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Posts tagged ‘REBBA 2002’

20
Dec

Agent Wants to Know If You Had Any Offers On Your Listing?

whisperingHow much are you willing to say about a previously turned down offer on one of your listings? This was the topic of last week’s Mastermind meeting at our office and it created considerable debate. Here is the scenario…. You have a listing that has been around for nearly two months. In that time you have entertained two offers. The first one came on offer night but it was much lower than the Seller’s expectations. Just after the third week, you terminated the listing and relisted it at a higher price. (This tactic has limited success but, depending on the time of year and a bunch of other factors, can help sell the property). Within days you received your second offer which was lower that the first offer. Now you are cruising in on month two. You are still getting lots of showings and agents are asking questions…why hasn’t it sold? have you been getting interest? AND… have you received any offers so far?

We had a rather entertaining debate at the office and on the local real estate Facebook group. One thread suggested that the listing agent has a duty, according to REBBA 2002, to say absolutely nothing. I find the logic incorrect on this. While our duty is to inform agents about the number of competing offers we are bound to keep the contents of competing offers confidential, but once an offer is rejected and expired, is it still our responsibility to keep the contents private? If you agree with that logic than you would have to agree that an expired offer is still, technically, an offer. I don’t believe that is the case. Plus I find it hard to imagine an agent responding to my question about other offers by saying “I can’t tell you”. In my mind that is a loaded response that immediately puts any possibility of a new offer off the table.

Another thread suggested that it was okay to divulge certain information about expired offers, such as price and terms (like conditions or closing dates) provided the Seller has given his permission. Generally this is not a bad answer but I don’t think it ticks all the boxes either. Essentially it suggests that the Seller is directing the listing agent to say something like “the Seller is hoping to get $1M and the last offer was only for $850k”. Clearly the agent is acting on the direction of the Seller but is he advancing his listing in any way?

While I recognize that we work under a strict code of ethics and the law, I believe there are a number of responses that work without implicating your Seller in a position of greed or being unrealistic. “We had two offers. One came really quickly and wasn’t what we were looking for, and the other had some conditions that the Seller was uneasy with” or how about “we were back and forth but in the end the parties just couldn’t come to an agreement”. and end the conversation with “we are still getting plenty of showings and traffic is high at open houses”. No lies, no disparaging comments. Simple truths. What you don’t want to say are things like “The offers didn’t meet my clients expectations” or “both offers were below market value” or “my clients expectations are too high” or ” my client is looking for $X (even if directed by your client to say so)”.

I am reminded about the saying that a good agent will say more by not saying. That’s a valuable lesson to be learned. I believe it is alright to say that you had two offers, but, if pressed about the contents it is okay to be vague. Don’t fall into the trap of saying too much especially if you are asked about price. Simply direct the potential agent to do their own research on comparable solds in the area and let them determine value. 20 years ago our market was much different. Properties stayed on the market for months so naturally agents would ask about previous offers and yes, we would speak the truth. There was true kitchen table negotiating with candid discussions while not giving away too many details. My advise, strike a balance between saying something and not saying anything. That may sound strange but the reality is that human nature should be your guide. People want what others have or want. If you say that there has been interest and offers then potential buyers want in on that action.

Mark McLean is the Broker/Manager at the Bosley Real Estate Queen St W office, the Immediate Past President the Toronto Real Estate Board and a director at the Ontario Real estate Association . The opinions expressed here do not reflect the opinions of TREB, OREA or Bosley RE

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29
May

Building a Team Part 2. The Sub Brokerage

sub-brokerageIn my last blog post I talked how teams are becoming a popular option for experienced agents in Toronto. Operating a team is not for the faint of heart. Successful team leaders need to have faith in the abilities of their teams and give them free rein to work for the benefit of the team, while poor team leaders spend more time managing than doing what they do best….sell.

Ultimately leaders build teams for two reasons; increase awareness of their brands and make more money. The sub-brokerage model, currently being developed in Ontario, might help teams with the second point but does nothing to help point one. So what is a sub-brokerage?

