Red Deer Real Estate Blog
The Competition Board and Real Estate: The Rules
Friday, 10 December 2010 12:47
The Competition Board and Real Estate: The Rules
The Federal Competition Bureau recently handed down its ruling regarding the Real Estate Industry in Canada. To understand why the FCB was even investigating and ruling on the industry you’ll need to know a little history. A few years ago, the Toronto Real Estate Board ordered a Broker in that board to stop placing “mere listings” on that board’s MLS system. The broker took offence and filed a complaint which eventually lead to the investigation of competition throughout the industry. As a result of the investigation, the FCB had a number of concerns, all of which were met by the Canadian Real Estate Association...the main one being that “mere listings” were a legal and acceptable business model and were to be allowed on MLS systems.
Just so you know...in Alberta, and especially in Red Deer, on the Central Alberta Real Estate Association MLS system...”mere listings” have always been allowed.
A “mere listing” is one in which a Realtor places a home for sale on the MLS system, usually for an upfront low fee and turns almost all responsibility over to the owner/seller. From that time on, the seller is on his/her own. On the Red Deer board, our Realtors have the right to do this type of listing...except, the Realtor must verify the authenticity of the information on the home, and may have to assist the seller in forming a contract...if an offer is received.
You, as a for sale by owner, will NOT be allowed direct access to the MLS system anywhere. The FCB upheld the integrity of that system by ensuring that only members (REALTORS) have access to the system.
Why is the system’s integrity important? A huge percentage of appraisals, evaluations of property and statistics used by the Federal Government, Banks and other Lenders, Realtors, sellers, buyers, leaseholders, Insurance companies and a host of others rely on the information acquired, verified and filed into the system by accredited Realtors. Turning the system into a wide open market would sully the information, rendering it useless. If that were to happen simply getting a mortgage or other Real Estate backed finance would be much more difficult and expensive, no one would be able to determine property value...city assessors would have no accurate information base to assess your home for tax purposes...a multitude of problems and added costs in other areas would arise. We all know what happens when added costs are a factor in business...the consumer pays more.
Currently Realtors in Red Deer are making business decisions...they are assessing their ability to offer this type of service. There are a couple of companies doing a form of this type of service already...there were 3 last year, but one has already been unable to afford to renew their CARA dues and remain a member of the Red Deer board. I do not know if anyone will opt for this...but I can tell you from experience...discount..do it for less...do it yourself businesses are not very profitable...history has proven time and again that while businesses start up offering something for nothing...they eventually fail..and leave the industry they were in. All businesses have to make enough money to pay their bills, just as your household does...if you’re spending more than you’re bringing in...you know where you’re headed.
Remember..it is a law: Commission is always negotiable between the Realtor of choice and the Seller...it is not fixed in any way. Every Realtor you talk to about commission is supposed to tell you that...some probably don’t...but they’re supposed to.
Oh and I know you’re about to bring up Walmart...discounting doesn’t work..right??? OK..Walmart makes it work...but remember...The Walton family is one of the RICHEST in the world now...all by buying in huge volumes...getting a lower per unit cost...and under selling the competition...so tell you what...if you own enough houses I’ll give you a Walmart of a deal!!!
FYI: based on the sales recorded so far in 2010...with an average commission...(it is an assumption and not necessarily correct but required for this exercise)...working 40 hours per week (same as an average employee)...and assuming they are paying average expenses to be a Realtor...the average Realtor makes $12.91/hour to take home to the family. And you wanted to cut their commission!! For shame!!
I have simplified the information here...it is much more complex (dealing with the Federal Government always is)...if you would like more detailed info please contact me and I will provide it for you.
This Guy Sells Homes!
You Get What You Pay For
Friday, 05 February 2010 11:40
Does saving money on commission actually end up putting more money in the Seller's pocket? You have to believe in the old adage "you get what you pay for'. Last year in Red Deer, there were 2 companies offering Sellers some type of discount on their services or a number of "packages" involving the Seller doing a certain amount of work while the listing company got paid less. On the surface this looks like you would end up keeping more of your money...BUT...according to Red Deer Real Estate Board statistics NOT SO!
Neither of these two firms had more than 1 -2% market share and neither of them negotiated for their clients a percentage of list price equal to the entire City of Red Deer Board average. In simple terms, the total number of Realtors in Red Deer sold 1,701 properties through MLS. The average list price was $302,152 and the average sell price was $293,156. That is 97.02% of list price. One discount firm offering "packages" of "help" averaged 96.01% which is $3,060 below the board average...I sure hope those people saved that much....but they didn't. The other commission "squeezing" firm averaged 96.76%. This is better...only $794 below the board average.
This gets really interesting if you start comparing these 2 companies to individual larger market share companies. For instance, my company-Century 21, averaged $1,689 more than the commission squeezers and $3,955 more than the "package" helpers for our selling clients.
Even more exciting...my personal negotiating skills averaged 98.12% of list...a full $4,109 more than the commission squeezers and $6,375 more than the package helpers and I sold more homes than either of the companies.
You get what you pay for! When you hire a Realtor you are hiring a negotiator and a market savvy person who is supposed to earn their way. ASK a few questions...find out just how savvy your Realtor is...you have the right, it's your money.
If they're willing to work for less....apparently you will be getting less!
