Sunday, October 24, 2010

CREA ratifies deal with Competition Bureau

H/T to Animal Spirit for the link.

Here's what we know:
  • Very little. 
  • No details.
  • CREA says this deal exonerates any claims by the Competition Bureau that previous methods of managing the MLS were anti-competitive.
  • Competition Bureau says consumers will be able to pay for "what they want" on a case by case basis rather than be forced to purchase a suite of services for a set commission rate - although it's unclear how this will be accomplished.
Here's what we don't know:
  • If Victoria REALTORS® will adopt new fee-for-service business models or simply maintain their current commission-based models.
I think we'll see changes, slowly. I think the establishment will fight these changes bitterly. I expect that many consumers will be very confused because of what individual REALTORS® will be telling them regarding their commissions and cooperating brokerage commissions etc. I expect the VREB to be very quiet on this and maintain the status quo in terms of communication:
"Victoria has a diverse and competitive marketplace, it's business as usual here."
If any REALTOR® out there wants to weigh in on this issue on this site, I'll be happy to post blog posts with links on your behalf. Email me, the link is in the right column. Keep in mind, we're advocates for change here, so we'd love to tell readers of HHV how they can get the best deal on real estate services.

October 25 update: CREA and Canadian Competition Bureau deal is ratified.

Full text here
BNN coverage
Comments by Royal LePage
Comments by head of Comp. Bureau

13 comments:

mrmike said...

Wheeeeeeeeee!
Realtors will be back flipping burgers or cutting hair.

About time!

Marko said...

I will personally add a "mere listing" option to my list of listing services this week. Now the question comes up, what do you put as the Coop Brok Fee?

I think the majority of the business will always be commission based; however, at least the consumer has more options now and there is a new market to be tapped.

mrmike said...

ya, commission based like the brick or perhaps,future shop.
Good thing you offer 75% cash back!
Others had better follow in this new market to be tapped.

Marko said...

1. With most buyers agents not doing any real work anymore (other than filling out the offer papers), there can be significant benefit with dealing directy with the listing agent. It increases the room for comission reductions in your negotiations and makes you a more important buyer (than other clients who have a buyers agent that is getting part of the selling agents pie).

This is an approach that can be used by intelligent and savvy buyers that understand commissions, home construction, renovation costs, zoning, permits, etc. I would not recommend this for the average Joe - in my short time I have seen many people get burned with this approach. Secondly, there is no guarantee that the listing Realtor will reduce his commission. Infact, the majority will not.

2. Always view the home with the selling agent present. This will give you an opportunity to understand who you are dealing with (is the agent a shark, a genuine nice person, a deal-maker?), and will allow you to get good answers to specific questions about the home, buyers motivation, previous sales, etc.

I don't really see the advantage in this. Questions you have answered about the home will have a subjective bias, after all he or she is working for the seller, and is working to sell the home. While a buyer's agent also wants to sell you something, I would hope he or she would be more objective with the buyer.

, 3. Whether with a buying agent or not, always present your offer in person with both the real estate agent and sellers present. If after you make your in-person offer they say they need time, tell them you can go into the other room while they talk, but that if you physically leave, your offer goes with you. This reduces the the ability of a realtors to generate a bid war by contacting other potential buyers, adds seriousness to your offer, and allows you to see and understand the people that are selling the house and negotiate accordingly.

Works in theory; however, part of the reason people hire a Realtor is so they don't have to get involved in face to face negotiations. I love face to face negotiations, most sellers will refuse this approach.

4. Before making your offer, discuss openly what your thoughts are about the house without offending the seller or the agent (can be tricky if you are not very smooth, this can be a good spot for a skiller buyers agent if you are a bit of a bull in a china shop). Talk about what you would like to do, fix up, how much you are able to spend, etc. This will personalize your offer, and reduce the shock of the seller only seeing a price that seems low.

Sorry, but the reality of life is no one cares about how much you are able to spend.

Getting an estimate of how much it would cost to reno the house or repair something can be a good idea and is effective sometimes so worth trying. Problem is most homes in the core are in poor shape and the sellers know this, so you $100,000 reno estimate doesn't really change much.

Al said...

Victoria already has agents who do the "mere listing" for a while (2 years or more). The one we knew charges $500 fee for listing on mls.

happy renter said...

I really strongly considered a "mere listing" option when selling my condo, but in the end I chose against it because I just didn't have the time to show the place myself (ie., field the calls about viewings and be home to let people in). I weighed the convenience of hiring a realtor vs. the cost of hiring a realtor, and for me, right now, I decided that I could part with the cash. What I did do, though, was really, really negotiate the realtor's fees. Things are slow enough right now that people are absolutely willing to cut you a deal.

Just Jack said...

Real estate boards and real estate companies sponsor a lot of public events. Lower income means lower participation.


