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A change in the wind

CAROLYN IRELAND

From Friday's Globe and Mail

Latest comment posted at 12:55 AM EST 22/08/08

On the cusp of the fall selling season, agents are seeing a startling trend: actual negotiations between sellers and buyers ...Read the full article

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  1. Richard F from Vancouver Island, Canada writes: The laws of supply and demand are starting to kick in... or at least they should. There is also that little issue of affordability... they should bring back the minimum 25% down... and no CMHC guarantee. The market is full of flip sellers just 'testing the market', often listing with an agent without really having a need to sell... so prices remain high... unreasonably so. Of course every seller thinks he/she is an economic island unto themselves where the laws of commerce don't apply.. but eventually there is a reality check... of course right now the estate agents are egging the vendors on pumping the market for it's worth scrounging for listings by giving vendors unrealistic personal assessments of 'market' buoyancy. Just wait till after the kids go back to school... Krash!!

    The market is due for a correction whether anyone likes it or not... and yes, even here a few people will get burned.

    Anyway real estate signs are an ugly visual blight on the community...have no idea why it's allowed... all they get are lookey-loos out of the drive bys.. Our community is just infested with them.

    ...wish I could sell cans of soup they way they flog houses.
  2. S N from Canada writes: I hear you Middle Finger... Any 'profession' where someone can represent both sides of a deal and not have it declared a conflict of interest is utterly ridiculous.

    Interesting article though... Glad to see things are slowly starting to normalize. While I agree there will be a correction in the market, I think it will vary wildly by region. For example, I don't see 15% drops in prices in central/downtown T.O.; they might come down by a couple percent, but I think they'll stabilize after that and resume more historical annual appreciation - people will always want to live there. I'm thinking about the 905 region (Vaughan, Richmond Hill, etc.) where new sub-divison growth has exploded in the last 10 years, and you have tens of thousands of people living MILES from good public transit, amenities, etc... They have to drive everywhere. I think those are the places that may get hit hard in the next couple of years - especially if oil keeps going up. But people who bought houses in T.O. in close proximity to TTC/GO, shopping, etc. and didn't pay a stupid amount over asking should be fine.
  3. Rolly Bettse from BobcaygeonMazatlan, Mexico writes: We are entering another market correction phase. This one took longer than expected, due to the actions that took place from 1990 to 1995. That rebound took longer than expected but rose higher. This time there is a new severe factor that will change the market forces dramatically. Banks all over North America lost an unprecedented amount of cash thanks mostly to Asset Backed Commercial Paper, mortgage loans in short. Is buying a property at the top of any market ever a wise decision ? Will this correction be 18% as predicted, or 25% or 35% or worse ? It is only a normal period of correction and eventually will recover, perhaps 2 years, possibly 10, exceeding the previous correction.
  4. Jane Doe from Canada writes: Different story in Saint John NB. Here sellers are just lacing up their spikes in anticipation of the housing market taking off like a scalded cat. Let the games begin!!!!!
  5. Jonathan T from Milton, Canada writes: People who own homes are just exchanging homes at current prices. It is not a big deal if you sell your house for a high price and buy another at a high price. You are even.

    Problem is new buyers have run away. They are the fuel that sets long term home prices. But their impact is slow to be seen as they make about a 1/3 of the market (hence why sales are down about 15%).

    New buyers are at a very high risk entering this market right now since almost all will use new debt to purchase the home. There are new buyers out there, waiting and wanting to own a home, but the market will have to prove its resiliency over the next year to lure them back. If the market is successful at holding its prices, with no more than a 10% inflation adjusted drop in prices, then I think the buyers will anxiously return. But if prices fall out of control, then buyers will find the proof that they were looking for: that homes are over priced!

    It's one tough game to say whether the price of an asset is too high or too low. I have a feeling they are much too high given the economic turmoil facing the housing and mortgage markets around the world.

    Having said that BC housing market will crash. I would put money on it.
  6. bilbo baggins from Canada writes: I feel like a genius. Timed the market perfectly and sold mid March our of midtown TO. Got $ 100,000 over asking. Amazing what people will do to commute downtown to their cubicle.
  7. Mr. Blue Canoe from Waterloo, Canada writes: Compared with anywhere in Europe, Canadian real estate is a bargain.
  8. S N from Canada writes: Bilbo - is it really that amazing? If I planned on living somewhere from 10 years or more, and another $100,000 ($700/month) meant me having a 1/2 hour commute to work (or less) instead of 1.5 hours and cut my car costs (maybe only need 1 car instead of 2, less insurance, less gas) - then it makes total sense. Sure as hell is better than buying a cheaper place in Bolton where you have to drive to the nearest coffee shop and spend 3 hours a day commuting to work in your car.

    Mr. Blue Canoe - People have been throwing around that point (or a variation of it) for a while now, and I have to say it's never made sense to me. Comparing even the priciest real estate markets in Canada (Toronto, Vancouver) to places like London or Paris is comparing apples to oranges. The fundamentals are totally different; ie. the population of London or Paris alone is not too far off from the entire population of Ontario. Of course real estate here is cheaper - more land and less people. But aside from wealthy international investors who could afford to buy in anywhere in the world, whom does your comparison benefit? People living in Canada have to pay canadian prices with canadian dollars earned with canadian salaries.
  9. E B from Canada writes: Middle Finger, shame on you. I find your comment highly offensive. You cannot generalize. You do not know me, and you have no idea what I do for my clients, and NOT just for money! You have no idea how much I volunteer in my community, and how much I donate for various causes, beside being a real estate agent. You could not find one single client of mine who would regret working with me. We did not pump up property prices. Every property worth as much as someone is willing to pay for it, not more and not less. If you sell, the agent's job is get you as much money for your property as much is possible. I yet to meet a seller who would not take the $100,000 extra above what his/her property should worth from a buyer who is willing to pay (obviously except you). Where the market is, is a simple equation of supply and demand. Not every agents are millionaires, although that is what you think.
  10. g c from Toronto, Canada writes: The real issues are affordability and credit - plain and simple.
    Housing should not cost more than 3.0x - 3.5x one's annual household income. When it does, it's OVERINFLATED.
    Historically, home prices double every 18 years @ 4% annual appreciation.

