Real estate in Calgary - another bubble?

[Yoho]

Originally Posted by scotty2hotty

Just listed my house today, in fact. In a Toronto suburb. Showings start Thursday. Fully expecting to get about $100K above asking. That’s the kookiness of the market right now out here.

I’ll let you know ...


Edit: Sorry. Just realized you were asking about Calgary specifically

How much under market did you list?

It’s all so sustainable.

https://twitter.com/user/status/1655178033244848128

[Bill Bumface]

Originally Posted by undercoverbrother

I think it already is.

Doing something now is hard. I think we should just wait for it to get really bad, and I'm sure it will be easier then.

[you&me]

Originally Posted by Yoho

How much under market did you list?

It’s all so sustainable.

https://twitter.com/user/status/1655178033244848128

I don't get why if "we want $1.4 here", you don't just ask, you know, $1.4

[greyshep]

Originally Posted by you&me

I don't get why if "we want $1.4 here", you don't just ask, you know, $1.4

I hope that sale somehow blows up in his face.

[Calgary14]

Wow I am so glad I don't have to deal with "offer presentations"

[DoubleF]

Originally Posted by Yoho

How much under market did you list?

It’s all so sustainable.

https://twitter.com/user/status/1655178033244848128

I'd be kinda funny if video caused the CRA to deem a portion of the gains as business income based in IT-218R instead of gains that are exempt from income tax per the principal place of residence exemption. All the pertinent information the CRA would need is there.

This guy sounds like he's being a little #### and the PPRE wasn't designed for this type of ####ty purpose.

[Sliver]

Originally Posted by you&me

I don't get why if "we want $1.4 here", you don't just ask, you know, $1.4

What a doosh. Just wasting everyone's time. ####ing idiot.

[sketchyt]

IMO, lost in this discussion about housing affordability is the antiquated model of real estate transactions. In short, the massive rip off of what realtors bring to the table versus their fee structure.

It kind of made sense decades ago when homes were a fraction of the cost using the 7/3% model. But these days, on a $500k sale of a home, the seller forks out about $15k. This is insane. It's exponentially more than you would pay your freaking lawyer (i.e. the person who will actually look after your interests).

The new buyer will 'want to make that back' on the next sale (i.e $515k). It's not the correct way of thinking but it exists.

Realtors have exacerbated the rising prices of homes for decades while bringing little to the table (versus what you are paying).

Coupled with this being a self-enforced industry, it's a laughable business model where consumers are basically being hosed at every turn.

Next time you sell a home, ask your realtor to itemize what you are getting for $15k. It's a freaking joke because there is no good answer. Many of them will position themselves as scholars of a very complex economic and business model while standing behind a very flimsy 60-ish hours of courses.

[blankall]

Originally Posted by sketchyt

IMO, lost in this discussion about housing affordability is the antiquated model of real estate transactions. In short, the massive rip off of what realtors bring to the table versus their fee structure.

It kind of made sense decades ago when homes were a fraction of the cost using the 7/3% model. But these days, on a $500k sale of a home, the seller forks out about $15k. This is insane. It's exponentially more than you would pay your freaking lawyer (i.e. the person who will actually look after your interests).

The new buyer will 'want to make that back' on the next sale (i.e $515k). It's not the correct way of thinking but it exists.

Realtors have exacerbated the rising prices of homes for decades while bringing little to the table (versus what you are paying).

Coupled with this being a self-enforced industry, it's a laughable business model where consumers are basically being hosed at every turn.

Next time you sell a home, ask your realtor to itemize what you are getting for $15k. It's a freaking joke because there is no good answer. Many of them will position themselves as scholars of a very complex economic and business model while standing behind a very flimsy 60-ish hours of courses.

I wouldn't engage in a real estate transaction without an agent, unless it was a purchase of a specific property I knew for certain was undervalued.

