Connect with us

Real eState

Real estate agents caught on hidden camera breaking the law, steering buyers from low-commission homes – CBC.ca

Published

 on


A CBC Marketplace investigation has found that some real estate agents are breaking the law by steering unwitting buyers away from low-commission homes. 

Posing as homebuyers and sellers, Marketplace tested if real estate agents are engaging in this anti-competitive behaviour and found some agents deceiving the very buyers they are supposed to represent, in an effort to pad their own bottom line.

  • Watch the full investigation tonight at 8 p.m. (8:30 NT) on CBC-TV or stream anytime on CBC Gem.

Experts and industry insiders say what Marketplace has uncovered is indicative of an industry working for the benefit of real estate agents, at a cost to home sellers and buyers.

“There’s a huge inertia, and maintaining the status quo, it absolutely benefits existing realtors 100 per cent,” said broker and real estate agent Michael Walsh, one of the few speaking out on this issue.

The Canadian Real Estate Association (CREA) and the Real Estate Council of Ontario (RECO) would not talk to Marketplace about the investigation. However, shortly after learning about the findings, RECO issued a notice about steering to the over 93,000 real estate agents, brokers and brokerages under its purview, noting that such behaviour breaches the code of ethics.

“In addition to being illegal, the conduct undermines consumer protection, consumer confidence and the reputation of the real estate profession as a whole,” said the notice.

Across the country, the National Realtor Code of Ethics, as well as provincial real estate laws, dictate that agents must act with honesty and promote the interests of the individual they represent. Some provincial laws, including in Alberta and Ontario, address the issue of steering specifically.

The Real Estate Brokers Act (REBBA) in Ontario states that when a buyer enters a representation agreement with a real estate agent, the agent “…shall inform the buyer of properties that meet the buyer’s criteria without having any regard to the amount of remuneration, if any, to which the brokerage might be entitled.” 

Not doing so is called steering.

But those calling the practice out say RECO and other regulatory bodies are not doing enough to protect consumers and foster an industry that is fair and free from abuse.

Joanne Petit, in Vaughan, Ont., put her house up for sale without a real estate agent to help save on commissions that would have cost over $73,000. (Dave MacIntosh/CBC)

‘It’s not fair, and I think more people have to know about it’

When Joanne Petit and her husband, Frank, put their house up for sale this spring they decided to do it without a real estate agent. 

Joanne and Frank lived in Vaughan, Ont., where agents typically charge home sellers five per cent commission on the sale price of their home. In Joanne’s case, this would have amounted to over $73,000 plus 13 per cent HST.

In real estate sales, the commission paid to the listing agent by the seller is shared with the agent representing the buyer. Typically the commission is split in half.

In the industry, it’s referred to as the co-operating brokerage commission, and when a property is advertised on the Multiple Listing Service (MLS), the industry rules require that an amount of commission for co-operating brokerages must be included. This information, however, is hidden from public view and only visible to other agents and brokerages through an internal version of MLS.

To save on some of these costs, Joanne decided to skip the listing agent and instead paid a $200 flat fee to a discount brokerage that listed her house on MLS but left the rest of the work to her.

“I know there have to be people like myself looking on MLS to buy a house … and [they would]  say to their agent, ‘I would like to see this house,'” she reasoned.

Petit’s home was listed on MLS for a $200 flat fee. She decided to do the work of selling herself to save the $36,000 she would have been charged by a listing agent. (David MacIntosh/CBC)

Joanne was still prepared to pay the real estate agents representing the buyer one per cent commission, which totalled nearly $15,000. After six weeks on the market, Joanne received zero calls from agents with interested buyers.

“They called a lot because they wanted us to sign with them, they wanted us to list with them, they wanted to be the selling agent,” said Joanne, who eventually asked one of those local agents why no buyers were interested. She says he informed her that her house had been, in the words of the agent, “blackballed.”

“Agents want to work with agents, and agents want their 2.5 per cent commission,” Joanne told Marketplace. “It’s not fair, and I think more people have to know about it.”