    Reasons people were paying $500,000 for 2 1/2 storey partially-renovated semi in GTA when their household annual income was $100,000:

    - loose credit standards by financial institutions;
    - historic low interest rates which made people (ie. purchasers, developers, RE agents) think you can/should pay more $$$ since your monthly payments are same as higher rates with lower home prices;
    - new financial products like 35 and 40 yr mortgages.

    The first signs of a reversal of rising real estate price trends are increased supply and s/lower sales.
  11. Hornsworth Portswiler from Canada writes: I have experienced slimy realtors, but when I sold in downtown Toronto in July, my agent was professional, to the point and gave me a very good rate.

    One part of me would like to feel clever for 'getting out at the right time,' but I doubt Toronto is going to crash, assuming the global economy does not crash and Canada maintains its rate of immigration.

    And by the way, the 'property should be X times salary' argument is strange without real justification. It does make sense that carrying costs should be comparable to rent, unless there are special factors.
  12. The Middle Finger ..I.. from Canada writes: To E B from Canada who wrote: Middle Finger, shame on you. I find your comment highly offensive. You cannot generalize. You do not know me, and you have no idea what I do for my clients, and NOT just for money! You have no idea how much I volunteer in my community, and how much I donate for various causes, beside being a real estate agent. You could not find one single client of mine who would regret working with me. We did not pump up property prices. Every property worth as much as someone is willing to pay for it, not more and not less. If you sell, the agent's job is get you as much money for your property as much is possible. I yet to meet a seller who would not take the $100,000 extra above what his/her property should worth from a buyer who is willing to pay (obviously except you). Where the market is, is a simple equation of supply and demand. Not every agents are millionaires, although that is what you think. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> I don't think all realtors are millionaires. But you and your profession are responsible for pumping up prices. That is why your profession is gaining the reputation as grease monkeys. Let me ask you two questions. a) What is a realtor's responsibility for determining the listed asking price based upon the profession's reasons that it sees for hiring ' realtor expertise ' in a neighborhood vs the dangers of ' by owner ' promoted to both the seller and the buyer? b) If a property is listed on the MLS for sale at an an asking price of say $250,000 in a hot seller' s market, within 10 minutes of listing, is it mandatory on the seller to accept the first unconditional cash offer received based on the listing specifications? I await your response.
  13. Nature Lover from Canada writes: We are eliminating the middle class and that good ol' Canadian belief system that hard work will get you what you want. No amount of 'hard work' can get a young person into the real-estate market with a glutinous 'older generation' that will hang onto 2 or 3 houses as 'investments'. Only those kids whose families have such glutinous wealth can get a home by their parents buying them one. It is shameful that we eat our young in this way, as a culture and applaud ourselves for it. A correction is due, as is a smack to the upside of the head for those that have created this inequity.
  14. Nature Lover from Canada writes: 'John McCain, who only days ago said it took an annual income of $5m (£2.5m) to be counted as truly rich, yesterday came under attack for admitting he had lost track of how many homes he owned.'
    ----------------------
    My case in point.
  15. bilbo baggins from Canada writes: S N - Your numbers are WAY off - it takes $ 900,000 to buy a detached home in our old neighbourhood so add $ 400,000 - 500,000 to your equation.

    You and everyone else assume that EVERYONE has no choice but to work in an office in the downtown of a city. That just isnt the case. I commute 25 steps to my home office on my 10 acres (which was half price to 25 x 140 ' in TO). I can drive anywhere in half the time here versus Toronto as there is no traffic. Oh and the kicker, it's all green up here, no pavement, and pollution. My young kids have room to play, can walk safely around, and have lots of friends.

    Many people prefer city life and that's great. I just dont see the point of tying up most of your equity and being house poor.
  16. Down Town from Canada writes: bilbo baggins from Canada: You forgot to mention another key feature of where you now live - it's boring as hell. Have a nice day!
  17. bilbo baggins from Canada writes: Down Town - yes I miss waiting in line for everything, sitting in traffic, watching strange people, paying $ 20 to park, sitting in smelly subway cars.

    Having a great day. Rode some horses, cut the grass, did some wood working in the work shop, walked the back 40, going to bbq some farm fresh steak and eat local vegetables.

