Monday, October 25, 2010

Monday market update

MLS numbers courtesy of the VREB via Marko Juras.

Month to date October 2010 (last week's totals in brackets)
Net Unconditional Sales: 360 (251)
New Listings: 786 (539)
Active Listings: 3,980 (3,963) 

October 2009 totals
Net Unconditional Sales: 742
New Listings: 1,067
Active Listings: 3,219 

New inventory is only slightly outstripping sales (109 sales in the past 7 days versus 247 listings). Active listings are up slightly, although expect the end of month listings dump to bring this number down by a couple of hundred or more. Unless we have a very busy next 6 days, October 2010 numbers will be very close to September 2010 sales volumes. I expect the reported sales to surpass 400, perhaps even reach 450 - which will be celebrated by the usual suspects as "Sales jump by 13%!"

SFD average price is currently $615,112. Marko provides us with these numbers for original list ($683,380), revised prices ($638,634) and final sale prices ($615,112) which suggest vendors are still pricing their units almost 10% above market value when they first hit the market. If you're out there shopping, perhaps this is the kind of discount you should be negotiating.

90 comments:

Marko said...

SFD for the month

Price Original - $683,380
Price List - $638,634
Price Sold - $615,112

However, over the weekend I did see a number of places go for full asking price.

Marko

Alexandrahere said...

Good Monday morning to everyone.

Here are my stats for last week 18 Oct - 24 Oct.

SFH: Price range: 325K-775K, min 2 beds and 2 baths.

Areas: Victoria, Oak Bay, Esquimalt, Saanich East and Saanich West.

NEW: 32
SOLD: 11
P/C: 33
OM: 5

Average original asking price:$574,818

Average selling price: $547,182 or 95.2% of the original asking price.

Condos'

Priced from $260K - 625K
Min 2 beds
Areas: Victoria: Most (not downtown)
Oak Bay: All
Esquimalt: All
Saanich East: Most areas
Saanich West: Tillicum, Gorge and Interurban.

NEW: 20
SOLD: 11 Apts & 2 townhouses
P/C: 17
OM: 3

Average apt condo sold for $352,272 or 89.2% of original asking price.

Two townhouses sold; one for $308K down from 335K and the other sold for 432K down from $440K.

Looks like inventory must have increased this week.

HouseHuntVictoria said...

For people interested in the CREA/Comp.Bureau agreement:

Full text agreement

BNN coverage

Phil Soper's comments

HouseHuntVictoria said...

Melanie Aitken's comments are on the home page of BNN (Comp. Commissioner)

happy renter said...

To continue the discussion on commission fees, etc. from the previous thread...

I didn't know about Marko's services when I signed up to sell my place, but I did get my realtor down from 6%/3% to 4.5%/2% commission. I did that by saying that I was willing to put my place on the market right at market value, ensuring a pretty guaranteed sale. I also made it clear that just listing the place on MLS was another option for me that I'd quite seriously take if commission was just too high. If the realtor doesn't want to take a cut in commission he/she doesn't have to, but then he/she also won't get a listing. The market is getting tight enough now that I think there's a lot of room for negotiation.

Bubble 'n Fizz(le) said...

With most buyers agents not doing any real work anymore (other than filling out the offer papers) ...

This comment is a sure sign you've never actually bought a house before. In my experience it is the buyer's agent who does most of the work--driving clients to view houses, researching comps, sifting through listings to isolate ones that the clients might be interested in. etc. The seller's agent just sits back and waits--there really isn't much to do. For every property I've purchased I've taken up at least a full week (and sometimes more) of my agent's time searching for and viewing places. Executing the close of escrow typically takes another full day equivalent or so, what with inspections and other contingencies.

Just Jack said...

Most of the readers on this blog may be asking themselves when is this market going to correct. If you're stumbling over that question, then you're not looking in the right places. Because the market is correcting - it just hasn't gotten to your neighborhood.

Take the Malahat area for example. There are 192 properties listed with only 13 sales in the last month. That's 15 months of inventory. Sale volumes have dropped so low, that the market is now shallow and dysfunctional.

Which causes anomalies like:

In Shawnigan lake, a recent sale at $362,900 which sold in August of 2007 for $377,900.

Or a recent sale in Cobble Hill, at $449,000 but sold in August 2006 for $470,000.

Both of these areas where "hot" areas of selling, now, at 15 months of inventory, they appear to be teetering on collapse.

But that can't happen here - or can it.

North Saanich has 110 properties listed but only 6 sold in the last 30 days.

So you get a recent sale on Chalet at $1,865,000 which sold previously (over five years ago) in May 2005 for $1,735,000.

The same thing is happening in the Gulf Islands and Port Renfrew.

So for home owners in these areas, they know what deflation is, as there home values are rolling back four and five years to that of 2005 and 2006 levels. And the trend is for more price deflation.

Today, a typical house in the urban core municipalities costs $578,000.

In 2006 it was $480,000
In 2005 it was $448,000

A 17 to 22 percent drop in City home prices would be just a simple market correction for Victoria.

Now if you had bought in the last five years your entire home equity is about to disappear. Tsur Sommerville and Cameron Muir might not call this a bubble burst as isn't a large drop over an extremely short time period and people are still buying on the way down.

But if you bought in the last few years - who cares what you call it, as most will have been financially wiped out.

happy renter said...

The "easy" money in real estate is definitely in the listing end of things. My realtor signed me up and then just had her office call me to schedule viewings. I never even saw her again until I signed the offer that eventually came through. When a realtor is dealing with buyers, on the other hand, there's potentially a lot of time that goes into taking them to see various places, etc..

Waiting said...

My experience has been different. When I sold my house in Vancouver my listing realtor went above and beyond. As a mum of two small children (one a very colicky baby!) and a husband who travels a lot for work she used to come over and vacuum my house and/or hold kids so that we could get it in 'showing' condition. I figure she earned her commission!

Jack said...

