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Death of a Sales Commission

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Don sent in this link to a story in the Wall Street Journal about a Google ‘property portal’ that would allow real estate agents AND private sellers to put property for sale as a map search overlay.  Some predict that if a system like this became widespread and popular enough it would remove the monopoly that real estate sales systems like the MLS currently enjoy.

“While Google’s new property portal will be open to estate agents to exploit ,as well as private sellers, if it becomes incredibly popular, (and there’s every reason why it will), and the average private seller becomes more technologically savvy, estate agents as we know them, will cease to provide any real value to sellers and offer no value as part of the supply chain.”

Could this mean a future of competition that drives down real estate sales commissions?  We already have sites like Craigslist that allows private sellers to try to sell their homes without an agent, but that certainly hasn’t replaced the MLS.  So what would it take for an open net based system to be truly successful?

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goldie

MLS is not a monopoly. As the post proves, anybody can start a competitive service.

If you are not happy with real estate commissions, negotiate a lower commission or don't use a realtor. Or use an alternative service.

And stop whining.

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ReadyToPop

…but the band is still playing in this wet coast fantasy as though all is well, while in Europe the stinky stuff is about to hit the revolving wind maker…

Greek Debt Threatens the Euro

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Anonymous

year, yr right. much worse than i thought.

Forestry is a no brainer. Experienced forestry workers can't get work, so no hope for new grads.

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3700

I heard that the Degree Transfer, Forestry, and Nephrology Nursing programs have been cut. Not sure where the rest of the cuts are yet.

The Great Northern Way, YVR, and Downtown campuses are a major fianicial burden but there seems to be an inability or unwillingness to sell those properties. The GNW campus, especially, seems to be a massive headache for the four institutions involved.

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logic

most likely admin and support positions for the moment

one expects

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LordHuggington

@D. Bone: I wonder where the cuts were. Hopefully not their IT departments, because then that would make their "Employers Ask for IT" ads that I see on the sky train ring a tad hollow…

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D. Bone

BCIT cuts 82 positions.

http://www.vancouversun.com/BCIT+positions/232276…

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logic

kansai,

Yes, but this is Google. A name like that getting into the game changes everything, and often changes it fast.

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kansai_92

It's really boils down to critical mass.

Why do people list on MLS?

Because they know it will get the most eyeballs.

Why has discount outfits such as 1% Realty not taken off?

Because listings put into MLS by discount brokerages are put to the bottom of the list by full commissioned buyer agents.

This is a natural behaviour because agents want a larger commission. Thus the 1% stuff never gets looked at.

Look at how well ComFree is doing in Alberta.

Once they have enough listings and transactions, then the power shifts. Until that time, MLS remains king.

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Mold city

@Purp: CREA has been collecting this data for years, I don’t see them giving it up without a fight.

it's a chicken and egg problem. If google or similar can get this started and collect data on transactions that happen going forward then they will have the relevant data. The CREA data would eventually become just a historical curiosity.

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Purp

@24: He should buy, before he's priced out forever! 🙂

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Drachen

Too little info NW.

Generally I'd say it doesn't sound like a great deal, he will probably be able to shave another 50k or more off the price (counting from 168k) of a similar unit in a few years.

However, depending on location etc it might not be a completely terrible deal, and if he can make the payments at 8% then why not?

Engineering reports have a tendency to balloon I have a friend who bought a condo where the repairs had already been paid out but were just beginning to actually take place, during the renovation she ended up chipping another 20k when it ran over the initial estimate. Once they get inside the problem they tend to find other problems…

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NW leaky condo

One of my workers is interested in a 2-bedroom apt foreclosure) that he wants to bid @$100k but there is an engineering report/estimate of $68k/unit. All advice appreciated.

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Drachen

@Hovering:

You can get discounts from Canadian banks, the thing is, I think that American banks advertise the best possible rate while Canadian banks advertise the worst possible rate. I'm sure it's a legal difference, so the discounted Canadian rate is probably quite similar to the advertised US rate and the advertised Canadian rate is probably similar to the more 'risky' US rate.

You should look at 'Jumbo' loans with less than 20% down to get a better comparison. Using that model I see 30 year rates at about 6.5% and 15 year mortgages only slightly lower.