    Enjoy your exciting and scintillating day looking out tinted windows at Beijing like weather and pollution in your cube....well, you will likely have to walk 25 steps to a window.
  18. Jimmy Savile from Toronto, Canada writes: I'd rather live in the city in a smaller place (but prices are ridiculous I admit) than a bigger place in the inner or outer suburbs, because I'd rather die than commute in the insane gridlock that's rampant throughout the entire GTA and golden horseshoe.
    However, it's really sad that you get more bang for the buck when you move away from our limited subway lines in the city, which again involves driving to work every day. If our subway system was world class like Madrid's or London's and spread like a web throughout the GTA, many neighbourhoods would be desirable and we might see narrower gaps in price discrepancies between say midtown Toronto and Markham, since owners in either location could jump on a rapidly moving train to get to work - a massive plus. Granted, Markham is car culture sprawl if you're hoping to get groceries and enjoy activities on foot or bike during weekends, but that's another issue.
  19. The Middle Finger ..I.. from Canada writes: To Nature Lover from Canada who wrote: We are eliminating the middle class and that good ol' Canadian belief system that hard work will get you what you want. No amount of 'hard work' can get a young person into the real-estate market with a glutinous 'older generation' that will hang onto 2 or 3 houses as 'investments'. Only those kids whose families have such glutinous wealth can get a home by their parents buying them one. It is shameful that we eat our young in this way, as a culture and applaud ourselves for it. A correction is due, as is a smack to the upside of the head for those that have created this inequity.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Good comment. Best description I have seen. I applaud you.
  20. bilbo baggins from Canada writes: I agree Jimmy. Toronto's public transit is pathetic if not non existent. Also, it is sad that most neighbourhoods, in and out of the city, are not mixed use. All houses and you cant walk anywhere. Even in the city, this is rare unless you want to cram into a condo or live near a major road...not great alternatives for families.
  21. J L from Toronto, Canada writes: The Middle Finger is a typical whiney cry-baby... nobody puts a gun to the head of buyers and sellers - they are free to do as they wish. If people make the largest investment of their lives without doing their homework they are fools - plain and simple. In real estate, just like every other industry, there are good and bad companies/agents.
  22. S N from Canada writes: Bilbo - That's the case for your old neighborhood, and your old detached house... There are other central T.O. neighborhoods where houses (semis) were listing for $400,000 (at least they were last fall) and selling for $500,000 - so my numbers aren't WAY OFF - just depends on where you're talking about.

    Also, I never assumed that everyone has no choice but to work in an office downtown, but the fact is a huge swath of people in the GTA work in Toronto proper, and most don't have the option of being able to work from home, and thereby be able to live in the stix for less $$$. Good for you if you can swing it, but it's not a realistic option for most people.
  23. M C from Canada writes: Mr. Veinot says - 'If it was me, I'd sell first.'

    IE. cash in now because before the RE market crashes.
  24. RR Mac from Toronto, Canada writes: sarcasm warning:
    It can't happen here!
    We aren't in debt like they are!
    Condos aren't overbuilt!
    10% gain every year for the rest of your life is guaranteed!
    Toronto is a world class city!

    the amount of BS slung by real estate agents and the mortgage industry et al to date is truly astounding.

    the inferred reality of this article is a refreshing change.
  25. Montezuma 1 from Canada writes: People are like sheep, they follow the herd.
  26. Dr. Glenn Marshall from Lynedoch, Canada writes: If an agent does not want to take time to sell a property, then who wants that agent. I have watched over the years as commissions have crept up into the stratosphere, and the only people who seem to make out well are the agents, the lawyers and the municipalities.
  27. J L from Toronto, Canada writes: RR Mac sarcastically writes: 'It can't happen here!We aren't in debt like they are! Condos aren't overbuilt! 10% gain every year for the rest of your life is guaranteed! Toronto is a world class city!
    ...the amount of BS slung by real estate agents and the mortgage industry et al to date is truly astounding.'

    RR Mac - that is total BS!!! Most agents in Toronto would not make such ridiculous claims and rarely talk in absolutes unless you're dealing with an unsophisticated loser! There are plenty of very astute agents who give their clients solid advise and disclose the potential risks along with the benefits. Most people who buy homes are well aware of what they are doing!
  28. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada who wrote: The Middle Finger is a typical whiney cry-baby... nobody puts a gun to the head of buyers and sellers - they are free to do as they wish. If people make the largest investment of their lives without doing their homework they are fools - plain and simple. In real estate, just like every other industry, there are good and bad companies/agents.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    You must be an real estate agent. Try answering the questions I Posted 22/08/08 at 11:42 AM EDT. Otherwise, your just another greasy slimeball.
  29. Nathan Cool from Vancouver, Canada writes: I made a little over 150k last year and I can't afford a two bedroom condo downtown. There's something wrong here. Who is buying these properties?

    Affordability is finally becoming an issue. I think we'll see some back-sliding soon.

    I agree with the earlier post that calls for a minimum ~20% down payment. Some are way over their heads here.. if the economy turns down hard we're going to have to bail out the fools that over-reached.
  30. bilbo baggins from Canada writes: S N - true, you can find cheaper places but in less desirable neighbourhoods and the houses wont be in great shape but there will be a roof over your head. I agree with the comments of how far people stretch to get into a house. I will say over the long run, the price of our old house will go up more than this place I would bet. BUT and it's a big but, we didnt want to live there and raise a family in an already congested neighbourhood with condos going up everywhere. Traffic is already terrible and developers were putting pressure everywhere to intensify more. The straw that broke the camel's back was the increasing taxes and costs coming and the great reduction in service the city is providing - ice rink, community centre closed around the corner, roads in terrible shape, dirty, no snow removal most of the time, etc.

    Oh and I changed jobs to have one I could work from home with so where there is a will, there is a way. The vast majority of people could alter their situation to make a move.
  31. bilbo baggins from Canada writes: Middle Finger - With all due respect, our real estate agent represented US and WE made the decisions. And our goal? To MAXIMIZE the return on our sale of course. It represents our largest tax free investment. What else could drive our decision!?

    I'm not really clear on your first question but I think you mean an agent representing both the buyer and the seller. We were clear on that and our agent said she would have another agent represent the prospective buyer if that arose. We had over 5 bids and we sat in on the whole process and met each agent and their bid.

    We were under NO obligation to accept ANY offer at selling price, under or otherwise. In this case, our objective was the highest bid. What was interesting was the bids that came in from outside of the neighbourhood - Markham, Scarborough,etc (the commuters) were low and the bids in the neighbourhood (in semis moving up) were the high ones. They knew what they were willing to spend to stay in the neighbourhood. Obviously double income parents with nannies who both work downtown. (This was another reason to leave - most of the neighbours are work drones whose only self realization is their income and the private school they send their kids to. Great people but we wanted more down to earth friends.)
  32. indy jones from OVER PRICED, Canada writes: Here we go......The people with several properties are getting nervous......come the time in a few month's when a person is required to have 5 percent down in order to buy an overpriced house (max mortgage for 35 years) the buyer will be forced to hold off the purchase for a few years........

