Is Your Agent Taking a Bigger Slice of the Cake? | Issue 172 Guelph Weekly Sales Report
September 20th, 2019 Sales Summary:
Is Your Agent Taking a Bigger Slice of the Cake?
Talking Transparency in the Guelph Real Estate Market
The real estate industry is a funny business. Unfortunately not funny in a stand-up way, although there can be plenty of that with how we see people’s homes on a daily basis. No, I’m talking about how as an industry we can often do things to shoot ourselves in the foot and then cry about the injustice of the injury.
The real estate industry is competitive - I mean highly competitive. There are currently over 700 agents licensed and members of the Guelph and District Association of Realtors. There are another 1,500 in Kitchener-Waterloo and another 500 or so in Cambridge. Throw in the giant Toronto real estate board and its 50,000 plus members and you have a lot of people chasing your listing and purchase.
Our industry has been built on a co-op model that is based upon sharing a lot of information and cooperating with competitors to bring buyer and seller to the table, negotiate a deal and, at the end of the process, a reasonably happy exchange of properties. We get paid well to do this. Part of that payment is that we take on all kinds of risk. There is no pension, no safety net of unemployment insurance, no salary - just straight pay for results. If I can get you a price that’s acceptable to you from a willing buyer and we get the deal closed, it's often months later that we get paid.
The cooperation part comes in that I may not have ready buyers in my client list to match my listings. That’s where the Multiple Listing Service (MLS®) comes into play. We post your home on the local MLS® system, and we are rule-bound to cooperate with all other members or our association. Without this cooperative system of sharing listings and buyers, the efficiency of the real estate market would be severely impacted. In fact, there probably wouldn’t be a market.
With the advent of the internet and the consolidation of MLS databases, I am now able to see not only what properties are listed for sale, but also the sales data for most of the province - without having to have multiple memberships. That’s generally been good news. We can offer more services and cover more territory for our clients. It also means that others have that mobility as well. Part of the craziness during 2017 in our local market was a massive influx of agents from the GTA bringing their clients to our area to buy homes. Our sellers loved it because it meant a huge lift in our market.
One of the “disruptions” from a local industry point of view was that some of these outside agents (in fairness, not all were from the GTA) would send clients to open houses on their own, and even contact listing agents for appointments to view homes. When they found a suitable house, the client would call their agent and they would write up the deal and represent them.
This practice understandably upset some Realtors who felt used and misled when having shown a potential buyer through their listing, only to have that buyer show up at the offer table represented by some other agent.
Compounding the problem is that so much information is publicly available, that many buyers like to research and check out available homes on their own. They may not be represented at the time by an agent. They too often call the listing agent looking for an appointment to view a listing and let me be clear, there is absolutely nothing wrong with this practice.
Here is where the issue starts to surface. Agents with the listing feel like they are being taken advantage of, so they try to penalize the sales reps that bring the offers by clawing back a big chunk of the commission for the selling side. Typically, the sellers who signed the listing agreement (which outlines how the commission is split up) are unaware of the clawback and certainly don’t see that being refunded back to them.
I have no sympathy for the listing agents that are trying to do this. It’s greedy, makes the industry look bad, and quite frankly violates the code of ethics we as an industry work towards and are legislated by.
When we take a listing, we are taking on a legally binding contract to represent a seller and expose their property to as many potential buyers as possible. In my world, this means even those buyers that choose not to declare if they are working with another agent or haven’t even decided at this point. The legislation and the code of ethics is absolutely clear on this. I have an obligation to bring all qualified buyers through my client’s home.
In a perfect world this wouldn’t be an issue, but we all know that when there’s money involved people will do strange things.
At Home Group Realty, one of our core values is transparency. We have made it one of our foundational practices that we will not penalize any buyers or buyer sales representatives when they bring offers in on our listings. We feel this “problem” of non-represented buyers is not as large an issue as some of the big name brokerages in our trading area think it is. We will always cooperate fully with any potential buyers or agents in order to fulfil our fiduciary obligations to our seller clients. Our industry needs to have full disclosure and more open conversations with our clients and competitors, otherwise the cooperative foundation of this industry will be damaged and hurt everyone in the process.
This week in the Guelph market:
46 homes were reported sold which is a 27% increase over the same week last year. Market conditions remain strong, as 23 or 50% of the 46 homes sold went at or above list price. It’s certainly not getting easier for buyers in our marketplace!
The median home in Guelph:
3 bedrooms, 2 bathrooms, 1,168 square feet. Sold for $473,000 or $395.70/sqft. That home took 19 days to sell, and sellers were able to negotiate 99.74% of their original list price.
It’s worth noting that of the 46 sales reported, 6 of those were new condo sales in the MetalWorks project. They were for the most part 1+ bedroom units and well under 1,000 sqft. One of the few times where the median is skewed more than the average.
Thanks for reading.
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