Hello Garth,
It has occured to me that in the 8 months since I’ve read your book, been religiously reading greaterfool.ca and occasionally tuned in to garth.ca, you have never challenged the cartel that is MLS.  In my opinion, there is no greater waste of resource and robber of equity than Realtors.  You could argue that the on-going crash is a huge equity killer, but realtors have been robbing people of 5-7% of their homes’ selling price since forever, regardless of whether the market is up or down.  It could be justified if they were charge 1 to 1.5% as they do in the U.K.

In the article, as you do in all other postings, and your book, you offer no alternative but to use a realtor.  You never mention selling privately or ways to negotiate a reduction of the commission.  In a market where no one is buying, if you as a buyer approach an agent who hasn’t made a sale in a while, you could negotiate that if he makes a commission of x, he owes you y% for dealing with him.  If he balks, move on to the next sucker.
Example:
- buy a 200k house
- commission of 6%
- 3% to the selling agent or $6000 for ‘representing your interests’
You could negotiate that he gives you back 50%, representing $3000.  Is there a law that realtors can’t give kickbacks to clients under such an agreement?  Has anyone ever done this? What’s your take?
René in Québec City

Of course the realtors have a monopoly with MLS, but that’s a separate issue from the commission individual agents or brokers charge. Actually, MLS works just fine. It creates a broad marketplace allowing you to compare listings, and it gives sellers maximum exposure to a great number of people. With the advent of online house-hunting, it’s turned into the No. 1 tool for sales leads in the country. The only complaint I have is that FSBOs can’t list on MLS – something they should he able to do by paying a fee. As for commission, you can negotiate any damn fee you want, and there are lots of agents around who will charge you half of the rest of them. With regard to your idea of stealing back 3% of the purchase price of a home from the seller in a down market, I hope you rot.

Garth,
I am in the midst of a rental housing search in Toronto. I used to think that landlords based rents on market forces — the overall supply-demand equation, the condition of the unit, amenities, proximity to public transit, etc. But after trudging through a whole bunch of condos, duplexes and houses for rent, I’ve noticed that some prospective landlords have set rents way off the scale — far above what the unit, building, and location would warrant.

The funny thing is that almost all of these prospective landlords seem to be in their 30s. I can only conclude that what we’re seeing is a wave of new and maybe reluctant landlords who bought at the height of the market, have outgrown their space or realized that they can’t afford to live there, and are seeking to cover their own inflated mortgage payments.

You touch on this briefly in Greater Fool but it might make a good topic for a blog post. How has the rental housing market been distorted by “new landlords” who are setting rents based solely on their monthly mortgage payments?
Jordan

Good observation. There are scads of accidental landlords in the market now, who are greedy little twits trying to transfer their buying mistakes onto tenants. They bought to flip, got caught in the grinder, and now have to rent out their boo-boos to cover operating costs. Being GLTs, they try first to unload all of their overhead on renters, until smart guys like you come along. This is especially the case in Toronto right now, where more than 30% of all the buyers of 50,000+ condos were speculators. In any case, it doesn’t matter. Just offer what you can afford or believe is fair. In this market you should also ask for free months, free parking and a paint job. It’s a renter’s market, dude.

Hi Mr Turner,
I have followed your work for a number of years and appreciate very much all the sage information that you have made available.Presently I am living in Halifax and own some income property.

Single home prices are dropping but income property asking prices have not. In your opinion do you think it is wise for me to wait for better deals over the next few years as none of the asking prices today make any sense. At the current prices (if I paid them) the only return to me if 100 % rented would be (at best) a break even with no operating income for me at all each month.

The reason I would even consider doing it is that decent income properties do not come along very often but I am concerned that they will drop in value over the next several years due to this recesion that is well underway. I cannot afford to get stuck with another property that possibly loses money each month. Your brief thoughts would be appreciated.
Regards, John

My thoughts are why the heck would you ever want to buy an income property in a place where market rents are so low you can’t make money, and at a time when a capital gain is impossible? Besides, you’ll just end up fixing toilets at midnight and having people skip rent, without the ability to throw their sorry asses out in the snow. Trust me, there are easier ways to make money. Only get tenants if you have no friends.