    POP !!!!!!!!!!!!! HALF PRICED REAL ESTATE IN 18 MONTHS !!!!!!!!!
  33. The Middle Finger ..I.. from Canada writes: To bilbo baggins from Canada who wrote: Middle Finger - With all due respect, our real estate agent represented US and WE made the decisions. And our goal? To MAXIMIZE the return on our sale of course. It represents our largest tax free investment. What else could drive our decision!?

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Actually Bilbo, you detailed very well exactly what I believe is wrong but you are off regarding my concern. My concern is not that the agent can / may represent both sides. If one can answer my two questions posted at 22/08/08 at 11:42 AM EDT properly, then the buyer doesn't need an agent.

    Focus on listed asking price. The description of the property although necessary is immaterial. Buyers have eyes.

    As an extreme example of what is wrong, in 2008 in Winnipeg, a property was advertised on the MLS as being available for $ 350,000 but sold for $ 500,000.

    ( to be con't )
  34. The Middle Finger ..I.. from Canada writes: ( con't )

    Now look at the industry promotion of the role of its agents.

    The industry promotes itself and its agents as being a better bet / almost a necessity for both the seller and the buyer when moving forward rather than the option of risking ' By Owner ' because ' its agents are knowledgeable in the neighborhoods ' regarding issues such as appropriate price. In the example, the seller was put at risk because of a poor list price. Seeing the MLS advertisement, many potential buyers were sucked into the open house and unwittingly into an auction by the offer presentation procedures. And several knowledgeable agents were likely present on both sides. If you were to read the story, agents, many likely involved, were all expressing exuberant astonishment rather than being embarrassed by the huge deviation that discredited their profession. Where was their collective expertise? Go to my first question and reflect.

    ( to be con't )
  35. The Middle Finger ..I.. from Canada writes: ( Cont'd )

    The MLS system is a real estate advertising tool operated by the CREA and used to spread the word to potential buyers that listed properties are available for sale at the listed asking price. Today, in Canada, it is not only used locally but interprovincially and internationally via the Internet.

    In the case of the MLS, the seller gains the benefit of exposure to prospective buyers under the guise of having true intent to sell at the listed asking price. However, in many cases, the buyer is unwittingly lured in only to find out in many instances that not only is he really in an auction but that the seller has the option not to accept an offer even if the offer is made per the MLS advertisement. This alos occurs in other media such as newspapers, those brochures
    on the rack at your local Safeway, etc.

    Advertising in general has the intent to lure buyers by suggesting that the advertised item is available for purchase at an advertised asking price. There are rules set down by the Competition Bureau.
    Aski yourself if Walmart would get away with such a business practice. Go to my second question and reflect.

    ( to be cont'd )
  36. Mike Toronto from Canada writes: Middle Finger: While I think that there is considerable individual variability in the field, as a whole, I agree with you that there is something inherently unethical about the real estate industry and even upstanding individuals in the system may be pressed to do the wrong thing.

    I certainly do not believe that most real estate agents try to get the best price for their clients. I believe they try to get the best price for the amount of work they put in. In a hot market, the sky's the limit. But in a cooling market, if that means talking the seller down another $10,000 because the $125 in commission isn't worth it, so be it. How they can justify the percentages they ask for what is in essence a sales / administrative cost is beyond me.

    Out of curiosity:

    1) Do selling agents have to demonstrate that the other offers they have are real and not fictional?

    2) Can the same agent or agency represent different bidders for the same house?

    3) How does an agent who represents both the seller and buyer resolve their conflict of interest? How do they not inadvertently collude with the seller to get the highest price possible and therefore the highest commission possible? The argument that the house only goes for the price the buyer is willing to pay doesn't hold water if the advice the buyer is getting from their own representative is biased.
  37. bilbo baggins from Canada writes: Middle Finger - I understand now. I am a career sales and marketing executive and had ideas that I might sell my house without an agent. When I considered all the issues, time it takes, legalities, etc. I decided it wasnt worth it. We did engage an auction style sale and that was great. Does it lean toward the seller - absolutely. At least until March. It is now clearly a buyers market (though the sellers in TO havent quite accepted that) and that is the ups and down of any market.

    Agents have minimal impact on the end price of the property. The location does it all as well as luck that the right buyers will get emotional about having to buy the place.

    I think the right agent is critical to buy and sell. We tried to buy out of Toronto a couple of years ago and used a city agent and she tried very hard but it was clear she didnt understand the nuances of country properties - septic tanks, wells, etc. or have a sense of value. Same for the sale in the city. We interviewed 4 high profile agents and all had different styles and approaches but it was clear they knew what they were doing. We chose our agent and she was incredible, trust worthy and was right on for all of her advice. We couldnt be more pleased.
  38. The Middle Finger ..I.. from Canada writes: ( cont'd )

    Now most people including the provincuial regulators and the CREA will counter with the idea that it is the seller's property and he can do what he likes. I have no objection to this.

    But what I have an objection to is that the industry who operate the indiustry broadcast mechanism ( MLS ) and its practitioners ( agents )
    rather than setting the standards for quality control are defaulting to each seller and allowing buyers to be used and abused.

    I believe that the CREA must set and adhere to a set of operating standards for the operation of the broadcast mechanism ( MLS ) and its practitioners ( agents ) or risk developing a reputation as grease monkeys. However, rather than doing this, the CREA and its agents choose to jump on the seller bandwagon in order to earn fees.

    Now doesn't this sound very much like what has occurred in the world of high finance with banks, brokerage houses and mortgage companies? Look at the mess of ruined companies, reputations, foreclosures, and bankruptcies, etc.

