Monthly Archives: April 2010

By Nan Campion

Part 2 of 3 Series: In part 1 of this article I discussed how the Competition Bureau in demanding certain changes may well be taking the real estate industry back decades in ethics and in the protection of buyers and sellers. (Click here for Part 1)

Here, in part 2, I will be discussing the opinion of the Competition Bureau that CREA’s rules restrict the ability of consumers to choose the real estate services that they want, forcing them to pay for services they do not need. The Bureau stated that “Consumers should be able to choose which services they want to buy in order to facilitate that transaction, including lower-cost options.”

That begs the question of what the public is really paying for in a normal real estate transaction. My opinion is that the Bureau believes that it would be possible to set a value for:  holding an open house, chauffeuring buyers around, writing a feature sheet, filling in a listing form, negotiating a transaction and so on down the line.  If I didn’t know the inside of the real estate business, I think that might sound logical to me as well. However, although those are details that the agent handles for the client, what an agent brings to the table is far less tangible and therefore perhaps more difficult to understand.

People are talking more and more about how easy it is to access information these days and that therefore perhaps a real estate agent isn’t needed the way they were in the past.  They don’t see the Real Estate Association as offering anything other than a resevoir of information. Those saying these things are often people who see The Canadian Real Estate Association as simply the Multiple Listing Service. They believe that we are hoarding information and not sharing it so that we can charge the public high fees.

In fact, there was a comment published by one person who was complaining that it was easier to get information about an inexpensive book on line than to get information about a property worth hundreds of thousands of dollars. This person obviously thought we should provide all information out there on the internet for the whole world to see. There is a good reason that we don’t provide complete access to our client’s property information. The seller has hired us to sell their property while maintaining a regard for their privacy.  Often giving too many facts can be intrusive – after all every house is a person’s home. The ideal therefore is to give just enough information so that the buyer can decide if they want more or not. For those who do, the agent is there to discuss the property in depth with them one on one.  Aside from our ethical considerations for our clients, there are Government Privacy Laws that we are also following in the conduct of our business.

But I digress.  As information is becoming more and more easy to access, for those who don’t see the value of a real estate agent in most of the transaction I am surprised that someone has not set up a viable web site for these buyers and sellers. Based on the comments of the Competition Bureau, you would think that there are plenty of people who would be interested. In this day and age it should be easy to create and I certainly believe that this would offer choice just as the Bureau is requesting. With this in place it would be very easy for the public to know what they are getting in each site, rather than adding confusion to the current Multiple Listing Service.

That having been said, information and knowledge are two very different things.  The true value that a real estate agent brings to their client is not information nor is it facts, nor is it time spent, but knowledge.  Knowledge is something that can only be acquired through years of experience in all types of markets as well as through constantly taking the on-going courses which are required by the Board to ensure that   knowledge is up to date.

The Canadian Real Estate Association is far more than another name for the Multiple Listing Service. For years now, CREA and the local boards have been working to enhance the experience of clients by maximizing the education and knowledge that the agents bring to the transaction. The courses required of someone who wants to enter the profession have become much more rigorous and agents must take continuing education courses to ensure that their knowledge is up to date. Further, the Real Estate Associations have established a code of ethics that requires certain conduct of registered agents in all of their dealings with the public. There is a demand for ethical behavior, for total disclosure of all facts that could affect the value of a home,  for the agent to be very clear about who they are representing in all transactions, a demand that they work in the best interests of their clients at all times.

This is the essence of what a client is paying for when they hire an agent.  As knowledge and  experience  is an integral part of a person, the agent  takes that with them when they do an open house or talk to potential buyers on behalf of the seller and it infuses everything they do. The Bureau suggests that the client should only have to pay for the services that he or she needs. The problem with this approach is that the only thing that you are really paying for is the knowledge and experience of the agent applied to all of these other duties. Without the agent involved, these duties are basically valueless.

I am not suggesting that a seller should not hold their own open house, or that if they want to show the buyers around their house themselves that they shouldn’t. I believe people should have total choice in what they do.  What I am suggesting however, is that when the Bureau says that buyers and sellers should be able to pick and choose the tasks that they want an agent to perform, it would appear to me that they have very little understanding of the real estate business and how it functions.  The public is not paying for what the agent does but how they do it supported by the knowledge that they have acquired.

There is an appropriate saying that applies to each real estate agent:  THE WHOLE IS GREATER THAN THE SUM OF THE PARTS.

If I am correct in my opinion about the intrinsic value of a real estate agent, then where would the Competition Bureau get the idea that the public is being treated unfairly by the Real Estate Associations?

I will address this in part 3 of WHO REALLY WINS? – WHO LOSES

In the meantime as it is often hard to understand something until you have experienced it yourself, here are some point form comments from a recent client of mine that might help this discussion make more sense. (I have taken out any comments that were personal and have included only generic references). You will see that knowledge was applied and helped maximize the results throughout the whole process.
I quote:
“A good agent is worth their commission most definitely.
-advice re: preparation of the house, including some key renovations –this was a significant aspect and resulted in a very good selling price for the house
-excellent advice re: timing of the sale of our house
- the professional level of the “special feature sheet” was outstanding and I believe that it was key in generating interest in the house and drawing attention to the house ‘highlights’ resulting in a higher selling price
-interface with prospective buyers and a very proactive approach to emphasizing the house’s pluses
-very competent negotiations re:  sale of the house
-The points above are merely (a partial list of) the many areas where my agent  provided expert input and service. They do not, however, say enough about her in-depth knowledge of the whole real-estate ‘selling/buying’ process (This was invaluable as it saved much time and avoided possible wasted effort/mistakes.)  Overall I would say that a good real-estate agent is a real plus in the sale of a home and in finding a new home. ”

Nan campion is a Broker with Royal LePage/Johnston & Daniel Division.  Nan is a regular contributor to the Muddy York Real Estate Blog.