Real Talk!

Last February, after three years of discussion with the Canadian Real Estate Association (CREA), the Competition Bureau filed an application with the Competition Tribunal seeking to strike down CREA's rules regarding the MLS®, which it said restricted the ability to conduct real estate transactions without an agent.

The Competition Bureau wants for consumers to be able to pick and choose the services they want from a real estate agent. CREA has always been of the view that its rules regarding member board MLS systems do not in any way prevent or restrict a broad range of business models- there has never been a “fixed” rate for real estate services.

The Competition Bureau said it should be possible for Sellers to advertise their property on MLS® without having to use the other services provided by a Realtor®. Sellers would be able to hire an agent to put for-sale properties on the Multiple Listing Service® for a fee and if they wish, the sellers could carry out the remainder of the sales process themselves, thereby saving costs.

CREA challenged the Bureau, arguing that MLS® and Multiple Listing Service® trade marks were their property and assets. Under CREA’s rules, as the sole owner of the trade marks, CREA said they had both the right and the obligation to ensure compliance with the conditions governing the use of the MLS® trademarks.

CREA argued, also, that Canadian consumers have relied on the MLS® trade marks for generations as signifying highly professional and ethical real estate services. REALTORS® in Canada have spent hundreds of millions of dollars advertising their services in association with the MLS® trademarks. CREA has always been of the view that its rules regarding member board MLS® systems do not in any way prevent or restrict a broad range of business models.

The Multiple Listing Service® has been a valuable real estate tool in Canada for more than fifty years. There have always been three “pillars” or basic requirements for a listing to qualify for inclusion on a real estate Board’s Multiple Listing Service®. It is CREA’s view that consumers and REALTORS® both benefit from these basic features of MLS®.

The three existing requirements or “pillars” for a listing to qualify for the Multiple Listing Service include some offer of compensation between REALTORS®; continuous agency relationship during the term of the MLS® listing; and accuracy of information. If a listing goes into the Multiple Listing Service®, a member REALTOR® is required to verify the accuracy of information in the listing.

This week, it was announced that Canada's competition watchdog and the Canadian Real Estate Association have come to a compromise... they’ve got an agreement “in principle”. The terms of the agreement that will be presented to the 90,000 CREA members for ratification at the annual meeting in St. John's on Oct. 24. If ratified, the agreement will be filed with the tribunal and its terms will become binding for a ten year period. A bureau spokesman said the 10-year agreement allows realtors, sellers and buyers to adjust to new rules.

Of course, I don't know what all is in this agreement, however, according to a recently publicized quote from Competition Commissioner Melanie Aitken: "If ratified, the agreement will ensure that consumers have the ability to choose which services they want from a real estate agent when selling their home, and to pay for only those services."

For a flat fee of a few hundred dollars on the listing end, a Realtor® will put your listing on MLS® and will offer the selling realtor anywhere from a couple of thousand dollars down to $1, for selling the property. This then means that the buyers will have to pay their own Realtor's ® commission if they want to buy that property.

Hmmm... I wonder how many Buyers will prefer to look at property being marketed under the traditional model, knowing that the Sellers will be paying commission?

Certainly, Buyers will have to make changes to their budget... in the past, mortgage financing has included commission fees. Buyers were only required to come up with a deposit, a down payment and the usual closing costs and adjustments. Now, they will have to pay extra to have their own representation.

If dealing directly with a Seller, Buyer’s will have to trust that they are receiving full disclosure and will have to be wary of the Seller’s knowledge of the property. Otherwise, Buyers may hope to save costs by seeking out the services of the Seller’s agent... and there will be many more cases of multiple representation- precarious water for the inexperienced. Mistakes in this business are extremely costly.

To sum it up, those Buyers & Sellers who wish to utilize a listing-only service will have to have a fair degree of sophistication and understanding about the real estate process. Most will have to hire other experts and will need to have their lawyer more involved earlier in the process.

Michael Polzler, executive vice president of Re/Max Ontario-Atlantic Canada says, “We at Re/Max do not foresee any significant changes to the real estate landscape. There’s already a lot of options out there from a price perspective. Most people will choose to use a realtor when they sell their home because it’s a complicated transaction that could cost you a lot of money if you make a mistake.”

Why use a Realtor?

The services of a Realtor ® generally include open houses, websites, checking municipal permits over matters such as oil tanks, permits, by-laws, negotiation, disclosure and more- all of it, comfort that Buyers & Sellers have come to expect.

Studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts.

A REALTOR® will generally pre-screen and accompany qualified prospects through your property.
A Realtor® is bound by a strict code of ethics and standards of business practice.

A Realtor ® has been trained. All REALTORS® are graduates of a real estate education program and are committed to pursuing ongoing professional development courses.

A Realtor® understands their fiduciary duties.

A REALTOR® has access to up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your real estate goals accomplished, the property purchased or sold at the best price, quickly and with minimum hassle.