    ( to be cont'd )
  39. bilbo baggins from Canada writes: Mike Toronto - yes to all your questions. We were on top of our agent for these items. We were there watching all the bids come in. You do have to do your own homework and ensure you feel comfortable with the prices you are buying and selling for.
  40. The Middle Finger ..I.. from Canada writes: ( cont'd ) As an analogy from a different industry, would an oil or gas pipeline operator allow producers access to the pipeline and its employees for shipping its product to market if the producer were producing contaminated product? Of course, not. Once detected, the producer would be denied access to the pipeline as a part of the pipeline operator's quality control procedures to protect all downstream participants whether they are other shippers or eventual customers. That is why a homeowner as a consumer believes the delivered product that he uses to heat his home is a quality product and won't ruin his furnace. As a consumer, the homeowner has faith in the pipeline operator / employees. My belief is that if a property seller ( producer ) does not want to play by the CREA ( pipeline operator ) rules that's ok. However, by not being willing to do so, the seller should not gain the benefit of access to the industry advertising pipeline ( MLS ), its practitioners, ( agents ), and the appearance of credibility with potential buyers. The seller still has the option to go it alone ' By Owner ' and the inherent risks. The seller can choose to run an auction or a pure sale. He can advertise in local generic advertising conduits or on the Internet. He can price high or low. He can refuse to sell. He can be as honest or dishonest as he wishes to be and run the inherent risks. ( to be cont'd )
  41. The Middle Finger ..I.. from Canada writes: ( cont'd )

    But what the seller will not get benefit from are the professional broadcast mechanism to gain free advertising ( MLS ), the industry practitioners ( agents ),and the appearance of credibility with potential buyers. This would create a quality and balanced market place for both buyers and sellers.

    Unfortunately, the current operating situation is far from being quality and balanced and credible. The industry is operating at such a low standard that I believe it can hardly be viewed as professional and trustworthy. The industry professional regulators and government regulators are negligent in their duties. The practitioners are actually being complicit in lowering the standard and trust in the system with buyers.

    And just watch which side they will be cozying up to as the real estate market softens in Canada ..... The buyers of course, the very constituency they have been ticking off for the last few during the hot seller's market. Protect the credibility of the market place in a balanced manner then the industry and its practitioners would be viewed by all players in a much better light.

    Thank you.
  42. Mike Toronto from Canada writes: Bilbo Baggins:

    Glad to hear that you had a good experience with your agent. I'll have to carefully interview whomever I get to represent me when I purchase my first house in the near future.

    As in most fields, I think good, competent people are worth their weight in gold. But to me, there is something wrong with the system. When others that I know drove by a property that wasn't being sold by the same agency, the agent didn't want to stop until their client threatened to fire them. Also, others that I know sold their house in less than a business week. This suggests to me that their agent set the asking price too low. Of course, it's up to the seller to accept or reject the price but often sellers have to rely on their agents for advice and that advice often seems to run the risk of placing the interests of the buyer, seller, and agent in conflict.

    BTW, 'yes' to all my questions isn't necessarily good. If an agent can represent multiple bidders for the same house, how does one know what backchannel communication is happening? Can an agent help a favored client by sharing information on what others are bidding? Also, if an agent can represent both a buyer and a seller, how do they avoid a conflict of interest and not inadvertently (or deliberately) collude with the seller? These are difficult questions and a true profession would wrestle with them, but CREA's motto seems to be, 'Don't worry, trust us.'

    Mike
  43. indy jones from Toronto_Hot_Air_Bag, Canada writes: ( cont'd )

    POP !!!!!!!!!!!!! HALF PRICED REAL ESTATE IN 18 MONTHS !!!!!!!!!
  44. The Middle Finger ..I.. from Canada writes: So now that I have vented, can anyone justifiably answer my two question:

    a) What is a realtor's responsibility for determining the listed asking price based upon the profession's reasons that it sees for hiring ' realtor expertise ' in a neighborhood vs the dangers of ' by owner ' promoted to both the seller and the buyer?

    b) If a property is listed on the MLS for sale at an an asking price of say $250,000 in a hot seller' s market, within 10 minutes of listing, is it mandatory on the seller to accept the first unconditional cash offer received based on the listing specifications?

    In b) the written offer is exactly as advertised, in cash and with no conditions.

    I await anyone's response.

    Thank you.
  45. Phil M from Toronto, Canada writes: Prices should never have escalated that high that quickly to start with. The blame lies with a slew of factors, including stupidly optimistic realtors & buyers, 1.5% down (or less) 40 year mortgages, low interest rates, and speculators.

    A correction is overdue, and will be slightly more severe for having taken longer to arrive. But make no mistake, the correction is here. Statements such as 'prices are holding steady, up X% from this time last year in market Y' totally miss the point that prices are DOWN from a few months ago. The average sale price dropped $38K in Toronto in July (Source: Toronto Real Estate Board). And no, those aren't statistical outliers, that drop is statistically significant, and the trend is continuing in August.

    Anyone who spends any time looking at monthly figures (such as the CRIA and TREB folks) should be well aware of this trend, and their blatant attempts to paint a picture to the contrary forces me to revise my opinion of some real estate professionals from stupidly optimistic to outright dishonest.
  46. indy jones from Toronto_Hot_Air_Bag, Canada writes: Phil M from Toronto, Canada writes:

    Anyone who spends any time looking at monthly figures (such as the CRIA and TREB folks) should be well aware of this trend, and their blatant attempts to paint a picture to the contrary forces me to revise my opinion of some real estate professionals from stupidly optimistic to outright dishonest.
    --------------------
    What??? Is this news to you? Anyone who is selling anything will pump it up with hot air. Think people would learn from overpriced Internet stocks that were pumped up by analysts........a bit naive????
  47. The Middle Finger ..I.. from Canada writes: To Mike Toronto from Canada who wrote: I agree with you that there is something inherently unethical about the real estate industry and even upstanding individuals in the system may be pressed to do the wrong thing.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    You're right. Any good honest agents are forced to compromise their principles in order to survive when the industry ( professional and government ) regulators fail to do their job to protect the public.