Market? Homes in Red Deer? What the…
Tuesday, 13 October 2009 12:32
Walk up to any Realtor and ask him the question "how's the market?" and the only thing you'll know for sure is whether this Realtor has just SOLD a home! If you get the answer, "awesome", they probably just did. Fact is, the volume has slowed, prices have a slight bit of pressure on them and the light at the end of the tunnel is still pretty small...BUT...it's not depressed...it's not crashing and the world is not coming to an end. The number of homes on the market is weighing down the overall picture but the fact is that only 52% are actually selling...the others aren't selling; they're looking for a flash of magic, their lucky break or they need more money. So if you're thinking of selling, you need to get back to the way we used to sell homes - with a little effort put into presentation and a good dose of reality when it comes to price. Unfortunately if you bought in early '07, you're in tough to hold your money together but almost any other year should have satisfactory results.
By the way, I think the market is awesome!
Hey, did you sell that house?
Thursday, 19 February 2009 12:51
Now there's a question I hear everyday! Surprisingly lately the answer has been yes. First half of Feb (according to the Red Deer Real Estate Board stats) show that sales for the month are already equal to sales for the entire month of January. (62 properties in Jan - 62 in first half of Feb.)
This doesn't mean prices are going up, but it does mean that people have confidence enough in the future to make a move and get a home. This is an extremely positive sign for the economy...Interest rates are as low as they've been in 60 plus years...values have reduced considerably from their lofty boom time heights...there is a huge selection to choose from...and the government is offering renovation tax incentives as well as "green" your home incentives.
Inventory levels are not spiking upward, housing starts are off considerably and sales have been brisk...you do the math...but in my book the bottom is very close if not here and now is a great time to buy. The only absolute no risk guarantee in life is death...for everything else there is a risk equation involved so assess the risk, decide if you can live with it and move accordingly.
If you are selling a home you need to know buyers are highly educated on the market, and are ready to pay for value. Pricing your home to reflect awesome value is the ONLY way you will sell...in fact, buyers can be insulted by overpriced homes with misleading comments making the home out to be more than it is...so if you're on the market and not adjusting your price you are selling your neighbors home!
This guy sells homes!
Richard
Thanks
A Question of Patriotism?
Monday, 09 February 2009 13:34
It has been brought to my attention that someone thought I was questioning people's Patriotism by stating "so be a good Canadian and buy a Home"... in my last blog. Well if you're thinking of patriotism in the manner of our soldiers abroad...you are stretching things a bit far, but if you mean "what can I do to help my country"...then maybe you're right.
No doubt these are scary economic times. The easiest thing to do is sit back and do nothing. If we all decided to sit back, nothing would sell, people would go nowhere, companies would be forced out of business, people would lose all they have and the country would grind to a halt. Recovery would take years and the world would be a totally different place.
I'm sure that no one wants this to happen...but the government cannot stimulate the economy unless the people are willing to step out and take a chance and continue to spend.
You don't have to buy a home...but you have to make an effort to do something. Our provincial government is spending money on the radio now, advertising that you not succumb to the FEAR (false evidence appearing real). Our Federal government is sinking the country deep into debt to overcome the situation. One way or another you will be spending money to stimulate the economy...you can do it their way or you can do it your way...either way...you will be doing it.
Do what you can afford to do...and if you're looking at real estate on the web or reading real estate blogs on the web you are probably looking at buying a home...my message is go ahead and do it...stay within your budget comfortably...but home ownership has historically been a good investment. You should be planning to spend at least a year or more in your new home before looking to sell.
So...be a good Canadian, buy a home...or at least something you can afford for the greater good!
This guy sells homes.
Richard
Two of the Most Asked Questions in Red Deer Real Estate
Friday, 23 January 2009 13:24
Although I believe my knowledge covers all (!), I will limit it to Red Deer Real Estate for this blog. The market is not as volatile as the media would have you believe. Sellers are not dropping their prices rapidly and buyers are searching for their interpretation of value...this is how the market works almost all the time.
First question: Should I buy now? Answer: If not now...when? Everyone needs a home (obviously)...if you have the down payment, qualify for a mortgage and are going to be in this home for more than a year...preferably 2 or more years you should be making your move. Trying to guess when the market will hit bottom is almost impossible...and most investors never recognize bottom and buy when the upswing is well underway.
Second question: What about the economy? Answer: In the history of North America, economies have gone up and down...and yet we survive and thrive. It is hard to believe that this time will be any different. If you know your job is not in jeopardy, your industry and company are solid...then you have the stable foundation on which to buy. Our government will be looking for ways to get you to spend money to stimulate the economy and they will be spending your tax dollars to stimulate the economy, so be a good Canadian and buy a home!!
Thanks for the read...
This guy sells homes!!
Richard
Seasons Greetings '08
Monday, 24 November 2008 14:22
Didn’t I just write one of these last week? What an awesome year! If you’re like me and you’re tired of all the negative news out there, here’s some good news…
After an extremely busy year… in which I was rarely home early… my wife has not changed the lock on the door! My grandkids, now 5 and 2, are still the center of the universe…better known as the Island of Sodor (Thomas the Train) and we are all healthy and happy. Gail and I have been working together for almost 3 years now…the scratches from the early training period have finally healed from my face…and I could not function without her assistance.
We had a little less time off this year…and stayed more focused on business, resulting in achieving my goal of being in the top 21 producers in Century 21 Canada-wide…(#13). I am proud of this achievement, but know that it would not have been possible without the support of people like you who continually refer me to friends and family!
I am looking forward to an exciting 2009, and hope you are as well. I wish you all the best in health, wealth and happiness! Enjoy this holiday season, and once again, thank you for your past and future support.
Merry Christmas,
Richard
