Blame

crash1

Realtors are often doormats on this blog.

While many in the profession are pumpers-and-dumpers who will try to talk anyone into any deal for the sake of a commission, are local agents to blame for today’s economic mess? After all, the global financial meltdown, this recession and the withering job losses all started with real estate – first in the US, then here and elsewhere in the world. Did realtors cause that?

When I first started riding, my eyes were bigger than my common sense. I drive into a Harley dealership one day and bought a brand new Road King as my first bike. Just over 430 km later the bike was a write-off and I was lying face down on the white line. Was that the Harley salesguy’s fault?

The seeds of the current situation, which will get worse, lie within us. Rarely satisfied with what we need, and consumed with what we want, we fail to self-govern. Daily on this blog people obsess about buying a big house and others gloat about owning one.

Realtors, and their little friends in the media, may not be making things any better with exhortations to buy and their fabricated market facts, but it’s the covetous greed and vain social-climbing of consumers who threaten us still. So long as we get off on this real estate porn, the lack of judgment will continue.

I received the following note from a realtor I have not met. Sounds like a good man. Maybe he rides.

“I have often thought of writing you to express my gratitude for your honest efforts on all fronts of the economy. I recently had the privilege of attending your more recent public speech. At the end I felt that you had moderated your position somewhat as the evening progressed and understandably so given the hosts of the evenings obvious business interests. I have visited your new website “Xurbia” and clearly you are not optimistic on the immediate future.

I am a realtor. I’m not necessarily a successful realtor by conventional standards of measurement. At least three years ago I saw our local market headed for a correction. I actually had mild arguments with many of my peers as a result of my contrarian views. I have recently sold what revenue properties my wife and I owned based on not a lot more than that every day we didn’t sell them at the current market value we effectively bought them ourselves. The bottom line was that, as far as revenue properties go, they did not support themselves at their current market value even though we bought them years before. Now I am faced with investment decisions for the proceeds of the sale of that revenue property and quite frankly am at a loss as to where to put it given today’s economic climate.

As a real estate professional I am deeply disturbed by the conduct of my profession. Most certainly we should endeavor to be “trusted advisors”. We should always put the client’s needs first understanding that in so doing we will ensure a loyal client base long into the future who will actually refer friends and family to us thus further ensuring the success of our business. In my area we recently changed the law which prohibited part time real estate practitioners, not something I was in favour of and I do believe it has led to further degradation of our profession. Speaking of profession I am somewhat embarrassed there as well as how possibly can someone who has taken nothing more than a six month correspondence course consider themselves a professional. Within the limits of the code of ethics I do try to encourage prospective buyers and sellers to seek out a true “professional realtor” who has invested in themselves through education and experience to become the best possible asset to their buying and selling clients.

While you may be ridiculed for the word you spread, you are too commended by many and I wish to add my name to that list of supporters. As embarrassing at times as your criticism of my profession is it is warranted. Unfortunately those of us in the profession who think as you must work with those in the profession who do not and to publicly align ourselves with your rationale might prove costly. It is important that I maintain a given level of trust and respect but I cannot rationalize publicly stating my opinions on such matters as real estate with entire honesty. I thank that there are such true professionals as you to educate those who might not otherwise be.”


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For today’s blog, “Doomed?”, go here

100 comments ↓

#1 Bobby on 02.15.09 at 10:16 pm

Realtors are not the problem, they are just a byproduct of their profession.

When your sole source of income is a sales commission, if you don’t sell you don’t get paid. Therefore they have no recourse but to put a continued positive spin on the market. Sadly, many buyers are rather niaive and ilinformed so look to these so called professionals for advice. If the RE industry was to come out and say that prices will be 30% lower this time next year, there would be few sales and hence little income for that period.

This whole process has led to a number of inequities and problems in the marketplace. Realtors bid up the prospective selling price just to get a listing. Then quickly say the market has changed, suggesting a lower price. There is only a $1500 commission change for a $100,000 price change. Tell me who loses. If there is no cost to list your house, laissez faire sellers put their home on the market just to see if it will sell at some unrealistic price. If not, they just shrug even though the realtor has spent time and effort marketing the property. Buyers can use the services of a realtor for a week to look at listings then walk away without buying. Show me any other so called profession where you work on behalf of someone for a week and not get paid. I could go on but you get the picture.

The financial services industry has had similar problems leading many astute investors to seek out fee only advisors. Their sole motive is to provide unbiased advice and have no vested interest in selling you a specific product.

Realtors have quite rightly become the doormat of the present market because many have misled their clients to facilitate a sale. The good ones with lengthy client bases will continue but many that have jumped into the business at the peak of the market will quickly leave as sales dry up. Moreover, I expect that there will soon be a litany of lawsuits against realtors as buyers start to realise what they have bought, a depreciating asset.

And, they will want to blame someone, and who better to blame but a realtor. It’s going to get ugly!!!

#2 KJ on 02.15.09 at 10:20 pm

Standing in line at a costco in Calgary the other, I was eavesdropping on a conversation that a realtor was having…(cell phones are so public aren’t they?). Anyway, she was telling her party on the phone, that she and her associate agents were alarmed at what was happening, too many listings , prices dropping, too few sales…no, we don’t where its going to stop finally…, prices had dropped $40k…listing were stale by 60 days…etc. What was interesting to me, was her comment that a great number of her current listings were sellers, that just wanted to get out of their house and rent while the market declined and then rebuy when the prices have hit rock bottom in a couple of years. Smart move…but good luck! This spring is not going to be pretty.What happened to the idea of real estate as a home to live in, shelter? I have sat out this crazy RE bubble, mostlly because I was unwilling to get into an exhorbatant mortgage that consumed more than 30 , 40 or even 50% of my income. Who needs the stress? I’d rather rent. However I am going to turn into a vulture in the coming year or so, because…I just would like to own my own shelter…with the bank, of course, when the prices get reasonable again.

#3 squidly77 on 02.15.09 at 10:27 pm

realtors were the tools for the banks
the banks used them to push mortgages
and they were more than willing and spun spun spun
realtors knew before the general public that a crash was inevitable but chose to continue spinning and pedaling homes to families and wide eyed specs alike
read a little about REIN
they should be charged with racketeering and for my money are the enemies of economies
not one realtor held a gun to someones head to force a sale..they simply lied and words can be just as damaging as bullets
if they claim that they did not know the housing crash was imminent they then must admit to not understanding the very industry that they claim to being the professional authority of
either they were professional and knew and lied
or they were not professional at all

i am sure that there are some very honest and people of high moral standards selling real estate
the problem is they let the spinsters spin away
they couldnt or wouldnt clean up their industry
now they all get painted with the same brush

#4 Van-zee on 02.15.09 at 10:44 pm

A valentines for the collapse-afarians.
http://cluborlov.blogspot.com/2009/02/social-collapse-best-practices.html

#5 Paul Martin Jr. on 02.15.09 at 10:52 pm

no fun letter, waste of time, old-pop kind of petty bla ba bla

#6 CC on 02.15.09 at 11:00 pm

Well I hope you had better gear than most Harley riders. About 20% of accidents impact the side of the chin where most of the Harley riders I know and see have nothing. Full face should be the law.

I could go down at say up to 80K and unless I hit something I’ll be right back up, bike too most likely, KLRs are tough. My gear is substantial and I always wear it.

Don’t forget bikers ATGATT. All The Gear All The Time.

#7 kc on 02.15.09 at 11:01 pm

This was on CBS 60 Minutes tonight, An interview with Paul Bishop telling about how “World Savings” bank was signing loans for NINJA’s and how he was fired for questioning the practices. Remember that World Savings was sold to Watchovia just before the bottom fell out and then Watchovia went bust to Wells Fargo. This paints a bad picture for the shape of US banking.

http://www.cbsnews.com/video/watch/?id=4803928n

#8 Sail1 on 02.15.09 at 11:08 pm

We should always put the client’s needs first understanding that in so doing we will ensure a loyal client base long into the future who will actually refer friends and family to us thus further ensuring the success of our business.

Let us lay blame.

