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Old 05-03-2008, 12:16 PM   #1
TroyD
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Default 2% Realty - Edmonton based realty company with only 2% fees

I was dropping of my car at the body shop this morning and while waiting for Enterprise to pick me up, I started to read the new Alberta Venture. They had a profile on this company: 2% Realty.

The whole article showed a very entrepreneurieal 28 year old (forget his name) from Edmonton. Who didn't see the point in paying more than 2% in fees, so he started his own company.

Check it out! http://www.twopercentrealty.ca/
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Old 07-03-2008, 02:40 PM   #2
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I guess it's a start, but personally I still have a problem with percentage based commissions for real estate. I think of it this way: prices from 2003-2006 nearly doubled in Edmonton. Were real estate agents working twice as hard selling homes in that time? Of course not! If anything, they were working far less because houses were selling before they'd even had a chance to put a sign in the lawn.

In addition, such a system does very little to encourage agents to try to get as much as possible for their clients homes, but does plenty to encourage them to take the first reasonable offer and quickly move on to the next.
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Old 07-03-2008, 03:42 PM   #3
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In addition, such a system does very little to encourage agents to try to get as much as possible for their clients homes, but does plenty to encourage them to take the first reasonable offer and quickly move on to the next.
I thought the opposite might apply, the reason we have commisions is to encourage agents to "push" up the price, so they can earn a little more. If we had a set fee, without question, the incentive would be to push through the first offer, and move on as quick as possible to the next set fee.

Some countires though are dabling with salaried real estate agents. I am not sure about this, seems to me there should be some incentive for having to work all hours of the night to close a deal (which real estate agents do).
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Old 07-03-2008, 04:05 PM   #4
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Well, working with the commonly accepted 7% on the first 100k, and 3% thereafter, let's take a look at an example.

Agent 1 sells a house for $500k on the first offer he gets, so he can move along to the next one. That's about $19,000 commission to be split between the two agents. Home owner clears $481k.

Agent 2 sells the exact same house for $520k, after working a bit harder and not taking the first offer that came along. Commission to be split is $19,600. Home owner clears $500.5k.

That's a very substantial amount of difference to the home owner, and absolute peanuts to the real estate agent. Do you see what I'm getting at?

A better system would have a set base fee to sell the place for 500k, and then the agent gets a substantial portion of anything above that. I haven't given much thought to the mechanics of how it would work, how you determine what the base price of the house and the base fee is, etc, to be honest. But in my opinion the current commission system is one that is completely broken.
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Old 10-03-2008, 08:47 PM   #5
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But in my opinion the current commission system is one that is completely broken.
Simple fix. It's called COMFREE!!! Pay flat rate of $695 and you also get the most motivated real estate agent you can ever find. I have sold a few houses via the COMFREE system and don't understand how real estate agents stay in business. The hardest part of selling a house is keeping it clean and presentable. Have yet to see an agent who cleans houses.

I was selling a house about 4 years ago and called a number of agents. The highest listing price any of them would go for was 185k. I listed on COMFREE for 197k and sold for 194k. This was before the market got hot so it was unheard of to get above list. Had I used a real estate agent I would have made a net of 175k max assuming I got full list vs. the 193k I made selling it myself.

A real estate agents 1 and only focus is getting listings. Houses sell themselves.

Last edited by Ponza; 10-03-2008 at 08:52 PM..
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Old 10-03-2008, 11:55 PM   #6
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Well, working with the commonly accepted 7% on the first 100k, and 3% thereafter, let's take a look at an example.

Agent 1 sells a house for $500k on the first offer he gets, so he can move along to the next one. That's about $19,000 commission to be split between the two agents. Home owner clears $481k.

Agent 2 sells the exact same house for $520k, after working a bit harder and not taking the first offer that came along. Commission to be split is $19,600. Home owner clears $500.5k.

That's a very substantial amount of difference to the home owner, and absolute peanuts to the real estate agent. Do you see what I'm getting at?

A better system would have a set base fee to sell the place for 500k, and then the agent gets a substantial portion of anything above that. I haven't given much thought to the mechanics of how it would work, how you determine what the base price of the house and the base fee is, etc, to be honest. But in my opinion the current commission system is one that is completely broken.