Just Jack,

It would be interesting to know how much money was spent on those places you listed while they have been owned.

Any renovations (carpets, roof etc) need to be added to the purchase price. But you wouldn't really be able to figure this out unless you are the owners. I suppose you could add in property taxes and realtor fees as well.

All in all, those people barely made anything on the 'basic' price initially paid. Just wait till they add up all the other costs and factor in inflation.

Just Jack said...

I can see listing a home on MLS for $650 bucks. As the agent will have to measure the home and probably estimate a value for the vendor.

If you want the agent to handle calls and viewings that would be extra.

If you sell the home yourself without a selling agent, thats the end of it. Property sold.

However if a buyer brings their own agent then you have to pay a standard commission to his agent. And, your original agent will have to be involved in this as well, so there should be another flat fee charged to you of about a grand from the original listing agent to handle the paperwork.

So it could be as cheap as $650 or up to $12,000 for the typical home. A savings of around $8,000. And if I were the owner of a real estate company, I wouldn't send a agent to the property, I would send a summer student or someone working at minimum age to collect the info and pictures. Heck, I could hire an appraiser to do all the measuring, photos and other legwork at a third of the price and have their errors and omission insurance cover me.

I think most people are going to have problems selling the home themselves, because of the seller's agent not wanting to deal with the home owner who doesn't want to pay a commission. And you probably will find selling agents discouraging the home sellers listings. Because the home isn't going to be any cheaper for the buyer. I can see a lot of problems with deposits and down payments not being refunded because of misunderstandings over towel racks and drapes.

I can also see some of the selling agents really putting the gears to a home owner. Non returned calls, faxes, missed time lines, subject removals, threatened legal action, etc. It would be like a cat playing with a mouse.

Seriously, how many of us know what is or what is not in a standard on a contract. How many of these contracts will be signed before they are taken to a lawyer to be looked over.

omc said...

These #s are contrary to what the usual suspects were saying about the market picking up. Not much of a fall market. Not much of a bounce to that dead cat.

4K of listings is still high for this time of year. From watching my PCS, there has already been tons of listings taken off the market. This spring could be really ugly when many of these come back on.

HouseHuntVictoria said...

Just Jack,

IMO, what needs to happen is consumers need to be better educated about buying and selling homes. The whole "seller pays the commission" line is not logically accurate and will come back to bite buyers agents.

Buyer's bring the money to the transaction. Just because the seller remits the commissions to the agents involved doesn't mean the seller is paying them. That's like saying a tax that's included in the price of an item is "tax free" to the buyer when it's not. It's "no additional tax" applied, but the buyer still pays the tax, it's just remitted on behalf of the buyer by the seller.

To me at least, the real question that needs to be asked is how much would a buyer be willing to pay for a buyer's agent if they truly understood it was them paying the commission? My guess, roughly what they pay a lawyer to write up the legal transfer.

Will any buyer's agents out there offer their services, albeit time limited, for a flat fee? Dollars for donuts there will be some doing this very soon.

Catherine said...

I think the problem with agents' fees is that the percentage hasn't gone down with the increase in price. So a house that used to cost $300k would result in X commission. When the house doubles in value the commission approx. doubles. But the agent's cost of living/expenses didn't go up that much and the work he/she does sure hasn't (in fact less, with advent of internet searches etc). I'd love to have a job that pays twice what it did 8 years ago!

Just Jack said...

Lots of confusion on who pays the commission. I look at it this way whether you use an agent or not, the property sells at market value. The buyer pays the same price for the property, agent or no agent.

The seller, had contacted an agent to sell his home and had negotiated the fee, fee plus commission or straight commission and signed a contract with the listing agent.


So, to a prospective buyer, the flat fee or commission is immaterial as it is the seller who pays the commission as a deduction from market value.

BUT - its the selling agent, that's the problem. Dealing with a home owner is going to add to their grief. When the agent brings a prospective buyer, but the deal falls through. Then the buyer privately approaches the seller with an offer. Should the selling agent be paid a commission? Enough deals will go this way, that selling agents will avoid the homeseller listings. I bet the real estate board even makes the listing look different in searches or they may only be available on the agents system, or can be excluded when property listings are sent to a client. The board could even raise the price of a homesellers listing to a thousand bucks.

The one thing for sure, is that it will not be a level playing field for all parties.

Marko said...

"The one thing for sure, is that it will not be a level playing field for all parties."

The REAL GOOD Realtor will survive...why? Exclusive buyers agreements. He or she will be able to command, for example $5,000 for his or her services...."here they are, I do X....I have a superior knowledge base for X reasons". If the commission is $20,000 he or she will kick back $15,000 and if the commission is zero you will pay him or her $5,000.

Look at other markets; you have people on usedvictoria offering photography services for $50 that others charge $5,000 for. Difference is one person is really good and established the other one sucks or is just starting out. In real estate a newbie agent receives the same commission as one that has been in the industry for 20 years - how does that work?

I keep preaching if Realtors want to improve the industry and demand solid commissions they have to establish much higher barriers when it comes to entry to practice. Like a 4-year business degree or something before you can write your license. As for the current Realtors, just grandfather them in.

An even better solution would be to half a one year FULL TIME program post 4-year degree that goes into details regarding financing, contracts, home construction, issues like asbestos, electrical, oil tanks, zoning, permits, etc. This will never happen, but I can hope.

happy renter said...

Interesting perspective, Just Jack. If the listings that don't involve listings agents make it on to MLS for all to see, I'm inclined to think that buyers agents won't be able to avoid having to show them to their clients so long as their clients are computer savvy. I, for instance, would never just trust a realtor to show me everything and would be on MLS looking to see what's available myself. If I saw something on there that my realtor wasn't showing me, I would ask to be shown it. If, however, those listings that are made without a realtor never make it into full public view or are excluded from PCS updates or something, that'll really be a problem.

HouseHuntVictoria said...

JJ,

If you define "market value" as the sale price sure. But many agents (if not most) make the claim they get more money for their listings than do FSBO types. That's 1 rationale for using an agent right?