To explain sub-brokerage one needs to have a brief understanding of the Tax Fairness for Realtors Act, 2014. The proposed act would allow real estate salespeople to form personal corporations just like Ontario doctors, lawyers, social workers, architects, engineers and accountants. While Realtors are allowed to incorporate in other provinces, the Ontario Real Estate and Business Brokers Act, 2002 currently prevents salesperson incorporation. Despite intense lobbying by both OREA and TREB, the Real Estate Council of Ontario isn’t close to changing their position in the immediate future. To speed up the process, some brokerages are offering a hybrid model which would allow an agent to set up their own brokerage but use the services of the parent brokerage such as accounting and trust accounts. Imagine I currently work for ABC Realty Inc Brokerage, under the rules of a sub-brokerage I would incorporate a new brokerage called “ABC Realty Mark McLean Team Ltd, Brokerage”. Confusing? As the only shareholder of this corporation I have many of the tax advantages of a corporation. For a top performing agent, a sub-brokerage allows a team leader to retain money in their business as a tax deferral strategy.

But Team Leaders need to recognize that sub-brokerages may in fact create confusion with the public. Using the example above, I have worked very hard to develop “The Mark McLean Team” at ABC Realty. This is MY brand. Now I am striking out on my own as the Broker of Record (if you are a sales representative you will have to complete your brokerage course) of a sub-brokerage of ABC Realty, Inc. Legally my brand name has changed. It is still too early to tell if additional problems will arise since we are only now entering into unchartered waters with the sub-brokerage model. From the outside it seems like a complicated process. The team leader will have to essentially build a brokerage from the ground up with the exception of hiring front and back office staff or managing trust accounts.

Like my first post, my concerns revolve around team management. Creating a sub-brokerage means that you are now responsible, on every level, for your team. While the “parent” brokerage might look after your accounting you may take on additional responsibilities. In addition, the parent company might want some say in how you run your business, that very request could create an added tension. Understanding the additional challenges should be an important factor is your decision.

In the third, and last part of this series on team building I will talk about choosing your team.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

25
May

Building A Real Estate Team? Part 1


In theory building and running a real estate team seems like a pretty good idea. You are getting more leads than you know what to do with so you bring on a junior agent as your buyer agent. You give them good quality leads and if they sell the client a home you take a percentage of their commission. The more junior agents you have working for you the more money you make. Sounds awesome.

The reality is that when you run a team you agree to take on a lot more responsibility. Not only are you a selling agent you are now a manager, a leader, a trainer, a mentor and an engaged human resources director. If you cannot lead effectively, or over-manage the team you will ,in effect, spend more time managing and less time doing what you do best…selling. But when you dive into the relationship even further a few dichotomies surface. As a sales representative you are working as an independent contractor for your broker, your team members also work for the brokerage but report to you. Hopefully you have the same values as your brokerage and are on the same page when it comes to business goals. With any luck your team members are well-trained and share your ethics too. But what happens when a team member does something wrong? Your brokerage is on the hook to clean up the mistakes even when, for example, the mistake was made because they were following the team leader’s direction. So the question remains, who is responsible for the team members? The team leader or the brokerage? With teams these two entities are fundimentally at odds with eachother. The brokerage provides services essential to the agent (The ABC test of who controls the services) vs the team leader who supplies the leads ( the economic reality test). The real estate brokerage is, in many ways a unique creature. It is statutorily required to provide certain duties, like oversee agents, provide accounting and practice risk reduction. 
Compensation based on commission.

Here is something else to consider. There are currently three separate cases before the courts in the United States that are challenging the very nature of the agent and team member relationship. The outcomes could very well force team leaders to re-evaluate how they build their teams. In each of the cases the team members are arguing that they were hired as buyer agents but were also required to perform tasks for the leader such as pick up and deliver cheques, meet appraisers, sit agent open houses, home inspections or even write blogs or post stories on social sites. The very nature of these tasks, it is argued, presumes an employee/employer relationship and if that is the case then wouldn’t the team member deserve the benefits that an employee would receive, such as employment insurance, medical and dental?

If teams are here for the long-term then, in my opinion, it is important for brokerages to develop a policy and procedure manual and some standards of service. Team contracts need to be more than just a handshake agreement or a quick email. The reality is that no two teams are the same so a blanket agreement is just not going to work. Have a lawyer draw up a binding agreement and make sure that it works within the laws of REBBA 2002.

Certainly brokerages need to understand that teams are developing at a fast and furious pace and there is yet another complication….the sub brokerage. I will talk more about that in part 2 and then later in part 3 I will talk about the finer points of developing your team.The reality is that as the team concept evolves, more questions and complications will develop. In the meantime the best you can do as a team leader is to have a written agreement which sets a tone and understanding of the relationship, achnowledge that compensation is based on commission, list tools and materials supplied for day to day efficiencies as well as who is responsible for their maintenance and upkeep, include clauses on sick leave, vacation time, desk duty (if required) and above all else have a system that will have solid arbitration mechanisms. 

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

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