Real estate in Calgary - another bubble?

[Winsor_Pilates]

Originally Posted by you&me

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.

There are brokerages that operate like this and do have very high standards of who they take on; continued training requirements, competence standards, annual reviews with each agent, business plans required on application etc.
Then there are others that take on anyone who will apply like you've mentioned.

The odd part is why anyone hires agents from the latter knowing they are with a company with such low standards of conduct and are charging the same commission is the other companies with high standards anyway.
That agent also keeps more of that commission because the higher standard brokerage charge their agents higher splits.
So by hiring the agents from joe shmoe realty, consumers are actually paying that agent more than the professional agencies and getting the lowest standards to boot.

[Izzle]

Is there a good list of good brokerages that hold their realtors to high standards? All the for sale signs I see are for remax or royal lepage

[you&me]

Originally Posted by Winsor_Pilates

There are brokerages that operate like this and do have very high standards of who they take on; continued training requirements, competence standards, annual reviews with each agent, business plans required on application etc.
Then there are others that take on anyone who will apply like you've mentioned.

The odd part is why anyone hires agents from the latter knowing they are with a company with such low standards of conduct and are charging the same commission is the other companies with high standards anyway.
That agent also keeps more of that commission because the higher standard brokerage charge their agents higher splits.
So by hiring the agents from joe shmoe realty, consumers are actually paying that agent more than the professional agencies and getting the lowest standards to boot.

Originally Posted by Izzle

Is there a good list of good brokerages that hold their realtors to high standards? All the for sale signs I see are for remax or royal lepage

Winsor - totally agree, but Izzle's post makes my point... Without better defined standards, it can still be a crap shoot for the consumer.

Real estate brokerage is still essentially the wild west. Even under the same brand, one Remax office might be top-tier, while another might be a boiler room and all the consumer sees is the familiar blue and red sign.

It must be incredibly frustrating to be a "good guy" or run a good shop and constantly have these joe schmoe agents tarnishing your reputation by association. By allowing these lax standards to persist, the industry is its own worst enemy...

[topfiverecords]

Originally Posted by Winsor_Pilates

There are brokerages that operate like this and do have very high standards of who they take on; continued training requirements, competence standards, annual reviews with each agent, business plans required on application etc.
Then there are others that take on anyone who will apply like you've mentioned.

The odd part is why anyone hires agents from the latter knowing they are with a company with such low standards of conduct and are charging the same commission is the other companies with high standards anyway.
That agent also keeps more of that commission because the higher standard brokerage charge their agents higher splits.
So by hiring the agents from joe shmoe realty, consumers are actually paying that agent more than the professional agencies and getting the lowest standards to boot.

What is the % range of commissions that go to the brokerage? What other types of fees and expenses are incurred by the realtor.

What needs to be considered in the equation is how much work is put into working with clients that doesn't result in a commission. Our last move, our agent had to go through a four year process of looking and various offers that didn't complete before we finally found something. At one point we had nearly accepted job opportunities in another city and that house search here would have turned into a significant waste of their time and zero commission.

Selling realtor in Calgary is probably less risk, as long as it's with reasonable sellers, as things sell in a good timeframe here. Rare that listings will expire, and there isn't great need to do lots of advertising.

[Winsor_Pilates]

Originally Posted by Izzle

Is there a good list of good brokerages that hold their realtors to high standards? All the for sale signs I see are for remax or royal lepage

They are all independently owned, so I can't vouch for any particular Calgary offices, but in general I think you'll find a higher standard at place like Sotheby's, Engel & Volkers, most Remax's, and maybe even some of the smaller local shops.

That's not to say every agent at those places is solid or every agent at the quantity over quality places is bad, but it's a conversation I think clients should be having with agents when they interview them for the job.

Ask them things like:
-Why are you with the company you're with?
-What fees do they charge you and how much of the commission you make here is split to them?
-What specific advantages does listing with your brokerage provide me vs others.

If you interview multiple agents and find there's a big difference in how much they have to give to their company, ask the guy at the cheaper company why they're charging the same as the other guys?
Do they have justification to win your business and put more in their own pocket or should they pass some of that saving on to you with reduced fees to match their reduced expenses.

