The new threat to real estate commissions

Real Estate commissions have been remarkably consistent for years.

Despite threats from the internet and the competition bureau, real estate salespeople have managed to keep their part of each sale.

The Globe and Mail points out one factor that may threaten that income.

In short: rising prices make it easy to just pay the commission, but sellers in a falling market might be a little pickier about how much they are paying to get their property sold.  Could bargain shopping and new real estate startup threaten the traditional real estate commission?

John Andrew, a professor at Queen’s University, suggests the following analogy: When the stock market is rising and you’re making money, then you don’t mind paying a broker a fee, but if you lose money on your investment, then the charges will be upsetting.

The market dynamics are changing at a time when new real estate startups, which are largely Internet based, are becoming more innovative. “There is no question that commissions are very high, and there is a big consumer pushback against that,” Mr. Andrew says. “It doesn’t make sense to me that it be a fixed per cent, and perhaps it’s time to begin to look at more of a sliding scale like we have for the land transfer tax, like we have for the income tax.”

Read the full article here.

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VanRant
VanRant
7 years ago

Interest rates are going up. 10yr CGBonds is now at 2.08 from 1.67 a few weeks ago.

http://www.bloomberg.com/quote/GCAN10YR:IND

Anonymous
Anonymous
7 years ago

“Can’t build underground apartments in Richmond and many parts of Downtown Vancouver.”

Why not? Most of the owners are already under water.

Priced out Renter
Priced out Renter
7 years ago

Can’t build underground apartments in Richmond and many parts of Downtown Vancouver.

VMD@work
VMD@work
7 years ago
chilled
chilled
7 years ago

DaMann Says: May 28th, 2013 at 9:53 am 111 ” Marco (Marco Vincenzi) was also a victim in this case as he had financial hardships at the time due to an upcoming wedding” WTF!!! He was a victim cause he was broke and a fool with money? Holy shit, I love that reasoning. Wow all criminals are victims cause , well, they needed the money. Unbelievable. I hope that woman goes to the cops, this is out and out fraud and the realestate board essentially did nothing. My god this city is a joke sometimes. ++++++ Sometimes? I’ll bet you big coin the cops won’t do a thing, label it a ‘civil matter’ because both parties were engaged in a business transaction. Try to remember, in our mish mash of police forces, the largest one – VPD – doesn’t even… Read more »

Manna from heaven
Manna from heaven
7 years ago

I hate this thread!

Please start a new one.

Anonymous
Anonymous
7 years ago

“Realtors and brokers can also have salaried employees. For example do you think everyone who works for Rennie is paid only by commission?”

Of course not. Some employees that act as buyers in Infomercials disguised as news are paid SAG scale rates.

Many Franks
7 years ago

@Mr. X: A couple of years back one of the downtown hotels was selling an underground 10x10ish concrete-walled room for around $85k. It was the cheapest real estate in downtown Vancouver at the time. I believe it even featured an electrical outlet. Throw in a sleeping bag and a foam pad and you could probably rent it furnished for a tidy profit.

DaMann
DaMann
7 years ago

” Marco (Marco Vincenzi) was also a victim in this case as he had financial hardships at the time due to an upcoming wedding”

WTF!!! He was a victim cause he was broke and a fool with money? Holy shit, I love that reasoning. Wow all criminals are victims cause , well, they needed the money.

Unbelievable. I hope that woman goes to the cops, this is out and out fraud and the realestate board essentially did nothing. My god this city is a joke sometimes.

Mr. X
Mr. X
7 years ago

“People would be building 20,000 square foot bunkers with multiple suites. That would sure be nice.”

As absurd as that sounds, I can actually imagine that happening in Vancouver. We could get 10-storey apartment buildings entirely underground! Talk about a mortgage helper! It brings a whole new meaning to basement suites! If real estate prices keep increasing at the pace they have for the past 20 years, eventually we will be at the point where a SFH in Vancouver goes for $30 million. The only way someone could afford that would be to build an underground apartment building as a mortgage helper.

