Personal Finance

Proposed Change to the Act governing Real Estate Agent Listing Commission

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  • May 21st, 2015 9:10 am
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[OP]
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Rothesay wrote:
Apr 10th, 2015 10:59 am
I think what you have here is very solid. However, I'm not very good with legal language, I am thinking whether the language would allow for a flat fee under a certain amount.

So using your example, on a $1 Million listing, if sale price is under $1M, would the propose changes allows for the owner compensate the listing agent for a fixed fees and for offers over $1M, it will be Fix Fees + 2.5%
Yes.

S.36(1), which is presently in force, allows a flat fee or % of the total sale price or both.

My proposed S.36(1)(b) would allow flat fee or % of the total sale price above a certain amount or both. You pick the amount where % commission starts at and pay the % commission on the difference between that amount and the sale price (and any flat fee if agreed).

So under my proposal and the example if the agent doesn't even get the $1M listing price (and that's the amount you agreed that the commission would start from) he gets no % commission, but would get the flat fee if that had been agreed upon when the property was listed.
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eonibm wrote:
Apr 10th, 2015 10:41 am
Please get lost.
I can voice my opinion just like anyone else, or are you just looking for cheerleaders/zealots to pat you on the back?

You're just a greedy 1%er who wants to sell your Rosedale mansion and pocket as much $$$ as possible, nothing more. Don't wrap it up and tie it in a bow as a "worthy" cause.
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While I see what you are trying to do...I don't think your argument has any merit

your argument is quite hypocritical ... you say RE property prices have gone up x % but RE agent's fees which are based on a % of the transaction price..so you want to benefit wholly from the increase in property values but limit/cap the benefit of a profession who's job is to facilitate the transaction of RE

your argument is they haven't done any extra work than before when RE prices were x...yet you haven't done anything extra to enjoy the increased property values as well

I don't see what merit you have to cap the compensation on others while enjoying unlimited increase yourself.

Furthermore, it's absolutely ridiculous for you to want to cap a profession's commission rate (in your example 2.5%) just so you can save money!!??? what???
I mean RE commission has decreased over time..it used to be the norm is 5-6% to list (3% to listing and 3% to cooperating) yet there are many agents today who will do it for 3.25% (1% list, 2.25% to cooperating)

I really don't see how your proposal is anything but a selfishly motivated foolish endeavor to cap/limit what the commission rate of an entire profession just so you can benefit from RE price appreciation but want to eat other people's share as well.
[OP]
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Sauerkraut wrote:
Apr 10th, 2015 11:40 am
I can voice my opinion just like anyone else, or are you just looking for cheerleaders/zealots to pat you on the back?

You're just a greedy 1%er who wants to sell your Rosedale mansion and pocket as much $$$ as possible, nothing more. Don't wrap it up and tie it in a bow as a "worthy" cause.
Hardly, I want to pay for performance. Obviously you don't understand that this concept can benefit anyone, from those owning $200K condos to $20M mansions. You don't have to own a Rosedale mansion or be greedy to benefit. You just have to want to save money like anyone does, especially we RFDers!

You're obviously an agent or someone who feels people shouldn't have the choice to pay for performance. Don't worry, if implemented, this commission structure is not being forced on you or anyone. It's just an option which people should have.

If you are an agent then you shouldn't be concerned about this proposal in the least because your clients will feel you are worth a % commission on the entire sales price. So, relax already.

Choice is never a bad thing!
[OP]
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LandKing wrote:
Apr 10th, 2015 11:43 am
While I see what you are trying to do...I don't think your argument has any merit

your argument is quite hypocritical ... you say RE property prices have gone up x % but RE agent's fees which are based on a % of the transaction price..so you want to benefit wholly from the increase in property values but limit/cap the benefit of a profession who's job is to facilitate the transaction of RE

your argument is they haven't done any extra work than before when RE prices were x...yet you haven't done anything extra to enjoy the increased property values as well

I don't see what merit you have to cap the compensation on others while enjoying unlimited increase yourself.

Furthermore, it's absolutely ridiculous for you to want to cap a profession's commission rate (in your example 2.5%) just so you can save money!!??? what???
I mean RE commission has decreased over time..it used to be the norm is 5-6% to list (3% to listing and 3% to cooperating) yet there are many agents today who will do it for 3.25% (1% list, 2.25% to cooperating)

I really don't see how your proposal is anything but a selfishly motivated foolish endeavor to cap/limit what the commission rate of an entire profession just so you can benefit from RE price appreciation but want to eat other people's share as well.
Obviously you are an RE agent and furthermore do not understand the proposal. No one is forcing you to accept this commission structure, are they?

First of all, I am the one who invested it the property and possibly took on a mortgage, not you, so why shouldn't I benefit the most from the increase in value? You did not invest a dime in my house except the $2K and 2 mos in the real estate course in order to be able to represent me if I so choose.

Furthermore if you want to talk about caps, there already is the option in the Act to cap the commission at a flat rate or to pay a lower commission than 2.5% or whatever, so the option to cap or reduce commission rates is nothing new now is it?