As a buyer, I'd use a Marko-type cash back on purchase agent to buy a full service listing paying full cooperative brokers commissions as one way to recoup my purchasing costs - whether they're agreed to be real or not. If I drop $500K on a home, get $5000 back from Marko, then I've paid $5K less than "market value" right?

As a buyer, I wouldn't automatically work with an agent though. I don't see much point in my house hunt to drag an agent all over the place while I do my research. I spend most of my time online. When I'm ready to see a home, I want to deal with the listing agent or the homeowner: these are the two people who should be able to reasonably answer my property specific questions. How can I expect the buyer's agent to know the subtleties of the property if this is the first time they've seen the place? If I'm simply employing a buyers agent to get a second opinion, I'll do as my wife suggests and wait until she asks me what I think if I want to hear a second opinion.

If changes come and are readily evident on the MLS, I might specifically target listings where the owner is willing to speak directly with me so I can make a more-informed decision about the property. In the future, these will likely be the flat-fee, no co-op brokerage commission listings on MLS.

But I would use an agent, and even pay a fee for doing this, to conduct the transaction for me if it meant I gained some implied value; i.e., the work they do to protect me in the purchase is not work that I can do for the same money or in the same time frame. In other words, I pay them a fair amount to do work that I do not understand or can't do because of access to information or time.

Just Jack said...

"If you define "market value" as the sale price sure. But many agents (if not most) make the claim they get more money for their listings than do FSBO types. That's 1 rationale for using an agent right?"

---------------------------
Never, has this been proven as true. I chalk this one down to one of those "lies my realtor told me."

You can search out 1 percent discount listing agents and compare what they get for a home to what full commission agents do. Lots of work to do and its a tiny percentage. Its maybe one or two percent which is indistinguishable with all the other noise and subjective items in real estate values.

Common sense tells you that it can only be a small percentage. That's not to say that people do not overpay for real estate, that happens from time to time. But an agent can not consistently get any significant amount over market value simple because she or he has bluer eyes than the next agent. So I call BS, to any agent that says he or she can get you a higher price than someone else.

And really, how could you prove it as being a true statement? The realtor's handbook is full of these type of statements. My favorite being "location, location, location" an absolute meaningless mantra.

It's like religion. A friend of mine is a born again Christian and he keeps asking me if I believe in God. I always avoid the topic, but one day I said: "yeah I do, and I saw God in a dream." He said: Oh really? so, what does God look like? And I said:

"first of all, she's black."*

So you see everyone has a different interpretation on things that we all seem to know the answer to.

*apologies to anyone that may feel.....hurt by the above.
Oh, hell get over it, or just don't stand beside me in a thunder storm.

Alexandrahere said...

All those people who listed their homes for months on end and then finally took it off the market, did not pay their realtor a dime.

If you are going to pay a "flat fee" to an agent, mls or whatever to advertise your home....you are going to pay that fee "up front". If you don't sell your home, you get sick, circumstances change etc. then you are out of pocket.

One good thing about this method is that homes would be put on the market at close to fair market value.

Also, in many of these scenarios the seller is going to have to show the home to the prospective purchasers on his own. This means he has to be home to do this, i.e. he'll have to arrange time off work perhaps in order to accommodate many.

happy renter said...

Alexandrahere -

That's exactly why I finally went with an agent - I just couldn't be home to show my place whenever buyers were available. My condo was on the market for 3 months and in that time there were probably 20 people who came to see it. I never could have accommodated them all. I was really considering listing the place on MLS myself because I have family in real estate elsewhere who could have talked me through anything in the process that I wasn't clear on, but I just couldn't be home for viewings. Not to mention the fact that even if I only scheduled viewings at night or something, I couldn't have left town at all in those 3 months without losing out on potential sales.

Leo S said...

I keep preaching if Realtors want to improve the industry and demand solid commissions they have to establish much higher barriers when it comes to entry to practice. Like a 4-year business degree or something before you can write your license.

Talk about backwards. Instead of mandating useless education to justify sky high commissions how about we accept that realtor is not a job demanding high education or training and pay appropriately?

Sorry, not meant to attack you personally, but scrambling to justify commissions by tacking on useless degree requirements is exactly the wrong thing to do. Broken window fallacy and all that.

Like you yourself have said, being a realtor isn't nearly as much work as it used to be. Everything is available in minutes online, and increasingly that info is even available to the public. It will take years, but unless some realtors can demonstrate with hard evidence that they can actually sell your house for more than the discount guy, those full commission realtors will disappear.

Just Jack said...

I don't know if the FSBO homes would be nearer to fair market prices. I mean if my job was to get as many flat fees as I could, I'd let the vendor price his own place. I would measure the home, or take the info from an old listing, update the data, slap the vendors price on it and cash my cheque.

For $650 or so, I would not do a heck of a lot of work.

transplant said...

I have sold several homes by owner while living in Alberta through We List. This worked well. You don't need a realtor, you do need a lawyer and you need a lawyer even when you have a realtor. For less than one thousand dollars you can hire an appraisal to establish market value and post your "listing" with pictures on We List. they also provide a sign. I don't think it is available in Victoria. However we never got less than market value and we sold in less than a month. As the seller you are in control of when you show the property and if you love your home who better than you to sell it? We sold in a soft market also and it worked. Price it right and keep the house clean.

happy renter said...

I'm still thinking about HHV's little game from the other day. Any thoughts on this place, anyone?
http://kimsettler.com/officelistings.html/details-14577682

The price was just reduced to $380,000 today. I'd pay $350,000 for it.

HouseHuntVictoria said...

Would you still buy from her knowing she posted this stunning prose on her blog: real estate market bottoming out

Marko said...

"Talk about backwards. Instead of mandating useless education to justify sky high commissions how about we accept that realtor is not a job demanding high education or training and pay appropriately?"