A good agent will maximize the return on your property if you're a seller. If the agent has increased your return by more than that $15k commission, they haven't done their job. If you're buying they'll hope you find properties and put in the lowest offer. The trick is finding a good agent. It's way to unscrupulous of a profession, with many agent just in it for the quick commission.

[sketchyt]

Originally Posted by blankall

I wouldn't engage in a real estate transaction without an agent, unless it was a purchase of a specific property I knew for certain was undervalued.

A good agent will maximize the return on your property if you're a seller. If the agent has increased your return by more than that $15k commission, they haven't done their job. If you're buying they'll hope you find properties and put in the lowest offer. The trick is finding a good agent. It's way to unscrupulous of a profession, with many agent just in it for the quick commission.

Just a few points:

• You wouldn't engage in a RE transaction without a realtor because there haven't been any good alternatives. This is why the industry has been dealing with anti-competition issues for a decade or so now.
• There is no objective study that proves that a realtor gets more for your home. See point above. There was a 2013-ish NAR study that compared this to FSBO sales but that study is hugely flawed (which is why realtors don't exactly flog that data point around).
• If it's a 'trick' to find a good realtor, then that's a massive fail. But you are right, good realtors do exist but out of 5000+ realtors in Calgary I bet that number is under 100. I mean, that's a huge problem.

Ultimately you have thousands of unqualified 'professionals' looking after what is likely one of your most important financial decisions of your life who are also contributing to the inflationary prices of homes across North America.

[Weitz]

Great realtors are worth their weight in gold. Unfortunately vast majority of them are awful.

[sketchyt]

Originally Posted by Weitz

Great realtors are worth their weight in gold. Unfortunately vast majority of them are awful.

That weight is steadily decreasing because they can no longer hide behind their wall of sold data. For example, CREB even sold their data to a for-profit entity which they set up with other boards as a way to be compliant competitively. They also cut themselves off at the knees as the top value prop for a realtor WAS access to data.

Consumers can now educate themselves with platforms where you don't have to speak with a realtor (in no way, shape or form am I affiliated with the below):

• Bode
• Honest Door
• House Sigma

If good realtors are worth their weight in gold, then a halfway-decent real estate lawyer is worth their weight in antimatter. This is where I actually found value in the RE process.

[you&me]

Originally Posted by sketchyt

That weight is steadily decreasing because they can no longer hide behind their wall of sold data. For example, CREB even sold their data to a for-profit entity which they set up with other boards as a way to be compliant competitively. They also cut themselves off at the knees as the top value prop for a realtor WAS access to data.

Consumers can now educate themselves with platforms where you don't have to speak with a realtor (in no way, shape or form am I affiliated with the below):

If good realtors are worth their weight in gold, then a halfway-decent real estate lawyer is worth their weight in antimatter. This is where I actually found value in the RE process.

Just to play devil's advocate:

I think the biggest problem with realtors and their commissions is
a) the general lack of meaningful standards in the industry;
b) the lack of alignment between client interests and compensation, and;
c) the relative visibility of the commissions.

For a), the bar to become a realtor is abysmally low and the requirements to maintain licensing are - as far as I'm aware - virtually nonexistent, essentially coming down to whether or not you pay your pimp, er, real estate office. As noted, a realtor is supposed to be a trusted advisor in the most significant transaction many people make in their lives; the licensing process should reflect that.

On point b), I have a hard time accepting the idea that all buyers agents act in the best interest of their clients, when the commission is essentially paid by the seller and their agent (via split). We've all seen the stories of buyer's agents not showing FSBO or cut-rate commission listings to their buyers because there isn't the same commission in it for them. If instead each party paid an equitable commission (i.e. 3.5/1.5 in Calgary - which is generally low, btw), agent and client interests would be more closely aligned.

Lastly, point c) isn't so much about the industry as it is about perception; real estate commissions are generally in line with compensation relative to the size of the transaction, the only difference being that Joe-public doesn't necessarily realize what the (%) margins are for a interior designer, investment banker, boat dealer, etc... What essentially amounts to ~1.5% for a 500k, million or two million dollar transaction isn't out of line. I think the real problem is when that commission gets paid whether dealing with a top level professional or some loser schmuck that manages to trip over a deal.