Lastly, if your services as an RE estate agent are so valued then I am sure you will find that clients won't choose this option because they'll want to pay you more. So, why so upset that people have a choice which you do not have to agree to? You can still continue to charge full commission on the sale price right?

As for being selfish, how is wanting the option to pay a lower commission rate any less selfish that you as a RE agent wanting to prohibit that? Answer me that!

The fact that you real estate agents that are commenting on this thread are so scared of this proposal speaks volumes.
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eonibm wrote:
Apr 10th, 2015 11:52 am
Obviously you are an RE agent and furthermore do not understand the proposal. No one is forcing you to accept this commission structure, are they?

Furthermore if you want to talk about caps, there already is the option in the Act to cap the commission at a flat rate or to pay a lower commission than 2.5% or whatever, so the option to cap or reduce commission rates is nothing new now is it?

Lastly, if your services as an RE estate agent are so valued then I am sure you will find that clients won't choose this option because they'll want to pay you more. So, why so upset that people have a choice which you do not have to agree to?

As for being selfish, how is wanting the option to pay a lower commission rate any less selfish that you as a RE agent wanting to prohibit that? Answer me that!
I'm not an agent.... and I have no skin in the game..i just see a hypocritical argument

I did not and won't comment on the services performed by a RE agent since that is totally irrelevant to what you are talking about.

You seem to understand there is choice on what commission to pay along with flatrate agents... so why is your proposed amendments necessary and not to just benefit you from enjoying all the gains of RE appreciation/transaction while limiting others share?

you just convoluted it in a totally unnecessary manner to mask your true intent.
[OP]
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LandKing wrote:
Apr 10th, 2015 11:59 am
I'm not an agent.... and I have no skin in the game..i just see a hypocritical argument

I did not and won't comment on the services performed by a RE agent since that is totally irrelevant to what you are talking about.

You seem to understand there is choice on what commission to pay along with flatrate agents... so why is your proposed amendments necessary and not to just benefit you from enjoying all the gains of RE appreciation/transaction while limiting others share?
Because, if you read my proposal, flat fee does not provide any real incentive to get a higher price, nor does paying the % commission on the ENTIRE price provide enough of an incentive. The bulk of the commission is earned simply due to the price attributable to what I could have sold the home for in a second because it was such an attractive price. I see no reason to pay for that portion.

Paying a % commission for only the increase in price above the price which I could sell a property for in a second does provide a HUGE incentive. In fact it is the only incentive beyond a flat fee if that is also agreed to.

But even if you don't believe that, why so bothered that people have increased choice? If agents services are worth a % of the total sale price then they should have absolutely no problem convincing clients to choose that commission structure. The fact that there is an additional choice allowed will not matter one bit.
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As a seller, ultimately you choose whether or not to accept an offer, not the realtor. The incentive is already in place. If the realtor doesn't drum up an offer with the price you want, they get $0 commission. This sounds like much ado about nothing with no material impact.
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Apr 29, 2006
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I don't get it....why don't you just work a deal out with S.36(2) and use a sliding scale of percentages.

If the sale price goes above a threshold, the percentage commission goes down.
[OP]
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Mike15 wrote:
Apr 10th, 2015 12:13 pm
As a seller, ultimately you choose whether or not to accept an offer, not the realtor. The incentive is already in place. If the realtor doesn't drum up an offer with the price you want, they get $0 commission. This sounds like much ado about nothing with no material impact.
Say I have a house that the agent and I know would for sell in a minute for $1M by the listing alone because all exactly similar houses in the area sell for well over $1M easy, ie the 'it would sell for that easy' price. The house is listed for $1M.

Here are the two scenarios which will be possible under my totally optional commission proposal:

Agent A agrees to the typical 2.5% of entire sale price:

At $1.0M sale price commission = $25,000 + any flat fee
At $1.3M sale price commission = $32,500 + any flat fee

Agent B agrees to 2.5% commission of any amount over the 'it would sell for that easy price', ie $1M:

At $1.0M sale price commission = $0 + any flat fee
At $1.3M sale price commission = $7,500 + any flat fee.

Who has the greater incentive? Who has to work harder to get their commission? Agent A gets it even if the house sells for the 'it would sell for that easy price' as it's such a good price. In fact agent A gets more than 3/4's of their commission as a result of the 'it would sell for that easy price' if the house sells for $1.3M. However, Agent B gets nothing unless they sell it for over the 'it would sell for that easy price' . Also, remember, it can also be agreed to set the price at which commission would start getting paid to lower than the listing price or lower than the 'it would sell for that easy price'. Set it to $800,000 if you want to create more of an incentive or $500,000 or even lower (zero if you want but then that's the same commission as if you did the standard 2.5% of sale price). It does not have to be the listing price.

It's pretty obvious to anyone that Agent B has the greater incentive to get a higher price. Agent B might not get more commission than Agent A but has more incentive to get that commission. RE estate agents are running scared that clients would have the option to have the commission calculated this way. It's not even being forced upon them! They don't even have to agree to it! The other commission options will still be available!

Very telling indeed.

