, 07:46 PM) Let`s not be naïve. This type of ruling has existed in the U.S. For several years....not much has changed.....business as usual. The only persons who truly benefits here are the brokers who want to push their failing business models. Realty sellers who started much of this has a lawsuit at stake. The sold tons of homes at massively discounted commissions and still closed shop because of a lack of something obvious. It`s called PROFIT! Here they get to list you for a fee......take your money for doing nothing....and throw you to the wolves.....the buyers agent working for the buyer. Discount brokers have been listing homes on our MLS for flat fees for years.....only difference is they were resposible and working on your behalf. Now....those that choose the discount route will still pay and receive no service or reprentation for it. Big deal! LOL.

PEOPLE SELL REAL ESTATE NOT WEBSITES. What the CB proposes sounds sweet, until you actually SELL real estate like I do. Then you realize how much time, work, dedication, commitment is involved. Without those characteristics....you fail.

I just lost a listing to a discount broker using the new rules....she unknowingly underpriceced her home by $25,000, offered 1.5% commish to selling broker. She feels she is saving but what she is really doing is listing with a low producing ie: no experience realtor, ie: failing realtor, ie:realtor who has no clue as to the true market value of her home. She`s alienating the better agents with potentially the best buyers by offering less commish, ie: her home is being boycotted by agents (rightly so I may add) so she can delude herself into thinking she saved money. Many more real life stories like this one boys and girls. I`ve sold over 1000 homes and been on over 10,000 appointments so I have a little insight as to how this works. Selling and buying a house is a learning process guided by a competant realtor (even with the experienced seller). REALRORS SELL HOUSES. WEBSITES DO NOT!
How were all the FSBO (FSBO companies control 30% of the Alberta market, according to a B.C.Realtor) able to sell without using a realtor, or by paying a low commission to the buyers agent? Their advertising exposure was website, signs, etc.
And as far as agents `boycotting` certain listings, well welcome to your violation of both your Realtor Business Code & the CB Law!

 

[gwasser]

QUOTE (wealthyboomer @ Oct 2 2010, 08:43 PM) How were all the FSBO (FSBO companies control 30% of the Alberta market, according to a B.C.Realtor) able to sell without using a realtor, or by paying a low commission to the buyers agent? Their advertising exposure was website, signs, etc.
And as far as agents `boycotting` certain listings, well welcome to your violation of both your Realtor Business Code & the CB Law!

I would advice my clients against buying such listings because of the quality of the listing data and my accountability as the buyer`s Realtor towards the buyer. Also the liability of negotiating with an inexperienced seller who later claims that the Realtor took advantage of his/her inexperience when acting in the best interest of the Realtor`s client will probably lead to a lot of court cases. How about the first time seller who doesn`t know the true value of a property or a starting REIN investor or an old Lady or any mentally not that agile seller representing themselves against an experienced Realtor or a predator investor?

Your obsession with commissions is just that an obsession. You get what you pay for, as always. As to violating the code of ethics by not going after lower paying commission properties, that is B.S. These days, buyers agree in the exclusive buyers/brokerage contract that they will make up for any shortfall in commission. So what you think you save on the purchase price you pay anyway as a supplemental commission.

Now you have also the situation of the actual services provided. For many seeing a discount brokerage sign on someone`s front yard will soon become a warning sign rather than a sign to attract buyers. And of course, if you do waive the `other services` and later you change your mind, you likely ending up paying more then when you took the whole package as one.

At the surface this may look like a good thing and that may be the case for an experienced investor. But for the consumer in general this is Pandora`s box. There is now a whole lot less protection and a lot more misinformation for them to deal with. I just hope that this ends as Thomas Beyer suggested, i.e. it sizzles out but somehow I doubt that very much.

This is the same as discount brokerages in the stock market where so many REIN members have so many traumatic experiences. For experienced investors such as myself it is great. But how many lost their shirts because they have no access to a reliable full service broker? The only difference is that in the stock market you can start small while in real estate there is no small - only big and a lot bigger.

 

[housingrental]

20% ?
Who the agent with high fee brokerage who sells 1 house a year?
There are many options for agents that offer 50-80+% to agent + minimal fees

QUOTE (Berubeland @ Oct 2 2010, 09:27 AM) I`m not sure if all are aware that the original complaint against CREA was from a Discount Broker who had his MLS access terminated for posting all active listings on his website regardless of agent/broker. That broker had to shut down his brokerage and has won 1 civil lawsuit against CREA for damaging/ending his business and has settled? another.

Also I think that that CREA was subject to a lot of internal pressure as a bunch more of the main brokers were thinking of opening another site to compete with Realtor.ca (which is a very poor source of information compared to the MLS.ca from before)

Additionally the FSBO`s have merged/been acquired and have their own site now, which is much better.