Sellers who use the full service package of a REALTOR®, generally, pay no selling costs unless the home sells; if they sell “by owner” they must pay a fee to have their property placed on MLS® and then, extensively advertise with their own money, and without guarantee of sale.

Buyers who use the full package services of a Realtor®, generally, have the costs of their services included in the purchase price, all of which has been determined by the Seller at the time of listing their property.

Fabian and I were recently called to a listing appointment in a nearby village. The property owner was just completing some minor repairs for damage that had occurred last winter when a group of vagrants had invaded the home, occupying it for about a week before neighbours called the authorities.

The newest crime trend, it seems, is holding illegal parties in vacant and foreclosed houses. Organizers are even bold enough to advertise on social network sites, like Facebook, hosting a night of drinking and revelry for profit, usually catering to underage crowds.

One such event advertised $10 a head and $3 per drink and said that attendees would be required to show I.D. (as if the whole thing was legal!). This sort of crime is prevalent across the USA where the recent economic crisis has left numerous homes empty. Is it a sign of the times?

In one community, a self-dubbed “party crew” was touring homes for sale to discover if they were occupied and if the utilities were turned on. While viewing the properties they would open or unlock doors and windows. Using MySpace, they would advertise a telephone number to call, in order to be texted the location of the party.

Most parties resulted in drunken brawls, crowds of more than 500 and many left behind thousands of dollars in damages. Broken toilets, smashed drywall, graffiti, feces, urine, vomit and blood are left for the victims to clean up. Such was the case of our recent prospective listing, where the revellers had smashed chandeliers and windows. Apart from petty and irritating vandalism, the cost of this sort of invasion is emotional, too.

Vacant homes are being burglarized by scrappers, as well. Whether under renovation or up for sale vacant homes are being broken into for tools and building material, particularly copper piping, it appears. There have been reports, also, of outside air conditioner compressors and furnaces being targeted. In most of the cases, this is considered the work of seasoned pros that are good enough to shut the water off, before stealing important plumbing components.

Most of these burglaries are crimes of opportunity, according to authorities. Burglars will often check a residence for an unlocked door or open window, because that makes for an easy target. They mainly steal items that they can pawn for quick money. Police suspect most burglars are people trying to get money to feed a drug habit.

In some neighbourhoods, authorities have suggested that, in addition to keeping doors and windows locked, residents should purchase ventilation devices that will allow airflow while doors and windows are closed, install security lights with motion sensors outside the residence, and keep bushes trimmed so there are fewer places for criminals to hide.

What to do about these crimes? Most folks know that their insurance companies require your house have a baby-sitter. We really aren’t supposed to leave them unattended. However, it is also important to let your neighbours know that you plan to be away... ask them to watch for strange cars and visitors and to call the police if they see something suspicious.

Property sellers are also getting fed up with people trying to steal their property... yup, I’m talking about the dreaded “low ball” offer. Many offers are coming in lower than Sellers expectation and if their Realtor hasn’t prepared them, they’re angry and disappointed.

Now, there are some times that a lowball isn’t meant to steal a property, there are times that a Buyer is stretching their budget and just taking a shot at it, hoping you might be in a position to accept their low offer. In this case, it isn’t a matter of disrespect, it may be a little cheeky... but it isn’t meant to insult.

Actually, the term "lowball" doesn't have a formal definition in real estate, though some salespeople suggest that any offer that's less than some large percentage of either the fair market value or asking price of the property is a lowball. Others will tell you that any offer could be labelled as "lowball" if it provokes the seller to outrage or anger.

While a lowball offer may be unwelcome, it should be seen as an opportunity to open negotiations with a Buyer. If a Seller wants to sell the property, every offer deserves consideration and preferably, a counteroffer. Buyers and Sellers need to know the as much as possible about each other's rationale, in order to properly negotiate. I believe that it is up to the Realtors to present the offers and counteroffers with some explanation, in order for the parties to properly consider each offer/counteroffer.

Realtors presenting a lowball offer need to spend time preparing for the presentation. The opening offer presentation should include information about the Buyers’ intentions. Perhaps it is the Buyer's belief that the property will not attract many good offers and that the asking price is unrealistic... the Seller will want to know why... and it is reasonable for the Buyer to offer some explanation. I’ve had some people come with lists of deficiencies for the subject property, however, generally Sellers are aware of the obvious shortcomings of their property and have made allowances in their asking price.

Looking for a good deal isn’t really criminal, although some opportunists do seek desperate Sellers...
If we’re going to talk about criminal... here’s some recent news:

Oshawa couple charged in real estate open house thefts:

Facing more than two dozen charges each, after items were stolen during real estate open houses are Peter Mason King, 52, and Nora Ann Thomson, 51, both of Mary Street North in Oshawa. While investigating, police followed the suspects to Oakville where the two were observed lifting items during open houses and a store. Police have recovered a large quantity of jewellery, money and property totalling approximately $100,000

I’ve said it before, and I will say it again. This is exactly why I don’t care for public open houses.