    There is a herd mentality. Except its the public being herded. Have you ever been to Head - Smashed - In Buffalo Jump about an hour South of Calgary. Not many buffalo survived the industry operating apparatus ( the cliff ) but the indi=ustry practitioners ( Indians ) did well.
  48. J L from Toronto, Canada writes: The Middle Finger asks... a) What is a realtor's responsibility for determining the listed asking price based upon the profession's reasons that it sees for hiring ' realtor expertise ' in a neighborhood vs the dangers of ' by owner ' promoted to both the seller and the buyer?

    PLEASE use proper english - I can't understand what the heck you are trying to say....maybe you can try re-writing the question?
  49. J L from Toronto, Canada writes: The Middle Finger asks...b) If a property is listed on the MLS for sale at an an asking price of say $250,000 in a hot seller' s market, within 10 minutes of listing, is it mandatory on the seller to accept the first unconditional cash offer received based on the listing specifications?

    There is no law in Ontario that forces a home-owner with a home for sale (whether it's For sale by the owner, exclusive, or on MLS) to accept a full price, unconditional offer.
  50. J L from Toronto, Canada writes: Mike toronto asks: Out of curiosity: 1) Do selling agents have to demonstrate that the other offers they have are real and not fictional? Answer: Absolutley. 2) Can the same agent or agency represent different bidders for the same house? Answer. The same brokerage can as they may have multiple agents working for them. Agents who work for brokerages CANNOT represent 2 buyers vying for the same home - they would have to pass one buyer off to another agent within the same brokerage or not represent one of the buyers. 3) How does an agent who represents both the seller and buyer resolve their conflict of interest? How do they not inadvertently collude with the seller to get the highest price possible and therefore the highest commission possible? The argument that the house only goes for the price the buyer is willing to pay doesn't hold water if the advice the buyer is getting from their own representative is biased. Answer: This is called Dual Agency. All the rules (i.e what the agent is allowed to do, say, etc.) are clearly spelled out throughout all the contracts that both the buyers and sellers sign with the brokerage. For example, the agent cannot tell the seller what the buyer is willing to pay unless directed to do so in writing by the buyer.
  51. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada who wrote: The Middle Finger asks... a) What is a realtor's responsibility for determining the listed asking price based upon the profession's reasons that it sees for hiring ' realtor expertise ' in a neighborhood vs the dangers of ' by owner ' promoted to both the seller and the buyer?

    PLEASE use proper english - I can't understand what the heck you are trying to say....maybe you can try re-writing the question?

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Ok.

    a) As a seller, to establish the listed asking price for my property, why should I hire a real estate agent?

    b) As a buyer, to verify the reasonableness of the listed asking price for a property, why should I hire a real estate agent?

    Please be specific on a real estate agent's professional contribution to listed asking price only.
  52. The Middle Finger ..I.. from Canada writes: J L from Toronto, Canada who wrote: The Middle Finger asks...b) If a property is listed on the MLS for sale at an an asking price of say $250,000 in a hot seller' s market, within 10 minutes of listing, is it mandatory on the seller to accept the first unconditional cash offer received based on the listing specifications? There is no law in Ontario that forces a home-owner with a home for sale (whether it's For sale by the owner, exclusive, or on MLS) to accept a full price, unconditional offer. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> I agree. A homeowner can do whatever he wants to do as long as he doesn't mislead the public. He can run the risk of any legal action. I don't believe that he would survive misrepresentation if challenged. An entire industry of purported professionals should not be complicit in misrepresentation whether specifically stated in the law or not. Regular ethical advertising media take steps with Declarations to ensure that any advertising is not a misrepresentation. Declarations are usually regarding availability and stated price in order to prevent misrepresentation to the public. I believe the Competition Bureau would take a very dim view of any organized misrepresentation if challenged. So please advise your opinion with regard to advertising to the public that a property is available for sale at a listed advertised price using public advertising media apparati such as the internet, newspapers, brochures, television, etc and the most important real estate industry advertising vehicle, MLS, in lieu of your comments.
  53. The Middle Finger ..I.. from Canada writes: J L from Toronto, Canada who wrote: The Middle Finger asks...b) If a property is listed on the MLS for sale at an an asking price of say $250,000 in a hot seller' s market, within 10 minutes of listing, is it mandatory on the seller to accept the first unconditional cash offer received based on the listing specifications? There is no law in Ontario that forces a home-owner with a home for sale (whether it's For sale by the owner, exclusive, or on MLS) to accept a full price, unconditional offer. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> I agree. A homeowner can do whatever he wants to do as long as he doesn't mislead the public. He can run the risk of any legal action. I don't believe that he would survive misrepresentation if challenged. An entire industry of purported professionals should not be complicit in misrepresentation whether specifically stated in the law or not. Regular ethical advertising media take steps with Declarations to ensure that any advertising is not a misrepresentation. Declarations are usually regarding availability and stated price in order to prevent misrepresentation to the public. I believe the Competition Bureau would take a very dim view of any organized misrepresentation if challenged. So please advise your opinion with regard to advertising to the public that a property is available for sale at a listed advertised price using public advertising media apparati such as the internet, newspapers, brochures, television, etc and the most important real estate industry advertising vehicle, MLS, in lieu of your comments.
  54. David Gibson from Hamilton, Canada writes: People who are consumed with offering so much less than asking price, or asking so much more than their property is worth, are all missing the boat, although this is the simple crud the newspapers report. The most important thing in real estate, whether you are a seller, buyer, agent, or appraiser, is determining what a house is worth. This is a learned skill. Most deals result from reasonable asking prices and reasonable offers. Worst of all is the real estate crud on television, but that comes with the territory of TV.
  55. The Middle Finger ..I.. from Canada writes: To David Gibson from Hamilton, Canada who wrote: People who are consumed with offering so much less than asking price, or asking so much more than their property is worth, are all missing the boat, although this is the simple crud the newspapers report. The most important thing in real estate, whether you are a seller, buyer, agent, or appraiser, is determining what a house is worth. This is a learned skill. Most deals result from reasonable asking prices and reasonable offers. Worst of all is the real estate crud on television, but that comes with the territory of TV. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> I understand your sentiment. Both likely involve insincerity. However, both of these are less off a concern to me as too high an asking price leaves the buyer in control and too low an offer leaves the seller in control. What I am concerned with is whether the goods being advertised to the public are truly available at the advertised asking price to the first unconditional cash offer that aligns to the advertised specifications. Standards of adverting real estate should be no different than for Walmart. My issue is not directly with the homeowner. My issue is with industry operators and advertising media who consciously allow homeowners to screw around in their sphere of influence where the result is that the public is being duped.
  56. double mike from Canada writes: .
    There are many wonders in the world. Once I visited a tiny town, which had 3 piano stores at the same street. How the heck those stores survive is above me.
    Another mystery is how an average family with $85,000 gross income can really afford a $370,000 house...
    Poor, silly lemmings…
  57. J L from Toronto, Canada writes: The Middle Finger: 'Organized misrepresentation' is a really distorted description of what occurs - it is an open process. Buyers are well aware that offers are being held off until a later date and many other disclousres are made throughout the process.

