The Canadian Real Estate Association (CREA®) and the Competition Bureau came to an agreement on September 30th, 2010. Even though CREA® has agreed to the terms of the deal the 98,000 members (all Realtors®) represented by a few hundred local MLS® Board members have yet to vote and they will do just that on October 24th, 2010. It is very likely that this will be passed and these new rules are here to stay. Melanie Aitken, the commissioner of the Competition Bureau has had her way and has been successful to break what she termed a “monopoly.”
A lot of people call and ask, what exactly has changed. In simple english, what has changed is that the sellers can now pick and choose the level of service they want from a Realtor®. Under the agreement, CREA® will eliminate its ability to adopt anti-competitive rules that discriminate against real estate agents who are hired by consumers only to list or merely “post” a residential property on the MLS®.
Steve Ladurantaye of the Globe and Mail says “While a deal between the Competition Bureau and the Canadian Real Estate Association means agents will be able to break real estate services into small, individually priced chunks rather than charge a set commission for a complete sale, companies such as Royal LePage don’t plan to offer à la carte services.”
While what Steve says is technically correct but I do believe that there will be more accountability as is always the case when there is competition. If we look at the cell phone arena, the rates of new plans has come down significantly in the recent past, with new entrants such as SOLO Mobile and Wind Mobile. One could have never thought of an unlimited calling plan 6 months ago but now the new and the more established companies have unlimited calling plans. If this is any indication then I think that the general public can definitely look forward to lower commissions and most definitely more accountability.
Very recently, one of our clients sold their million dollar home for just $ 649. She ended up saving $ 29,000. Now that is substantial by any standards. She listed with us on the MLS® and got a direct buyer off the MLS® and sold privately. Another client sold their downtown Vancouver Condo and paid less than one percent in commissions.
To quote from the Globe and Mail, “That type of service may appeal to a certain segment of the market but I don’t think it appeals to those who would traditionally use a professional agent,” said Royal LePage president Phil Soper. Most of our clients have used traditional Realtors® before and were sick of high commissions. One of our clients sold their reno and flip project, and had there been a traditional commission structure, he would not have made a dime. His entire profit would have been spent in paying the commission.
The flexibility of being able to sell private, regardless of how the lead comes, is our forte. Even if there is another Realtor® involved in the transaction, the savings are immense. Often times the amount of money being saved is used by the clients to negotiate down and thereby getting the deal done.
Regardless of the reaction by different Realty companies and the media one thing is for sure, interesting times lie ahead and perhaps a bundle of savings…
“Change is the law of life. And those who look only to the past or present are certain to miss the future.”