Traditionally there has always been some fluctuation in the real estate market. That is why you hear the term “seasonally adjusted”. It’s generally not a great time to list a house on Labour Day or Easter weekend. Then there is The Christmas holidays between mid December and Mid January. For most, these are days for relaxing, travelling, and celebrating. But what about July and August? While there is some business still going on through July, August tends to be pretty quiet so, by all means, take a bit of time off to recharge those batteries but remember that the tail end of August should be used to ramp up for the Fall.
Before jumping into the audience participation part of the morning, I talked a bit about Destitute Dan, a fictitious agent who really didn’t do anything to keep his business going over the summer. He made some good money in the spring and figured that he had enough to carry him through to the Fall market. Dan spent a lot of time at the cottage, worked on his tan, went out to dinner with his friends, slept in, and even found some time to help his parents clean out their garage, but by the end of August Dan was pretty much out of money. The point is that Dan didn’t budget his time very well. He did not invest any time or money preparing himself for the fall market. By Labour Day, Dan was already behind on his marketing, and in a few short weeks, Dan will be behind on his CEU credits, his website will be in need of a serious update….well you get the picture.
We had a good discussion on the things we should be doing, so check out the list above. Got something I missed? let me know and I will add it. The piont to this exercise was to get the agents thinking that real estate is a full time business. Like any job, it requires a strong committment of time and effort for it to pay off. And while the job requires daily attention, we are reminded to view the big picture as well. When there isn’t a lot of homes to inspect, there are other matters to attend to.
There has been a lot of press lately about the Competition Bureau’s complaint against organized real estate’s ownership of the MLS system. The head of the Bureau said that the real estate industry was anti-competitive and limited consumer choice. In an effort to address many of the Bureau’s complaints, The Canadian Real Estate Association made some minor revisions to their rules and regulations. Essentially, these changes clarified what has always been understood; Brokerages can charge whatever commission they want and offer whatever service the client wishes.
News of these changes spurred some real estate brokerages to embrace the discount philosophy and so started the race to the bottom. If one company can post your house on MLS for $799, another can do it for $599. Someone else will come along and offer to list it for $399 and yet another will offer to do it for $199. Soon it will be free. While I have only seen a few national brokerage companies offer discounted services, the market has been flooded with new companies all vying for a slice of the discount market.
As an experienced broker in a full service company, I understand the realities of what these new companies face. And let me be frank- The math just doesn’t work. It is nearly impossible to make a living listing homes for $199. First of all, you need to build a presence if you want any chance of success. That means, an office (or your parent’s basement), secretary (your mom), website, advertising, computers, insurance, licence, etc, etc. Most importantly you need to list homes, lots of homes.
In my mind, I’m getting a picture of what many of these new companies look like and how they operate and I wonder what kind of protection the consumer is getting. Several weeks ago one of our agents sold a home that was listed by a new discount brokerage. The MLS listing offered the selling broker a $1 commission. Anything above that amount had to be negotiated between the owner and the selling agent. Well, we managed to negotiate a commission and the deal firmed up but by the time the home closed, the listing company was already out of business and we weren’t able to bill them the $1. Go figure.
There are a few of these types of stories floating around and if we, as an industry, are not careful, it will get worse. We should all be concerned that the loser in this race to the bottom will ultimately be the consumer. One of the main pillars established by Realtors, and overseen by the Real Estate Council of Ontario, is that of Agency. Simply put, agency is the public’s guarantee that they will be protected. Watering that down or taking it away completely will be a disaster.
I don’t object to discount brokerages but the reality is that you get what you pay for. The Competition Bureau may be hell bent on opening up the MLS system but it should not be done at the expense of the consumer, the very consumer it is meant to protect.
The views expressed here are those of the author and may not be the views of Bosley Real Estate Ltd.