UBC in crisis mode
UBC in crisis mode
7 years ago

Anonymous on
http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/05/recbc-decisions-come-under-media.html
May 28, 2013 at 7:43 AM

The follow up on CTV reports $1250 fine and 4 month suspension for the fraud. Marco (Marco Vincenzi) was also a victim in this case as he had financial hardships at the time due to an upcoming wedding. What a joke, commit fraud, forgery and misrepresentation and get a $1250 fine and 4 month suspension?

Priced out Renter
Priced out Renter
7 years ago

Building up on the Lower Mainland is stupid.
Remember we are in an earthquake zone.
Richmond Buyer’s are crazy.

Democrass
Democrass
7 years ago

I should add, that it also means smaller bedrooms, cramped spaces, etc., etc., you get the picture. If people can afford a SFH lot in this city, it is usually a 33×122 or smaller, the house you are permitted to build on that lot may be totally inadeqate depending on the size of your family and they way that you want to live.

Anonymous
Anonymous
7 years ago

“Because without leads the house will not sell itself for maximum price, even in a “hot” market.”

Most people have a computer and look at the MLS if interested in buying. Realtors will still show houses without a bonus otherwise they would never be involved any sales. 99% of listings do not offer a bonus. Although it is easy for them to skip or talk down the small number of listings (like 1%) that offer less than the going rate buyers agent commission.

Democrass
Democrass
7 years ago

“There should be no density restrictions?”

That’s not a density restriction, it is a lifestyle restriction. It increases density only if you allow additional households to live underground (I doub’t that it would be a popular living option).

Square footage restrictions mean that I can’t have a home office, I have to limit the number of kids I have, I can’t have a space to practice hobbies, If my kids want to learn the pianno, I cant put it in the basement and watch the news while they practice, I can’t have a games room.

Why is my freedom to live the way I want on land that I own, in a way that does not harm my neighbours or detract from their use and enjoyment of their land curtailed by City Hall?

Anonymous
Anonymous
7 years ago

“I know that I would offer a bonus of $15,000 extra on top of regular commissions to get my house sold.”

Bonuses do not do anything to help real estate transactions. The best thing to do is just pay the going rate – not a penny more and not a penny less.

Anonymous
Anonymous
7 years ago

Democrass: “It is an absurd restriction in a place that has the most expensive land in the country.”

There should be no density restrictions? If you allowed unlimited density as you propose (even if just under ground) that would inflate land prices even more. People would be building 20,000 square foot bunkers with multiple suites. That would sure be nice.

Democrass
Democrass
7 years ago

“Here’s a solution to Vancouver’s running out of land problem! Don’t build up, build down!”

I don’t think that that is a solution in Vancouver. I could be wrong but I believe that in Vancouver you have restrictions on the total square footage you can build and basements are included in that square footage. It is an absurd restriction in a place that has the most expensive land in the country.

Mr X
Mr X
7 years ago

Here’s a solution to Vancouver’s running out of land problem! Don’t build up, build down!

“Mr. Graham, a former cable television mogul who was once married to Barbara Amiel Black, drew up plans to carve out three storeys below his 19th-century home in Knightsbridge. The extra space was for a swimming pool, a three-car garage, a gym, ballroom, changing rooms, hot tub and servants’ quarters…

Driven by soaring house prices and tight regulations on above-ground construction, the super-rich here have taken to spending millions of dollars digging deep to increase their square footage and boost property values. And these subterranean enclaves have become more and more elaborate – housing everything from tennis courts to bowling alleys, theatres and even a car museum.”

http://www.theglobeandmail.com/life/home-and-garden/iceberg-homes-make-for-irate-neighbours-in-london/article12183291/

Anonymous
Anonymous
7 years ago

“Just drop the price by $15K”

Because without leads the house will not sell itself for maximum price, even in a “hot” market. We’re in some cases discussing selling assets making more than the annual salary of typical NHL players, who all have agency representation. No surprise people have the desire to leave the sorted details to those with experience.

Contradiction
Contradiction
7 years ago

#98
You are on
You are a renter, and you are priced out.
You will never have a home for sale.
While you are at it, employ the same logic and strategy with
Lawyers, doctors, mechanics, politicians, teachers ………..etc