There was an article in the Globe & Mail’s “Life” section this week that caused a big stir in the real estate industry.
But I’m here to tell you that there’s a reason this was in the “Life” section and not Business. It’s just blather, written by somebody with no idea what he’s talking about…
There are important differences between “journalists” and “writers.”
A journalist is someone that collects and distributes news and primarily works with factual information.
A writer is something entirely different. When I think of a writer, I think of somebody who has more creative control over the content that he or she produces, and thus the result can be a complete work of fiction, or something in between.
In Tuesday’s Globe & Mail, an article called “How To Find The Right Real Estate Agent” ran in the Life section.
It was, in my mind, an opinion piece, and nothing more.
Don’t get me wrong – I respect writers, because I am one, myself. And before you point out that my blog contains more opinion than any newspaper, I’ll beat you to the punch and say that I agree.
But I write about real estate because I am a real estate agent, and I’m a real estate expert. I talk and opine about the field that I specialize in.
Writers and journalists, on the other hand, might not be experts, but often they pass themselves off as exactly that.
Fabrice Taylor, who I respect as a writer, penned a highly opinionated, and highly inaccurate “story” about real estate this week that caused about ten of my clients to email me and suggest a Friday Rant. I didn’t want to touch it at first, but as more and more friends, family members, and colleagues asked me about it, the more it began to fester.
Mr. Taylor’s article, which can be read HERE, starts out well; he suggests “Don’t hire a friend” to be your Realtor, and I agree. One of the biggest problems with our industry is that everybody and their mother (and their mother’s mother…) is working in real estate. Every weekend, I go out for dinner or drinks and get talking to strangers and when I mention I’m in real estate, somebody is bound to say, “Oh yeah? I’m thinking about getting into real estate myself!”
Mr. Taylor is correct – you shouldn’t use your friend, who has been in the business for six months, simply because he or she is your friend. One of the largest problems in the real estate industry in 2012 is that there are scores of 20-something Realtors who, after having failed or grown tired of their previous “careers,” work ten hours per week from their couches and continuously misrepresent properties and will eventually be sued to high Heaven.
But after Mr. Taylor makes his first point, his article becomes nothing more than a “how-to guide” written by a jaded, once-burned home-seller who is simply trying to cash-in on a hot topic by writing about real estate; and I say this with the utmost respect for Mr. Taylor as a writer.
My issue with this article is that it’s written from the perspective of an expert, when in fact, it’s not.
Mr. Taylor says “you have to understand the agent’s incentives,” when in fact, he is not an agent, nor does he work in the industry. What does he know about the agent’s incentives? How much research has he put into this?
Mr. Taylor describes, “how the realty industry operates,” but what does he know about it?
If a reporter were to say, “Let me tell you how Occupy Toronto really went down,” and he went on to describe that he had slept in a tent for three weeks while posing as a protestor, then I would say, “Okay, I’m all ears.”
But Mr. Taylor is giving “inside information” for an industry he knows nothing about, and his advice is tragically flawed.
Mr. Taylor surmises, “A quick sale benefits the agent,” and goes on to describe his one tragic tale of selling his own house. He paints the entire industry with the same brush, which is incredibly irresponsible.
I’m here to tell you that the big money comes from a quick sale, not leaving your property on the market to rot for three months.
Mr. Taylor says, “Don’t get rushed into the bidding war,” and this is quite possibly the worst advice I have ever heard.
Under-pricing your home and soliciting multiple offers is a time-tested technique, and like it or not (I’ve shared my mixed views…) this is the best way – nay, the only way to obtain more than fair market value in today’s market. Buyers will buy with emotion, and being caught up in a frenzy on offer night usually pushes one or more buyers to give way to logic and pay more than you might have expected the property to sell for.
How can you advise against this?
I’m not going to re-hash the way to list real estate in Toronto in 2012, but if all goes well, and you’ve spent weeks getting your property for sale, and you’ve priced it so that hundreds of potential buyers come through the door and several of them make offers, then you’re going to get maximum value for your home.
What’s the alternative, Mr. Taylor? Price the property at 130% of fair market value and gradually decrease the price over the coming months?
Mr. Taylor, advising – as a writer, and not a Realtor, that sellers “Don’t get rushed into a bidding war,” is like a writer suggesting that you shouldn’t “rush to the doctor to get that pre-cancer screening.”