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patriotz

@gvrdpropertyowner: However, there will still be an advisory role for knowledgeable agents, such as there is for financial planners who work with unsophisticated investors, Just a minute here. Anyone receiving a sales commission for anything is incented to work in the interest of the seller. That goes for securities, RE, cars, and anything else. You cannot be an objective advisor to the buyer and collect a sales commission from the seller. That is an inherent conflict of interest. And yes that goes for "financial planners" as well as realtors. There are fee-only financial planners who are paid only by the buyer and work only in the interest of the buyer. All the time. In theory some knowledgeable person could be paid to act as an advisor to a RE buyer in the same manner, but I certainly wouldn't hire a… Read more »

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patriotz

@Hovering:

I already answered your question above. For the banks to lend money for 30 years they would have to sell 30 year bonds to get the money. To sell such bonds the banks would have to offer a rate way above what they do for 5 year GIC's – because bond buyers consider private sector long bonds risky, and thus they would have to charge way more for the mortgage.

Similarly securitization of such long mortgages wouldn't fly.

Remember that banks are just intermediaries who borrow money and lend it back out again.

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HeMan

Crabman,

Economics is not that simple. Make work projects and work that has minimal value is a burden to society. Real value added work is where we want to allocate resources. If the fees paid to the realtors are in excessive of its true economic value, then it’s no win to the society. Rather, the money consumers spend on the realtor fees could be spent supporting goods that makes the society better.

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Hovering

drachen

I have always been a five year fixed man myself.

but (i think) americans can get 30 year fixed today for 4.97% according to Yahoo (undoubtedly you could find a lower rate).

I imagine if one bank in canada offered such a product everyone else would.. or perhaps there is a law that prevents them ?

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Drachen

@Hovering:

5 Year Variable 2.15%

1 Year Fixed 2.65%

2 Year Fixed 3.15%

3 Year Fixed 3.49%

4 Year Fixed 3.99%

5 Year Fixed 3.99%

7 Year Fixed 5.25%

10 Year Fixed 5.35%

From ING, you can get over 5 years but you pay.

For those talking about resets, it's irrelevant to most new buyers as they have the 5 year variable.

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chumpdawg

did the article say "Cease to provide value"…. I have had a great realtor who paid for his fees many times over with his service and advice. Get this- he told me in 2005 not to get more than $300k worth of mortgage. He refused to show me houses that would require greater than $300k. But what if the houses keep rising, I asked? I'll miss out on more profit (we had already flipped 2 condos with him) He said, dude, you are a sales manager at a software company. Go do that. You are not a speculator. You want to speculate, go find another realtor. He said he lived through TO in 1991 and saw the carnage everywhere. Told me it would come to Vancity someday. You've done well on your flips, but it only takes 1 wrong move… Read more »

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Drachen

@gvrdpropertyowner:

"Hopefully this will finally make the real estate market an efficient one."

It hasn't helped the stock markets, if anything it's had the opposite effect.

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Hovering

random question:

why can americans get 30 year mortgages at a fixed rate and we only get 5 – 10 year ones and then we have to "reup"?

seems to me if a bank offered a 30 year fixed at todays low rates they'd get some jumpers

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Purp

I agree that the sales history of the property in question and other comparables is what makes the MLS database more useful than any of these free services. As far as I know the BC Assessment only has the sales history posted for part of the year.

I agree with Yalie, CREA has been collecting this data for years, I don't see them giving it up without a fight.

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observer

@Yalie: The google portal development is interesting. Google is a big player and though their focus is more on advertising, they do come out with products that people actually use and are a brand that people know. This might just be enough for people to start using their system. I can see a new kind of value broker using their system to list properties and charging less for equivalent services. The google system might work if people start using these value brokers at both ends (buyer and seller) and bypass using traditional realtors and the MLS system. It probably simply a question of getting enough quality players (buyer, sellers, their agents, lawyers) to use the new system so it become self sustaining.

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Hovering

I sold two places in Alberta on my own. The first time I used a "for sale by owner" website/company that placed ads in the newspaper for you and they planted a crappy sign out front of the condo. The second time I made my own crappy sign and placed my own newspaper ads. In retrospect I think the newspaper ads were a waste. After I moved to Vancouver I noticed that there were very few "for sale by owner" properties. When selling my third place (I wasn't flipping, I lived in each place for years I swear) I tried to sell it myself but got zero interest. I swallowed my pride and got a realtor and the unit sold over list after one agents open. I think Vancouver has a mistrust of "for sale by owner" properties, perhaps due… Read more »

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