I received the following press release from RECO the other day, and my first thought was, “Wow, these changes are great! Bravo!”
But upon further reflection, I thought, “Wait a minute – these aren’t proactive changes; they’re reactive changes. These are things that should have been dealt with years ago.”
It’s not a case of “too little, too late,” but I often wonder why it’s so hard for organized real estate to enact necessary change.
Have a look…
Here’s a copy of the email I received the other day.
There are two topics addressed:
1) Fee structures for brokerages
2) Multiple offer documentation
Have a look:
I think both of these changes are long overdue.
The RECO letter says that “ultimately, market forces will determine which fee structures are attractive to consumers” and I couldn’t agree more.
Some consumers feel that a full-service brokerage gets the highest return on investment.
Other consumers want to list with the discount brokerage who charges $100 to put the property on MLS.
At the end of the day, consumers should be able to hire whoever they want, and pay whatever they want.
Personally, I have always welcomed the competition. The discount brokerages offer me an opportunity to showcase my skills in this industry, and I haven’t seen any drop-off in business since they became more prevalent in the last 12 months. I also believe that when the market turns, these brokerages will go out of business, as consumers will see the need, and the value, of a full service brokerage.
Agree, or disagree; that’s up to you.
But the idea that RECO was putting restrictions on the type of fees a brokerage can charge is utterly ridiculous.
Now, they’ll allow a brokerage to charge part flat-rate, and part percentage. But why stop at that?
Two parties that enter into a contract should be able to determine the contents of that contract, should they not?
A contract is a contract! Why limit the fee structure at ALL?
If a seller wants to offer a flat-rate of 1%, plus a $2,000 bonus if the property is sold to a person with the letter “q” in their name, and an additional 1.5% if the buyer has a cute dog, then why shouldn’t they be able to write this up in a Listing Agreement?
As for the second change – regarding the handling of multiple offers, let me be the first to say that this is a great idea……….just as good as it was when I first had it seven years ago…
It’s funny – because the handling of multiple offers goes hand-in-hand with these discount brokerages, so ultimately when you open one door, you close another. But whether or not EVERY brokerage is set up to actually track all registered offers is a topic for another day…
People ask me all the time, “Do you really know how many offers there are on a given property?”
My answer: “It depends.”
It depends on the brokerage, the listing agent, and the property.
As an experienced Realtor, I know who I can trust, and I can sniff out a bad situation.
If a brokerage with a bad name (or an uknown name…) and a shady listing agent has a listing, and they are reviewing offers, and I don’t trust them, I might advise my clients to sit on the sidelines.
Two weeks ago, I wrote about a multiple offer process that was handled more professionally than I’d seen in years. (You can read it HERE). But not all processes work like that, and it IS possible for a listing agent to claim there are seven offers on a property when there are only four.
How often does this happen? I’m tempted to say – not very often.
But it COULD happen, and it’s up to organized real estate boards and regulatory bodies, such as the Real Estate Council of Ontario to put measures into place to make this impossible.
If ANY licensed Realtor wants to know a) how many offers are registered on the property, b) which buyer-agents registered those offers, then this information should be readily available. If a listing agent is playing by the rules, then what do they have to hide? What downside is there to instituting a rule like this? The only drawback is a tiny bit of work involved on the listing agent’s part, but the upside is more transparency, and more trust!
I’m glad RECO is looking into this matter, but the part of the press release that really bothers me is that which reads: “Until new regulations are in effect, the current rules for handling offers still apply.”
What current rules? Are there rules?
Rome wasn’t built in a day, and as the real estate industry moves forward, rules and regulations will have to amended and updated. I don’t think RECO has the man-power necessary to follow-up on every complaint, every issue, and cure the industries woes all at once.
But this is a start. Right?