Hello Garth,
Ten years ago plus, I had enrolled in your investment advice and used it when you were offering it online, so I respect your knowledge and information. Now I am coming to you for some up to date knowledge, as the world’s economies are in turmoil.

As economies around the world tank and bounce… what can a person do in Canada, to mainly preserve capital? Having absolutely no debt, what instruments should we as Canadians be putting our money into..

Are Canada Savings Bonds somewhere to put capital for preservation…in case our bank(s) tank. Are different currencies somewhere to put money?
Thanks, Ben in Edmonton

Hey, Ben, money is safe in the form of money. Stop screwing around with it. Next question…

Hi Garth,
First, thank you for The Greater Fool.  It has given me a great deal of ammo when speaking to my new in-laws and my wife about buying a house.  Both, of course, dislike the notion of us continuing to rent. While my investment advisor’s advice hasn’t held true (undoubtedly, she has a stake in me “buying and holding”), your prognostications in the book not only make sense on a gut level, but logically too, and are clearly playing themselves out in headlines each day.

I’ve been watching the mutual funds with my down-payment dive into the toilet, I’m debating selling them now, so that I know that I have something, or holding on for the ride.  I thought I’d stick with the “Garth Turner brand” and buy another one of your books.  Would The Little Book of Financial Wisdom be the right choice or is it now too dated?   I know you’re very busy and if you don’t have time to respond, please accept my sincerest thanks for the great book and for helping me secure my financial future.
Corey in Toronto

All my books are timeless, of course, but that one was written shortly after Nine Eleven, and the world has changed a tad. I’d suggest you wait for the next one, “After the Crash” which I found out today will be off the press in the second week of January. As for selling your mutual funds, are you on drugs? That is absolutely the worst thing you could do, as the markets have lost half their value and are surely closer to the bottom than the top. That means hang on, girl. While this week’s advance looks like a bear market rally, to be followed by some more disgusting drops, the stock market will anticipate a better economy six or eight months before it happens, and up to a year before real estate stabilizes. So, you will have lots of time to regain fund values, and still score on a house.

Hi Garth
I read your column every day and was hoping you could offer me some advice. My husband and I are becoming increasingly worried about our economic future. We presently own 4 properties, the home we presently live in which was mine before we married, our dream home which is presently being rented, my husband’s home prior to our getting married which is now rented, and a downtown condo which is also rented (it was meant to be an investment property and something we hoped to make use of down the road) When we married 5 years ago we moved into my home which is in Pickering and then we found our dream home in Ajax. It has a beautiful setting on the water and because homes on this street rarely come up for purchase we entered into a bidding war and eventually bought it with zero down but with the equity from  our other homes. We had intended to sell our two homes and move into it but I became pregnant. We were thrilled as I had only months earlier miscarried and had been told that it would be very unlikely that I could become pregnant again. We decided that as much as we loved the home that we had just purchased that the baby came first and we didn’t want the stress at that time of having to sell 2 homes and make the move while I was pregnant. We also decided that because our present location, being much closer to the city, my job and daycare, that we would postpone the move for a couple of years, hopefully build more equity in our home and make the move then. Our intention was to move in the spring of 2009 or the very latest spring 2010 so my son could start school in his new community and it would be less stressful on him. We never expected the market to turn as it has. My question is now what do you think we should do. We presently to not have a contract with our tenants but we have an understanding that they can stay until next May. Do you think we should put our present home in Pickering ( which at the height of the market we probably could have gotten close to $500,000) on the market this coming spring or do you think prices may rebound in 2010 and we should wait until then? Any advice you could offer us I would much appreciate.
Thank you, Camille

Well, that’s going to be one expensive baby, isn’t it? You have already messed up your financial life, so asking me for advice at this point is not too helpful. But I have to ask – how does hiring a realtor to sell houses while you’re pregnant create stress? Isn’t there way more stress now knowing you own three too many houses at a time when both prices and rents are plunging? Your plan of waiting to sell so you could ‘build more equity’ did not exactly work out too well. My advice to grow up and realize how screwed you could be. Get all four houses on the market now. And suck on a pickle.