Just because the entry to practice is a licensing course and a high school diploma does not mean that people shouldn't expect more of their Realtor.

happy renter said...

HHV -

Eeek! That's horrible. I retract my offer.

Animal Spirit said...

One things is sure - when the flat fee listings hit MLS it will mess up all of our statistics. FSBO have always been latent in the nubmers. Now they will have to be included in the totals.

Any guesses on how much lower (or higher) the average real estate transaction will be with the changes?

Marko, Alexandrahere and HHV - would you be able to post medians and not just averages? The average is far too volatile a statistics to be meaningful for trends (i.e. take out the one Oak Bay 3.5M sale and the average MTD is 607.1K, not 615.1K). Median isn't perfect, but it is better.

pacific said...

The market has changed and the players are still using the old rules. Information today is almost free, and a lot of folks have the time to sift and sort and make a decision on whether a property is worth viewing considering their needs.
Transaction costs have gone through the roof in absolute dollar terms, adjusted for inflation. The good old service industry lives on, with little in the way of value added for society...just shifting the wealth effect. Does this make us more competitive globally?? No.
The homeowner is just adding to debt.
There has to be a better formula to retain the services of professionals in real estate who can help the process without charging court room fees.

pacific said...

The market has changed and the players are still using the old rules. Information today is almost free, and a lot of folks have the time to sift and sort and make a decision on whether a property is worth viewing considering their needs.
Transaction costs have gone through the roof in absolute dollar terms, adjusted for inflation. The good old service industry lives on, with little in the way of value added for society...just shifting the wealth effect. Does this make us more competitive globally?? No.
The homeowner is just adding to debt.
There has to be a better formula to retain the services of professionals in real estate who can help the process without charging court room fees.

Leo S said...

Just because the entry to practice is a licensing course and a high school diploma does not mean that people shouldn't expect more of their Realtor.

I don't see what value I get if my realtor has a business degree, aside from that he has a big student loan to pay off and will be even more desperate to collect his commission. I think your experience in construction is far more useful as far as that goes.
However overall I'd rather pay less, unless someone can actually produce evidence that a realtor's experience will save me money.

I'm hoping we'll see some good stats once MLS is opened up to listing-only agents and we can get some good comparisons between the different types of listings.

Leo S said...

LOL @ Kim Settler

When those interest rates and home prices start ticking up and your payments jump a couple hundred dollars -- will having waited really be a benefit?

Right, because when interest rates increase that puts upward pressure on house prices. Makes sense.

I'm fine if you choose to wait. You need to do what's best for you. But if you're banking on buying when the market hits bottom -- well, at a minimum, you'll be a day late and a dollar short.

Great strategy. Write an article dripping with sarcasm and insults for the potential buyers that are still on the fence. Bet that will make them want to work with her.

Marko said...

"I don't see what value I get if my realtor has a business degree"

I do in so many different ways. It isn't just the educational component; it also shows commitment and investment on part of the individual.

"I'm hoping we'll see some good stats once MLS is opened up to listing-only agents and we can get some good comparisons between the different types of listings."

It will be difficult to get solid stats out of this. For example, listing-only agent puts up a listing. Seller sells privately to someone who found the listing on MLS. This is going to be recorded as an expired or cancelled listing most likely.

patriotz said...

Buyer's bring the money to the transaction. Just because the seller remits the commissions to the agents involved doesn't mean the seller is paying them.

That's exactly what it means. Any business gets its money from its customers. But its employees are paid by the business, to work in the interests of the business. That's the contractual relationship. You wouldn't say that the guy at Future Shop is paid by the customers. The taxman doesn't think so either.

Likewise, a RE agent is contracted by the seller and paid by the seller to work in the interests of the seller. The seller gets the money for the commission from the sale proceeds, but the buyer is not paying the agent. The seller is.

Mr.4AM said...

Wow, what a stunner headline from the Financial Post this morning..."CREA cartel not broken yet". I can't believe they called them a CARTEL, but the name *is* somewhat appropriate given the context of the story. Good read, though not sure if, when or what may be done about the monopolistic and anti-consumer control CREA will still possess.

Mr.4AM

a simple man said...

the number one tool in a realtor's toolbag? The secret handshake into the liar of the mls system.

Access to the mls is what drives many sellers to them. And they tout the power of the mls openly.

ummmmm...

"The cost for a real estate agent to list on the Multiple Listing Service through the Victoria Real Estate Board is $25. There is an additional cost of $75 once property sells."

Read more: http://www.timescolonist.com/business/rules+give+people+more+options+cheaper+ways+sell+their+home/3726737/story.html#ixzz13UPbvVjw

Sweetrealtor said...

In my past experience, previously working with a discount brokerage and also with bringing existing buying clients to offer on FSBO's, the sellers who have the biggest beef with commission dollars also have absurd expectations with listing prices. It's a bad combination with low commissions offered to the buying agents and ridiculous listing prices advertised to the buyers. I'd be willing to bet this scenario is prevalent as more "mere listings" appear on MLS. A good agent can talk to the sellers and make them understand what the market is telling them and what is a realistic price for their property. Will the agent put any effort into this with mere listings?

Another thing to keep in mind is the comparables used in coming up with a price for the property almost always have standard commission fees worked into the price. So shouldn't a FSBO list for 3% less than the comparables if they aren't offering any commission?

Thanks to Alexandrahere for mentioning that agents don't sell every property and simply have to accept the losses. There are a lot of agents spending money right now on a multitude of listings that aren't going anywhere.

Don't get me wrong, I agree with many of the commission statements here. The percentage paid to commission hasn't been decreased with the increase in property value, etc. That's why I started with a discount brokerage but I found the commission structure too restrictive. I'm now with a brokerage that lets me do whatever I feel necessary with commissions. It's easy to come up with a strategy that works for all parties involved. It doesn't matter who you work with, you can always ask for a discount. Real estate is one of the few industries where bartering is part of the parcel and this can start at the listing contract.

HouseHuntVictoria said...