You can rest assure real estate agents are not the only group that is lacking in morality. There are many professions from lawyers to cab drivers that have done much worst. I can’t believe, that no sales person has ever misled a client willingly or not.
If occupations are to lead by example, let us start by transforming the mindset of the snakes that run our daily lives in politics, and that includes unions.

#9 nonplused on 02.15.09 at 11:09 pm

Well, I think Garth has both attacked and defended realtors. He still recommends using one no matter what. (I agree. Just as you shouldn’t marry or divorce without a family lawyer you shouldn’t marry or divorce a house without a realtor.)

Most of the realtors I have dealt with are just ordinary hard working business people who get paid by commission. They tend to invest heavily in the sector they are promoting, like the guy above, which indicates if nothing else that they really believe what they are telling you.

The worst thing one ever did to me was notify me of a new bid coming in on a house that I had previously bid on but got turned away. I bid a bit higher, but the other buyer went over list, probably on knowledge there would be another bid. So I am not sure if his intentions were to give me a last look at the property or just generate a phantom bid. Although I am sure he received no direct compensation for the effort. Anyway, I put him in the bad box for it and haven’t used him again since.

Good story on the first bike, Garth. They say that the first six months are the danger time for new riders. After that the stats drop down to that of other motorists, somewhat skewed by the lack of airbags and a steel frame around the occupants, but somewhat offset by defensive driving.

I have always been a big fan of learning to ride off-road. That’s what I did as a kid and I credit it with giving me the skills to not have laid down a road bike to date. (Although I wrecked tons of parts off road.) People hate them because they think they do “environmental damage”, which they do, but from observing trail damage around here I would say it’s less than a horse. There are single track trails cut by the “Alberta Heritage Fund” near Calgary 30 years ago that to me don’t appear to have changed a bit in that whole time. The exception being extremely steep slopes that motorcycle riders will attempt but no horse could be cajoled into scaling.

Quads and 4×4’s are a different matter. Quads weigh a lot more so the ruts are deeper. 4×4 accessible trails are generally impassible in many places, with extensive rutting as deep as the tires will go before the vehicle bottoms out. But there is usually an unrutted single track trail around the mess accessible only to motorcycles.

It’s all about weight. A dirt bike can “huck rocks” better than a horse, but only for a few feet and then it is at the maximum speed the rider can handle it. After that it does about the same damage as 2 peddle bikes on the same trail. One could argue somewhat less, as the weight is distributed better by the larger tires.

But I switched from a Harley to a Yamaha. So I guess I’m second class now but it suits my desires better at a much lower cost of ownership, and I think it’s a better machine technology wise. Still, even a big Harley gets over 40 mpg, so if you want to be green and look cool doing it, go with 2 wheels.

#10 Jordan on 02.15.09 at 11:42 pm

Garth — how does one go about finding a trustworthy real-estate agent? What, for you, are the key “litmus tests” or questions to be asked?

#11 Glenn on 02.15.09 at 11:44 pm

Nothing better then seeing some smug yuppy “all-hat-no-cattle” Harley riding wanna-be getting in over his pointy little head and dumping his $80,000 ride. Who subg that song…instant karmas gonna get ya? I suggest a set of training wheels, or switching to a hobby more suited to his abilities. Badminton, perhaps?

#12 Glenn on 02.15.09 at 11:57 pm

Might want to ditch my previous post, I logged it before I read the entire story. Dont want my comments laid at the admins feet yadda yadda. Dont feel bad tho, I dumped my first bike but it was a long ways after 200km and my second dump was wet weather conditions and railroad tracks. Two drops in 150,000 miles aint bad overall.

#13 average guy on 02.15.09 at 11:59 pm

Garth you’ve been punked. Sounds like a nice guy? Sounds like a bogus letter to me. Admits he’s not a successful realtor but accumulated income properties over the years because he couldn’t sell them for clients?… sure. What did he use for a downpayment, typically 30% down is required for income properties, unlike 0% down for owner occupied. He’s embarrased because a RE licence can be obtained with a 6 month correspondence but doesn’t agree with banning part-timers. So a part-timer with 6 months of correspondence training is a good thing?… sure it is. Would you deal with a part time lawyer or a part time doctor? People on this blog enjoy bashing realtors but agree they should sell their houses and rent. If I hire a realtor he better be working for me, not telling every potential buyer who walks through my door that RE is going down for the next 3 years. You can’t suck and blow at the same time. This so called realtor probably is a rider, in the back of his mom’s minivan.

#14 wellwell on 02.16.09 at 12:02 am

A crashed motorcycle is the right metaphor. I just read a Telegraph article by Ambrose Evans-Pritchard (admittedly a pessimist) that made my blood run cold. The economy of the former Soviet bloc is about to collapse, taking Western Europe down with it, and the weak institutions of the EU cannot cope:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html

In the gallows humour department, there was one passage in the article that was so bleak I laughed out loud, in spite of myself:

“Latvia’s central bank governor has declared his economy ‘clinically dead’ after it shrank 10.5pc in the fourth quarter. Protesters have smashed the treasury and stormed parliament.”

#15 Rog on 02.16.09 at 12:03 am

It is very true. I myself am a sales person, (thinking of becoming a realitor when the market changes for the better).

From a realitors standpoint they have to make a living. Imagine if every realitor said “now is not a good time to buy the market is going to continue to drop” I doubt that realitor would be eating for much longer.

In fact Garth makes a great point here it is never the realitors decision to buy a home, no more so than it is a car salesmans decision to buy that new car. Ultimately it is up to the customer to buy or not to buy.

Realitors are simply an intermediary who’s job is to bring the buyer and seller together. Everyone needs to remember that the agent is paid comission and that can have a powerful infulence on what comes out of their moulths.

One of the biggest problems with real estate is that so many have a vested interst in it, it’s hard to get a non biased opinion. Just think about how many people make money off the real estate industry….realitors, real estate bords, banks, flippers (well used to anyway), and the media to name a few.

Long story short is always be careful when comission is involved as there are many more vultures than there are saints in this industry.

#16 Alberta Ed on 02.16.09 at 12:06 am

Um… not to get off topic, but… how was the bike? (He asked, with pain in his voice…)

#17 CinToronto on 02.16.09 at 12:56 am

Hey Garth: Can we get contact info for the good realtors? I would love to know the name of an honest, intelligent realtor in T.O.

#18 Fritz on 02.16.09 at 12:58 am

Ha Ha Ha …..nice picture! Is that you taking a soil sample? Or did a realtor cut you off? Thank you for the book. It was great ! How about selling a dog carrier for a motorcycle on Xurbia? Something for a 100 to 120 lb dog and no hacks or trailers please .And remember: the shiny side up!

#19 Soylent Green is People on 02.16.09 at 1:08 am

Daily on this blog people obsess about buying a big house and others gloat about owning one.

****

I read the blog daily and I don’t recall any such thang…

#20 Zoronqueen on 02.16.09 at 2:07 am

Hi Garth,

You did not put up my last post… Don’t know if it’s because it was too outlandish….

The realtor we have currently is pretty upfront about the current market. He himself has lost value on properties that he owns. He listed our property 35K below market value and currently it’s the lowest on the market in that type of house. We’ve had 3 offers so far but none have panned out. The last at 295K could not get financing….Must be an exception….

Anyways as an aside… My previous post was an argument as to why Edmontonions feel they are sheltered from Depression should it come….
1) Enjoys 2,263.7 hours of sunlight in the average year, more than any other major Canadian city. Good for those solar panels….
2) Has great vacinity to farms for source of food ie. cows, wheat. We even have a overpopulated of gophers. Gopher Stew…. Yum…
http://www.cooks.http://www.cooks.com/rec/view/0,1748,153179-241193,00.html
3) We have a good source of water with the capability to create a crank well.
4) Should the power grid go out, it takes max 2 days to restore.
5) We have a source for oil/gas
6) We have a place to raid for medical supplies….
http://www.edmontonjournal.com/Health/Heart+institute+still+pulse/1221778/story.html
7) We have very few natural disasters ie. hurricane, earthquake
8) we have a good supply of wood. Has the longest stretch of urban parkland in Canada, which is 12 times larger than New York City’ Central Park.
9) Loads of housing….Many new subdivisions have gone up during the housing boom…

#21 Scandia on 02.16.09 at 2:32 am

To the RE gent, You sound like a human being struggling to live an ethical life. Just like me. I hear you saying that any one who works PT cannot be a professional? There are many reasons professionals chose to work part-time. My family doctor has vastly reduced office hours compared to most physicians. I find her to be the best doctor I’ve ever had and feel reassured she has another life,other committments.
Good luck to you.Keep building trustworthy relationships. No doubt the context we are in is a field of moral hazard.