This is so relevant in today`s market about 60% of people start their search online with this number only increasing going forward.

So everyone that thinks that this case is about lower fees is horribly wrong, it`s about realtor vs realtor.

As for my opinion on CREA, I think they are a bunch of parasites. Agents do work hard and try to do a good job and between their broker and CREA and their local RE board fees, they have a very difficult time of it. They are just as victimized or more by these organizations, there is no way for them to earn a living and lower fees too. The agent sees as little as 20% of the total commission in their pocket and then pays desk fees, phone fees, logo on business card fees and tons of other fees designed to separate them from their money earned. It`s ridiculous.

 

[housingrental]

This is the same as discount brokerages in the stock market where so many REIN members have so many traumatic experiences. For experienced investors such as myself it is great. But how many lost their shirts because they have no access to a reliable full service broker? The only difference is that in the stock market you can start small while in real estate there is no small - only big and a lot bigger.



Hi Godfried - How many full service brokers have produced that much added value after fees vs something like E-trade? For most investors.. few....

How many real estate investors who have a building, know its worth, decide to list it for worth + X%, etc.. are going to be worse off paying a reducing selling agent fee? Very few I`d guess...

 

[Berubeland]

QUOTE (housingrental @ Oct 3 2010, 10:37 AM) 20% ?
Who the agent with high fee brokerage who sells 1 house a year?
There are many options for agents that offer 50-80+% to agent + minimal fees

No, first of all the listing agent will usually split 50/50 with the other selling agent

Then each agent will split with the broker. So the high commission is being split 4 ways. All of a sudden the agents we love to hate so much for making a $20,000 commission actually only made $5000 or less depending on the commission split with their broker minus their business expenses.

As for Luciano`s post above... Realty Sellers was put out of business by CREA because their access to the MLS was terminated not because of lack of profit. Realty Sellers was the original complainant to The Competition Bureau. Agent vs Agent. The owner of Realty Sellers turned around and bought Chestnut Park Realty after he won the first civil lawsuit against CREA. He has another case against CREA as well.

 

[gwasser]

QUOTE (housingrental @ Oct 3 2010, 11:43 AM)

Hi Godfried - How many full service brokers have produced that much added value after fees vs something like E-trade? For most investors.. few....

After 30 years or so of investing I use both a discount and a full service broker. My full service broker is not always right in his recommendations or proposed actions. But overall he has proven his worth to me on many occasions. He made some good calls, but even more important, he kept me from many blunders (and did not get commissions for that). If he wasn`t there I would be significantly worse off.

A lot of this discussion is based on anger towards having to pay other people their dues. Yes there are bad Realtors, stock brokers, lawyers, property managers that are not worth their salt. But there also are many good once who have proven their value over and over again.

It is good to be cost-conscious but it is not good to blame other people for your poor investment experiences. Afterall, you the investor makes the final decision and you will be the one reaping the results including commission costs. I can tell you reading some of the posters here that with the attitude displayed on this forum I would not touch them with a 20 foot pole. They can go and abuse another realtor, preferably a discount realtor. As Lucky Luciano and many others pointed out at nausea, you get what you pay for.

 

[DaveRhydderch]

I, as a Realtor, am actually excited for these changes. I find myself ranting more and more against some of the bigger name Realtors. They simply don`t do that good of a job to justify what they make. More importantly, they don`t do their job well enough.

They`ll always be a place for Realtors with buyers. Buyers require time and effort, so for anyone who does sell by themselves, I still recommend paying full fees to buying Realtors.

Ultimately I see this affecting the selling side more. Realtors can only do so much to market a property. Websites don`t sell houses. People don`t sell houses. The house sells the house. Websites and people merely MARKET the house.

I will embrace the change, and will offer a cost structure to people depending on what they want. I`m already planning how I`ll protect myself where necessary. I`ll be honest that my primary concern is that discount anything comes with a bad reputation.

 

[Luong98]

QUOTE (DaveRhydderch @ Oct 3 2010, 02:07 PM) I, as a Realtor, am actually excited for these changes. I find myself ranting more and more against some of the bigger name Realtors. They simply don`t do that good of a job to justify what they make. More importantly, they don`t do their job well enough.

Well said. I don`t see the discount brokerages taking any real market share. A business model based primarily on pricing will lose at the end. Look at Rogers offering Chatr to compete with Wind Mobile. This change will simply change the quality of service that most REALTORS will offer. Instead of just the status quo, most will have to adapt to justify their worth or lose out to a discount brokerage. Which means, REALTORS really have to offer "real" services, take continual education and weed out the p/t REALTORS.