"Another thing to keep in mind is the comparables used in coming up with a price for the property almost always have standard commission fees worked into the price. So shouldn't a FSBO list for 3% less than the comparables if they aren't offering any commission?"

Doesn't this confirm my belief then that the buyer ends up paying the commissions?

It's really irrelevant whether or not a listing is over-priced by an agent or overpriced by the home owner. If it's over priced it won't sell. If a homeowner wants to waste money on an MLS listing, they should have that ability, no? Free market etc...

HouseHuntVictoria said...

A simple man, that $100 to VREB for MLS listings is only one fee the agent has to pay. Brokerages take transaction fees too, which vary amongst the brokerages. I've heard they start around $300. So an agent offering listing only for $500, will only make $100, unless they find a way to get around the brokerage fee, which may be possible but will likely be very detrimental to the MLS service if there are a bunch of sold listings that still show active until they expire.

reasonfirst said...

"So shouldn't a FSBO list for 3% less than the comparables if they aren't offering any commission?"

Why would they not list at market and pocket the diff unless thay feel they are at a 3% disadvantage without a realtor?

Al said...

We bought a new house in Feb 2009, and sold the old one in Oct 2009 without spend a single penny.

We put an ad in usedvictoria on Friday, had more than 50 replies by Sat night. Selected 12 families (as the house was rented then with limited view time), had just one open house on Sunday afternoon. By the offer time on Wed. 6pm, we got 6 offers, and sold for 3% more than asking.

We did have a couple agents evaluated the house beforehand, and set our asking price at the high end minus 5K (commission).

Guess it was the good time for sellers, the price (just under 500K, for 1000sf with unfinished basement) and location (near UVic) helped as well.

So if your house is in the middle or low end of the market, and priced well for the current market and kept in okay shape, you could definitely do FSBO, without spend much money (we only used agent on one out of 5 house we sold in the past)

happy renter said...

Commission is absolutely always negotiable. I was feeling very sheepish about asking my realtor if the fee she quoted me (6%/3%) was the lowest she could do, but I did it anyway and she was willing to talk when it was clear that I'd find an agent who was willing to make a deal with me. I've since mentioned that fact to friends who thought that 6%/3% was some kind of industry standard that realtors couldn't veer from. They thought that it was *required*. That's what the industry would like you to think, but you can always strike a deal. If they can't afford to work with you, then they'll just say no.

Alexandrahere said...

Patriotz: Hmm I was just thinking about what you said. i.e. it is the vendor who pays the commission "salary" to the agent. Too bad we can't use that commission as an income tax deduction for a "one-time/one shot" employee. But then I guess if he fell down the stairs while showing your house, we would have to pay workers' comp.

Just Jack said...

Some independent agents might flat fee, but my guess is that the broker's office will do most of the flat fees.

The client goes to the brokers office, one of the staff takes the information down and what level of service is to be provided. The broker takes the information from a past listing on the property confirms it with the client and google maps a picture of the front of the home and inputs it right onto the mls system as the person is in the seat in front of him. And takes the payment by credit card.

That's it.

What is MORE important is that it generates leads for the salesman and you can talk them up to a higher mls package when they are in the office.

I'd also go short (60 days in the contract) that way they have to pay another fee to extend the listing.

This is a better scam than offering a "free market evaluation" to get people to call.

I'm figuring a staff of 3, could generate $30,000 to $60,000 a month in sales.

I bet everyone who goes for the flat fees will be inundated by other agents trying to get the full listing. That alone would make the client upgrade to the broker screening calls and setting appointments for another grand or so.

omc said...

It is great that some people have been reasonable when FSBOing their houses, but I have never myself ran into a reasonable FSBO seller. We have been approached several times over the last few years by people wanting to sell their homes privately. The sellers have all been completely unrealistic in what they thought of their house, comparables and a fair market value. We watched all of these people eventually going through MLS, and eventually selling for a lot less.

I don't even waste my time anymore, but give a reply of "it would be best for us if the home was to go on the market". Always these people start out high, and have to make numerous price adjustments just to get an offer.

Sweetrealtor said...

omc - You are right on the money...

nan said...

Supporting the CB's attack on the CREA is the same as supporting the bubble that shouldn't be there in the first place.

If Realtors didn't make so much, they wouldn't even be on the Melanie Aitken's radar.

This whole charade is just a government-sponsored distraction to keep the public hopeful that real estate might get a little cheaper in the future without pointing the finger at themselves.

If the CB really wants to do something useful, it should head over to the CMHC and see how Harper and his cronies are contributing to properly functioning marketplaces in Canada.

If they hadn't made such a mess of things, juicing prices and transaction volumes, Realtors would be paid fairly, as they had been up until 2000.

**I am not a realtor**

Alexandrahere said...

Animal Spirit: The average sale was $547,182 and the Median price was $559,000. Total number of sales was 11.

patriotz said...

So shouldn't a FSBO list for 3% less than the comparables if they aren't offering any commission?

No, because the buyer only cares about how much they pay, not who's getting a cut of it. Also the listing price is irrelevant to what any property sells for - which is determined by the most willing buyer.

Stocks don't sell for a different price depending on how much commission the seller is paying.

That's also why (logically) it's the seller who pays RE commissions, not the buyer. A buyer is not going to pay more for an identical property just because it has a full service agent. This all assumes the buyer is rational of course. If the buyer isn't rational, well who knows.

omc said...

I think that is the point patriotz, the FSBOs I have ran into aren't making a deal with you on the commission. They are keeping it to themselves.

I never want the home owner present when I look at a house, many would be insulted if they knew what I thought. The FSBOs I have seen I know I am not interested within 5 mins (much less in fact), but I have had to listen to their spiel to be polite. The crap, diversions and misinformation is mind boggling.

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

Bubble and fizzle said: This comment is a sure sign you've never actually bought a house before. In my experience it is the buyer's agent who does most of the work

Nice shot bubbles... should have posed that as a question instead of a statement though.

