The Toronto Community Housing Corporation will be selling forty-two properties, beginning in March, and they are currently looking for Realtors to do the job.
Full disclosure here, folks: I have zero interest in these listings, or working with TCHC.
But I do want to examine how they are choosing a Realtor, who they are looking for, and whether or not their selection process is in the best interest of Toronto tax-payers…
Let me ask you a simple question: do you believe that the City of Toronto is being effectively run?
Personally, I don’t think it is. And I don’t know how many people would disagree.
Look no further than the last decade of chatter about where, when, and how to build public transit, and you’ll see how “effective” our city is at running itself.
We won’t even get into Rob Ford at this point, as it’s just redundant.
I’m convinced that no matter what task is at hand, no matter what decision has to be made, and no matter what the topic is – city council, and almost every wing of government is going to let us down.
I’ve been watching the sale of Toronto Community Housing Corporation properties for the last year, and I’m dumbfounded by how its done.
Time and time again, properties are listed for sale, ZERO effort is put into the listings, and they sell for less than I personally believe they woulda-coulda-shoulda sold for if they were listed properly.
I don’t want to debate the merits of using a “full service brokerage” today. That’s a whole other topic, and you either believe that a top Realtor, from a top brokerage, gets a higher price for a property, or you don’t.
What I want to debate is how effective the city is at selling off their stock of properties, and whether or not they’re taking the right approach, using the right people, and getting the most money for these assets.
If the city gets $500,000 for a given property, then that money is presumably put back into TCHC somehow. But what if they got $550,000 instead? That $50K could go even further!
I’m a tax-payer, and perhaps I’m naive to think that this city is run efficiently.
But if I know one thing – it’s real estate, and I can tell you that the way the TCHC is divesting itself of property holdings is leaving a LOT of money on the table.
Case in point: an RFP for the plan to sell the next forty-two properties.
It could be argued that TCHC has basically come out and said, “We want to hire the cheapest Realtor in Ontario.”
Their RFP package is 44 pages in total – email me if you want a copy.
In their package, they refer to “evaluation criteria,” where basically they give you a report card as follows:
I can’t even imagine what people write for their “strategy.”
And to be perfectly honest, I don’t know if the people at TCHC who are evaluating these “proposals” really care what they’re reading. Would a Realtor be hard-pressed to convince TCHC that things like photos on a listing might be of value? Or correct information? God forbid we actually spend money on a survey, floor plans, or any sort of marketing…
But what really gets me is the following:
So their “scoring system” is a function of the “lowest fee proposed.”
Is that REALLY the best way to choose a Realtor to sell forty-two properties for sale on behalf of the City of Toronto, its constituents, and its tax-payers?
I’m not saying, “All cheap Realtors are bad Realtors.” But most of them are…
And I’m not going to suggest that a Realtor will charge a 5% commission for forty-two listings either. But TCHC wants a flat-fee, and they want it as close to ZERO as they can get. Just look at the formula they’re using!
So what do you think that ZERO will buy?
It buys a listing, on MLS, and nothing more. Not a shred of effort to effectively market these properties, maximize their value, and maximize the amount of money that goes back into TCHC’s pocket to build housing in other areas of the city.
This whole process is a joke.
Check out the following section from the 44-page RFP:
Now let’s say, hypothetically, in a city far, far away from here, that an agent who had previously listed a slew of properties for a hypothetical city, had double-ended something like ten of thirteen properties – providing the buyer for the transaction, who won the bidding process, in multiple offers each and every time?
Could you chalk that up to a simple coincidence? Or might Section 4.4.5. above apply?
And what if that hypothetical agent started re-selling these properties once the hypothetical city’s housing corporation had moved on?
What a joke.
Each and every one of these properties could be sold for more money than they’re going for, only if they were sold properly! If you don’t believe in the value of a top Realtor, then maybe I can’t convince you. But I am of the firm belief that TCHC is saving $2-3K in listing fees, per listing, by hiring agents I’ve never heard of, who put no work into the sale process, and they’re leaving $30-$50K on the table each time they sell a property.
What’s $50K times 42 listings?
Explain that to these people:
I certainly don’t agree with their stance, ie. that TCHC is somehow responsible to house each and every person in the city of Toronto.