Marketplace producers posed as homebuyers with hidden cameras

To test if Joanne’s house was indeed being snubbed by agents avoiding the low commission,  producers from Marketplace posed as homebuyers looking to purchase a home just like hers and in the same neighbourhood. 

The team contacted three local real estate agents who showed up first in an online search.

Each of the agents was asked to book a showing for Joanne’s property as well as two other nearby properties listed on MLS. 

Marketplace‘s test found that two out of the three agents steered the potential buyers away from Joanne’s home.

While one agent was upfront with the buyers about the low commission and offered to help the would-be buyers purchase the home anyway, the other two agents did not tell the buyers about the commission and discouraged or thwarted them from seeing the home.  

One of the agents steered the buyers by telling them the house was overpriced by $200,000, and said the owners would not budge on price. The other agent told them she was unable to book a showing at all, and suggested the property might have tenants, a turnoff for many homebuyers wanting to move in themselves.  

WATCH | Real estate agents found ‘steering’ on camera:

Hidden cameras show real estate agents steering buyers away from low-commission homes

19 hours ago

Marketplace posed as potential homebuyers and asked real estate agents to show them a low-commission home being sold by the owner, Joanne Petit. Some agents attempted to steer the would-be buyers away from the property. 2:12

Joanne said she never received a call from the agent who said she couldn’t book a showing.

She says the other agent did call but didn’t ask if they would be willing to negotiate, even though that agent told the buyers they would not. Joanne says the agent also didn’t inquire about the price of the home, which was in line with other sales in the same area.

“Right off the bat, she wanted to know if she was getting 2.5 per cent [commission]. When we told her that there would only be a one per cent commission, she said, ‘OK, thank you, I’m not interested, I’ll keep my clients to myself.'”

The identities of the three agents have been concealed because Marketplace‘s investigation determined that this problem is industry-wide, and not isolated to these specific agents. 

In a second test, Marketplace made calls to 50 real estate agents in five markets across Canada. Half the time the team called as homeowners looking to sell, and half the time as buyers. When producers asked 25 agents if they, as sellers, could lower the commission they offer to buying agents, 88 per cent warned against doing so. 

Although they’re not supposed to do it, some agents may be very cognizant of what they’re getting paid and push their buyer to another home,said an agent in Halifax.

“I have had agents say to me, ‘You know we’re looking at two houses, they’re both a good fit but I’m definitely sort of massaging them towards yours because there’s more in it for the realtor,'” said another agent in Winnipeg.  

‘It’s just completely unethical’

RECO says that commissions are negotiable and “sellers decide how much, if anything, they wish to offer to pay a buyer’s brokerage,” but when all 50 agents were asked about the commission they charge, nearly all quoted the same amount. A quarter of the agents referred to their fee as standard, and the majority said they would not negotiate. Marketplace shared what they documented with real estate lawyers including Lisa Laredo, who’s practised real estate law in Ontario for over 15 years. 

“It’s beyond steering, it’s just completely unethical,” said Laredo about the hidden camera test. “You’re not actually providing a service, you’re not servicing anyone but yourself.”

Lisa Laredo, a real estate lawyer in Ontario, says steering by real estate agents is against the law and unethical. (Norm Arnold/CBC)

When Marketplace reached out to the two agents who steered, both denied doing so. The one also stands by her assessment the house was overpriced.

Michael Walsh, who runs an agency exclusively for buyers, is not surprised by the findings of Marketplace‘s test and says the current framework for real estate sales enables steering. 

“That’s part of the inherent issue in the model where buying agents are offered compensation by listing agents. We wouldn’t be having this conversation if that wasn’t in place.”

Historically, all real estate agents only worked for home sellers and only had a fiduciary duty to them. It wasn’t until the 1990s that buyers’ agents came to exist in Ontario after some agents advocated for the change. However, the commission structure, wherein sellers incentivize agents to bring buyers, remained in place. 

Michael Walsh is the president and broker at Exclusively Buyers Inc., a brokerage that only represents homebuyers. (David MacIntosh/CBC)

Walsh and researchers studying the industry agree that the only way to truly fix this problem is to change the way real estate agents are paid, so the buying agent’s commission is not paid by the home seller via the listing agent. 