    The part that I would prefer was changed is the blind bid that occurs - I would prefer an open auction (not unlike an art auction). However, the government has legislated what can and cannot be done and this is the system that has developed.
  58. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada who wrote: The Middle Finger: 'Organized misrepresentation' is a really distorted description of what occurs - it is an open process. Buyers are well aware that offers are being held off until a later date and many other disclousres are made throughout the process. The part that I would prefer was changed is the blind bid that occurs - I would prefer an open auction (not unlike an art auction). However, the government has legislated what can and cannot be done and this is the system that has developed. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Re Part I: You just admitted there is a systematic attempt to manipulate the offer presentation process to create an auction environment with the intent to drive prices higher. This is the line that the industry has crossed. Re: Part II: Then the industry should come clean up front and change to an auction format. I wouldn't oppose this. But then again, the reason the industry doesn't is because under an auction format there is no need for the real estate agents. Legitimate auction houses already have this turf covered. You state: ' However, the government has legislated what can and cannot be done '. Please identify the legislation.
  59. J L from Toronto, Canada writes: The Middle Finger asks : a) As a seller, to establish the listed asking price for my property, why should I hire a real estate agent? ANSWER: This is a classic mistake of novice real estate investors. List price SHOULD NOT be the primary focus when a home-owner chooses a listing agent. Pricing the home is important but it is merely one of many things your agent needs to do to get that perfect sequence of events that'll get you top dollar. Establishing the right list price is mandatory for any agent on your short-list but there are so many other things you need to ensure they'll do for you (i.e. staging, professional photography, websites, floorplans, print media, email campaigns, brochures, virtual tours, agent previews, database campaigns, etc, etc, etc). b) As a buyer, to verify the reasonableness of the listed asking price for a property, why should I hire a real estate agent? ANSWER: Again, a classic error for novice home-buyers is to believe you just need an agent to establish price. Price is only a mere part of the process. Buyer representaion is free but it has tremendous value. There are so many variables to take into consideration when buying a home. This would take way too much time to fully answer but generally, a good buyer agent (having sold hundreds of homes) will have so much experience in matters of neighbourhoods, architecture, resalability, negogiating, insurance matters, disclosure and legal issues, pricing and terms, industry resources (i.e good home inspectors, lenders, lawyers,), etc, etc. - people would be foolish to not be represented (especially when it is free).
  60. J L from Toronto, Canada writes: The Middle Finger ..I.. from Canada writes... 'You just admitted there is a systematic attempt to manipulate'

    Really? where did I say that? I think you are losing it. It is no secret that offers are held off to ensure anyone who is interested in the home has a chance to view it and then bid at a later date. Of course the intent of the vendor is to get the highest possible price - welcome to capitalism? In Ontario this is all legal.

    RE: Legislation.
    Google REBBA
  61. J L from Toronto, Canada writes: The Middle Finger: FYI - homes can and are auctioned in Canada.. so I don't know why you think it would get rid of the real estate industry - it doesn't seem to have done so over the last century.
  62. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada:

    I am neither a novice seller or novice buyer. Four of the six homes I have owned outright are selling in the $700K to $1M range.

    You state:

    As a seller: Establishing the right list price is mandatory for any agent on your short-list.

    As a buyer: .......... ( the agent ) will have so much experience in matters of neighbourhoods ............. pricing ..............

    So how do you explain the extreme example in my post 23/08/08 at 10:47 AM EDT and the reaction in my post 23/08/08 at 10:57 AM EDT?

    Also, how does having an auction support your comment that as a seller ' Establishing the right list price is mandatory for any agent on your short-list. '
  63. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada who wrote: The Middle Finger ..I.. from Canada writes... 'You just admitted there is a systematic attempt to manipulate' Really? where did I say that? I think you are losing it. It is no secret that offers are held off to ensure anyone who is interested in the home has a chance to view it and then bid at a later date. Of course the intent of the vendor is to get the highest possible price - welcome to capitalism? In Ontario this is all legal. RE: Legislation. Google REBBA >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> You just said it again ' It is no secret that offers are held off to ensure anyone who is interested in the home has a chance to view it and then bid at a later date.' That's manipulation of the process by or condoned by the real estate industry that disadvantages a buyer. Thank you for the REBBA reference. I shall review it However, like other provincial legislation, I suspect it is likely silent on the issues at hand. Being able to do something because there are no rules doesn't mean a profession should engage in it. Ethics and morality usually voluntary behaviours particularly when others can be hurt.
  64. J L from Toronto, Canada writes: The Middle Finger.. having sold six homes is novice - I do that every 2 weeks.