Does anyone really think that the amount of work to sell one house equates to $19,600 for an average house in Edmonton??? Most people do 99% of the legwork on the Internet and I hope Comfree, 2 % Realty, etc become the norm. You can see the sellers starting to realize this as over 30% of homes for sale in Edmonton are on Comfree now.
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Old 11-03-2008, 08:44 AM   #7
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Simple fix. It's called COMFREE!!!
Absolutely, that's what I used to sell my condo a few years ago. It wasn't easy and took longer than I'd expected, and I definitely got sick of having an open house every Sat/Sun for a couple months, but eventually I got list price for my place. On the flip side, when I bought that condo I had used a realtor. That doesn't cost the buyer anything (directly anyway), and to be honest my realtor was useless. They tried to set up a system to automatically forward listings in my price range and preferred area, and it took them weeks to do it right. They got my email address wrong, the price range wrong, and so on. Eventually I took to cruising MLS myself to find properties I was interested in. All the agent did was meet me and take a quick walk through the place, and then some paper work on the offer itself. Unfortunately it was a family friend (every family has several, am I right?), and I couldn't turf them even though I thought they were useless.

I still think there's a place for realtors for people who don't have the time or inclination to sell their place on their own, but surely their traditional fees are impossible to justify.
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Old 16-03-2008, 02:42 PM   #8
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Realtors have been raking in the money the last few years. Lawyers get around $575.00 or whatever on a purchase, but not a percentage.
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Old 16-03-2008, 04:41 PM   #9
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Realtors have been raking in the money the last few years. Lawyers get around $575.00 or whatever on a purchase, but not a percentage.
although on cases where the outcome and the time and expenses required to achieve it are uncertain (as in personal injury or libel suits - selling a house), a contingency - or percentage - is used by lawyers also...
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Old 23-05-2008, 10:11 PM   #10
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Quote:
Originally Posted by raz0469 View Post
But in my opinion the current commission system is one that is completely broken.
Simple fix. It's called COMFREE!!! Pay flat rate of $695 and you also get the most motivated real estate agent you can ever find. I have sold a few houses via the COMFREE system
Check out http://edmonton.comfree.ca/ - then click on the Monthly Reports button - then view the April 2008 report.

There were 3,562 listings - 233 sold... More than 93% of those listing through ComFree did not sell. If one believes the 3,329 non-sellers bought the minimum package of $695, those non-sellers paid ComFree more than $2.3 million dollars. If they purchased the enhanced package.........

These sellers did not save ten's of thousands in commissions each - they paid ComFree $2.3 million, did all the work themselves - saved nothing & did not sell their house.

Last time I checked, realtors paid all the costs of advertising out of their own pocket and charged their clients nothing unless they could sell the property at a price the seller accepted......
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Old 26-05-2008, 08:57 PM   #11
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Out of the total commission, the seller's agent:
1) kicks back a portion to the buyer's agent

2) kicks back a portion to their real estate office (often in the form of mandatory charges like paying monthly fees for office space etc. where the agency makes a profit no matter what, or in the form of referral fees for clients who arrive as part of, say, a corporate relocation...these clients are essentially guaranteed to buy so the agent has to pay add'l kickbacks for them)

3) spends a portion of the commission on what I'll call "actual" expenses: gas, stationery, advertising, etc.

4) keeps the rest for him/herself as payment for the actual hours worked.

So our example commission of $19,600 gets sliced and diced quite a bit before what you'd actually consider the agent's salary.

That said, agents' business model is fading. As Comfree have figured out, you can provide people with the info they need over the internet and clients can shop through dozens of places in one evening from their existing home. Gone are the days when the agents controlled all the info about what else is available and for how much.

The main issue is achieving critical mass. 100 different agents/companies all advertising on the internet are useless as each would have only a few listings and nobody would be able to go to all 100 websites. But with only 2 sites (MLS and Comfree) dominating the market it becomes a lot easier. I see the market reaching an equilibrium, with Comfree growing further in Edmonton (and especially in other parts of Canada!) but a sizable proportion of sellers still choosing to employ agents given all the "grunt work" involved with fielding calls, hosting open houses, negotiating, etc.