 

[Rickson9]

Similar data should be culled from various locations in the Canadian market. I think it would be interesting to discuss. Speaking for myself, I find it hard to believe that information asymmetry doesn`t exist here.

"The best way to observe information asymmetry at work is to measure how an expert treats you versus how he performs the same service for himself. Real estate provides the perfect opportunity, since housing sales are a matter of public record, and real estate agents often do sell their own homes. Recent data covering the sale of nearly 100,000 houses in suburban Chicago show that more than 3,000 of those houses were owned by agents.

"There`s one way to find out: measure the difference between the sales data for houses that belong to real estate agents themselves and the houses they sold on behalf of clients. Using the information from those 100,000 Chicago homes, and controlling for any number of variables - location, age and quality of the house, aesthetics, and so on - it turns out an agent keeps her own home on the market an average of 10 days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she pushes you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and make them fast. Why not? Her share of a better offer - $150 - is too puny an incentive to encourage her to do otherwise. So her job is to convince you that a $300,000 offer is in fact very good, even generous, and one that only a fool would refuse."

http://www.wired.com/wired/archive/13.05/realestate.html

 

[Thomas Beyer]

QUOTE (luckyluciano @ Oct 2 2010, 06:46 PM) .. REALTORS SELL HOUSES. WEBSITES DO NOT!
Indeed ..

If you feed peanuts .. you get monkeys !

Usually you get what you paid for !

 

[Lucas]

Good post...interesting data.

Thanks,

Lucas


QUOTE (Rickson9 @ Oct 3 2010, 02:57 PM) Similar data should be culled from various locations in the Canadian market. I think it would be interesting to discuss. Speaking for myself, I find it hard to believe that information asymmetry doesn`t exist here.

"The best way to observe information asymmetry at work is to measure how an expert treats you versus how he performs the same service for himself. Real estate provides the perfect opportunity, since housing sales are a matter of public record, and real estate agents often do sell their own homes. Recent data covering the sale of nearly 100,000 houses in suburban Chicago show that more than 3,000 of those houses were owned by agents.

"There`s one way to find out: measure the difference between the sales data for houses that belong to real estate agents themselves and the houses they sold on behalf of clients. Using the information from those 100,000 Chicago homes, and controlling for any number of variables - location, age and quality of the house, aesthetics, and so on - it turns out an agent keeps her own home on the market an average of 10 days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she pushes you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and make them fast. Why not? Her share of a better offer - $150 - is too puny an incentive to encourage her to do otherwise. So her job is to convince you that a $300,000 offer is in fact very good, even generous, and one that only a fool would refuse."

http://www.wired.com/wired/archive/13.05/realestate.html

 

[wealthyboomer]

QUOTE (gwasser @ Oct 3 2010, 01:10 PM) As Lucky Luciano and many others pointed out at nausea, you get what you pay for.Of course you get what you pay for....you don`t pay until AFTER the sale! The SALE is what you wanted, regardless of the fee/commission!

 

[bizaro86]

QUOTE (DaveRhydderch @ Oct 3 2010, 02:07 PM) I, as a Realtor, am actually excited for these changes. I find myself ranting more and more against some of the bigger name Realtors. They simply don`t do that good of a job to justify what they make. More importantly, they don`t do their job well enough.

They`ll always be a place for Realtors with buyers. Buyers require time and effort, so for anyone who does sell by themselves, I still recommend paying full fees to buying Realtors.

Ultimately I see this affecting the selling side more. Realtors can only do so much to market a property. Websites don`t sell houses. People don`t sell houses. The house sells the house. Websites and people merely MARKET the house.

I will embrace the change, and will offer a cost structure to people depending on what they want. I`m already planning how I`ll protect myself where necessary. I`ll be honest that my primary concern is that discount anything comes with a bad reputation.

This is absolutely the side of the business that will see changes. In the old days, a Realtor might have to put ads in the newspaper, and the local glossy real estate magazine for each listing. Now with buyers able to search mls.ca and get automatic email updates, that expense is largely unnecessary. So the selling agent`s commission could fairly come down. Alternatively, being a buyer`s agent hasn`t gotten any easier. Buyers (first-time and otherwise) will still want to drive around and look at a bunch of houses. It`s not like gasoline and nice cars have gotten any cheaper.

Michael

 

[RedlineBrett]

Not sure why this tread continued much past Thomas`s post

"On the new rules / MLS: even up to now fees were negotiable and low fee realtors existed, as did FSBO`s. Thus, I expect little substantial changes, as both FSBO`s and low commission realtors did NOT do very well and captured maybe 10% (at best) of the total market.