Btw, some (very few) of these comments by real estate agents are helping to prepare the brief as there is a section on the objections by RE agents might be and why their arguments are specious. This is helping to add to it. It seems the only objections are "I'm scared about my commission going down! HELP!"
[OP]
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blu3xtc wrote:
Apr 10th, 2015 12:26 pm
I don't get it....why don't you just work a deal out with S.36(2) and use a sliding scale of percentages.

If the sale price goes above a threshold, the percentage commission goes down.
That is a disincentive and goes the opposite way of my proposal. I am trying to increase the incentive not decrease it! S. 36(2) results in the higher the sale price the less the commission earned every dollar more that it is sold for. In my example above in post #26, 80-90%+, ie up from 75%, of the total commission would easily be made as a result of the 'it would sell for that easy price'.

That's why you never see it in practice.
Penalty Box
Dec 27, 2013
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Toronto
eonibm wrote:
Apr 10th, 2015 11:25 am
Using your logic The Competition Bureau would never have forced the Canadian Real Estate Association (CREA) to required a broker sell flat rate MLS listings to consumers which they did recently, because, after all, as you say 'the average person moves once every 15 years' and so it will not 'change the balance of life for the masses'.

Using your logic Ontario Minister of Government and Consumer Services, The Honorable David Oraziettias would not be introducing legislation in July of this year targeting phantom bids, because 'the average person moves once every 15 years' and so it will not 'change the balance of life for the masses'

Well let me enlighten you about how many people it will benefit. It will benefit those property owners who are behind the almost 40,000 real estate transactions per month that occur now in 2015 across Canada with over 15,000 of those occurring in the GTA alone.

So let me get this straight. There are almost 500,000 real estate transactions in Canada per year now and almost 200,000 in the GTA alone per year and you are saying it does not matter if the rules are changed because it will not 'change the balance of life for the masses' and 'the average person moves once every 15 years'? Well, lets see now. That's 8,500,000 transactions that will occur in Canada in 'the next 15 years' and 3,000,000 transactions in the GTA (and that's without any increase) but to you that will not 'change the balance of life for the masses'. Really? Wow? What planet are you living on?

Either you have absolutely no clue about anything to do with real estate or you are an idiot. I'll assume the former as I don't like to call people names (and before you jump the gun I am not calling you that but just telling you that was an option I had) and enlighten you. Sheesh!

Sources for # of transactions:

Canada: http://creastats.crea.ca/natl/ GTA: http://www.torontorealestateboard.com/m ... h_0315.htm

I can only assume that with comments like the ones sherman51 just made that those making them are obviously real estate agents who don't want to see their gravy train slowed down at all or simply have no clue about real estate. Or, they think giving 500,000 property owners per year and 200,000 in the GTA alone increased choice of commission structures while preserving consumer protection is not worthwhile. WOW!
I wouldn't expect anything intelligent to come out of the RFD masses Eonibm, so don't waste to much of your talent on these guys. Its interesting because all these people that make "$200,000" a year on these forums, they seem to have the comprehension of a 5th grader.
Penalty Box
Dec 27, 2013
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eonibm wrote:
Apr 10th, 2015 11:52 am
Obviously you are an RE agent and furthermore do not understand the proposal. No one is forcing you to accept this commission structure, are they?

First of all, I am the one who invested it the property and possibly took on a mortgage, not you, so why shouldn't I benefit the most from the increase in value? You did not invest a dime in my house except the $2K and 2 mos in the real estate course in order to be able to represent me if I so choose.

Furthermore if you want to talk about caps, there already is the option in the Act to cap the commission at a flat rate or to pay a lower commission than 2.5% or whatever, so the option to cap or reduce commission rates is nothing new now is it?

Lastly, if your services as an RE estate agent are so valued then I am sure you will find that clients won't choose this option because they'll want to pay you more. So, why so upset that people have a choice which you do not have to agree to? You can still continue to charge full commission on the sale price right?

As for being selfish, how is wanting the option to pay a lower commission rate any less selfish that you as a RE agent wanting to prohibit that? Answer me that!

The fact that you real estate agents that are commenting on this thread are so scared of this proposal speaks volumes.
of course they are scared when they read this stuff.

they think they have an "essential service" but it's all just a song and dance. In no other business in the world do sales agents make commission the way these guys do.

thast the only reason why there are like 40,000 RE agents in Ontario. They are all "smart" wanted to make the easy buck.

I dont blame them. I wish I was smart 10 years ago and became a RE agents.
Penalty Box
Dec 27, 2013
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Sauerkraut wrote:
Apr 10th, 2015 11:40 am
I can voice my opinion just like anyone else, or are you just looking for cheerleaders/zealots to pat you on the back?

You're just a greedy 1%er who wants to sell your Rosedale mansion and pocket as much $$$ as possible, nothing more. Don't wrap it up and tie it in a bow as a "worthy" cause.
Umm, I dont think hes looking for cheerleaders. That being said, you haven't posted anything of value other than just trolling the guy.

It's really sad that when you get called out for trolling and told to get lost, you retort "I can voice my opinion"..... What opinion did you voice other than barking like a chihuahua??

Lame. Grow up dude, you're annoying.

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