Finally, April was not a great month for sales stats, Comfree or other. The market (including the 70% not controlled by Comfree) simply has waaaay more listings than at anytime in recent months. With the flood of listings, people are being a lot more choosy.

Last edited by Transplanted_Edm; 26-05-2008 at 09:04 PM..
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Old 22-03-2010, 02:52 PM   #12
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http://home.mytelus.com/telusen/port...CatID=National
Personally I think real estate fees are high.
It's been ages since I used a realtor.
If they operate the same as before (7% on the first $100,000.00 and 3% anything over that).
What gets me is a realtor telling someone to drop their price by $20,000.00. The realtor takes a $600 hit on his commission and you have dropped your price $20,000.00. That should not happen if he has priced it right in the first place.
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Old 22-03-2010, 07:10 PM   #13
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I'd consider using a realtor to sell my home if they cleaned it from top to bottom every time I had to vacate it when it was being shown.

What really gets me with realtors is the TOTAL lack of quality pictures and information on MLS and their listings. Often only a couple pictures and never any tax, condo fee, or utility information posted, like on Comfree. They're gatekeepers, not salespeople. I've never been shown a house by a realtor that they actually could tell me about, always just "Take a look around, I'll be here in the kitchen playing on my Blackberry".
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Old 22-03-2010, 07:26 PM   #14
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Oh no...2% realty...what's going to happen to Terry Paranych? Who will feed his poor starving children?

Ok, everyone get out of the pool.
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Old 22-03-2010, 07:32 PM   #15
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I'd consider using a realtor to sell my home if they cleaned it from top to bottom every time I had to vacate it when it was being shown.

What really gets me with realtors is the TOTAL lack of quality pictures and information on MLS and their listings. Often only a couple pictures and never any tax, condo fee, or utility information posted, like on Comfree. They're gatekeepers, not salespeople. I've never been shown a house by a realtor that they actually could tell me about, always just "Take a look around, I'll be here in the kitchen playing on my Blackberry".
Just like any other profession or service there are those who are good at what they do and there are those that aren't. Unfortunately, there are less good ones than bad...and that can be said for any profession.
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Old 22-03-2010, 09:15 PM   #16
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Yeah but all other professions actually require some skill to begin with.
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Old 22-03-2010, 10:31 PM   #17
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You don't think negotiation is a skill? Obama must have just been lucky this weekend then.
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Old 23-03-2010, 06:51 AM   #18
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My main issue is the simple fact that the fees are based on a percentage of the sale value of the home. I quite honestly don't think that's a fair way of determining the cost of their services at all. When the real estate market in Edmonton was going up 10, 20, or 50% a year in Edmonton from 2002 to 2008, were real estate agents working that much harder? Of course not. If anything they were laughing all the way to the bank selling homes without even showing them first.
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Old 23-03-2010, 11:45 AM   #19
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I'd be ok with flat fees.
$500 to get on MLS with professional pictures (FYI an iphone is not professional pictures) and a long write up with no typos. this is really the exception at the moment rather than the standard. You want aerial photos? sure that's $400 extra. views of the house at day and night? that's an extra $200.

I also think the onus/costs should be split up.
$1000 to have a negotiator - both sides can pay independently. perhaps a lower fee but a with a commission structure that they get paid depending on how far off the deal was from list price. huge discount off list - buyer's agent get's a nice commission. sell for over list - seller's agent gets a nice commission. selling negotiators would really only agree to it if the place was listed properly. buyers negotiators would work hard to lower the price as much as possible.

My beef is that it's a monopoly. you have to be a realtor to really list on MLS, which means you have to agree to their mostly non-negotiable commission structures.
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Old 23-03-2010, 01:32 PM   #20
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My beef is that it's a monopoly. you have to be a realtor to really list on MLS, which means you have to agree to their mostly non-negotiable commission structures.
It is changing (was on TV news last night):

http://www.chathamdailynews.ca/Artic...aspx?e=2502892

Quote:
Fair could not discuss the amendments in detail since the issue is before a federal tribunal but did confirm the changes make it possible for homeowners to pay a one-time fee to list a property on the MLS -- which would ensure maximum exposure -- and have prospective buyers contact them directly by phone.