Essentially, if the quality of the people involved more closely matched the level of the transaction, I think the entire process gets better and people would have less issue with the costs involved.

[sketchyt]

Originally Posted by you&me

Just to play devil's advocate:

I think the biggest problem with realtors and their commissions is
a) the general lack of meaningful standards in the industry;
b) the lack of alignment between client interests and compensation, and;
c) the relative visibility of the commissions.

the only difference being that Joe-public doesn't necessarily realize what the (%) margins are for a interior designer, investment banker, boat dealer, etc... What essentially amounts to ~1.5% for a 500k, million or two million dollar transaction isn't out of line.

I don't think you're playing devil's advocate, I agree with a lot of it.

I just think the visibility of commissions with realtors is complete BS because of the aforementioned lack of standards/education, the inability to quantify what you are paying for, and the anti-competitive nature of the industry itself.

Interior designers have certifications and degrees. From actual schools. Investment bankers have MERs but they can show an ROI. They also have certifications and degrees. From actual schools.

Agreed on boat dealer. Realtors are basically used vehicle salespeople. At least used car sales people don't pretend like they're economists, business analysts, and marketing professionals all rolled into one.

[Sylvanfan]

So you want everyone selling you something to have multiple degrees?

You sound like someone who's really bitter or jealous.

I know a lot of guys making considerably more than the Engineers with masters degrees I know selling MRO stuff to Industrial companies withzero education. People who generate sales get paid.

It's a sales business and I think it's pretty competitive internally. I think it's actually quite risky as getting the license is one thing. Making enough to stay at it is another. In order to be in it for sometime there's a good chance that person has learned a lot of that stuff in some capacity. If they oversell themselves as an expert of all of this...they won't be around the business very long.

Most anyone can list their own house or attempt to buy a property without a realtor if you really want. You can even pick a lower fee structure if you just want to get your house listed in the MLS system. What the seller pays for is the marketing of the property. You want to do your own marketing to sell your place have at it

[Fuzz]

Originally Posted by Sylvanfan

So you want everyone selling you something to have multiple degrees?

You sound like someone who's really bitter or jealous.

I know a lot of guys making considerably more than the Engineers with masters degrees I know selling MRO stuff to Industrial companies withzero education. People who generate sales get paid.

It's a sales business and I think it's pretty competitive internally. I think it's actually quite risky as getting the license is one thing. Making enough to stay at it is another. In order to be in it for sometime there's a good chance that person has learned a lot of that stuff in some capacity. If they oversell themselves as an expert of all of this...they won't be around the business very long.

Most anyone can list their own house or attempt to buy a property without a realtor if you really want. You can even pick a lower fee structure if you just want to get your house listed in the MLS system. What the seller pays for is the marketing of the property. You want to do your own marketing to sell your place have at it

It is pretty expensive to buy Photoshop to stretch all the images horizontally 200%.

[Winsor_Pilates]

Originally Posted by Sliver

What a doosh. Just wasting everyone's time. ####ing idiot.

I wouldn't be surprised if he only has his parents house listed to generate attention on tiktok and they don't even have any interest in selling.

If this idiot got another listing in the area for an actual seller who wants to sell, will any of these people make an offer on it? Nope.

If he takes buyer clients into a listing held by any of those agents, will they encourage their sellers to work with his group? Nope.

What a great way to make your clients homes blacklisted by the market and destroy your reputation with fellow agents. Moron.

[Sylvanfan]

I'm sure I've said it before but I can't think of another business where you advertise something for a price and expect someone to actually give you 40% more or you won't sell. So yeah that guy hopefully ends up getting his.

[#-3]

I think the problem with realtors commissions, is that they show their industries productivity has fallen by roughly half over the past 40 years.