    TeM iddle Finger writes:
    As a seller: Establishing the right list price is mandatory for any agent on your short-list.
    As a buyer: .......... ( the agent ) will have so much experience in matters of neighbourhoods ............. pricing ..............
    So how do you explain the extreme example in my post 23/08/08 at 10:47 AM EDT and the reaction in my post 23/08/08 at 10:57 AM EDT?

    ANSWER: Are you assuming that I believe all agents are created equal and, like robots, provide the same services? I don't understand why you would care what I think about a home that sold dramatically over the lsit price - there could a million reasons why that happened (i.e. planned, dumb agent, seller requested a low list price, no comparables in the area so the vendor priced it low to ensure a sale, etc, etc,).
  65. J L from Toronto, Canada writes: 'Also, how does having an auction support your comment that as a seller ' Establishing the right list price is mandatory for any agent on your short-list. '

    How does it not?
  66. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada who wrote: The Middle Finger: FYI - homes can and are auctioned in Canada.. so I don't know why you think it would get rid of the real estate industry - it doesn't seem to have done so over the last century.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Professional Auction Houses do exist and yes houses are auctioned in Canada. But they are advertised as auctions not as traditional sales. And the Auction Houses operate to a set of rules with those buyers attending knowing full well that they are at an auction.

    Like farm machinery and art, there will eventually be no need for real estate agents, particularly from the buyer's perspective, if the traditional real estate industry is eliminated. I wonder how many buyer's of auctioned US foreclosed real estate have traditional real estate agents as we know the profession? My guess is not many.

    And as prices fall, many agents themselves abandon the profession.
  67. J L from Toronto, Canada writes: The Middel Finger writes:
    '...there will eventually be no need for real estate agents...'

    OK buddy, good luck with that dream of yours.

    I would recommend you read REBBA and the CODE of Ethics and research the industry's growth and consumer satisfaction over the years and then look into the full service brokerages out there - I think you'll be surprised at what you find. There's a whole new generation of incredible servive oriented Realltors out there. Real estate is not a commodity and the industry is more complex than you think.

    Gotta go.
  68. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada who wrote: 'Also, how does having an auction support your comment that as a seller ' Establishing the right list price is mandatory for any agent on your short-list. '

    How does it not?

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    If its mandatory, an auction does not exhibit the agents experise. At best there might be a starting / minimum price for bidding. But no real estate agent is needed. An auctioneer and seller can do this.
  69. The Middle Finger ..I.. from Canada writes: To J L from Toronto, Canada who wrote: The Middel Finger writes:
    '...there will eventually be no need for real estate agents...'

    OK buddy, good luck with that dream of yours.

    I would recommend you read REBBA and the CODE of Ethics and research the industry's growth and consumer satisfaction over the years and then look into the full service brokerages out there - I think you'll be surprised at what you find. There's a whole new generation of incredible servive oriented Realltors out there. Real estate is not a commodity and the industry is more complex than you think.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    I know they are out there. But if the real estate industry is selling itself as complex, lookout. The Financial Services industry got fancy with their engineered complexities. Today the economy may be taken down led by real estate and the Wall Street ghurus and many real estate agents are losing / abandoning their jobs.

    Thanks for the debate. On another story, it looks like we support the same presidential candidate.
  70. J L from Toronto, Canada writes: The Middle Finger 'If its mandatory, an auction does not exhibit the agents experise. At best there might be a starting / minimum price for bidding. But no real estate agent is needed. An auctioneer and seller can do this.'

    One more for the road... your statement above is not correct. Auctioning a home the right way is a multiple week endeavor with a comprehensive marketing strategy/plan - it's unlike other auctions. In the U.S. they are really good at it - the results vary significantly on how the home is marketed and presented.
  71. Grampa Canuck from Stirling, ON, Canada writes: Whew! I'm going to try to get a word in here edgewise.

    Toronto (and elsewhere) real estate prices are over-blown and a result of the debt and low-margin induced iquidity bubble we've been experiencing. Lots of money has been circuilating that has been created from shakey debt and over-leveraged investment banks, etc. Add to this the massive public and private debt in our major trading partner.

    Eventually, if something is not sustainable, it will stop. Real estate pricess must reflect their price-earnings ratio. In other words, the price of real estate must, in the long run, reflect the earning capacity of those buying and holding real estate. The real estate price bubble we've been experiencing has not reflected the true financial reality of the public.

    Also, I envision a situation where eventually more and more sellers are self-listing their properties online. There's a couple of these services out there right now. Once the MLS monopoly is broken, people will be able to buy and sell without the siphoning off of wealth by the real estate industry. This route won't be for everyone. Some may not have the confidence to proceed with online selling, and others may want someone 'to do it all for them'. And, some situations may be very complex and require a level of expertise. But the real estate industry/MLS monopoly must eventually be broken.
  72. Former 2 Time CIBC Staffer from North Vancouver, Canada writes: I wish real estate agents would become as redundant as travel agents. With the internet, those who provide no value should become disintermediated. I have bought properties through an agent and privately as well. I've never found what my RE agent did for me was above and beyond the research I could do myself.

    The real estate industry should be forced to crack open MLS just like Sabre was opened up in the travel industry... Then we'd see which agents can provide real value...
  73. Mac- GLG from