The future for realtors, or a worrying development?

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With the potential for a slower year ahead what will this mean for realtors’ commissions? Real estate along with most other industries is becoming increasingly competitive and faces new challenges from disruptive technologies and business models. A new service has been launched from Oakville, Ontario that aims to be part of the real estate agent’s toolkit. Based online, feeDuck.com gives home-sellers the chance to start a bidding war between realtors. The vendor enters their details on the website for free and local agents who have signed up to the service can then put in their bid to handle the sale. The agent who has bid the lowest will be introduced to the seller 72 hours after the reverse auction starts. Although the seller is under no obligation to accept the bid Paulo Vital, Vice-president of Sales for feeDuck says: “Our research has found that over 80 per cent of these homeowners eventually end up listing with a real estate agent to actually make the sale. Homeowners are trying to save money but end up spending more in wasted time and resources.” So will this mean a boost to your business revenue or will you end up with more volume but lower income? 
  • Angela Wong-Liao - Invis on 2015-01-16 7:37:32 AM

    Buying and selling a home is one of the biggest investment for most Canadian families, why penny wise pound foolish.

    It is prudent to use an experience and local real estate agent to list your house, so that you can get best pricing and smooth sale.

    Homeowners may pay more commission for a reputable, experience and caring real estate agent but in my opinion, it is money well spent to protect our biggest investment.

  • Omer Quenneville on 2015-01-16 7:40:23 AM

    These types of services have been around longer then the 25 years I've been in the business. The issues is, not all agents that list your property gets you the best price. Some agents should discount their fees, they don't do much. But when you get a good agent they are worth their weight in gold.

  • Mike Brady on 2015-01-16 8:21:57 AM

    Realtors make way too much to list a property. With the internet and now public access to MLS it is just not worth $10k+ to do a listing.

  • Ron Butler on 2015-01-16 9:54:17 AM

    This subject just turns into the infinite argument about the magic of "knowledge and ability" trumping high commissions. What I would love to see is the government force the MLS system to open up to all parties, FOR A FEE (I understand the system cost money to build and run), creating a completely open system. Then we will truly learn the value of Realtors.

  • Hal on 2015-01-16 12:48:04 PM

    In Alberta, anyone a homeowner can list a house for sale on MLS for as little as $200. In Edmonton, there are about one in 30 homes listed this way, or through a for sale by owner network. Technically a realtor lists it for them, but because of the small fee, no representation is given.

    Some homeowners are capable of handling the negotiations by themselves, but most can't do it. To each his own.

    I am a realtor and mortgage broker.

    The people who list on MLS without representation don't understand one important piece of information. Most people who use MLS to buy a house don't want to call the homeowner directly. They want to view the properties online by themselves, and then they call a realtor to set up the appointments and show the houses.

    When the realtor is setting up appointments for a listing that isn't paying commission, guess what happens. That listing doesn't get shown.

    I would advise that for homeowners wanting to sell on their own, they can list for cheap if they want, but then indicate on the listing that they will still pay the regular commission to the realtor who brings the buyer. Then their listings would sell almost as fast as the listings put on by regular realtors. Right now, the listings put on without regular commission just sit. Then the homeowner gets frustrated and lowers the price even though price isn't the problem.

  • Ron Butler on 2015-01-16 12:57:49 PM

    Hal, you make great, valid points, my thought was that if OREA MLS system was wide open other internet players could get more involved offering more services, including salaried real estate agents who could organize the showings and act a third party buffer for negotiation for a flat fee at a much lower cost. You are correct, the buyers agent would need to be properly compensated to get the needed activity.

  • Dominc on 2015-01-16 9:15:10 PM

    Open up the MLS instead of "getting the best price". What is the best price anyway? The unrealistic prices? People don't even know what the best price is, and as a result they don't mind overpaying tens, even hundreds of thousands of dollars on flips without even knowing how much they overpaid? Our MLS and information it obtains is purposely designed to keep parties in the dark. Lack of transparency serves as a breading ground for an idiot buyer who sets the price and comparable for just another idiot buyer on the same street or neighborhood and if you must own a real estate in this country you MUST let yourself to be lowered to those standards. Unfortunately our real estate is build on backs of immigrants who set the paste for the whole industry. What we really need is a transparency in multiple listings where nobody gets fooled in to purchase because agent said it is a good deal but where our buyer can make an educated decision. Are we beyond that point now?

  • Walid Hammami on 2015-01-17 11:14:13 PM

    The internet as a whole is a business disruptor.

    Mortgage brokers are suffering from it. A lot of them losing business to rate cutters who themselves are barely making a living (unless there is a huge volume to back it up)

    Realtors were feeling it because of websites like salebytheowner.com and others like it

    Now there is another one that would takedown the commission by 40% (instead of 100% from the alternative)

    It seems that the value of a good personality and strong business development acumen are no longer a requirement for success. But that's not true.

    There is a market for the bottom liners who are seeking for the lowest fee and there is a market for people who will pay for special services.