40 years ago salaries were at ~1/4 of what they are today, and home prices were at ~1/10, probably explained for the most part by most household transitioning from 1 income to 2 over that same period. Not sure how accurate it is but doing some napkin math, if a real estate transaction is a 4 way split between Buyer Agent, Sellers Agent, and their respective brokerages/business expenses. Than 40 years ago a realtor probably would have needed to be involved in ~24 transactions / year to reach the median income, and today they would only need to be involved in 12. I know those who are working realtors are not out their aspiring to the median income and are pushing for a lot more than 1 transaction / month. But I think that is the best way of thinking about their net impact vs net benefit to society, they are pulling more money out of the market per transaction relative to wage inflation than they used to, so net productivity of the industry has dropped compared to other income earners.

probably to keep pace with productivity gains, it would have made more sense for the industry to have a commission structure like
0K -100 K 7%
100 K - 200K 3%
200 K - 300 K 1.5%
300K - 400 K 1%
400K - 500 K 0.5%.........

It would have maintained a more flat fee structure like we used to see in middle income houses that were all under $100K in the 70s. While still maintaining a fairly high minimum fee standard for lower value transactions.

And it would have gotten rid of a lot of the bad incentives, buyers agents benefitting greatly from higher prices, and the need to throw money at services that only create value inside the transaction but not in the external market, just to show that they are doing something with all of the money they are collecting, and probably would have limited the number of hobby-realtors in the industry (people selling getting licensed just to for 2-3 sales per year for personal contacts), right now if you have a large enough social circle that your personal contacts can feed you 2-3 jobs / year without any marketing expense, you can probably make a pretty decent side income with relatively little effort, but when enough people do that it puts a squeeze on professionals causing them to jealously guard their inflated prices.

The real problem with this plan comes further up the inflationary ladder, when $7000 as the base for commission the first $100K is no longer a meaningful amount of money. But I would argue that should be a challenge for the industry to show real productivities gains, given that buyers do 50% of the work themselves in advance of even leaving the house, why can't the expectation be that they typical realtor handles more transactions / year in the future?

[you&me]

Originally Posted by Sylvanfan

So you want everyone selling you something to have multiple degrees?

You sound like someone who's really bitter or jealous.

I know a lot of guys making considerably more than the Engineers with masters degrees I know selling MRO stuff to Industrial companies withzero education. People who generate sales get paid.

It's a sales business and I think it's pretty competitive internally. I think it's actually quite risky as getting the license is one thing. Making enough to stay at it is another. In order to be in it for sometime there's a good chance that person has learned a lot of that stuff in some capacity. If they oversell themselves as an expert of all of this...they won't be around the business very long.

Most anyone can list their own house or attempt to buy a property without a realtor if you really want. You can even pick a lower fee structure if you just want to get your house listed in the MLS system. What the seller pays for is the marketing of the property. You want to do your own marketing to sell your place have at it

You're kind of conflating two different points I was making; one point was, yes, plenty of salespeople are compensated at higher rates than realtors... Your MRO sales guy vs the engineer, for example.

But the other point is that a lot of other salespeople have more training (degrees, accreditation, what have you), more accountability, or often both. An investment advisor that consistently loses their clients money will either be fired by their firm, or if an independent, unable to demonstrate a track record to attract new clients. That's not really the case with a realtor, particularly in the case of them providing bad advice to their clients.

Back to your example about the guy sells MRO... The main difference between a realtor and this guy is that the company he sells for acts as a gatekeeper to ensure certain standards are met and the company is represented in a positive way. Regardless of education, that company isn't just letting anyone run wild with their product... That would be disastrous for the company's image.

Whereas, the real estate agency model is set up to encourage as many people as possible to become realtors, regardless of their ability, so that they pay desk fees to the agency... What's the stat? Something like 5% of agents are responsible for 90% of deals?

The real problem is that this cavalier attitude is applied to a role that's been inserted into the biggest transaction of most people's lives... On that basis alone, the industry and the individual realtors in particular should be held to a standard equivalent to the significance of the transaction they're involved in.