On Monday, real estate agents from all across Canada gathered for their annual meeting in Ottawa. The important item on the agenda was what their response was going to be to the competition bureau’s inquiry about their business practices.
CREA fired back, voting to approve some interesting changes in the industry. They decided to allow agents to offer a fixed price listing. They also voted to allow agents to be able to pass along a buyer’s contact information to the seller if the seller so chose. Each individual local real estate board would have to vote to approve the changes.
The competition bureau shot back quickly. They called the changes “… (a) blank cheque out there for CREA and its members to pass any rules it wants.” The crux of the issue still remains that the competition bureau thinks that the current model forces sellers to pay for services they don’t want.
The ability for a consumer to pay a listing agent a fixed fee has been around forever. As long as that agent offers half of that commission to other agents, everything is all good. Frankly, this change is about as innovative as changing the label on a bag of chips while keeping the same flavor inside. Yawn.
Once the competition bureau gets done with CREA, the door will be open to actual innovation in the business. Too often we hear stories of discounters being shunned like lepers when they try to enter a market.
Who says real estate agents have to be compensated by a percentage of the sale? Their argument has always been that since their paycheck comes only when the house sells, that’s in the seller’s best interest. In reality, all it creates is an incentive to get the deal done, seller’s proceeds be damned.
Organized real estate is hardly going away. Buyers, (especially naive first timers) want to have a trusted agent in their corner. They want someone pointing out reasons why one home is a better value than another. And since buyers aren’t likely to shell out dollars from their own pocket to pay their agent, sellers will still have to offer a commission to buyer’s agents.
Yet what about selling? I’d like someone to explain to me what extra work an agent does to market a half a million dollar property to a $200,000 one. If someone takes up that challenge, they’ll probably throw out reasons like virtual tours, doing open houses, and all sorts of other things Realtors do to sell homes. But how many of these extras are truly effective? I’d bet most of them are just activity for the sake of activity. Sellers see an agent working hard, the agent justifies their commission.
How much extra work does an agent have to put in to justify $15,000 in extra commissions?
For the record, no one is recommending giving sellers direct access to MLS. If that happens, the accuracy of the data goes straight down the crapper. There needs to be a competent agent inputing the data. I just challenge that a well priced house sells itself and the fees charged should more reflect that.