With the vote, CREA believes it has fully addressed concerns raised by the Competition Bureau without sacrificing the quality of information on the MLS, the association said.
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Old 24-03-2010, 11:10 AM   #21
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The Competition Bureau rejected the changes as not enough, by the way, hence the tribunal.
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Old 08-04-2010, 01:39 PM   #22
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Ref. the Com-free comment. That Com-free person is exactly why the Competition Bureau needs to look at that company and all for sale by owners. Private sellers hate realtors, but they charge even more and get to keep all the money whereas realtors pay ridiculous amounts out plus taxes and brokerage fees. Com-free states buyers get to keep the commission, so there is a commission portion being kept by sellers, yet they don't allow buyers with realtors to show their homes or pay half the commission, so they are anti-competetive. Plus, as it is a commission portion, then they should have to declare that portion as income. It might be difficult to say what that portion should be, but it should be a set percentage that is declared. Either that or capital gains taxes should perhaps come back. The Competition Bureau says prices should come down with competition. Well, not if for sale by owners have anything to do with it as the fellow on here shows. What he did was rip off a buyer. Private sellers should be takiing off the commision portion they hate realtors for EARNING - earning anything after all the costs they have to pay - while sellers, kind of an underground economy of realtors without any experience at all - want to keep all the money they hate realtors for earning. Buyers should refuse to pay it - refuse to be ripped off for no service, no experience, by buyers who are greedy. They won't let a realtor show a home and pay half the commission saved; sellers want it all themselves. The government needs to get involved re. private sellers ripping off buyers. Te example on here shows what happens ref. private sellers. The buyer paid more without commission having to be paid by the seller than he or she would have through a realtor.
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Old 08-04-2010, 01:53 PM   #23
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This is what I was referring to. Since the commission is being kept and it is stated it is being kept by sellers, it should have to be declared as income with taxes paid on it. A person should have to take out some kind of insurance, also, to prove they have enough to be personally sued by buyers. Realtors have insurance, but buyers have to sue a seller directly. What if it is a bankruptcy or that person is leaving the provinces. Realors take courses, have specific forms and duties and liability, but sellers seem to just think they can do anything. The seller here just ripped off a buyer and gets to keep all the commission he thinks a realtor shouldn't earn. Why should he get to keep that commission part without paying taxes on it? Buyers are being ripped off by for sale by owners like this guy.

Simple fix. It's called COMFREE!!! Pay flat rate of $695 and you also get the most motivated real estate agent you can ever find. I have sold a few houses via the COMFREE system and don't understand how real estate agents stay in business. The hardest part of selling a house is keeping it clean and presentable. Have yet to see an agent who cleans houses.

I was selling a house about 4 years ago and called a number of agents. The highest listing price any of them would go for was 185k. I listed on COMFREE for 197k and sold for 194k. This was before the market got hot so it was unheard of to get above list. Had I used a real estate agent I would have made a net of 175k max assuming I got full list vs. the 193k I made selling it myself.

A real estate agents 1 and only focus is getting listings. Houses sell themselves.
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Old 08-04-2010, 06:01 PM   #24
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^Not sure if you saying private sellers should declare their commission or what.
Are you for private sales or not?.
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Old 12-04-2010, 03:32 PM   #25
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Default Sure, for sale by owners can sell-but not keep the commission portion tax-free