Same with things like agents who do their own listing photos, don't get a floor plan made, don't do a video, print cheap listing feature sheets.
That's all ways they are saving money, so the seller has every right to know that and question if paying a full listing commission makes sense.

[Winsor_Pilates]

Originally Posted by topfiverecords

What is the % range of commissions that go to the brokerage? What other types of fees and expenses are incurred by the realtor.

Depends on the company. It can be as little as 0% with some brokerages that just charge a small monthly fee to the agent and can be upwards of about 30% to the brokerage at others.
A lot of them are tiered so the agent gives a certain % up to say $100,000 gross commission and then it drops after that.
If you're with an international brand, there's fees that go to the global company too.

Other fees are typically marketing stuff, ordering documents for strata properties, listing fees charged by the local real estate board, insurance we have to carry, print items, maybe staging, sometimes extraordinary marketing items like featuring the property in a magazine or things like that.

Then there's recurring fees like assistants, websites, signage, professional marketing materials (headshots, branding), office rental, CRM systems, maybe bus bench ads, mailers, complex accounting fees, subscriptions for things like docusign, dropbox, mailchimp, hootsuite.
These are not direct to any 1 client, but can be significant and become a large part of the expenses of the job.
I've had run rates over $20,000/month some years when a had a big team, and those costs are before any guaranteed sales.

I agree wholeheartedly that a lack of transparency is an issue in the industry.
Commission can be very high, but I think if clients are shown how much of these expenses some agents carry, it starts to look more reasonable.
Gross commission is not Net take home commission.

I think agents do a poor job of explaining these items to consumers and it comes off like they're taking a $10,000-$30,000 commission straight to their chequing account.
It really is running a small business and there's many expenses.

Sellers in particular should ask agents to break down some of their expenses, where the commission goes and make sure they're feeling value before hiring that agent.

[Twitchy15]

housing market still crazy? we moved in may/ june and it was something. Wonder if interest rates are starting to cool things down.

[Rutuu]

Are there still two realtors in on a deal? One for the seller and one for the buyer?

[Winsor_Pilates]

Originally Posted by Rutuu

Are there still two realtors in on a deal? One for the seller and one for the buyer?

Usually but I think in Alberta agents can still do dual agency where they represent both sides.
We can't do that in BC (except small towns).

[DoubleF]

Originally Posted by Winsor_Pilates

Usually but I think in Alberta agents can still do dual agency where they represent both sides.
We can't do that in BC (except small towns).

I think you can in Alberta, but most realtors refuse to. They might cut a deal at a reduced price with another realtor from the same brokerage to represent your side of the paperwork though. That's what happened for me for two houses I purchased/sold.

Realtor was selling the brand new house he developed and I walked in off the street to look at it. Dealt directly with the first realtor, but he paid a different realtor $1,500 - 2,000 of the seller realtor commissions cut (vs full commissions) to go through the motions of reviewing the paperwork and representing us as the buyer even though the first realtor filled in the paperwork and mumble mumble explained it to us.

The second I was selling the house and there was some random mistake my wife made and hired a realtor. Realtor hired a second rando from her brokerage. No idea how it was compensated, but we didn't have to pay for the other individual. TBH, we could have just walked straight to a lawyer and gotten that done without realtors involved. Costly lesson.

[Rutuu]

Yeah ok. Where I live there is usually only one realtor on the deal, so commissions are 2.5% - 3% and the seller pays.

If two agents are splitting those fees, so 1.25% - 1.5% they're running really lean. If two agents are combining to get 5% - 6% of the real estate deal, well it's time to lose the buyers agent and just pay a lawyer the $1500 to do the deal on the buyers side.

[taxbuster]

The double-ending realtor is a problem for both buyer and seller - neither can be certain that they are getting truly independent advice. Doesn't matter what the fees are --- if, as a seller, you're giving away money on the sale or as a buyer you're paying too much..the fee is the least of your problems. The lawyer's job is different...that is to make sure that title is clear and properly transferred -- nothing to do with pricing.


As a tax pro I have occasionally acted for both buyer and seller ...and I advise them together, at the same time and never individually, so both hear the same issues from the same person at the same time. Realtors (mostly) don't do that.


