Paul Wildy

Okay, I see what this thread is about now.

If you ask me its basic economics - supply and demand and all that. If realtors really earned that much money then everybody would become one (after all I understand it only takes a course lasting a couple of months) but the fact is the majority of them dont earn a fortune and they face plenty of risk (some months with no income at all) just like any small business. Of course, like in any industry, there are the "elite" that earn millions per year selling high-end homes in lucrative markets but the majority certainly seem to live modestly as far as I can see.

Estate agents in the UK only charge around 1% but as anyone trying to sell their house to move to Canada will testify the reality is that there isnt enough money in it for them to make them actually give a sh*** whether they sell your house or not. It simply isnt a sufficient incentive and so you get crap service. If your house sells then great, they pocket a couple of thousand, but if it doesnt sell who cares? - not them.

For those that dont want to fork-out 6% of the value of their hard-earned biggest asset then the answer is simple - dont do it. There are alternatives - private sales costing nothing at all through to services like Property Guys and Assist-to-sell that offer much cheaper alternatives to the full-service agencies. For anyone selling it would be stupid not to at least try one of these cheaper methods first and if it doesnt work then get a realtor in.

destinationnovascotia

I haven't got a problem with Canadian realtors earning more from a sale than UK estate agents. I just don't see why it varies so much in relation to the price of the house.

I am not suggesting that they should earn any less, just that it should be worked out differently with everyone paying the same amount of money for the same about of work undertaken.

MB-Realtor

There are many of us in the business who would like to see drastic changes to reflect the 21st Century way of working.

A sliding scale charge may be necessary due to, for instance;

liability is going to be more on a $500,000 house than a $100,000 one.

there is often more work on an expensive house (often the selling agent has to accompany the buying agent due to various issues).


Personally I think a fair charge to sell a house would be $5,000 + 2% of the final selling price, split 50/50 between selling & buying agents if a sale is accomplished, if there is not a sale, or there is an aborted sale a $500 charge + direct out of pocket costs.

JonboyE

I think the best way, at least for peace of mind, is not to think "my house is worth $400k, but I have to pay those @#$%#@& realtors $20k to sell it". Just think "my house is worth $380k".

At the end of the day it is just numbers on a piece of paper. You never had the $400k in the first place so why worry about losing part of it.

destinationnovascotia

Just another thought. When I was looking for my house our final shortlist was 2 houses. The one I didn't buy was about $120,000 cheaper but needed alot of work.

If I had bought the cheaper one my realtor would have earned less. She still took me around to see them all, gave me advice and did the paperwork.

How would that have been fair for her?

JonboyE

I would also think that the higher the value of the house, the fewer number of buyers around with the means to pay for it. Hence higher marketing costs.

I would not have a problem with this as long as there was no fee if the home did not sell during the realtor's mandate, or to a buyer who was not introduced during the realtor's mandate.

Paul Wildy

Actually I do agree with the part about the fee not being a percentage of the sale price - that doesn't seem to make sense to me. And in the original post here by MB Realto the process described in such detail is clearly the same regardless of the value of the house.

They do that in the UK too though - even our solicitor in the UK calculated his fee as a percentage of the sale price and that process is exactly the same amount of work for a 40k or a 400k house. Mind you he was really a robbing b****d.

Canucklehead

Good evening: My sister is a Real Estate broker in Nova Scotia...your description of the role sounds very similar to her experience. FWIW, she was shocked when I described estate agents' practices, lack of regulation, and no requirement for formal qualifications in the UK. We have sold properties using an online agent in the UK i.e Housenetwork for a minimal fee and avoid contact with the shiny suited, spotty youths who tend to predominate in the property game down our way.

Canucklehead

ray1968

As a realtor it is very hard to justify 5% of selling price - in the GTA 4.5 - 4% is actually more common from the trades i have seen and 2.5% of that goes to the buying broker. So the listing broker actually gets 1.5 - 2%

Also theres no way to say a realtor is the equivalent of a lawyers - realtors are more business people - more marketeers, many of them spend many thousands on advertising not just the properties but also themselves to get clients, they have to pay brokerages a monthly fee or a %tage of their commission. They also don't have pension/holiday/sick pay or disability or medical benefits so they also need to pay for that themselves.

Realtors are Not the be all and end all - but on the same hand they do have the guts to go out and start their own business without a safety net - how many people can say they can do that? Also there may be unscrupulous ones and if you come across them make sure you let everyone know who they are, the sooner they are weeded out of the business the better.


Finally the CDN equivalent of what the UK system is like would be to list exclusively which in the GTA is 2.5% of commission or less - this is not far off from UK prices - but i does mean that no buying broker is involved and your house will sit on the market for longer. There of course the DIY route - which some people try but it doesn't work more often then it does , or if the job is so simple and commissions are so great - go out and get licensed and then let us know how it really is

destinationnovascotia

I know, the percentage game seems to apply everywhere. I just don't understand why as it doesn't appear to benefit anyone unless you are a realtor or estate agent who specializes in high end properties.

Judy in Calgary

Something that some readers don't seem to realize is that, in order to serve the high end market, you have to live a high end lifestyle. By that I mean that you have to belong to the same golf club as your prospective clients, you have to dress as they do, you have to drive the same cars as they do, etc. So you have to invest money in order to earn money.