Speaking of which – I’ve been in and out of hospitals all my life with sports injuries, but that doesn’t make me a doctor. I don’t give medical advice. So why is Mr. Taylor qualified to give real estate advice because he’s sold one house, as per his article, and because he’s good with a typewriter and/or a pen?
Mr. Taylor doesn’t offer any research of his own – he’s just a writer. The only “research” he’s offered is quoting the infamous Freakonomics hypothesis that Realtors don’t care about what a house sells for because they don’t make much more of a commission. That hypothesis was linked together with the evidence that Realtors leave their houses on the market longer than the general public, however that study was based in America, not Canada, and it was conducted years and years ago under different market conditions, and in a different system. I can tell you that most Realtors in Toronto will list their houses, on average, for eight days. Because if they’re smart, they’ll list on a Tuesday, take offers the following Wednesday, and set it up for a bidding war – exactly what Mr. Taylor suggests that people do NOT do.
Mr. Taylor’s inaccuracies continue with the article, as he begins to explain “how the realty industry operates,” as if he has a clue.
He explains that “agents who work for big-name firms have to charge a lot because they’re charged big fees, as much as $2,000 a month.”
Really? What is this statement based on?
I work for a big-name firm: Bosley Real Estate. They charge me less than $2,000 a month. How much less? Well, about $2,000 less…
Some of the franchises charge “desk fees” to their agents, but those agents are receiving far better commission splits. It all evens out over time.
Mr. Taylor should have interviewed ten firms, posing as a new agent (isn’t this what journalists do?) like a writer presumably would post as an Occupy Toronto protestor, and actually asked these firms what they charge.
I don’t know of a firm in Toronto that charges its agents $2,000 per month in fees.
Mr. Taylor continues his advice down the page, this time as a Dear Abby soothsayer, and offers, “You should always negotiate the commission. Before you even let an agent in the door, ask them what they charge.”
I’ve made no bones about it: I have a fixed commission rate for every transaction I do. I work for a full service brokerage, and I am a full service agent. I am also in the top 1% of all agents in Toronto, and I believe I work harder and longer hours than any other agent that I know of. I don’t represent the entire industry, but rather I represent myself. If somebody wants me to list their property for a reduced rate and simply “cut out all the extras,” then they’re asking me to sell them a Lexus with no engine, no wheels, and no roof.
How can you ask somebody to negotiate on their commission “before you let them through the door” when you have no clue who they are, what they do, what services they offer, etc.?
Make no mistake – there are thousands of agents in Toronto who will work for less than the traditional rate, but that doesn’t make them good at what they do. I encourage sellers to explore all their options and decide on the value for themselves. If somebody wants to take a risk on the disposition of their largest asset, then that is entirely up to them. But Mr. Taylor acts as if a seller is getting a raw deal if they spend money to hire a top agent.
I remember two years ago when I sold my brother and his wife a house, and then sold their condo. My brother never asked me about my commission; he just signed the papers, and I got him seven offers and set a record for the price in his building.
Months later, somebody made a remark about me not “charging my own brother,” and my brother defended me. He said, “Dave is a top agent, he’s the best at what he does, and I trust that he’ll get me top dollar for my property. I work 70 hours per week, and I don’t have the luxury of doing any of this myself.” But he added more to the argument when he compared my value to that of what he sees in his own industry. My brother works for a pension plan, and he said, “When we buy a billion-dollar piece of infrastructure – you don’t think we’re going to pay somebody tens of millions of dollars to consult on the purchase? How irresponsible would we be if we went ahead with that purchase without using the services of an expert?”
Mr. Taylor concedes, “the cheapest agent is not necessarily the best, neither is the most expensive one.” Oh, well that’s helpful. So pick somebody in the muddled-middle, and aspire to mediocrity.
One of the myths that Mr. Taylor offers up is something I know to be absolutely true: “You get what you pay for.”
There are always exceptions to the rule, but nine times out of ten, you do, in fact, get what you pay for. And that’s why full-service brokerages in Toronto continue to flourish, and why Realty Sellers is more focused on their $540 Million lawsuit against CREA and dozens of individiuals than actually selling real estate. Realty Sellers is a bit of an misnomer, no?
But perhaps that’s a topic for another day. And I don’t want my name added to that list of people being sued, but I think the list includes the Pope, Bill Clinton, and Veronica from the “Archie” comics, so perhaps it really doesn’t matter anyways…