Actually I've bought and sold a number of houses. Have also owned two successful businesses. That's the problem, I'm not some fear-based first-timer with a huge mortgage committment I don't really understand looking doe-eyed at my buyers agent like he has some incredible positional authority I should bow to.

My mother can drive me to see a house that looks nice from the MLS listing (that I can research myself) and read me information on the listing sheet while pointing out the obvious.

Protecting me from the unknown, understanding the specific property and neighbourhood, knowing the costs of renovations or upgrades, knowing the market trends and being honest about them, and negotiating a good deal on my behalf.... That's what a buyers agent is supposed to do. And the agent we just let go? My mom would do a better job, and from others I have talked to, the agent we just let go is the norm, not the exception.

I think the term before I used was 'brokerage model laziness'. A hard working buyers agent that can do all of the above? Worth every cent of his/her commission.

Leo S said...

What we need is for realtors to be paid by the hour. The current commission structure makes it completely impossible for most realtors to be honest, because it is always in their interest to get you to buy or sell as soon as possible.

I'd much rather pay the realtor for the hours he/she works and avoid all the conflicts of interest.

Mindset said...

Leo Said: What we need is for realtors to be paid by the hour.

True. The quick sale is rewarded more than the difficult sale where a buyer or seller realtor had to do a lot of work. It would also be interesting to see a bill of the services that were provided and the cost of them (might be good for people to know how much actually goes on behind the scenes as well).

... you got me thinking... on the realtor side an hourly charge could also get rid of buyers that waste a realtor’s time or sellers that won't move the price?

Not sure this would work in the real world though, as buyers currently don't pay anything (the commission is all on the sale of the home / seller).

While we are talking about how the REal Estate systems is ste up, I have always thought that realtors should be buyer or seller focused, and not both. Being on both sides of the fence is designed to lead to concessions in approach, where selling realtors can sympathize with buyer realtors (and visa-versa) and a lowest common denominator is reached that is mostly about transactional efficiency, and not buyer and seller representation.

If the above doesn't seem true, lets take this away from housing to look at it in a different way. Can you imagine if prosecution and defence lawyers split the commission on a trial? I wouldn't want to be the person on trial or a victim in that situation because the focus would have moved away from justice and representation, and towards the money to be made by getting to closure quickly. To add a wrinkle, now think about letting defense and prosecution lawyers play both sides of the fence in a shared comission environment. What would happen?

My point: There is something fundamentally wrong with shared comissions combined with an ability to represent buyers and sellers.

My two bits....

Mindset said...

Marko Said: Look at other markets; you have people on usedvictoria offering photography services for $50 that others charge $5,000 for. Difference is one person is really good and established the other one sucks or is just starting out.

Not a good example. Photography revenues have crashed. A friend of mine paid for his beautiful house cash with photo revenue in the late 90's, early 2000's and now can barely make enough to even justify doing it anymore. The world finds ways of getting rid of inefficiencies unless there are entry barriers. MLS is open to the public? Look out, things are going to change.

We live in the information age. It doesn't take much process automation and information access to simplify a transactional industry and facilitate a similar service at a lower rate. Wasn't that long ago that we used to have to look at all of the houses to see which ones we liked, now we look at 15 on our PCS account without even talking to our realtor.

Who knows, maybe I'll be chatting with my buers agent/seller/seller agent over video on my smartphone a few seconds after a listing pops up that fits my criteria, and firing an offer over to a commidity legal house that drafts an offer with the right current protections and submits it for me...

Alexandrahere said...

Any time I have wanted to buy something, whether it be a TV from Future Shop or a house for sale by owner and I feel that that person is going to be difficult to deal with for whatever reason, I take the cowards way out. What I do is (especially if it is a commissioned salesperson) is phone them after I have seen what I want to see, and give tell them what I am willing to pay. If they start trying to re-negotiate or start giving me the but this has got this and this has got that compared to something else in the same price bracket, I just say I understand where you are coming from but this is all I can see myself being able to pay. I give them my phone number if they change their mind or just want some more time to think about it or talk it over with their spouse.

You only go back to see the house (item) when they agree.

You have nothing to lose.

Just Jack said...

How BIG do you think Victoria is?

I think most people really have a misunderstanding of the size of Victoria when they compare us with other cities.

The Greater Victoria area is made up of 13 municipalities, the regional district of Juan de Fuca and a few smaller First Nations Lands.

The inner core municipalities of Esquimalt, Oak Bay, Saanich, Victoria and View Royal have:

a population of 243,649 that live in 49,321 houses and 18,764 strata properties or a total of 68,085 dwellings. Today there are 1,347 (2 percent) of these properties for sale. And in the last 30 days 284 (0.4%) of them sold.

Saanich Peninsula is made up of Central Saanich, North Saanich and Sidney.

42,603 human hearts beat in this area and live in 11,066 detached homes and 2,853 strata homes or 13,919 dwellings. Today 395 (2.8%) of the homes are up for sale. And in the last 30 days some 60 (0.43%)of them sold.

And lastly the Westshore with the municipalities of Colwood, Highlands, Langford, Metchosin, Sooke and Juan de Fuca.

67,676 or 676,759 toe nails are clipped each year in this area. (which if piled on top of each other would be enough to build another Bear Mountain) Those toes inhabit 13,017 detached houses and 1,375 strata homes for a total of 14,392 dwellings. Today 918 (6.4 percent) of them are for sale, and 115 (0.8%) sold in the last 30 days.


Victoria metropolitan area is $353,928
Vancouver metropolitan area is 2.1 million.

Seattle 3,345,000
New York 8,400,000
London 7,557,000


So why don't we compare ourselves with a city that has had a similar population growth over the last decade and current population like the metropolitan area of:


Rockford, Illinois

Where the median home price is $94,000 or two times median income. Where a home in Esquimalt is $300,000 more than a similar home in North Rockford.


Ahhh, that's because Canadians are smarter than Americans and Canadian banks are more prudent lenders.