‘The industry functions as a cartel’

“In terms of commissions, the industry functions as a cartel. They enforce on the entire industry a certain high and relatively uniform commission level,” said Stephen Brobeck, a senior fellow and former executive director of the Consumer Federation of America, a non-profit organization based in Washington, D.C.

Brobeck’s research, which spans over 20 years, has determined that “decoupling” realtor commissions could drop the standard rate of real estate commission by one to two per cent over a couple of years, saving consumers billions of dollars a year.

“If the commissions are decoupled, for the first time buyers would be able to negotiate their commissions and they would come down. That would also encourage sellers to negotiate more vigorously with their listing agents and those would most likely come down,” Brobeck said. 

“Furthermore, it would give discounters a far greater opportunity to penetrate this marketplace, because they would not have to pay the going rate for buyer agent commissions.”

Brobeck’s argument and how commissions are paid is also at the core of two large anti-trust lawsuits in the U.S against the National Association of Realtors and major brokerages including RE/MAX LLC, Keller Williams and Realty Inc. The class-action suits claim that “anticompetitive conduct causes America’s homebuyers to pay inflated commissions.” These claims are also currently under investigation by the U.S. Department of Justice.

Discount brokerages make up about 10 per cent of the market share in the U.S. There are no figures available for Canada but it’s considered to be about the same or less according to discounters in the industry. 

Stephen Brobeck is a fellow with the Consumer Federation of America. He says with respect to commissions, the real estate industry functions as a cartel. (CBC)

Brobeck says it’s now up to provincial governments to make this change happen. Until then he also recommends that consumers not give up on negotiating the commission they pay.

“If you’re a seller you ought to try to negotiate the commission down by a full percentage point,” he said. “Secondly, if you’re trying to sell an expensive home, or you’re working with a broker who will help you sell one home and buy another home, they may knock an additional percentage point off the home.”

Joanne and Frank, however, remained steadfast in their resolve to sell without a listing agent. 

“The right person is going to come along at the right time,” said Joanne defiantly.

And in the end, patience did pay off. After three months on the market, they sold their house near full asking price to a private buyer, with no agents involved.

  • If you have tips on this or any other story, please email the Marketplace team at marketplace@cbc.ca

Adblock test (Why?)



Source link

Continue Reading

Real eState

Grand real estate sales on pace to set record in 2021 – Sky-Hi News

Published

 on


This year is on track to see record real estate sales in Grand County, driven by a high demand for mountain properties and limited availability.

Data from the Grand County Board of Realtors shows that October was the 115th month of gains in median sales prices compared to the same month of the previous year, while the available inventory has dropped consistently during that same period.

In October, the one-year change in the median sales price for all properties was up 11.8% while the number of active listings was down 14.4%, according to the board of Realtors.



“Due to the lack of inventory and the need for housing up here, when properties do get put on the market, they’re just going so fast,” said Lindsey Morrow, an agent with Keller Williams Top of the Rockies. “This has been a really strong year for real estate in general.”

The September report from the Land Title Guarantee Company shows the average sales prices for single family and multi-family properties are at their highest reported rates with single family homes reaching an average of $876,425 and multi-family properties going for $510,367 on average.



So far this year, real estate sales have totaled more than $861 million, which is a 41.7% increase over the same time frame last year, according to the Land Title Guarantee Company.

Last year saw record sales with more than $994 million in transactions.

The high demand for property in Grand County can be credited to a number of factors, including more people working from home, low interest rates, rising sales prices in surrounding mountain communities and recreational opportunities.

“Grand County is only an hour and a half from Denver … we have the infrastructure and internet for people to (work at home), and I think people are realizing that Grand County has a great work-life balance,” Morrow said.

A majority of the buyers are from the Front Range, which has accounted for 61% of sales so far this year, per data compiled by Land Title Guarantee Company.

All the demand means that active listings go quick.

Properties sold in October saw a 52% decrease in the number of days on market compared to October 2020. The average townhouse or condo sold after only 48 days and single-family homes sold at 72 days, according to the Grand County Board of Realtors.