#22 Investx on 02.16.09 at 2:43 am

“Most certainly we should endeavor to be “trusted advisors”. We should always put the client’s needs first understanding that in so doing we will ensure a loyal client base long into the future who will actually refer friends and family to us thus further ensuring the success of our business. ”

[Nods head.]
Honestly, I now take what my RE agent advises me with a grain of salt. That’s a shame.

#23 North Vancouver Citizen Jr. on 02.16.09 at 3:42 am

Since so many U.S. Politicians & Civil Servants are (no doubt Canadians too) or will be found to be “Income Tax Cheats”….. a new “Simple Fair Tax” is needed for the U.S and Canada.

…The IRS/Revenue Canada should be abolished immediately.

“””18…The Fair Tax. Period. No more IRS. No more BS. No more lobbyists gaming the system. Nobody has to file a tax return ever again, save businesses who already do monthly for their sales tax returns. Taxation becomes completely transparent and voluntary based on your desired level of consumption. It is a radical step, it will create a huge boost to GDP as every firm that has fled the US for Bermuda and similar will repatriate and in addition it will cut the compliance costs out of every American’s budget. Finally, it will tie government income inexorably to GDP, prohibit raising taxes without it being instantly visible to the public and provide incentives for capital formation – exactly what we need to create millions of new jobs.””

http://market-ticker.denninger.net/archives/2009/02/12.html

…..Citizens should refuse to file 2008…..

#24 Murray on 02.16.09 at 6:06 am

If only the majority of our politicians were as forthright as the majority of the real estates agents I have dealt with we would not be in the mess we are in. I have had real estate agents tell me in the past not to invest in certain properties on a speculative basis. On one occassion the agent was wrong. In two other occassions the agents were write. There are honest people in all vocations.

#25 Mike (authentic) on 02.16.09 at 6:53 am

Garth wrote: “When I first started riding, my eyes were bigger than my common sense. I drive into a Harley dealership one day and bought a brand new Road King as my first bike. Just over 430 km later the bike was a write-off and I was lying face down on the white line. Was that the Harley sales guy’s fault?”

As part of the Motorcycle media in North America I can tell you that this story is a common one. Riding a motorcycle requires a more advanced skill set and road understanding than driving a car. Education plays an important role in both rider and motorcycle salesman. Yes, it was the salesman’s fault, as they really should have known not to sell you that bike if they had proper training and asked you the right questions. But the buyer is also partly to blame for not knowing their own skill limits and possibly failing to educate themselves adequately.

The same in facts, interestingly enough, can be applied to with Real Estate, Realtors and Realtor Brokers and their clients.

The Real Estate juggernaut couldn’t run without easy credit, more than willing to lend banks, loose rules, euphoric mortgage brokers, short-sighted Realtors, blind RE Brokerages and the easy to dupe, gullible buyer.

Mike

#26 Mike B on 02.16.09 at 7:18 am

Greed… yes this is the root of alot of evil. As has been exposed here and American media it was the greed of the banks who gave out the money to people who in essence did not qualify all for the sake of a commission. Bigger the loan the bigger the commish. Then the folks on wall street peddled these flimsy covenants to the rest of the world disguised as mortgage back securities. The rest we know. Greed… Consider a standard RE transaction today. A million dollar home sells here in Toronto and the listing agent can net 1-2% say 10-20k to pass the papers back & forth and use a fax machine. The buyers lawyer can make something like 1500 to 2500 bucks for this same transaction. That’s someone who carries a legal responsibility plus has spent many years learning their trade. Compare the two “professionals” and you can see why people have such contempt for the agents. They often put “lawyer review & approval” clauses to free them of any further responsibility. Some even go so far as to have offers faxed to their home office so as to potentially hide if there really are multiple offers on a property or not. Greed & deceit

#27 David Bakody on 02.16.09 at 7:21 am

Real Estate is a double edge sword ….. only thing worst is a Yacht Broker ….. the sellers do all the work for the most part and are beholding to the brokers who control the data base …. the seller wants to sell and the buyer wants to buy ….. the problem being the buyer is for the most part least inexperienced and the real estate industry has the backing of governments and banks driving sales ….. Buyer Beware! true since the early days of snake oil salesmen. Some things never change.

#28 Kitchener on 02.16.09 at 7:44 am

I have been looking at cottage country in Ontario with possibly buying in the year if we can find something at a very good price. I have requested addtional info from a lot of the RE agents advertising the properties and at first they seem very nice, but as soon as you request more info like assessment values, or question the price because of location of old windows, the tone of the emails change. I would also like to know of RE agents who are honest. Anyone?

#29 dodgedabullit in Alberta on 02.16.09 at 8:02 am

Greetings: I think your analogy would have had far more impact if you had used a story about “real estate in motion”. How many of the boomer generation have plunked down a good portion of their retirement assets to buy an RV, many of which, the price would be a good chunk of the cost of a house. The fields, storage lots, and driveways of Alberta are littered with these, most with very low milage and no buyers. Here is another bubble presently collasping, yet the dealerships have tons of these and the industry is still churning them out. I have to wonder what financial instutions are supporting these “sub-prime” bemoths. As spring approaches the industry floods the media with advertising for us to “hit the road”, you to can own one, easy financing etc. I did a 5 day circle drive around northern Alberta this past summer, I was stunned, but not surprised by the amound of Trailers, RV, Boats, 5th Wheelers sitting along the road sides with For Sale signs on them . Often yards had multiple units waiting for another “greater fool”. I dare say that in many cases payments were still being made on some of this product. I well remember a neighbor with a young family, who not only bought a new house, but also purchased a used motor home. Three years later, both were gone.

#30 ThumbsUp on 02.16.09 at 8:15 am

Government, Banks& RE industry are the (drug/porn) sellers – the iron triangle interest group.

With the brand name of ‘affordable home ownership’, government agency CMHC insures unconventional (including 0/40) mortgages;
Banks: mortgages insured by CMHC (an AAA rated firm) automatically carry a rate of AAA, there is essentially no risk to the bank (with the risk transferred to the us taxpayers through CMHC), which resulted lax lending standard and cheap mortgage money.

Consumers – misled by the invisible hand of the iron triange, ‘adviced’ by friends and family ‘house will go up, buy or you’ll be priced out forever’, bought more than needed (as Garth pointed out.)

Homeowners – Had a conversation with a friend the other day, he asked why still renting, I told him the price will come down, guess what he told me – don’t worry, Bernanke is throwing cash from his helicopter.

Since when did inflation become so desirable?

#31 lgre on 02.16.09 at 8:27 am

“Well, I think Garth has both attacked and defended realtors. He still recommends using one no matter what. (I agree. Just as you shouldn’t marry or divorce without a family lawyer you shouldn’t marry or divorce a house without a realtor.)”

this was intended as a joke..correct? since when is a realtor comparable to a lawyer as far as knowledge goes..lol..also, since when do realtors sell houses?? as far as I witnessed MLS and the house sells itself..not realtors.. I sold property on my own without effort and kept the commission in my pocket, keep your house up to date and someone will buy, it’s just that easy. If someone is selling in 2009 and their house looks like 1969, well then you may need all the help you can get.

