Buying

Our federal body, the Canadian Real Estate Association (CREA), is locking horns with the Competition Bureau about a bunch of nonsense.

Sorry to trivialize things… if you want the full take, here’s a release CREA sent to the local real estate boards… click here.

Basically, the mls.ca site has been under attack for years.  Outside people want in, but it’s built, maintained and delivered by licensed Realtors.  In fact, that’s why the name was changed last year to Realtor.ca.  A large chunk of our multi-thousand-dollar-per-year dues are used to provide this site to the public.

So… people that don’t pay for it want to leverage it.  That’s not fair, plain and simple.

Here’s one reporter’s take on things:

Peter Foster:  Break the CREA cartel

Mr. Foster quotes some pretty interesting figures on real estate compensation.

It’s so funny how everybody thinks we make so much money.

The $20,000 is split between two agents… so on a $400,000 sale, I would make $10,000 plus GST.

At first glance, that’s a lot of money.  Sell 10 homes and that’s a decent year.

The truth is, if I sell 10 homes, I might end up with $20,000 in my pocket when it’s all done, not $100,000.

Here’s what everyone forgets…

Included in that $10,000 is 30% income taxes, 20% to my broker, my marketing costs (which typically hover around $1,500-2,000 per home), and my license, dues, right down to the cost of pens, printer ink and paper.  And some agents will actually work for $4,000 (at 1%) instead of the $10,000!

Where do you think they cut a corner?

Correct answer:  either marketing, or the time they spend.

Every “discount” broker I’ve met fits into one of two categories:  1)  either run-off-their-feet busy, because they’re juggling more volume to make up for their lower fees, or 2)  their ability to sell homes, and their track record are average at best.

When you’re too busy, you make mistakes.  And mistakes are very costly when you are transacting half a million worth of real estate.

It’s simple math.  Lower the fees, and the quality goes down.  In fact, the results often go down further than the fee savings.  I’ve seen some agents charge less and get a good result, but I’d say the success had more to do with luck, or a really good market like we’re seeing now.

Notice all the discount companies wash away when markets shift.  When homes take 3-6 months to sell, the turnover isn’t there for them.

Sure, the Internet has opened opportunities for showcasing inventory… but that’s not where our value belongs.

But if you think the value of what a good real estate agent does is putting a sign up and putting it on MLS, then I feel very sad.  It’s not your fault, it’s our fault.

I have to constantly remind myself that the general public is not to blame when they start attacking real estate agents.

Our industry does a TERRIBLE job of educating the public about what we do.  One of the biggest problems is that it’s too easy to get a license, so the quality of most agents is pretty bad.

Realtors have three licensing courses to take, which combined is the equivalent of less than half a year of college.  And we have just as much responsibility as a lawyer does in the purchase or sale of a home.

I would fully support a beefed-up education system for Realtors.  The barrier to entry would be higher, and the quality of care would go way up.

There would be less part-time agents, and the entire system would get a big injection of quality.

The truth is, right now, when you find a good agent, their advice and help is worth MORE than they charge.  A lot more.

… and unfortunately, those agents are in the minority.

I LOVED when the market slowed down between October and March, because for the first time in years, I could show people there IS a BIG difference in who can sell your home.

A “C”-player can do well in an “A”-market… but when the market is a “C”, you need an “A”-player to get the job done.

Think about it.

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