Where we live (rural BC) there's no double-ending (AFAIK) anyway, and I just sold a condo in Calgary where my long-time realtor acted for me, at a somewhat discounted rate. But I got my asking price, plus...so I appreciated the independent advice.

[Winsor_Pilates]

Originally Posted by taxbuster

The double-ending realtor is a problem for both buyer and seller - neither can be certain that they are getting truly independent advice. Doesn't matter what the fees are --- if, as a seller, you're giving away money on the sale or as a buyer you're paying too much..the fee is the least of your problems. The lawyer's job is different...that is to make sure that title is clear and properly transferred -- nothing to do with pricing.


As a tax pro I have occasionally acted for both buyer and seller ...and I advise them together, at the same time and never individually, so both hear the same issues from the same person at the same time. Realtors (mostly) don't do that.


Where we live (rural BC) there's no double-ending (AFAIK) anyway, and I just sold a condo in Calgary where my long-time realtor acted for me, at a somewhat discounted rate. But I got my asking price, plus...so I appreciated the independent advice.

Double ending in BC was halted in 2018 with the exception of small communities that are undeserved with agents and it may be more necessary for the few agents to double end.

I agree it's a natural conflict of interest and getting rid of it was the right move.

[shermanator]

Neighbour passed away recently and her family is selling their half of our 1950's duplex. The place requires a gut job in the basement and the kitchen and bathroom upstairs need gutting. It's priced very attractively for someone who actually wanted to move in to the inner city, but it appears the only people interested right now are people who want to bulldoze the property and rebuild.

We've had a couple knocks on our door from realtors asking how much it would take for us to sell. They leave pretty quickly when we tell them we want enough to buy the infill that costs $200k more down the street with no extra mortgage costs.

I don't know what that says about the housing market but 6 months ago the property beside ours sold in a couple hours for $1.1 million. Likely an easier sell as it's a single lot and will be bulldozed for infills.

[bizaro86]

Originally Posted by shermanator

Neighbour passed away recently and her family is selling their half of our 1950's duplex. The place requires a gut job in the basement and the kitchen and bathroom upstairs need gutting. It's priced very attractively for someone who actually wanted to move in to the inner city, but it appears the only people interested right now are people who want to bulldoze the property and rebuild.

We've had a couple knocks on our door from realtors asking how much it would take for us to sell. They leave pretty quickly when we tell them we want enough to buy the infill that costs $200k more down the street with no extra mortgage costs.

I don't know what that says about the housing market but 6 months ago the property beside ours sold in a couple hours for $1.1 million. Likely an easier sell as it's a single lot and will be bulldozed for infills.

Could you swing buying it and renting it out?

It probably is worth more all together, and you already have one half.

[shermanator]

Could I? Yes.

Do I want to leverage myself significantly do it? No.

[shermanator]

Originally Posted by shermanator

Neighbour passed away recently and her family is selling their half of our 1950's duplex. The place requires a gut job in the basement and the kitchen and bathroom upstairs need gutting. It's priced very attractively for someone who actually wanted to move in to the inner city, but it appears the only people interested right now are people who want to bulldoze the property and rebuild.

We've had a couple knocks on our door from realtors asking how much it would take for us to sell. They leave pretty quickly when we tell them we want enough to buy the infill that costs $200k more down the street with no extra mortgage costs.

I don't know what that says about the housing market but 6 months ago the property beside ours sold in a couple hours for $1.1 million. Likely an easier sell as it's a single lot and will be bulldozed for infills.

Other half sold a week before I posted this for $30k over asking. So I would say the market is still warm.

[chemgear]

Do I have the numbers right?

The Federal government is pumping immigration to record levels, population growth of 430K in just 3 months. 1.7+ million per year pace now.

Canada wide new home starts are roughly 250K per year?

We are hoping that these immigrants and new families are piling in at a pace of at a least 7 people in each and every condo/house now?

And Alberta has positive intra-provincial migration on top of that? Wild.

[The Yen Man]

The pace of suburb condos going up is insane though (up here in Sage Hill, they have several projects going on at once). I think the housing market in Calgary is still pretty warm, but I don't think the condo market is (or ever has been to be honest).

[greyshep]

Batman super villian...err I mean US economist predicting not so good things which will burst more than just real estate bubbles.

https://nypost.com/2023/12/19/busine...-our-lifetime/