#32 dodgedabullit in Alberta on 02.16.09 at 8:31 am

GreetingsL Just pulled this off the Anchorag Daily News:
http://www.adn.com/news/alaska/crime/story/691769.html

#33 tom on 02.16.09 at 8:40 am

Excellent article, I am very glad to come across and know that there are people that get it and understand the situation.
I see too many people now going around complaining and they really need to shut up because in the end, unless someone held a gun to your head and said buy this house, it is purely your fault.
They did not take the effort to consult with a financial planner in terms of affordability, they just bought because everyone else.
As i say, if we all started to jump off the bridge, they would too.

#34 TS on 02.16.09 at 8:45 am

CREA is now predicting an 8% decline in home prices across Canada in 2009…just 3 months ago they were saying 2%. If we do the math based on this trend the real number is likely 16%.

http://finance.sympatico.msn.ca/banking/mortgages/article.aspx?cp-documentid=17642858

#35 Stuff on 02.16.09 at 8:47 am

I asked this before. I may have missed any replies. Anyone know of any GOOD realtors in the Toronto Area? That actually want to work for their clients??

#36 TS on 02.16.09 at 8:48 am

There was an interesting article in the Saturday issue of the Toronto Star… the fastest growing real estate company in the area is one that sells your house for a FLAT FEE – not on a commission basis.

#37 Dave on 02.16.09 at 8:55 am

I had bought my first home when I was 25 (three years ago), I thought what a great investment. My agent seemed to think I had made a great deal and he didn’t flinch when I wanted to make an offer on a home right near the selling price on a home way over valued with a desperate seller. Looking back I could of gone ten grand cheaper and still got the house. My parents were pissed that I had made an offer that was sure to be accepted and my agent still continued to rave about what a great home I bought. There were numerous other issues about this agent but i won’t go into that.

So I settled into home ownership and realized what an expensive venture this had become going from living with my parents but my plan was to rent all rooms in the home as I was single and didn’t value my privacy to any great degree. So I lived with some random people for a few years and then sold the home.

Since selling I realized two things, 1) I don’t know how most people can handle all the expenses of owning a home, buy everything that they do and still have enough income at the end of the month. Unless of course you run a boarding house like me ;)

2) I didn’t feel I could trust my agent and I was soured on Re agents for a long time. Heres a tip, in selling a home, only hire agents who will take 1% commision, they are out there. After all they only put the home on MLS and put a lock box on your door knob.

I think I have learned an agent is sort of like a car salesmen. You don’t ask a car salesmen if he feels his cars are the best or is it a good time to buy a car. His answer will no doubt be an enthusiastic yes. The car salesman also has no attachment to the car, you and the car salemen are not some kind of team in setting you up with a new car. The car salesmen is only doing his job, so don’t expect a car salesmen to tell you its not a good time to buy a car, so why would you expect that from a Re Agent. So use your brain when buying/ selling a home, and use an agents advice sparingly.

BTW, I got married so my wife didn’t want a boarding house anymore, go figure….so we’re happily married and renting ;)

God bless.

#38 613 Happy where I am on 02.16.09 at 9:02 am

When I first commented on this blog, my message was simple… many people have too much house…

I am all for smaller, more cost-efficient houses that don’t cost an arm and a leg to heat, maintain and carry… those of you who are paying 50 or 60 percent of your income to live in a Mcmansion should get your head checked…

I have a small (less than 1200 sq.ft) townhouse in downtown Ottawa where I have lived for 20 years. It’s an older home built in the late 1800’s but has been renovated a number of times… My friends who are all downsizing from Mcmansions in Kanata and Orleans are insanely jealous of me…

Rarely are there for sale signs in my neighbourhood… I wonder what the Spring will bring… Even the big victorian houses sell within weeks.

The city center will probably not be as affected as suburban areas (condos are another matter !) but we will see…

As for real estate agents, they need to have a healthy housing market to get paid but I doubt many of them will be around after this year is out…

We are all to blame for the economic mess we are in… some more than others, but there is enough blame to spread around quite thickly…

#39 TS on 02.16.09 at 9:08 am

1 Bobby on 02.15.09 at 10:16 pm

Any financial advisor who sells mutual funds will be paid a ‘trailing fee’ by the mutual fund company irregardless of how the client compensates the advisor.

Advisors who charge fees are no better than those that don’t. Their motivation is no different – they are trying to make a living off your money – they’re simply charging you differently than others.

I’d like to know how many people reading Garth’s blog use financial advisors, and how many of those advisors told their clients to get out of the markets back in 2007. My guess is not many at all.

We have a very good advisor who I respect. He does not charge any fees, and buys funds for us with a “0” upfront load. In essence he lives off the trailing fees only and does very well with this approach.

Although good and knowledgeable, he did not see the turmoil facing the markets as being as serious as we did back in the summer of 2007. Like most advisors in the industry, he saw things in terms of previous cycles and experiences. This, of course, has proven to be folly.

My wife and I saw the storm clouds coming and insisted that our funds be moved into cash. The result was that we were able to conserve most of our RSP capital, while most folks we know are down 35% to 50% and they have had to push out their retirement plans by at least 5 years. Fortunately we are still on track…although I think a target 7% growth rate is probably unrealistic given the investment climate that we are likely facing over the next 3 to 5 years, so we may need to temper our expectations and extend our target retirement date.

At the end of the day each investor is responsible for what happens to their money. While it is prudent to consider the recommendations of a good financial advisor, this advice should never be blindly accepted without some serious thought and a thorough explanation of the rationale for the recommendation. If you’re not 100% comfortable with the advice…don’t do it.

Another good rule of thumb is if you do not fully understand the investment that is being proposed to you – you should NEVER buy it. A lack of understanding about any kind of investment is a good indication that the investment being proposed to you is too sophisticated for you – and therefore could be very dangerous.

One of my brothers-in-law made the mistake of going along with some investments proposed to him, even though he didn’t agree 100% because he thought the advisors ‘must know what they’re doing’. He’s down 30% since the fall and doesn’t even bother to open up his statements any more because they make him sick when he sees how much money he’s lost. Not a great position for a 64 year old to be in.

A lesson for us all to take to heart…

#40 Joren on 02.16.09 at 9:38 am

#36

I’m not sure if you read the same article I did, but the fastest growing Brokerage in Toronto charges its SALESPEOPLE a flat fee for each transaction.

Commission is still negotiable between the Salesperson and the seller, and I’ve never seen a flat-fee.

I know this because I used to work for said Brokerage.

#41 sd on 02.16.09 at 9:39 am

This sound like a great plan. Or is this what caused this ess. I forget anyway I still have good credit…….. http://edmonton.kijiji.ca/c-cars-vehicles-boats-Home-Equity-You-US-Real-Estate-Investor-W0QQAdIdZ107275253

#42 Joren on 02.16.09 at 9:48 am

Sorry #36, I found the article you were talking about and it’s different from the Company I thought you were referring to (which also had press on Saturday) The ‘fastest growing’ part threw me.

I’d never heard of the company in your article. Though reading it brings up an important point… you often see these ads touting ‘only 1% commission!!’. Remember that usually means you are still paying 3.5% as the 1% is only for the listing side – the selling side still gets paid somehow.

#43 Bill-Muskoka (NAM) on 02.16.09 at 9:58 am

Ah, what an exhausting weekend. We had the three grandkids (6, 3, and 2) up and they can output more energy than a CanDu reactor.

Nope, not one bit of concern about RE values or anything to do with them.

Now, I like Garth’s real and human tale of his own coming of age story about grabbing more power than one is capable of handling. Reminds me of my first bike ride, a Triumph 650 Bonneville. Oh yeah, there I was, first time rider with more horsepower under me than brains atop of me. It was a friend’s bike, and yes, I rode it well, but then I just had to crank open the throttle.

Well, as my fingers started peeling back off the grips all I could think of was ‘How do I hang onto this monster, yet shut the throttle down?’ For those who have ridden they know that as your hands go atop the grips, that as you move the throttle back the power increases. Hard to let off the throttle without letting go. Thankfully I thought to do a Rollback (long before WalMart started using the term), and neither the machine nor I sustained any damaged, other than my nerves.

Seems there is a lesson there. Simply, straight forward, and imminent?

Now, as to advice, here is an example of how much ill-informed hyperbole the MSM pumps into us on a daily basis.