    We really need to differentiate ourselves by something. Would it be a low rate/ low commission. Or superior custom service and trust.

    Think of Apple, how the hell can they keep selling with those insane margins and getting away with it (Iphone costs 171$ and is sold at 699$).

    Or think about the banks, we have lower rates and yet we don't have all the market share.

  • Omer Quenneville on 2015-01-18 6:34:04 AM

    Like I said earlier, these types of operations have been around for ever. Some clients always try to save a buck and some see the value in paying a buck. I had one purchaser that hated to see an agent make a living, so he insisted and bought privately and paid $15,000 more than he should have for his $250,000 condo, then he realized it had no parking so he paid $15,000 for a $10,000 space for a total of $20,000 too much. He now brags about how he saved the commission. I see this every day. All of his friend now come to me. True story. He still doesn't like agents. He is growing more bitter as each day passes. I am a believer in sharing the buck, not all agents agree and should charge less. When I sign up a listing, I higher photographers, floor plan guys, cleaners, repair people, promotion material etc... It always comes back in droves. My feeling is, the commission my client gives me is to be shared with these people and in return I get faster and higher sales price. Clients see the value, I don't hold back simply because I think it will sell quick and don't spend a dime. Full service all the time. Discount brokers do none of this and it reflects in the end result. Most properties sell within 3% of asking that is a 6% range and most agent sales don't end up in court. In the past month I sold two condos, both of which I sold in multiple times in previous years, they keep coming back. I couldn't provide that level of results and that level of service at a discount.

  • Dominc on 2015-01-18 8:02:09 PM

    January 18, 2015
    Huffpost Canada Business

    Currently the Canadian Competition Bureau is in a lawsuit against the Toronto Real Estate Board in an effort to allow the public access to data that previously only agents had access to - in particular sold data. There is an argument that this data belongs to the public, and having it available will increase competition and benefit the consumer. Imagine if you could go to a website and automatically see every sold price in the neighborhood before even setting up a showing. If this happens, we may see a situation similar to what has happened in the United States, where sold data is public, and the MLS is only the 5th most popular real estate website. Other technology based companies have stepped in offering a better solution. This is one more step in opening up competition in the real estate industry and making the 5% commission model obsolete.

  • Dominc on 2015-01-18 9:07:20 PM

    Realtors are MAJOR problem behind our unrealistic house prices, wildly criticized by international banking communities. CREA is lobbying for it's own members in federal government to ensure their own financial gains on backs of general public through non transparency. OREA through their crystal ball projections suggested only 2.xx% moderate growth in prices this year to stimulate the market activity to ensure some salary for their "starving" members. And what is Mr. Oliver up to? "Nooooooooo, no bubble in our real estate?" Lies and manipulations proved to be effective in Canadian economy and pretty inexpensive in comparison to economic stimulus. And what is Mr. Harper saying? Not much other than proposing new legislation to outlaw and criminally prosecute peaceful demonstrators in Tar Sand expansions, BC west coast and climate destruction. And what is Mr. and Mrs. everyday Canadian saying these days? Speechless and busy trying to make it for the mortgage payment.

  • Omer Quenneville on 2015-01-18 9:26:18 PM

    I don't agree Dominic, the problem is the government interfering with the average person trying to buy a house. They pretty much closed the door on anyone that sees home ownership as a dream to be fulfilled and left it wide open for the foreign investor. The average Canadian needs to jump through a lot of hoops to get a home. In Hong Kong, if you don't have a local address you have to pay a huge tax to buy. It doesn't effect the local buyer but has slowed the foreign investor. Our problem is we keep electing the same idiots over and over again and then expect something to change.

  • Ben on 2015-01-19 7:55:29 AM

    First a disclosure: I am a Real Estate Broker, full time for the past 25 years.

    When newspapers report on average house prices in any city in Canada, the price includes the real estate commission. That's a fact. If organized Real Estate is outlawed this coming Friday, does any anyone really believe prices will drop by 5 or 6% the following Monday?

    It's a false argument that the Seller "saves" 5% by acting as their own agent. There is no secret cabal of Realtors and Realtor associations controlling the market. Fact is that almost all houses sold and bought, are done so with the use of a Realtor. Exceptions are new homes or condos, where non-licensed 'sales people' are common. True, there are less qualified or unskilled licensed Realtors working today.
    But 99.9% provide a fee-based service that is used by 99% of buyers and sellers.
    Sellers who wish to market their most valuable asset themselves can do so anytime. But don't tell me they get the best price possible, or truly 'save' the commission. It's the owners themselves who want the 'fee' on top of the sale price. Otherwise they would market their homes for 5 or 6% less than 'market value' for the buyer to get a better deal. Like that's going to happen?

  • Dominc on 2015-01-19 1:18:56 PM

    True, the greed is contagious!

  • John Kearns on 2015-04-27 1:33:13 AM

    If you are a commission disruptor I want to talk to you
    Johnkearns@telkus.net

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