But I think if the entire general public knew how these properties were being sold, we might see some more bedsheets with spray-painted block letters…
So, CALLING ALL REALTORS! You have until February 28th, at 2014, and it’ll only cost you one USB stick, and an obscene amount of paper:
And for anybody that is curious which properties will be coming onto the market, here’s a list:
Agree, or disagree – it’s worth discussing.
Have a great long weekend everybody!
And guys – don’t disappoint the flower-chocolate-diamond consortium either…
at 7:42 am
Presumably each of these houses will have been appraised prior to the sale. It will be interesting to see how much below (or less likely above) the valuation.
at 6:58 pm
Six months ago, I phone an agent about a city home for sale for less than $400.000 a couple of blocks away from Christie subway station. I was told that no offers would be accepted for another week and a half. Two days later, I phoned for more info and the agent said that the property was sold because the city decided to expedite the sale. Who got tipped off? How much did someone profit from this rapid sale?
at 8:53 am
Sounds like the realtor from Hypotheticalopolis is one super ethical character! Maybe the Government employee who hired said agent should face some public backlash?
at 9:29 am
First, how would you propose that TCHC procure the services of a realtor? Going to the market in a transparent manner with objective evaluation criteria seems like an accountable way to do it, if you ask me. Remember how government agencies like e-Health used to procure services?
Second, Section 4.4.5 refers to unethical conduct related to seeking the contract with TCHC, not related to conduct once the realtor starts selling the properties. Basically, this section states the kinds of things that a proponent should not do in order to win the contract. All of your “hypothetical” situations relate only to an agent’s conduct once they have secured a contract form TCHC. And “hypothetically” this kind of conduct would be prohibited by TCHC, but I guess we won’t know until a contract is in place.
Finally, I don’t see how you would object to their method of evaluating a bidder’s price. Sure, you could argue that a 50% weighting over-emphasizes price, but all this formula does is attempt to objectively differentiate the pricing component of one proposal from another.
at 3:38 pm
I think David is clearly using “hypothetical” to alleviate himself of any liability, since he is outing an unethical agent.
And it sounds like the agent probably had side-deals lined up in advance.
at 5:26 pm
I understand how he’s using the term. It’s just not applicable to this situation (the RFP process).
at 9:35 am
Dufferin Grove, Bedford Park, Cabbagetown, Riverdale, The Beaches and High Park. Holy Crap that’s some prime real estate coming on stream!
I’ve got to think some of the agents that are responding to the RFP, are somehow, connected to/partnered with flippers, builders and developers. Which can make these transactions, much more lucrative than just double-ending the deal.
at 9:47 am
Yeah I thought this scoring system wasn’t that terrible. I don’t disagree with the premise that the TCHC could probably squeeze out a bit more out of some of their properties but they are a real mixed bag and when you’re selling this many houses there’s something to be said for just getting it all done at lowest cost to the public. It’d be easy to criticize from the opposite angle if the fee wasn’t weighted highly.
at 10:38 am
That’s true – if they awarded all these listings to one top agent, at a top brokerage, people might ask, “Why are you paying somebody so much?”
I think we can make an argument on both sides here.
@Rob raises a good point about e-Health!!!
at 10:38 am
Yeah, I could have seen a better formula that looked at the whole value proposition (factoring projected sales value based on staging/minor renos/doing nothing in with the commission), but at least the criteria is listed up front.
And if anyone needs freelance proposal development help, you know who to call (hint: it’s me — though with their pricing example you’d likely lose money if you had to hire proposal development help, even if you got the contract).
at 11:25 am
Is the RFP being run by city of Toronto or TCHC. TCHC was in the news a couple years ago for improper purchasing processes. City of Toronto has ppl running RFP’s that were promoted from administrative positions within the city (clerks issuing PO’s to vendors) and often prepare RFP’s with no understanding of the industry of the services or products being bid on.
at 11:45 am
on a tangent, and thinking about myself only. is there a way to find out what other single dwelling properties the TCHC own? Googling and looking at the TCHC portfolio only indicated what they’re planning on sell.
I ask since i purchased (have not closed) in a bidding war and am now seeing i bought pretty much next to 1 of these houses.
at 9:07 pm
TCHC listing pulled after bids received:
Advertised as excellent place to build big home…actually might be zoned for parkland.
at 7:25 am
at 11:49 am
its about time Toronto start selling these properties and investing it back into fixing its current stable of units.The future of Toronto funded housing is a partnership between builders and city hall,a great example is Riverdale and its stunning transformation.