Wal-Mart’s glow-in-the-dark mystery: Retail giant can’t account for 15,800 of its exit signs that contain a potentially dangerous radioactive gas

Forget the article because it was written by some desperate fear monger with little more than a high school level of scientific knowledge. Unfortunately, just like with Garth and some contributors, the commentors DO have the knowledge to dismiss the article as a pseudo attempt at FUD.

Have a nice day!

#44 Jake on 02.16.09 at 10:03 am

I do agree that realtors add a degree of convenience in the selling process, as well as a degree of healthy separation from the buyer. That being said, I have sold 3 homes myself over the years and have never had a bad experience. I guess pounding the 2X4 stake into the ground for the sign was a bit of a challenge, but my palms eventually recovered. The key for me was to have a great real estate lawyer who provided me with all of the materials I would need for the transactions. I also read up on selling online. My houses have always sold quickly, but here is the catch, I always take 4-5% off my asking price relative to comparibles. I really haven’t saved that much money going privately, but it has enabled me to set my homes up as the best deals and actually sell them. In today’s market, just moving your property is a big accomplishment.

ps. I have also purchased privately a couple of times. I have never had a problem. The RE industry will have to be completely overhauled or go the way of the dodo. Most of the agents I have met are also speculators, so they have just way too much resting on positive spin.

#45 dodgedabullit in Alberta on 02.16.09 at 10:06 am

Greetings: Here is another story, just to remind Canadians we are not alone, I have family there and have visited numerous times over the past 30 years. http://www.stuff.co.nz/4848474a13.html

#46 Jake on 02.16.09 at 10:09 am

I also wouldn’t be surprised if lawsuits arise in the future. Being a “professional” comes with professional accountability. Maybe they will have to buy malpractice insurance in the future like some other professionals.
Why is it that realtors so quickly refer to themselves as professionals? My lawyer friends call themselves lawyers. I will be a doctor soon and plan on calling myself one. My realtor buddy calls himself a young professional. Anyway, just a thought. BTW, he did his correspondence course in about 3 weeks…..professional indeed!

#47 Joren on 02.16.09 at 10:12 am

#36

Sorry, I just found the article you were referring to.
There was another that was referring to another Brokerage and the success they’ve had in the changing market.

#48 JET on 02.16.09 at 10:18 am

“In my area we recently changed the law which prohibited part time real estate practitioners, not something I was in favour of and I do believe it has led to further degradation of our profession.”

There seems to be some confusion about the above statement.

Is he or is he not in favour of part time? I read he is not in favour. They changed the law that prohibited it, which means now the law allows it, and he’s not in favour of allowing it.

In my opinion, someone who works part-time is no less professional than someone who works full-time. Both are bound by the same ethical and legal standards.

In fact, because the part-timer does not derive 100% of his income from the profession, I would expect him to be more objective than the full-timer who won’t eat if he doesn’t go along with the party lines.

#49 dd on 02.16.09 at 10:44 am

#1 Bobby

“Realtors are not the problem, they are just a byproduct of their profession.”

So should all sale people go on salary and no commissions?

#50 Sail1 on 02.16.09 at 10:46 am

#35 Stuff

What would your definition of work for you entail?

1. Are you willing to lower your asking price?
2. Are you willing to put money into renovations in order to sell?

If you are willing to do #1 in today’s climate you will sell, whether the agent works for 2 or 6%.

#51 Marie on 02.16.09 at 10:49 am

Garth wrote:
“Realtors, and their little friends in the media, may not be making things any better with exhortations to buy and their fabricated market facts, but it’s the covetous greed and vain social-climbing of consumers who threaten us still. ”

I had good experiences with realtors as buyer and seller. They proved themselves great ressources for referring contractors, home inspectors etc…They did a lot of leg work. I had more grievance with sellers who, anticipating real estate boom, overinflated the value of their properties instead of keeping in mind that if everybody was doing the same, the cost of home would become unafordable for young couples, even their own children. One case really stands up: we needed to expand our property to accomodate our growing flock of sheep. The neighbour wanted 10 times more per acres than the market price. We ended moving in a rural area where the real estate bug had not caught yet.

IMO, Halifax and along the coast up to Chester is really overpriced. Unless somebody has a really well-paid stable job lined up, moving to Halifax is not much better than Toronto or Victoria, IMO. The economy to support the kind of RE price asked is just the same than everywhere else. Talking yesterday to a friend in retail , business was really slowing down in NS. Government towns like Ottawa, Quebec might fair a bit better because no matter what, the politicians and their cohort will make sure they get paid.

#52 ralph on 02.16.09 at 11:00 am

The problem I see with the real estate business is that too often the broker pushes his sales staff to sell, sell, sell. Something like car sales. If your sales are down because you refuse to sell someone a lemon, you are going to get booted out the door.

These sales managers are always looking for star producers who can sell refrigerators to an Eskimo.

#53 Anon on 02.16.09 at 11:04 am

“Any financial advisor who sells mutual funds will be paid a ‘trailing fee’ by the mutual fund company irregardless of how the client compensates the advisor.”

This is false. I work for one of the big 5 banks, I am licensed to sell mutual funds and I am not paid a fee or commission. Our funds are also ‘no load’ which means there is no fee to buy or sell. In my experience most people have no idea what they are doing and buy/sell on a whim. They have no clue and their returns show it.

Real estate in Vancouver is a disaster. Many people have huge TDS/GDS ratios, massive amortizations, and are very extended.

People in my generation are wrecked. We can make 50-60k which is a very good income and still have no chance at buying without massive amortizations and TDS/GDS. This has an impact on Canadian society. I personally will never have children or settle down as I have no base and have no interest in ending up like my clients.

I think it’s sad that we can’t trust anyone anymore. Everyday there is a new financial scandal, a new unresearched real estate puff story, a new political lie. It’s a sad situation and it does not instill any confidence.

#54 Bailing in B.C. on 02.16.09 at 11:10 am

For those who do not hold much trust in realtors but see that listing on the MLS is a desirable, there are limited service realtors. I myself have never found the realtors in my area to be particularly insightful. I go to alot of open houses, and frequently I will bring up listings and price changes that the realtors do not know about. Our market is very small and easy to keep up to date with. I would put more credance in my own judgement as far as listing prices.

So if you feel confident in your knowledge of your local RE market you could try something like myrealty.ca. myrealty charges 0.5% if and when your house sells. They provide signs, forms and advice on the sales contract but most importantly they put your listing on the MLS. Of course local realtors will blacklist you unless you pay an additional commission. My advise would be to take the normal commision, say 20k, and instead of the listing agent getting about half and the selling agent getting about half, list with a limited service company and pay a 20k commission to the selling agent. Any realtor can list your property but a realtor with a real live buyer is worth their weight in gold. With so many hungry realtors around double the commission is going to make your house the first stop with every realtor in town. Of course all the realtors will hate you (except for the one that sells your property). I would avoid listing with a low cost realtor just to save commission (even if it’s to pass the savings on to buyers). In a market like this your property needs all the exposure it can get. Most buyers are with realtors (they have no choice unless they want to limit their search to FSBOs). All it takes to miss a sale is for realtors to roll their eyes and say “foundation” or “mold” or “grow-op” or what ever and your property will sit forever.

If you don’t feel confident to pick a listing price, list with a regular realtor. The wrong listing price can be the kiss of death.

#55 Just a Girl on 02.16.09 at 11:11 am

I noticed the Edmonton Real Estate Board has removed all their archives of prior year sales history. Right now you can only access 2008. Does anyone have a source where I can look back on 2006 and 2005 prices? (me thinks this is why the archives have been removed!)

#56 Bailing in B.C. on 02.16.09 at 11:48 am

Just as a follow up I have purchased and sold once with a realtor and purchased twice and sold once For Sale by Owner. I have also attempted to sell once FSBO and failed. I have attempted to buy once with realtor and failed. I find that the realtors complicate things. I talk to my realtor, she talks to the other realtor, the other realtor talks to their client, their client gives them a response, their realtor talks to my realtor, my realtor talks to me, and thus we go back and forth. Somewhere along the lines the message gets distorted and people end up thinking that the other party is satan incarnate, bent on destroying their fiances and eating their children. Most of the paper work a realtor does seems to be to cover their own arse. Which of course they need because of the number of transactions they do. Eventually one or more of them will go side ways and they need to protect themselves, but it’s an added step that you don’t need FSBO.