No, I think its because the banks have figured out that the typical Canuck is pretty stupid.

Just Jack said...

Recapping those numbers in more easily understood rounded ratios.

1 out of every 50 dwellings are for sale in Victoria.

1 out of every 35 in the Peninsula

and

1 out of every 16 in the Westshore

The combined areas would be 1 out of 36 dwellings are for sale. So where do you think the prices are coming down?

Alexandrahere said...

Wow neat stats Just Jack. I've written them down. Thanks.

HouseHuntVictoria said...

Just Jack, obviously this is a core/periphery/neighbourhood question. Certain neighbourhoods in the core will perform better than others. Certain municipalities in the periphery will perform better than others.

Sooke and Malahat are under pressure right now. I'd say Esquimalt/Vic West won't be performing as well as say Fernwood. Some of the higher priced neighbourhoods like North Saanich, Oak Bay and Cordova Bay are likely under-performing neighbourhoods like Mt. Tolmie, Hillside and Maplewood.

Am I close?

Just Jack said...

The pressure that Sooke and the Malahat have is that there are not enough buyers to sustain the market and prices have to come down. Eventually the lower prices creep into the urban areas.

When the market expands the best areas are the first to go up in price. When the market contracts the best neighborhoods are the last to go down in price. That doesn't mean that South Oak Bay will never have a price correction. If the neighborhoods around have dropped, it too will drop - but only at the end.

Right now, the opportunity is to sell your overpriced city condo and buy a house in Sooke. The price differential between the two is to your advantage. If you wait too long, then that opportunity will be gone and you'll be locked into a 600 square foot skybox for a long time.

Marko said...

Just Jack,

I don't know whether you have had the chance to experience the "Colwood Crawl" lately - I got caught in it at 1:30 pm the other day!

There might be a reason why placed in the core are "overpriced."

Marko

Dave said...

I think Victoria house pricing is strangely flat in comparison to larger centres like Vancouver. For example, there doesn't seem to be much of a premium to live in Oak Bay is comparison to outlying areas. I think there is a lot of room for prices to diverge with high end areas outpacing outlying areas.

I got stuck in the crawl the other day at around 2pm. There needs to be a couple overpasses built to help it out, especially with the growth in the Western Communities.

Jack, I think those sales number differences are a reflection of demographics. Younger people live in the outlying areas and they tend to move through the market more quickly than the granny demographic in Oak Bay. I think the inventory numbers would be a better metric to evaluate the health of each sub-market. If lots of people are selling in Langford, they are probably out buying as well. In Oak Bay, they just die and don't buy again.

HouseHuntVictoria said...

I will be the first to agree that the crawl sucks. But, that said, if you compare it to other urban centres, it literally is painless.

Tried driving through the Massey Tunnel in rush hour lately?

How about into Vancouver from Langley on Hwy 1?

The 30 min crawl is minor in comparison.

Dave said...

HHV, ya I missed my ferry reservation the other day because of the Tunnel. Still got on though.

The Crawl will only get worse as the growth is mostly in that direction and Victoria is growing relatively quickly.

I still think the price premium is low to live in areas like Oak Bay.

commuter12 said...

Yeah "the crawl" is a very minor thing. I find driving from downtown to Broadmead is far worse. Mind you I rarely drive the crawl, since I bike instead.

Marko said...

6.8 million dollar sale yesterday is going to pump the average up heavily for the month.

Marko said...

http://www.youtube.com/watch?v=UfEfDZGhKt0

Deanna said...

@commuter12

Really? You find the Pat Bay worse than the island highway for traffic?

Can't agree. I drive the Pat Bay regularly since moving out to Central Saanich and I have yet to be stuck in a traffic jam/wait longer than a single traffic light cycle - other when there has been an accident on the highway. My average speed on the Pat Bay while commuting has been above the speed limit. I don't think you can say that about the Crawl.

Just Jack said...

As I am almost always up for the challenge, I thought that I might be able to tease out the price differential between the typical Oak Bay home and one in Langford.

I had to make a basketful of assumptions and weed out waterfront, water views, big lot, new developments in order to try to get an inclination which makes this an absolute crap analysis. But here it is for your reading pleasure.

The "typical" Oak Bay home is a 2100 square feet home on a 7,300 square feet lot and sells for $690,500.

The "typical" Langford home is 1,934 square feet on a 7,405 square feet lot and sells for $467,500.

The price difference between Oak Bay and Langford is $223,000 or 48%. $223,000 in mortgage financing costs an additional $800 per month. So, in my world, the cost of the Colwood Crawl is $800 per month (+/- $10,000 per year) which works out to about $45 per work day or roughly $25 per hour to compensate for your lost time and extra variable car expenses like gas and repairs.

So is the cost of the crawl expensive or cheap? Judging by how few people car pool - I'm saying its cheap.

omc said...

Comparing Oak bay houses to the west shore is almost impossible. We call Oak Bay a nice neighborhood, of terrible houses. That 2200sqft would include a low height finished basement (probably DIY) and maybe some sort of substandard finishing of the attic into bedrooms. The amount of footage comfortably usable by a 6' plus male would only be about 1300sqft.

The price differential would be much higher than $220k.

On the other hand, most families are 2 incomes. That leaves your earning for commuting to the west shore at $12.50 plus expenses. So if your time is worth less than $10hr to you, maybe the west shore is for you.

Al said...

How about other differences (between Oak Bay and Langford), say property tax, water rate?

Marko said...

How about that in Langford you have to pay to get your garbage picked up and your mail isn't delivered to your front door?

Dave said...

If you can afford a $467k mortgage I would hope you're making at least $25/hr.
I know I don't want to be at work any longer than I have to so if I were offered the 'opportunity' to be paid for my hour of driving I'd politely decline.
Also I would take Oak Bay neighbours over Colwood/Langford neighbours any day. No offense :)

If and when I have kids you'd have to give me a big raise to miss those 2 hours at home with my family.

