Percentage Change: The Commission Game, by Tara Perkins, a real estate reporter with Globe and Mail, was interesting to read, mainly because it had a good mix of fact and fantasy. Published on 25 May 2013 as a cover story in the printed business section, it discusses real estate commissions. (http://bit.ly/Z7ib7j)
According to Perkins, “technology has failed to snap consumers out of their complacency”. Perhaps what seems complacency is actually a real, need driven service that the consumers are seeking out. Real estate transactions are increasingly complex than ever before. Take it from me, an industry insider and a Real Estate Broker. A simple measure of this complexity are the real estate forms. They used to be much simpler and involved a lot less legalese. The standard form alone now is 5 pages long. Add a few pages of clauses to that and you are dealing with a pretty hefty document. I haven’t even discussed all the legal papers required before even getting to the offer stage.
But let’s just say that a real estate sale was as easy as adopting the technology. The Internet part merely gets the buyers and sellers the information on the real estate out there. One still has to safely navigate the procedures set out for selling and buying houses, which by the way are not dictated by REALTORs but are dictated by the laws of the country. Between spousal consents and terrorist financing, real estate sale is not as easy as browsing the Internet.
Yes there has been a lot of talk about the Competition Bureau, at the expense of taxpayers’ money, trying to accomplish whatever they were trying to accomplish. I wrote the previous line like that because I really fail to see, what is so anti-competitive about real estate commissions from a consumer’s perspective. The choices available to the average home seller or home buyer are endless. You don’t have to believe me. Just get a real estate license and then try and go out and get a listing. You will very quickly realize how much competition is out there, within the real estate community itself. There are REALTORs providing options from low commissions, to buyer discounts, to added incentives in addition to charging less commission. Here as well, just like anything else, the age old wisdom of ‘You Get What You Pay For’ applies.
There are a lot of flat fee, ‘mere posting’ services out there. This would be where the seller pays few hundred dollars to post their property on Multiple Listing Service (MLS) and then fields the calls for appointments, open houses, offers etc. These programs work or not will depend upon who you ask. Several companies started out on similar fee structure and have since closed down. Realistically, if these kinds of programs worked, then don’t you think that companies like Century 21, Royal LePage, ReMax etc. would have them?
I am not a national level REALTOR. No individual is, as there is no such thing. I provide powerful local focus with a global perspective, within the Greater Toronto Area (GTA). So when discussing market, I stick with GTA and what is happening here.
Every newspaper and media outlet seems to be having a field day with the housing prices and how they have risen, supposedly at an astonishing speed. Does anyone stop to wonder why that is happening? Perhaps GTA’s population should be an indicator. According to one source, Canadian baby boomers added a little more than 400,000 people to the Canadian population. We have seen the same growth in population of Southern Ontario in little over 3 years that the baby boomers gave us in almost 19 years over the entire country. Look at the current vacancy rates in Toronto and you will see how people are flocking to rent while there are virtually no vacant condos out there. All these tenants are potential buyers and they will buy as soon as they can qualify for a mortgage. Where do you think the prices will go then, up or down?
So it seems baseless for Perkins’ article to speculate that the market is going to stay flat, that the sellers are not going to make as much money and somehow that is going to cause a downward push on the real estate commissions. May be real estate commission are, what they are, because the real costs to being a REALTOR are way higher than what meets the eye.
CREA’s consumer education campaign has the right premise, “Why do we think if we can look it up (on the internet, then) we can do it? When it comes to your home, get help, get a REALTOR.”
Formally educated as an Architect, Jagdeep Singh is Toronto REALTOR™ consulting on both resale real estate and new developments. Powerful Local Focus on Real Estate with a Global Perspective™
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