As a side note, all this talk of dishonest realtors -people get what they want. Realtors are paid by sellers and sellers aren’t paying realtors to be honest. How many people on this board would list with a realtor who was brutally honest? We don’t want them to outright lie maybe but errors of ommission are fine. If you were selling your house and had a potential buyer on the verge of signing standing in your living room and they asked you if you though now was a good time to buy or whether prices would go down, how many of you would honestly launch into your REAL opinion? Dollars to donuts most people would be blah blahing about price drops, low rates, new highways and Olympics or whatever they could come up with. Their not lying. No one has a crystal ball. Prices COULD go up, the Olympics MAY save us, Elvis MAYBE alive and well. Whose to say? Just get the paper signed!

#57 Paul Martin Jr. - LIES on 02.16.09 at 11:52 am

Excuses like realtors can’t tell the market is crashing, are BAAAAd. Are we kindergarden?
Realtors SHOULD tell the truth, ALWAYS.
They should have built cash reserves for rainy days and when it rains, do not lie to customers that is sunny!
They know is a commission-based work, and bad years will alternate good years. Are we 4-years olds?

#58 JN on 02.16.09 at 11:56 am

We are talking about two things here.

1. Some Realtors want to be absolved from guilt. Maybe they didn’t know. Maybe they did. Fine. That’s the guilt part of the equation. We forgive some of you… as you seem sincere.

2. Their actions (whether malicious or not) played a HUGE part in causing the problems we have in housing today. It doesn’t matter if they knew or not.

So, I guess they just have to live with the fact that every house they sold in 2006, 2007 and 2008 is going to cause major problems for the people that they were trying to help. That’s the cold, hard facts.

#59 kitchener1 on 02.16.09 at 12:19 pm

#36 TS
There was a company years ago in the GTA that would list your home on MLS for a flat fee of approx $1000, you would be responsible for all showings and legal paperwork etc…

I don;t recall the name but they were sued by MLS and the realtors assoication so they had to stop listing homes. That would be a great service if it was still available.

As for realtors, my experience with them has been negative. Funny thing is that from reading this blog and various newspaper,magazine articles it seems that most common advice given by realtors is that sellers list their home below market value in the hopes of a quick sale.
Not sure if the realturds realize this but every low sale in a neighbourhood sets a floor for comparabiles in the area, thus driving the market price down, once this is repeated over and over again, maket prices drop very quickly.

#60 kitchener1 on 02.16.09 at 12:34 pm

#28 Kitchener
regarding cottage properties. I too am looking for a recreational property. Just wait it out and a good deal will come along, there is very little movement in that market. Pay what you want, if that means putting in an offer of 40% less then asking then so be it.
Its hard to get a market value for cottages as there are so many variables. The assessment value from MPAC for a cottage is worthless, all it takes is one big monster cottage to be built in a area to skew all the other “shacks”
Realtors in cottage country also have a vested interest in maintaining high prices, its a micro market and no realtor wants to be known as the one who sold the cottage down the street for 40% less then asking. One low sale for them can impact others hiring them in that local market, thats why I beleive that they are not as open to low offers.

#61 KJ on 02.16.09 at 12:39 pm

Anyone know an intelligent and honest real estate agent in Kelowna? The last ones we were working with kept insisting that since Kelowna was a “destination” the prices would not decrease but increase. We asked to look at homes in the $375K range and they took us to homes in the $425K plus range. Better hurry up and buy they said last summer and fall, its not going to get any less , people are buying up these deals quickly. One of them even phoned me to gloat over the fact that a home we had looked at which we said wasn’t suitable for our needs (too small) entered a bidding war and sold for the asking price???? Our previous real estate agent in the late 1990 ‘s helped us get a deal at only $30,000 under asking price. Who was the buyer? Well, it was another real estate agent. We were assured that prices would only continue to worsen at the time. That same house that we bought for $182K and sold for $160K. In retrospect we should have held on, an honest RE agent would have told us this was not the time to sell. Sometimes I really believe that they only want their commission, and operate with no integrity, but their own bottom line. I repeat does anyone know an honest intelligent RE agent in Kelowna? Garth, how do you find a good honest real estate agent, whose bottom line is not just their bank account ?

#62 Irene A Gates on 02.16.09 at 12:40 pm

My boyfriend and I fixed up and flipped three houses back in the seventies — we even took the real estate course (6 weeks full-time) so we would know what we were doing. Back then the rule was: in any RE transaction both RE agents are working for the seller, because it’s the seller who’s going to be paying them. As a buyer, you can’t expect to get good advice from “your” agent unless you’ve managed to find a gem who values your long-term business relationship over the commission he stands to make on your next purchase. Is this still the case?

#63 KJ on 02.16.09 at 12:42 pm

Re Previous post #40 I meant to say that the house we bought at $182K sold for $162K and is now worth over $500K. Yeah I think the price did not decline so much hey?

#64 pbrasseur on 02.16.09 at 1:12 pm

It is pointless to blame realtors.

The blame should go to one place only: easy credit made available by the nanny state and its central banks.

He who profits most from the crime is the likely criminal.

Thing is, the nanny state is addicted to consumerism just as badly as consumers themselves. He needs the growth brought by consumerism to sustains itself, mostly true since it can no longer rely on always more numerous new generations to bailout and finance previous ones. After all he is the instigator (via its central banks) of easy credit and of multiple policies promoting property for all, including those without money…

Obvious consequence it is not just consumerism that is in peril here, it’s the nanny state himself.

No wonder why governments are throwing money around like it was no object!

Better hope nanny will not bring us all down with her.

There is only one way to prevent that: take care of yourself and accept that government won’t always be there for everything. That’s the best you can hope for, the alternative is decaying services ans social unrest.

#65 Dave on 02.16.09 at 1:22 pm

Hey Garth: Can we get contact info for the good realtors? I would love to know the name of an honest, intelligent realtor in T.O.
——————————————————

I have an honest realtor. She’s telling clients to be careful now is not the time to buy. If you’re looking for the price of your home to increase its not going to happen anytime soon etc.

Thats exactly what everyone wants/needs- someone who is looking after their client. I firmly believe that people will remember this type of realtor in the future, the one who was honest in the worst of times!!

#66 Dave on 02.16.09 at 1:32 pm

I asked this before. I may have missed any replies. Anyone know of any GOOD realtors in the Toronto Area? That actually want to work for their clients??

—————————————

I mentioned I do. She’ll just be totally upfront in telling you now is not the time to purchase but will hope you consider her when there is stability…far down the road. If you do wish to purchase soon, she’ll obviously help you too

#67 Calgary37 on 02.16.09 at 1:35 pm

UPDATE

Re: Jim Sinclair and his warning message from the previous thread “Risk”

I was sorting through a bunch of old printouts and I came across a similar warning that Jim gave on October 7, 2008.

In that post, he listed a number of items that were causing him concern. In his recent post, the only item he mentioned was the Lehman Bros. collapse.

In October, a number of people were expecting something to happen including George Ure. Whatever was going to happen in October got pushed back to the summer of 2009.

While some people, including Gerald Celente are looking for something to begin happening in March, I would only treat Sinclair’s recent warning as a normal general warning to keep your wits about you.

Rest easy, no new reason for losing sleep over.

Stay Prepared.

#68 Keith in Calgary on 02.16.09 at 1:36 pm

Actually Garth the Harley salesman must share the majority percentage of the blame……..

He did not properly qualify your ability as a rider, and sold you a product which you were not able to safely operate.

There have been numerous lawsuits of this nature that have occured over the last 3 decades, with victory going to the claimant…..and had you lived in the US and/or were of a litigous nature, there would have been one more added to the pile.

One of the most famous occurred when a doctor piled his 1970’s vintage Porsche 911 Turbo into an abutment in Texas at 100 mph and killed himself. Porsche lost that case and as a result, the Porsche driving School came about.

