Re: You get what you pay for, REM, January
Since the outset of the Competition Bureau/CREA discussions, many registrants and brokerages have started promoting “new” models of real estate practice and commission/fee structures.
To my mind, in the calculation: Gross sale price (minus) fees and/or commissions (equals) net price. The most important component is what the seller nets.
Richard Robbins pointed out in a recent seminar that “the only way” for a seller to obtain the “highest possible” gross selling price is
1) on MLS for a reasonable period (6-15 days);
2) in “showable” condition; to which I’ll add the unstated:
3) at a market-based asking price (with a pre-planned “expectation for acceptance of a target price,” which might be over/under the asking);
4) offering the typical/normal/within-range-of-expected co-operating broker fee;
5) competent legal interpretation of offer form/terms/clauses by seller’s rep;
6) competent negotiating skills by seller’s rep.
In my opinion, without these six components in place, a seller will likely not get the “highest possible” gross selling price and any “savings” from a discount fee/commission will likely go to the buyer.
Wouldn’t most sellers prefer immediate competing bids (at the standard co-op fee) versus one less-than-expected offer after a week or two of sparse showings? In other words, if the net to the seller is not increased, who cares how cheap the fee/commission is?
My only exception and reservation on the above comments is if the reduced fee/commission is charged up-front and as a non-refundable, non-contingent fee. Then perhaps that model is an innovation. Maybe it will be the thin edge of the wedge that will lead us to widespread use of retainers for both buyers and sellers. I whole-heartedly endorse a move to retainers as the standard operating procedure.
In general though, and notwithstanding any business model that might be offered to induce sellers/buyers to select a particular firm offering a new twist, real estate sales is a commission-based industry. To reduce an individual practitioner’s incentive is an invitation to reduce their industriousness.
Yes, we welcome all new, inventive, envelope-pushing and competitive business models, but after observing all the machinations of CREA, the Competition Bureau, et al, to me there is still nothing new under the sun.
Finally, I await RECO’s final position/interpretation of how a “mere posting” broker in Ontario can step into and out again of the agency aspects of a written Representation Agreement. My anticipation of the RECO decision is based on my understanding of REBBA 2002, that I can be deemed to have become an “agent of a client” by way of oral communication or actions that imply my unilateral “offer and acceptance” of the duties of a fiduciary.
Robert Ede
Sales Representative,
Re/Max Hallmark Realty
Toronto