If the Competition Act thinks that prices will come down because of competition, yet for sale by owners don't reduce their prices (ie the include commissions in their prices), yet they won't allow Realtors to show their homes and pay half the commission and they don't have to pay tax on the commission portion or other expenses as Realtors do, then something is wrong with that picture. The Competition Act is, then, basically saying the anyone can act as a realtor and keep the commission, be anti-competitive (keep commission yet don't have to allow others to show their properties - ie allow buyers with realtors to have their realtors sell the property with commissioin paid). They are undermining the experience, liability, training, rules, law, etc. realtors have to follow while saying for sale by owners can do whatever they want and keep all the commission. They are acting as realtors, keeping the commission (Com-free admits they are), so should pay tax on the money or Capital Gains should come back in. For sale by owners should reduce their homes by the amount of commission or pay tax on the money. Com-free isn't concerned about the buyers who are basically being ripped off by private sellers who want all the commission portion, so buyers should wake up and stop thinking that they are with private sellers against realtors; that is brain washing on a bizarre level. Also, there is no way that the public should Kijiji-ize MLS. If a realtor has to pay $100 to put a home on MLS and pay thirty percent, for example, of anything earned to a brokerage, plus do an evaluation and drive there and back usually twice with other costs over the year that have to be paid and taken into consideration, then the realtor is making nothing, absolutely nothing, and is basically being asked to be a slave to a for sale by owner who has no right to keep the commission, but they will - while not paying taxes on the money. They want to use a privately owned site for themselves - yet can I go into any business and use their anything? The private seller situation will have to be looked at because it is simply wrong. Sellers can sell, but they shouldn't be able to act as an underground economy of realtors without training while being paid the amount realtors are being asked not to be paid although their expenses are so high. Many are below the poverty line already after expenses and it will just get worse. What will be the tax loss to the government and the implications of that? Hello government - are you seeing this possible issue? I find for sale by owners who denigrate realtors yet who try to keep all the commission reprehensible and fair game for new taxes. If a realtor can't show a home of a for sale by owner whose price includes commission and be paid a fair amount then I think there is a problem. Many don't want to deal directly with sellers because they don't want to listen to their justifications, ranting and raving, and don't want to argue with them - which many would if they aren't suckered in or if the market isn't super hot. Why wouldn't they want to use a realtor if a home is going to cost the same amount? I really resent a private seller wanting the same amount or more while they cut down realtors. So, yes, sellers should be able to sell - but they should have to take out a licence as garage sale individuals do, perhaps have to take a course, perhaps have to show they have enough money available to be sued if they do anything wrong or some such thing. I don't know - I just don't think it should be a free for all of for sale by owners who know nothing about business law luring buyers in and that is supposedly okay that they do that and get paid as a realtor - free and clear of taxes and expenses.
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Old 12-04-2010, 04:28 PM   #26
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What if a home owner hires a home assessor (not a realtor) to price their home so they can put it on the market. The home assessor gives them a fair market price ( in writing) then they put it up for sale. Let us say the homeowner sells their home for the price the assessor gave them or even 5% below asking. Where did the commission (or profit) come in if they got a fair market assessment and sold on or just below the asking price?.They made no profit or commission if they sold it at fair market value and they definitely did not make a profit if it went for under the assessors asking price. Where is the underground economy if they get the fair market value for their home?.
The only way they may make over what a house is worth is in fuel driven times when houses are selling like hot cakes and are going for over asking price.
On another note, it is the owners house and they should be able to choose they way they want to sell it.
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Old 12-04-2010, 05:08 PM   #27
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Andy3, try paragraphs. It is almost impossible to read through that and take much away from it.
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Old 12-04-2010, 06:57 PM   #28
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ComFree advertises "keep the commission" but that's more of an expression - it's more accurate to say that there is no commission. So therefore all this talk about declaring income and paying tax on it is ridiculous.
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Old 13-04-2010, 10:33 AM   #29
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If the Competition Act ....
Andy3, you make some good points but you are missing it in other areas,

yes, mls is "owned" by realtors and i don't believe it should be "free for all public access for vendors.

on the other hand, individual people are free to buy and sell virtually anything they want privately whether it's a 15 year old appliance which could be a fire hazard to to a ford (also a potential fire hazard?) to a full-size tandem dump truck which could well be a danger to it's operator and others.