Last year they also paid $360K to the estate of an aquaintance of mine (to settle a $4.5MM award) who was killed in the Carrera GT he was driving. He lost control after an accident avoidance manouver and was unfortunately unskilled enough with this extreme high performance vehicle, and the end result was his demise at California International Raceway. This is also why the new Porsche GT2 has mandatory traction control…..where as the CGT did not.

Realtors who have lied, misrepresented, omitted, or otherwise did not directly act in their client’s interests are, and can be, held to the same standard as automobile manufacturer’s and their representatives. Problem is, most of them are broke, or have no qualms about going BK, so you’d have to sue them, their brokerages, and their national franchise companies, as well as the media in your area who pumped up the market.

If I was a lawyer, and I am not, but I did stay at a Holiday Inn Express last night, I could probably make a nice practice out of suing the RE industry over the course of the next decade.

#69 Jim Tuba on 02.16.09 at 1:59 pm

Even More Debt for Canadian homeowner
http://ca.finance.yahoo.com/taxes/article/cpmoney/more-canadians-refinancing-mortgages-pay-off-other-debts-20090128

#70 Simon in TO on 02.16.09 at 2:33 pm

35 Stuff on 02.16.09 at 8:47 am I asked this before. I may have missed any replies. Anyone know of any GOOD realtors in the Toronto Area? That actually want to work for their clients??

******

#35, I have an agent, and I think he’s great. He’s totally honest, no BS, and he understands that he has to do hard work to keep clients and close deals. He is focused only on income properties, however, so if that’s not what you’re looking for, he probably can’t help you. However, if you are looking for a duplex or a triplex, he’s your guy. His name is Paul Anand.

#71 David Bakody on 02.16.09 at 2:41 pm

Say this isn’t so….. America’s National Debt is costing almost $6 Million a minute and that does not include the deficit and under the table funding for the war projected at 2 Trillion in long term health care and equipment replacements for two Wars. And there is yet to be a bottom to the housing crisis!

http://zfacts.com/p/461.html

#72 YES! It is your fault on 02.16.09 at 3:33 pm

[…] may want to subscribe to my RSS feed. Thanks for visiting!I was reading an interesting article by Garth Turner about real estate, current economy and […]

#73 TomOfMilton on 02.16.09 at 3:33 pm

A bit of funny for the current times. Sorry I don’t know the author as it was sent to me in email by my brother in law:

“Due to recent budget cuts and the cost of electricity, gas and oil, as well as current market conditions and the continued decline of the North American economy, please note:

The Light at the End of the Tunnel has been turned off.

We apologize for the inconvenience. ”

*snicker*

#74 Opportunity on 02.16.09 at 3:44 pm

Realtors are just sales people who make a living selling property. Like the guy who goes to the office in the morning they have a job to do. Since over 90% of the realtors don’t last more than a couple years, the real estate brokers need to get the bodies out there to stay in business and it is a dod eat dog world. Blame the brokers, they are the ones pushing the BS.

By the way, it is starting to look like a good time to consider buying some property, if you have the bucks. Take 30% off the asking price and start there.

#75 Darryl on 02.16.09 at 4:32 pm

Tom of Milton

“The Light at the End of the Tunnel has been turned off.”

Grandma? is that you grandma? hey ………Where did you go??

Sorry, heaven’s been forclosed on.

#76 BOB on 02.16.09 at 4:50 pm

More bad news.

http://business.theglobeandmail.com/servlet/story/RTGAM.20090216.wmanufacture0216/BNStory/Business/home

#77 Glenn on 02.16.09 at 5:21 pm

Never, ever be afraid to lay blame where it belongs. Case in point, the Iceland issue. The whole thing comes crashing down but do ANY of the politicians step up and admit they made a mistake? Hell no, they just step down!

Or corrupt “peace officers”. Is there any way in a million years that there could be these huge mountains of drugs on our streets unless the police were not intimately involved in the distribution? Of course not, the cops are making money hand over fist with “Asset Forfeiture” laws that are a direct result of the “war on drugs”.

Or lastly, the flag-waving feminist man-haters that have torn Western society to shreds. Now that their biological clocks are thundering the 2 minute warning, they all wonder where the good men are? Hint: They married foreign girls! The young “ladies” my wife works with (tattoos, out of wedlock births, inability to cook or clean, 25 pounds overweight, etc) openly complain “Why cant all men be like your husband?!”. She just smiles and nods, then we both jokingly ask later “Why cant they be more like my wife?”.

Dont let these realtors slip out under the cloak of ambiguity, they should get all they got coming and then some. Garth, start selling tar and feathers on xurbia!

#78 North Vancouver Citizen Jr. on 02.16.09 at 5:36 pm

1/

“”Canadian Auto Workers president Ken Lewenza said the union’s trade-deficit report “confirms that Canada’s unbalanced trade with Asia and Europe is a major cause of the industrial carnage we see around us today.”

However, the data also showed that for the first time Canada is running an auto-industry trade deficit within the North American Free Trade Agreement area.

The country’s traditional auto trade surplus with the U.S. plunged to $4 billion, barely one-fifth the level of three years ago, and this failed to offset the long-standing auto trade deficit with Mexico, which amounted to $4.5 billion.

Meanwhile, despite flagging overall auto sales in Canada, imports from outside NAFTA kept growing to a record $15 billion, while Canadian auto-sector exports to Asia and Europe fell 30 per cent to $1 billion.””

http://www.google.com/hostednews/canadianpress/article/ALeqM5iCd0Zvcd14gAIgaVWdIirsaBXV6Q

2/

US, UK, Eurozone, Russian Banks Face Meltdown

Failure to save East Europe will lead to worldwide meltdown.

http://globaleconomicanalysis.blogspot.com/2009/02/us-uk-eurozone-banks-face-meltdown.html

#79 Shifty on 02.16.09 at 6:08 pm

the government warned British Columbians for the first time to prepare for recession.

http://www.timescolonist.com/news/Most+ministries+face+major+budget+cuts+this+year+Throne+Speech/1295575/story.html

#80 average guy on 02.16.09 at 6:39 pm

#61 KJ says in the late 90’s we sold a house for $160,000 that we paid $182,000 for… in retrospect we should have held on, an honest agent would have told us now was not the time to sell…. well, sorry for your stupidity but were you sleepwalking when you signed the listing to sell your house? You contacted an agent because you wanted to sell… temporary insanity? You hired an agent to sell your house and the agent did just that… you had to agree to the final selling price, didn’t you? Don’t try to blame someone else for your own foolishness. And now the house is worth $500,000?… looks good on you

#81 squidly77 on 02.16.09 at 6:56 pm

#55 Just a Girl
realtors like to keep information about past sales activity and prices away from the public

here are the edmonton housing stats going back to 1991
http://web.archive.org/web/20050305192027/www.ereb.com/z_stats/Quarter+Stats.pdf

they are easy to find if you know where to look..

#82 squidly77 on 02.16.09 at 6:57 pm

those edm stats actually go back to 1961

#83 Gord In Vancouver on 02.16.09 at 7:27 pm

Another day, another BCREA pump job…..

http://www.vancouversun.com/business/real-estate/Sales+volume+homes+plunges+cent+good+time/1295717/story.html

#84 Learn it or forever be a slave on 02.16.09 at 7:37 pm

Money as debt

http://video.google.com/videoplay?docid=-9050474362583451279

#85 Da HK Kid on 02.16.09 at 7:54 pm

Hello Everyone, you dont need an RE agent if you have a strong RE lawyer who in fact has the same agreement the RE boards use anyway as its boilerplate.

This lawyer also has to do all the nitty gritty searches anyhow. If the home is older then it’s simply more important to have a good building inspector (who btw works for you along with your lawyer) to give you the skinny.

RE agents are just as a poster said above only working for the seller. They must at some point create good news for the buyer to commit.

Like said, I have not used an agent for years. If the seller wants to use an agent you represent yourself and the other RE agent gets half the commission.

