People will learn very quickly that private sales is not the road to go." Harris used an example of a private seller unknowingly telling a buyer that they could build a second storey to the home when city bylaws wouldn't allow such construction.
I am receiving a flood of comments, messages and article links regarding the new changes to the MLS system. Personally I think its a great day for real estate agents and their customers. Sorry let me rephrase that comment. I think its a great day for some agents. For some other agents its going to be really tough and for some they will leave the business. Agents that devote their full time to their clients, provide great service, have their own referrals and their own system set up and are great people to deal with, will see their client base grow and there will be a need for their service even more in the next few years. The agents that currently provide no service, or are part time agents, do not devote time to their clients and should not be real estate agents will have a very hard time and will last a little bit then they will eventually drop off. There will be some agents through this group that will stay on and will have some success.
I will define the groups above and the reason why I have stated what I have stated. (by the way these views are not the views of Century 21, CREA, MLS, OREA or any organization I'm a part of, they are mine and mine alone)
Group 1: This is the group that right now truly gives their customers the service they want. They provide them with all the necessary tools to sell their house and at price they want. I said that in one sentence but there are countless amount of variables that go into selling your house. It is not just listing it on MLS. I'm not going to list all of the things that great real estate agents do but there are countless number of tasks and variables that go into being a great real estate agent. MLS is a tool for agents but it is not what defines agents. In the article I've linked above they use the example of knowing by laws. This is a huge variable and it is just one of many that agents provide. Let's say you sell the home on your own with no real estate agent. A potential customer comes in and asks you if you are able to extend your house. You say "I don't see a problem with that", thinking sure why not. The house is sold and the summer comes. The buyer now wants to do some construction. They find out you cannot do anything of the sort due to some bylaws. There is a lawsuit. Whether or not the lawsuit is valid. It happens everyday. The new maximum for small claims is $25000. What does the buyer have to loose now? No lawyer involved. This is one example. I could go on forever. If you have a lawyer the sky is the limit. My lawyer friends are loving the new Real Estate changes. Most of them are preparing to buy new boats this summer due to the new flood of incoming lawsuits they expect. They are predicting owners who negotiate and show houses themselves with no insurance to cover them will misrepresent their houses. Even if they do not know it. "Most people don't know the laws and bylaws" (my anonymous lawyer speaking)
Group 2: Clients who do not provide their clients with services but pretend to or are bad agents or just part time agents. First off I have nothing against part time agents. I was one of them. I tried to work part time in the beginning. It did not work at all because I was not providing my clients with top notch service. I had to wait until I got home to provide that service. I realized that to provide my clients with great service I needed to be able to work full time in the profession. If a potential buyer wanted to come see the house during the day and I was at work, I could not allow them to see the house until I finished work. That is not great service and my clients deserved better. I also realized since I became an agent, there were agents that just take listings and sign on the dotted line. They provided no service in between where they should. They convince their clients to take less money, just so they don't have to be bothered in negotiating. They have no time due to all of the listings they are juggling at low rates. I have seen it and have won many negotiations because the other agent just didn't care about protecting their client because the client thought they were saving money in commission. (so they could spare ten thousand in the end). If they cannot protect their income how can they protect the sale price of your house? These agents will have problems due to the increased competition they will now face. Instead of offering low commissions there are going to be offering very low listing prices. How are they going to negotiate no services when they already are not providing their customers with service? They are going to lower their rates even lower. Soon they will realize that there is no point in listing houses for no money when you consider you are paying yourself minimum wage. Minimum wage is great but at least go work for a company that will give you minimum wage and provide you with some benefits and no stress of working 24hrs 7days a week. The point of going into business for yourself is to enjoy the benefits and working with great clients which you can pick and choose. When you work for volume you have to accept everybody. There is no choosing.
My opinion on the new CREA rules and I will go more in depth in the future, it is still very fresh and I want to understand the rules completely and to what extent the changes will be to the Real Estate industry in Canada. I think that it will change the business in that agents who currently provide no services will struggle because there will be more competition and the agents that provide great service will flourish because a lot of people will go to these agents and realize that being a real estate agent is very hard and takes a lot of time. After a lot of law suits and horror stories people will realize that we do a lot of work and provide a great service. Some people will sell their houses. I'm not saying they will not. There will be some success stories through the grape vine during the BBQ months. "Hey I sold my house all by myself" That is what you will hear, "it was easy". They will not tell you about the waste of time Toms that came last week, or the people that came into the house that you thought were very scary and probably didn't want to buy a house but just wanted to look at it before coming back to burglarize it. How do you feel about giving your number out to strangers? They won't tell you about the 30 people that called and didn't even qualify for a mortgage. I could go on forever. Hey if these new rules make it that agents cannot make a living people want to sell their houses by themselves and want to quit their jobs for a few months then hey that is OK too. I do not believe this will come to pass. I believe that people paying for full service agents will appreciate their agent who sold their house quickly and did a phenomenal job in marketing, sales and negotiating. After hearing a few horror stories this Christmas people who are not agents will understand that they like their own jobs and that buying a sign and putting a listing on MLS is not the end all to selling a home.
This blog was written by Ernie Arrizza