Good realtors and firms that can deliver will thrive, as before .. and firms that cut their costs to the bones will not as they`ll starve themselves !

Expect to pay around 2.5 to 3% to sell a home .. more % wise if a cheap home/condo (say below 150K) and slightly less %-wise if high priced, say over 500K .. JUST LIKE TODAY !! "

Cheap listing fees have been offered by agents for quite some time. I would love to know how many of the `anti realtor` crowd have taken a listing presentation lately. I think they`d be surprised to see that 7/3 or 5% flat has gone the way of the dodo.

A great many brokerages have moved to a `cost plus` model for listings. So they reduce their risk by actually charging their costs to sellers and then adding a bonus on when they get the property sold. You will see more and more of this now but it`s nothing new. Are you a proud seller that wants to list your property for 10% more than it`s worth to `test the waters` because `it only takes one buyer`? Well that won`t be free anymore. You`ll either cover the brokerages costs now or they won`t agree to take the risk without a nice carrot at the end (IE a % fee structure similar to what they are now).

What pops the eyes of many sellers is the fee paid to the brokerage that brings a qualified buyer to the table. Working the buyer side is a completely different beast and buyers can easily be 3x-4x the amount of work when compared to selling. The industry has `standardized` commission offerings to buyers agents so that a buyer agent knows they are getting paid regardless of what house their client ultimately chooses. This may change now, and for sellers that refuse to offer solid buyers agent comissions well this cost simply gets passed onto the buyer and worked into the overall value proposition of your offering to them.

I tell buyers I work for $X, if the seller / seller`s brokerage is only offering ($X-$5,000) then you have to top me up the $5,000. We treat that like any other expense related to the property (be it an outdated kitchen or a roof that needs replacing etc.) and we factor it into our offer. I can trim my commission off just about any asking price so as long as there is a difference between list prices and sold prices I`ll never worry about getting paid.

The end result of changing the playing feild and the proliferation of discount brokerages, sellers representing themselves on MLS + more FSBO sites will only complicate the process and make someone with true expertise all the more valuable. Wait for the inevitable stories of joe consumer getting screwed when they tried to DIY and those brokerages that offer value will steal back much more market share than they`ll lose.

 

[housingrental]

Sure but this is of total comission offered on property which your other wording didn`t imply... so if 2.5% buyer agent commision buyer agent gets that less broker split + there costs - what I`m trying to write is there many cheaper options for broker fees where agent takes much higher portion of comission QUOTE (Berubeland @ Oct 3 2010, 02:23 PM) No, first of all the listing agent will usually split 50/50 with the other selling agent

Then each agent will split with the broker. So the high commission is being split 4 ways. All of a sudden the agents we love to hate so much for making a $20,000 commission actually only made $5000 or less depending on the commission split with their broker minus their business expenses.

As for Luciano`s post above... Realty Sellers was put out of business by CREA because their access to the MLS was terminated not because of lack of profit. Realty Sellers was the original complainant to The Competition Bureau. Agent vs Agent. The owner of Realty Sellers turned around and bought Chestnut Park Realty after he won the first civil lawsuit against CREA. He has another case against CREA as well.

 

[wealthyboomer]

An interesting point about our Canadian Real Estate, written by an Australian Lawyer:Where the buyer’s agent gets paid only if the deal goes through, makes more commission the more his or her client pays, and gets paid by the party that he or she is negotiating against, is rife with conflicts of interest. The Canadian system facilitates collusion because it creates a situation where it is always in both agents’ interest to get a sale at any price.

 

[RedlineBrett]

QUOTE (wealthyboomer @ Oct 4 2010, 04:37 PM) An interesting point about our Canadian Real Estate, written by an Australian Lawyer:Where the buyer`s agent gets paid only if the deal goes through, makes more commission the more his or her client pays, and gets paid by the party that he or she is negotiating against, is rife with conflicts of interest. The Canadian system facilitates collusion because it creates a situation where it is always in both agents` interest to get a sale at any price.


I have heard this claim before, from my own brother actually

Not sure how it works in other countries but this is how it works in many parts of the USA in addition to Canada.

In Alberta, the buyers must sign a `renumeration disclosure` document where they acknowledge how the buyer`s agent is to be compensated. Realtors need to disclose that even though they have a single agency relationship with their buyer that they are being compensated by the seller`s brokerage. Most buyers are thrilled that they don`t have to cut a seperate cheque to their realtor and are happy to sign the document regardless of the price they`re about to pay.

Commission arragements are and always have been negotiable. If buyers would like to provide an incentive to their agents to get a better price then they are free to offer any arrangement they see fit.