Tuesday, October 19, 2010

Flat Fee Commissions; The Race for the Bottom

Consumers are absolutely entitled to the Lowest possible prices for everything that they use. Who has this slogan? " The Lowest Price is the Law" Why not Free?

If a consumer had the choice to pay $4.00 or $8.00 for the same item what would they select? If you were shopping for bed linens and you found the 400 thread count sheets at Winner's or a boutique location at Hazelton Lanes in Yorkville would your selection be any different? So every store in Hazelton Lanes should close!

But... real estate services are not packages that can be delivered off the self. The niche marketing developed by For Sale By Owner sites and the Property Guys have resorted to calling REALTORS robbers to garner your attention. They have the most to lose in this war on rhetoric. FSBO sites will be decimated by agents offering FLAT fee commissions. [why post on a website seen by hundreds when you can post on a website MLS.ca seen by hundreds of thousands daily.]

It sounds wonderful that Buyers can contract for services directly from Real Estate Agents. It is simple. Well Not really, Banks will not pay commissions in addition to a Purchase Contract. So although you have bought a house you cannot add the appraisal, survey, hydro meter, hook ups, development charges and real estate fee to the contract, they are expenses of the sale.

There is no commission at all....

"Quite a lot of agents are going to offer fees for service. If the vendor is listing for a fee, why can't the buyer's agent do the same? Then there's no commission to deal with at all," Mr. Andrew said. "Everybody engaging the services of a real estate agent would have to be on a contract."

The other major ramification of the agreement could be a gradually squeezing of for-sale-by-owner (FSBO) sites, which could find themselves competing more and more as discount models on the MLS. That was one of the fears of National FSBO Network, whose vice-president of operations, Stephen Skelly, had argued in a letter to the Competition Tribunal that if agents list property on the MLS for a one-time fee and provide no additional service, his members would not be able to compete.

http://www.montrealgazette.com/business/fp/money/CREA+nothing+deal+lawyer+says/3691706/story.html
Read more: http://www.montrealgazette.com/business/fp/money/CREA+nothing+deal+lawyer+says/3691706/story.html#ixzz12pBOYXKk
There was the nugget; If agents list on the MLS and offer no other [additional] services. No Pricing, Presentation, Marketing, Negotiation or Transaction Management?

So if there is a mortgage or debt against the property and the owner has bills to pay... The agent has offered you CASH back post closing; where does that come from?

It all sounds great, but Real Estate is a service that some people need and some people don't. If you drive, you hate filling up. You hate gas prices, Great. Don't fill up. Don't Drive.

But if you do need to sell, you do need the services of a professional realtor, to explain your options, ensure that you understand your choices, make your decisions and complete those promises that you made contractually to the other party. We will need to book, organize and record showings, inspections, appraisals. Confirm financing. Deal with your lawyer to confirm they have received your documentation and have completed their obligations to search title, check for municipal work orders, purchase title insurance and verify taxes. Hand over the survey of the property, not a photocopy of a fax of a copy you received. You need and want my Errors and Omissions Insurance.

Your word to your bank that you have registered your mortgage properly and that the bank has a proper 1st Mortgage is not enough, they want your lawyer to sign off, with photo ID's and Passports? Why? Fraud is rampant in our electronic fast paced lifestyle.

Everything in life may be found for less from someone, But I am able to answer my own phone before the third ring, and will visit you after 9 PM if need be.

3 comments:

C. Moffat said...

Hello!

Do you have any advice for buying from developers?

I am a first time home buyer, a complete virgin in that respect and I am looking for all the advice I can get.

The place I am looking for is in the Brampton/Georgetown area. Right now I am thinking of buying from Weavers Mill in Georgetown, but I am shopping around quite a bit.

shopTOism said...

Thank you for your questions,

It is exciting to buy your first place!

Take an agent with you when you register at the sales office, Buying off of plans provides a cooling off period, Take the contract to a lawyer to have the closing costs examined and explained in detail to you and CAPPED by the builder in writing. Consider the situational placement of the property - the vacant field beside you may be the gas station or convenience store. Consider the traffic flow off of main streets and how head lights shine into houses in the dark. Be mindful of sunsets and bright yards with no shade. Trees can be exciting!

I always recommend buying a resale as you often get the fence and air installed with some upgrades to taste where you can see and touch what you are buying.

The prices are always better preconstruction, and YOU get to select where and what model on what street. You get to pick the upgrades.

Good Luck. What ever you choice.
If I can assist you, call me directly at 647 218 2414

I know that Eden Oaks Homes is a reputable and established builder that will deliver what was promised.

Canadadeals.ca said...

Excellent Blog.. When Buying or Selling Real Estate in Canada free Classified ad services like kijiji and www.canadadeals.ca are a great way to advertise, research and market real estate over the web.