That being said I commute down the Pat Bay right now :(

Dave3

DavidL said...

@Just Jack
Wow - amazing number crunching and analysis ... however I think a comparison between Saanich West* and Langford may be more accurate than a comparison with a home "behind the tweed curtain". I would guess that the average house in Saanich West is 25 years older than in Langford, but you will save 10 to 25 minutes (each way) if commuting to downtown.

*Saanich West is any portion of Saanich that is west of the Pat Bay (#17) highway.

Ryan said...

"Right now, the opportunity is to sell your overpriced city condo and buy a house in Sooke."

I don't think that's much of an opportunity. Sooke and other outlying areas may have started to fall first but they're still a long way from the bottom. I'd way rather be stuck in a downtown condo than stuck in Sooke. A bunch of my co-workers bought houses in Sooke earlier in the bubble. All but one of them eventually moved back, because the commute was killing them.

And I have to agree with everyone saying the crawl is a thousand times worse than the Pat Bay. Blanshard/Pat Bay is basically just traffic, you get stuck at lights but you keep moving and eventually it spreads out. When I lived in Langford I sometimes had to slow to a crawl or even stop at the Helmken overpass. What is the next light, Spencer Road? That's a long fucking way.

Ryan said...

"How about that in Langford you have to pay to get your garbage picked up and your mail isn't delivered to your front door?"

One way or another, you pay for garbage pickup. And when I lived in Langford my mail was delivered to the front door, no idea what you're talking about.

DavidL said...

The Colwood/Langford crawl reminds me of the opening scene to Office Space:

http://www.youtube.com/watch?v=Tm47ds-r6sA
(Use headphones if watching at work.)

Marko said...

"One way or another, you pay for garbage pickup. And when I lived in Langford my mail was delivered to the front door, no idea what you're talking about."

The majority of new development out there the mail is delivered to those large Canada Post boxes, not the front door.

Fair enough - property taxes in Langford are cheaper leaving enough room to pay out of pocket for garbage disposal.

Still annoying thought.

DavidL said...

@Ryan wrote: And when I lived in Langford my mail was delivered to the front door, no idea what you're talking about.

In the late 1980's/ early 1990's Canada Post introduced super mailboxes in new urban subdivisions as a cost-reduction measure. Older neighbourhoods continue to have home delivery.

Most of the housing developments that have been built in Langford over the past 15+ years have super mailboxes. There has been virtually no new development in Oak Bay for half a century! ;-)

Just Jack said...

I didn't say my analysis was good. The thought just crossed my mind as how much are people paying over one neighborhood to another.

And Here is Oak Bay broken down
for non water view or waterfront homes of around 2100 finished square feet and 7300 square feet lots.

From least to most expensive neighborhoods.

$615,000 Gonzales
$635,000 North Oak Bay
$668,000 Henderson
$690,000 Estevan
$750,000 South Oak Bay

The last area is Uplands but the properties are substantially larger in both house and lot size to make any comparison difficult. The typical uplands non water view home is 3,348 finished square feet on a 20,700 square foot lot and rings in at $1,350,000.

Gonzales may be skewed as there were only a few sales and I would think would be similar to South Oak Bay.

Marko said...

Bidding war on 1914 Leighton, went $25,000 over asking price. Inventory in the core still selling strong.

omc said...

I'll call you on that one Marko.

What would that house have sold for 6 months ago? 100k over selling price? At least.

You mean "well priced inventory in the core is still selling". My PCS is still showing lots of overpriced inventory sitting in the core.

commuter12 said...

Yeah sure the highway speed on the pat bay may be higher but that does not mean it's any faster than commuting to langford. I don't know I find it fine to sit through a couple of lights.

As for the garbage pickup it's great. I can chose the level of service I want and the service is much much better. I pay $300 a year for weekly two cans including the blasted HST. Great service no more whiny douche bag like the saanich guys.

But I do like the negative view of Langford that still exists out there since it saved me a huge pile of cash on my place. I get Costco and Superstore to myself all week too and never set foot in them on the weekend. All in all it's a good deal.

Leo S said...

No amount of money would make me move to Langford. I'd rather live in an apartment close to work than have to do the commute every day. Doesn't matter what the price differential is, I'm not wasting my non-work time sitting in traffic.

Maybe if there was high speed rail it could be an option, but as long as the only feasible commute is by car there is no way in hell I'm living there.

commuter12 said...

Yup the 25 minute commute is killer for sure. I'm glad so many people dislike it because like I say it has saved me a fortune. As for catboxes it's hard to live in those with a couple of kids and a wife. I always get a kick out of Victorians and their weird ideas about driving and driving distances. I know people in Alberta who commute 50 km each way.

Leo S said...

Yup the 25 minute commute is killer for sure.

Friday after work driving out of town towards malahat, I've been stuck in traffic for over an hour. Depends on where you're getting off I guess.

As for catboxes it's hard to live in those with a couple of kids and a wife.

Yes, truly an impossible feat. How do millions of families manage it??

I know people in Alberta who commute 50 km each way.

Great. I know people that commute 1.5 hours each way to Toronto. That doesn't make commuting those distances ok, that just makes them extra crazy.

I value my time, and spending an hour a day in a car where I can't do anything else is not a good use of it. (Yes, arguing on the internet is not either, but at least it's fun!)

By the way, I spend 20 min commuting to work on my bike every day, but that is not wasted time because it doubles as my exercise.

DavidL said...

@commuter12 wrote: As for the garbage pickup it's great. I can chose the level of service I want and the service is much much better. I pay $300 a year for weekly two cans including the blasted HST.

I live in Saanich and would much prefer a pay-as-you-go scheme for garbage. As my wife and I are avid recyclers, we only produce a small half can of garbage every two weeks. My neighbours four or even six times the garbage we do, but pay the same price. I've proposed a pay-by-weight approach to Saanich when they were conducting their recent online survey. It's not about the money - it's about reducing waste ...

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