Morrow said the demand has slowed toward the end of the year, though it remains comparatively high when held up to previous years. Demand is the highest for properties priced below $600,000.

“It’s definitely calmed a little bit compared to the summer where there were multiple offers and properties spent two or three days on market,” she said. “Though as soon as you get into those properties in the $400,000 or $500,000, which are desirable, those are going off within five or six days.”

According to the Grand County Board of Realtors’ data, a majority of properties sold so far this year range from $600,000 to $999,999.

Inventory below $600,000 in Grand County is increasingly rare with only 13 single-family homes currently on the market.

On top of the incredible demand and low inventory, external factors such as rising building costs, labor shortages and problems in the supply chain have also contributed to the extreme sale prices.

Single-family properties going for $1 million to $1,999,999 in 2021 have increased by 52-55% increase compared to last year, GCBOR data shows.

However, there are still opportunities out there for buyers.

With rental rates increasing, Morrow urged interested buyers to reach out to a lender while interest rates remain favorable

“If people are willing to spend $3,000 per month on rent, that could potentially get them a $600,000 or $700,000 house, which there is inventory for,” she said.

Morrow said the market is sustaining itself so, unlike the 2008 market, it’s unlikely there would be a crash and current trends will likely continue until more inventory is available.

“Appraisal values of properties are still coming in at or above contract price,” she added. “The biggest thing is we don’t have the inventory for people moving into the community.”

Building permit numbers indicate that Grand County is picking up the pace on construction with 2021 seeing a record number of permits for single family homes, according to Steve Jensen of the Grand County Builders Association.

Not including construction in Fraser, Granby or Winter Park, Grand County has issued 237 permits for single family homes so far this year compared to the same period in 95 in 2020 and 108 in 2019. Of the permits issued this year, 89 are fire rebuilds.

Adblock test (Why?)



Source link

Continue Reading

Real eState

More Bad News For China’s Sorry Real Estate Market, UBS Says – Forbes

Published

 on


The hits keep on coming for China’s economy.

This time the news is the country’s already beleaguered real estate sector is set for more bad news.

“Property activities are likely to fall further in the coming quarters, and without policy easing, property sales and starts could fall 20% or more by 2022,” states a recent report from Swiss bank UBS.

The current and near-future prospects for China’s property sector is the result of spillover from the Evergrande debt debacle earlier this year, policy tightening by the Chinese government, and shifts in domestic demand, the report explains.

In turn, a real estate slowdown could hit the broader economy hard slowing growth to 4% or even lower. That’s a standstill from China’s perspective.

In other words, China’s economy is likely headed for a hard landing soon if its government doesn’t take swift action.

“Our baseline forecast is for gradual policy easing, but there is a substantial risk for policy easing being delayed or insufficient,” the UBS report states.

Policy easing would likely mean lower cost of borrowing for domestic Chinese companies and or easier loan standards.

Still, the news comes on the back of a sharp contraction in China’s steel production earlier this year, at the same time when the world’s other top steel producers were seeing growth in output.

It doesn’t augur well for China’s economy overall so investors in Chinese or Hong Kong stocks might want to be cautious for the immediate future.

Adblock test (Why?)



Source link

Continue Reading

Real eState

Research: Small-business real estate lenders for San Francisco North Bay – North Bay Business Journal

Published

 on


The latest North Bay Business Journal research (Lists.NorthBayBusinessJournal.com) focuses on lenders certified to handle U.S. Small Business Administration program loans for real estate.

A list of SBA 504 lenders (certified development companies) is ranked by the value of debenture portion placed in Sonoma, Marin, Napa and Solano counites from Oct. 1, 2020, through Sept. 30, 2021. Other information provided includes the number of loans made in each county.

Detailed information from the list is available for purchase as a spreadsheet via the links above.

Want to have your company surveyed for this and other lists? Contact Research Director Michelle Fox at michelle.fox@busjrnl.com or call 707-526-8682.

Adblock test (Why?)



Source link

Continue Reading

Trending