One of the reasons I know that is that, a long time ago, I was an administrative assistant for a high end head hunter. He and his partner lived in Mount Royal (Calgary's premier "snob" district), belonged to the Calgary Petroleum Club and the Glencoe Club, drove luxury cars, dressed to the nines, travelled first class, stayed in 4 and 5 star hotels, etc. Partly because of that, they earned credibility amongst Calgary's business executives. They were considered to be the "go to" guys when it came to head hunting. (With that having been said, I should add that they also provided a good level of service. But I don't believe the good service, on its own, would have been enough to earn the position they'd carved out for themselves.)

When it comes to sales, the 80/20 rule applies. You get 80% of your revenue from 20% of your clients. The clients who provide you with 20% of your revenue give you 80% of your headaches. They are the ones who are much more likely to take a long time making up their minds whether or not to buy, quibble about minor details, change their minds, return merchandise for refunds, etc. High end clients tend to be decisive, they recognize value when they see it, they're interested in leveraging their time, and they don't argue about a few thousand dollars here and a few thousand dollars there.

It takes time to build relationships with high end clients, but the efforts are amply rewarded. Once you gain credibility in that group, you can laugh all the way to the bank.

Those of you who feel uncomfortable with the modus operandi of Canadian realtors don't have to use one. You can sell your houses yourselves. Even if you do use a realtor, you don't have to pay the commissions that are thought of as "standard." You can negotiate a lower percentage or a flat fee. You can find hungry realtors who will do that. Whether or not they are necessarily the most competent realtors, I don't know. But, hey, it's your house, your money, and your time.

I think there's a fine balance between watching your pennies and using that energy to make more money. Sure, I could change my car's oil if I really wanted to. But, what's a more profitable use of my time -- paying Jiffy Lube to change the oil while I earn more money than I'm paying them or foregoing that income and changing the oil myself?

Also, remember that realtors have a lot of expenses. As Ray said, they are independent business operators who earn 100% of their money from commissions. In addition to advertising, maintaining a car in which to drive clients to houses, etc., they have office expenses. The real estate salesperson does not get all of the commission. He/she has to pay close to half of it to his/her company's office, to pay the rent, to pay for office furniture and equipment, to pay for support staff, etc. As Ray said, they get no supplementary medical insurance, no holiday pay, etc. In addition to that, according to the Canadian system, they get paid only when they sell a house. There are many houses that they advertise, show to buyers, etc., that don't sell in the 3-month period that a listing typically lasts.

By the way, if you try to sell your house yourself, I can almost guarantee you that buyers will come to you and say, "Well, you're not paying a real estate commission, so you should lower your price." And you'll attract those troublesome tire kickers and cheapskates who are such a nuisance. That's what happened to my husband and me when we tried to sell our house. (We then discovered the benefit of having a real estate salesperson who, amongst other things, qualifies buyers before he/she lets them in your front door.)

I believe MB Realtor gave a fine explanation of what realtors in Canada do. I appreciated his original post in this thread, as well as the other information he has provided to this forum. But what is a better use of his time -- concentrating on making himself known to the sellers who are quite happy to hire a real estate salesperson or convert reluctant British expats to the Canadian way of house selling? He's a free man, of course, and he's welcome to spend his time any way he likes. But my personal opinion is that, in threads like this, he's throwing pearls to swine.

With that having been said, though, I believe the information he provided is Wiki-worthy. If MB Realtor would like to transfer that information to a Wiki article, I would welcome it. If he doesn't want to do it himself, or doesn't have time to do it, I'll be glad to do it.
x

MB-Realtor

Judy, I don't consider it pearls before swine, I'm proud of what I do, though I must admit that sometimes it does get a little depressing to see my chosen profession being put down all the time, so sometimes I might just bite a little.

I don't look at the time I spend on here as "work", I like the community and I try to contribute to threads that I am knowledgeable on, its not all about real estate.

We had a lot of help from other people when we emigrated, and I'm just trying to "pay it forward". Its so different here from the UK, I get a kick out of helping people. If I do get a client from it, thats great, if not I'm still going to contribute.

Stewart.

MB-Realtor

I've not done a WIKI post, I'll have a go with it, and if I get into problems I'll come looking for you Judy to put it right.

Poppy2

Oh ok. I am clearly one of the apparently petulant members who are the swine having pearls thrown to them.

I thought this thread was going very well and some really important points were being raised in a very well mannered way, until we were refered to as swine.

I dont understand the point regarding the high end living and attracting the 80/20 clients, that point was not clear to me, but that often is the case when I read in haste. So I apologise in advance there.

MB-Realtor, as usual, has been very informative and patient. I like the fact that I can be honest about my gut reaction and havent been totally slammed for it, as has happened in the past. This thread goes a long way to mending that apparent divide between people who understand the process and people who have unresolved doubts. It all helps and is why we need BE, to explore issues, expand upon things and understand new processes or difficult ones.

I apologise if my contribution to this thread made anyone feel that they were wasting their time, I greatly appreciate the effort that the OP went to. Thank you

Mrs Muesli

No, I don't much like being regarded as "swine", although they are extremely intelligent animals, so I'll not protest too loudly. However, I don't think Judy in Calgary/Italy meant it in a particularly flattering way.
Nor do I get the high flying bit....most of us are not in that category anyway, so why is that reference relevant? It still all boils down to what real estate agents do to earn their inflated fees, and although MB-realtor has explained all the ins and outs of his work, it doesn's make parting with that amount of money any less painful. I would suggest that even the high flyers and high earners don't actually enjoy paying 5% or 6% commission.