in each case, they decide how much outside help they want to buy - whether that be a lawyer or an appraiser or a mechanic... and in any case if the purchaser pays less or more than what it's worth, the vendor's tax situation is unaffected. a house is no different.
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Old 13-04-2010, 12:41 PM   #30
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Yes, anyone can sell anything, but the Competition Act states that prices should come down due to competition for realtors. If for sale by owners are, for example through Com-free, obviously keeing the commission, which is an income, really, a taxable income for realtors - and the Competition Bureau is basically giving encouragement to sellers to not use realtors, yet is encouraging them to use their system when sellers often have no business law experience or costs other than related to the house or advertising which they should be able to write off, they should, since they are saving the commission as Com-free says, have to pay tax on the money and they should be looked at as a serious underground economy. Or, municipalities who need more money, should make sellers take out a licence, take a course, and prove they have enough in equity to be sued or perhaps have to advise sellers of the fact that there won't be any money there or they won't be about after the fact - something (although the latter won't happen due to Privacy Act issues, most likely). I think it is wrong for the Competition Act people to try to encourage for sale by owners to sell using the MLS system which is a complete insult to realtors and means that all their courses, costs, laws, and all the rest are meaningless in many ways. Anyone, then, should be able to be a realtor, just hang out a shingle and say here I am - perhaps just work with a lawyer and not a brokerage. Why should realtors have to pay such exhorbitant fees to brokerages? Because, in part, the brokerages are liable for their realtors, apparently. Realtors have a million dollars in liability insurance or some such thing - but one has to sue a seller privately. Lawyers aren't there to walk through an acreage or condo to ascertain what is what, know what to ask for or look for or write into a contract. The Competition Bureau is really saying that realtors don't have a duty of care to their buyers and sellers; they are, apparently, worthless in their eyes and are basically stating they should often work for nothing when listing and putting all on MLS for a private sellers. What a junky system MLS will be - meaningless, really - a version of Kijiji. Commissions paid should have to be stated after a sale, then, ref. sales information, because it will have a huge impact on the variation in prices - and wouldn't it be something if private sellers eventually made more than the realtors they say they hate because of using MLS. It would effectively have been taken over as if we are a communist country and private business shouldn't be successful - capitalism is no more because the government can just walk in and order those who are successful to just cease and desist their operations as it isn't fair to the masses. Will the public denounce private sellers keeping commission? No - just realtors who lose half of the half due to costs and taxes while private sellers don't. Real esate is a business and realtors have a lot to know and liability. What requirements do private buyers and sellers have? I wonder how many cases are in court ref. problems and/or will be with individuals representing themselves - and that would have an impact on court costs and time. I don't have all the answers but I do think it is wrong of the Competition Bureau to try to hand sellers real estate licences while denigrating realtors, making their jobs and liability and knowledge seem worthless. I remember years ago that in an Arab country the leader said teachers weren't required; that parents could home school their kids. Those parents, though, for the most part didn't have education. They often couldn't , obviously, and although individuals are more enlightened and educated now, for the most part, they are also not aware of much and their cockiness might get them into trouble as sellers and buyers may find themselves, after a contract has already been written and accepted, in a problematic situation they can't get themselves out of. Lawyers aren't realtors, on site. Buyers and sellers aren't realtors yet they are entering into contracts that have huge implications, financial and otherwise. (sorry - typing very quickly - must go - didn't add paragraphs).
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Old 13-04-2010, 01:22 PM   #31
Gemini
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^Your stance on a homeowner selling their own home is completely out of whack.
You talk about homeowners paying taxes on commission or any profit they make.
What profit does a homeowner make if they sell their house at fair market value?.
By selling a home yourself all you do is cut out the middle man (which would be a realtor). The owner is not making any commission if they sell their home themselves.
All they are getting is what the property is worth as deemed by a house appraiser or home assessor.
A prudent buyer or seller of a home would/should be represented by a lawyer who would legally register the land title transaction and deal with banking issues.
A prudent buyer would/should have a home inspector look through the house they intend to buy to make sure of no major defects.
If these precautions are taken why include a realtor?.
As stated before, it's the homeowners home, not the property of realtors.
If a person wants to sell their own home why the big deal.
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Old 23-03-2012, 04:44 PM   #32
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Quote:
Originally Posted by moahunter View Post
Quote:
Originally Posted by raz0469 View Post
In addition, such a system does very little to encourage agents to try to get as much as possible for their clients homes, but does plenty to encourage them to take the first reasonable offer and quickly move on to the next.
I thought the opposite might apply, the reason we have commisions is to encourage agents to "push" up the price, so they can earn a little more. If we had a set fee, without question, the incentive would be to push through the first offer, and move on as quick as possible to the next set fee.

Some countires though are dabling with salaried real estate agents. I am not sure about this, seems to me there should be some incentive for having to work all hours of the night to close a deal (which real estate agents do).
Actually with the exception of North America and some of the commonwealth countries salaried agents is the norm not the exception and has been for many years.
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