Be careful of what you wish for - you just might get it.

Marko said...

Month-to-Date Market Statistics
Posted by
Oct 25 2010
Monday, October 25, 2010 8:00:

MTD October
2010 2009
Net Unconditional Sales: 360 742
New Listings: 786
1,067
Active Listings: 3,980 3,219

Please Note

Left Column: stats so far this month
Right Column: stats for the entire month from last year

Mindset said...
This comment has been removed by the author.
Mindset said...

Marko said: there is no guarantee that the listing Realtor will reduce his commission. Infact, the majority will not.

True, but dealing directly with the sellers agent still makes you the more important buyer to the seller (they still get a bigger commission and handle the whole deal). They will be more likely to reduce comissions, unless already offering a low fee like yourself.

Marko said: I don't really see the advantage in 'viewing the home with the selling agent present'

The main benefit is to know who you are dealing with, and to get a chance to talk to the 'source' yourself. Information is power.

Marko said: most sellers will refuse this approach (face to face meeting)

Wasn't too long ago that sellers would refuse a home inspection.... wasn't it? A face to face is still something to aim for here. I can't imagine any negotiation as important as buying most peoples single largest asset being left to email or phone communications with a window for the sellers agent to create bid wars. IMO, the reason people don't discuss offers face to face anymore is laziness and a brokerage mentality to buying and selling homes.

Marko said: Sorry, but the reality of life is no one cares about how much you are able to spend.

Hmmm. pretty black/white answer there. This really depends on the seller doesn't it? And sitting across from them would let you know what kind of people they are and where they stand? No? Contextual information always helps two sides understand each other, and provides much better information than just price alone (shouldn't this be a negotiation between the interested parties?).

The power of contextual information is the reason presidents always start with the information that surrounds/supports a decision and build up to the main point.

I would also argue that no one cared about the buyers position in the recent past because it was a sellers market.... With power shifts to the buyer, there will be a shift of sellers willingness to hear out a buyer.

Good points though Marko. Thanks for the feedback.

Marko said...

True, but dealing directly with the sellers agent still makes you the more important buyer to the seller (they still get a bigger commission and handle the whole deal). They will be more likely to reduce comissions, unless already offering a low fee like yourself.

I agree and your potential to get the best price is via this method; however, so is the potential that you miss something important and seriously get screwed over. So, it is a toss up. If I didn't have my license I would use the method exclusively, but I don't recommend it.

Wasn't too long ago that sellers would refuse a home inspection.... wasn't it? A face to face is still something to aim for here. I can't imagine any negotiation as important as buying most peoples single largest asset being left to email or phone communications with a window for the sellers agent to create bid wars. IMO, the reason people don't discuss offers face to face anymore is laziness and a brokerage mentality to buying and selling homes.

I personally like face to face negotiations, primarily because with new homes you really want to know who you are selling to with the 2-5-10 warranty.

IMO, it isn't just brokerage laziness, our society has changed as well. Most families are now two busy working professionals so getting 4 busy people together face to face can be a challenge.

Also I know from personal experience selling new homes with my old man that if someone tries to give us an ultimatum "take this price or we walk" during face to face negotiations this has just irritated us and we have rejected it, only for the buyer to come back later and pay a higher price than we would have originally settled for if they had been reasonable during negotiations and given us some time to think about it. There are not as many desperate sellers out there as people think; however, a decent Realtor should be able to pick up some clues to determine the extent of the motivation.

Mindset said...

Marko said: Also I know from personal experience selling new homes with my old man that if someone tries to give us an ultimatum "take this price or we walk"

There was no 'take this price or we walk' here.... just a 'you can negotiate with me here and we can discuss a fair price, but if I leave, my offer goes with me, and we will have to draw up a new offer if you would like to talk again'

Other than that, good points though Marko.

The 'brokerage model laziness' I mention is personal experience. We had a buyers agent put our offer in by email (or was it fax), and only talk to the selling agent and us by phone during the deal.

I've owned my own businesses and been in complex sales/negotiations my whole life, and with the amount of money potentially changing hands for the Oak Bay home I was interested in, the email/phone approach of our buyers agent was ridiculously uneducated and lazy.

My experienced friend (who gave me the tips) in real estate couldn't believe how our buyers agent handled it. Almost made him want to pull out of retirement to kick some @$$ on all the bubble market agents out there that don't understand the complexities of buying/selling the largest asset most people will ever own.

totoro said...

You can already list on realtor.ca for $109. This is a national service so available to us now.

You don't have to pay ANY commissions to anyone unless you choose to do so. See: http://www.bestvalue.biz/

You can pay a commission if you wish to attract more realtors. At some point I'm going to try to do it without offering a commission and I expect it will be more successful than craigslist or FSBO.