When and if the property market provides another good time to buy look at putting this into practice along with negotiating the other RE agent fees near ZERO or something fair where the amount of time their agent spent x $20/hr.

I’m sorry but I can drive around access properties the same way. I dont need someone cutting in when I’m dancing fairly.

#86 CalgaryRocks on 02.16.09 at 8:16 pm

That same house that we bought for $182K and sold for $160K. In retrospect we should have held on, an honest RE agent would have told us this was not the time to sell

The assumption is that RE agents know what house values will be in the future. Let me tell you something. If there is one person out there that knows that for a fact, that person is not your RE agent because that person is too busy becoming the richest person on planet earth with their knowledge of the future.

Give me even as little as a 5 second advance knowledge of the future and I would be a multi-millionaire by Friday. (Ok, maybe I would pace myself, no need to get the SEC involved, but still, you get the point.)

#87 David on 02.16.09 at 8:31 pm

There are plenty of culpable parties with respect to the housing bubble. Realtors were fairly far down the food chain in the feeding frenzy that took place. In any given community there are usually far more licensed real estate agents than there are sales in a given month, so some of them are less than success stories and the barriers to entry into the profession are minimal. I am not sure what the standard definition of real estate expertise is or who qualifies as a real estate expert. If one defines a qualified sales professional as one who sells the right product at the right value to the right person, then many of the bubble era agents fell down on the job.
The 6% rule probably made a bit of sense back in the days when homes traded at $20K, but in an era of flipping $600K McMansions by people with no down payment and 40 year debt anchor around their ankles, the reward system helped define the industry behavior.
There was more greed than fear during the housing bubble and there were lots of fast bucks to be made by home sellers, realtors, brokers and banks. Sadly our economy is now in ruins because of unrestrained greed undeterred by healthy fear.

#88 David Bakody on 02.16.09 at 8:38 pm

Just returned from Garth’s Halifax Waterfront Show ….. first class performance in a very professional setting to a full house. As there was some sweet treats after I did stay and chat with a couple of people, both stated they enjoyed the presentation and now have a better understanding of the issues. And that is what this mess is all about ….. understanding the issues …. then making sound thoughtful professional decisions.

#89 Future Expatriate on 02.16.09 at 10:14 pm

LOL… my realtor IS a great guy… AND he rides!

#90 TomOfMilton on 02.16.09 at 10:37 pm

#68 “If I was a lawyer, and I am not, but I did stay at a Holiday Inn Express last night, I could probably make a nice practice out of suing the RE industry over the course of the next decade.”

Folks, I’m not in favor of using litigation to hedge the bets of idiocy. Do you not already find enough crazy rules governing your every move or purchase decision? I certainly don’t want some foolish rulemaker deciding that I need to “take a course on buying a house” because I’m lumped in with a collection of people whom couldn’t do the math or control their need to have fancier. Leave the law suits for helping genuine victims of malice. If litigation is at all successful in saving stupidity…well then it would pay to be stupid. I don’t like a world where that is so. You won’t like a world where that is so.
Suddenly it will be “No more insurance for motorcycles because mentally deficient little Johnny wrapped himself around a tree while driving like a freak…and should be compensated for it”.
Or you can no longer buy a house or sell one on your own because it is for your own protection and the protection of everyone that you pay a fee to an “expert” to do it.

First they scare people with the law suits…then pretty soon we are afraid to do anything for ourselves…because we might be sued. And GUESS whom those fees for buying and selling a house will go to then!?

No thanks to the suggestion of suing to clean up the mess.

#91 nonplused on 02.17.09 at 12:03 am

#31 lgre

No joke. Realtors may not have the fancy degree, but like lawyers, engineers, and doctors, they do most of their learning on the job. Maybe you have the time and talent to acquire their skill set on your own for a one off use but I don’t. Far to busy right now skiing and seeing if solar power is all it’s cracked up to be (seems problematic, but getting there).

I used to fix my own car, back when I could figure out where all the wires and hoses went and didn’t have much money. Now I only fix some problems, the ones I understand and don’t make me too dirty. Same with real estate. But I don’t use any agent. Recommendations matter.

Some lawyers aren’t very good at what the do too. But some are worth the $375 an hour. It all depends.

When I got married the first time, I used a priest, and my own self confidence, and ended up broke with a divorce settlement that said I had joint custody but ended up meaning that I couldn’t see my kids because my X moved to a different city. I had to wait for her own personal proclivity to bankrupt her so she had to move back before I could re-establish normal relations with my kids, a process that took 4 years! Where was my priest? How come he didn’t have a better understanding of this going in and prepare me for it? He was a scam artist, I later learned. Realtors are to be commended for their honesty as compared to the clergy. The clergy wants only tithes, their version of commissions, and will happily annul an obviously consummated marriage should that indicate more marriage fees and good tithes from the plaintiff down the road. Stop bashing realtors! They are far more holy than your pastor or priest.

When I got married time number 2, well, I think I made a better choice for a wife, but this time I consulted my lawyer. If things go sour again (which I doubt, partly she’s got more realistic expectations and partly she had to forgo the usual “divorce bonus” paid to the lower income spouse), she walks with what she brought to the marriage before and during and nothing more from me than the child support clearly laid out by the government. It’s all very crafty. Because my lawyer put all my assets in trust, for both women’s children equally, the “spousal” thing looses power. The courts are all about “the children first” and only kill the man because they think by giving the money to the woman somehow the money ends up nearer the children. (Or the reverse in a very few cases). But if you set it all up in benefit of the kids from the get go, then it all makes more sense. No money from me if you dump me, but the trustee will take care of your kids.

So yes you can do the real estate thing yourself if you want. I just don’t have that kind of time. And I think these folks have some useful insight, if you find someone who’s been around and knows what he/she is doing, and is looking not to this commission, but your next one (wants repeat business or referrals.)

#92 Mike (authentic) on 02.17.09 at 5:45 am

Selling your house on our own is easier than you think! Heck if you want even easier, use WeList or ComFree.

We sold our house (March 08) and saved $37,000.00 in commission! To me, that was well worth the few days in negotiation, walking to the lawyer to do the paperwork and hand over the keys. I even worked 2 offers myself.

Easy peasy, lemon squeezy.

Point is, you can do it, it’s about 8 hours of real work, but I saved $4625 an hour over using a Realtor.

About FLAT FEE Realtors. Here is one we looked into ourselves: http://www.flatfee495.com/ Will sell your home for $495! On the mls, no frills, but would save the average seller $15,000.00

Mike

#93 Just a Girl on 02.17.09 at 10:03 am

#81/82 squidly77 – thank you!!

BTW, I have an honest, hard-working agent in Edm. When I asked her this week, should I look at buying a condo? (ie. put my rent into principal pmts, with such low interest) She told me without hesitation, NO NO NO, too much downside risk. She’s right of course. I must’ve had a fever.

#94 Soylent Green is People on 02.17.09 at 1:46 pm

#35 Stuff on 02.16.09 at 8:47 am I asked this before. I may have missed any replies. Anyone know of any GOOD realtors in the Toronto Area? That actually want to work for their clients??


Ed Murphy, Sutton near High Park, he’s good for buying you a house, amazing negotiator

#95 Glenn on 02.17.09 at 2:11 pm

That flat fee realtor service sounds like a winner. The MLS is a good system, and widely known, the only catch is the realtors commission.

Remove that little hurdle, and your in the right ballpark.

#96 Shawn on 02.17.09 at 3:17 pm

The quoted Realtor said in his letter to Garth:

“In my area we recently changed the law which prohibited part time real estate practitioners”

I posted on this Site a while back that I thought part-time real estate agent was not allowed at least in parts of Canada.

Hard to find info on this but the real estate agent confirmed it.

This country is over-regulated and there are thousands of communist-like laws like this. The econmy is shackled by such restrictions on freedom. You can be a part-time surgeon but in some provinces not a part-time real estate agent! This is pure protectionism. Then there is the near monopoly of the MLS system…

If the MLS ever sells shares on the market, I will buy.

The free market system is under attack, but it never existed in the first place.

#97 Gary T - Kelowna on 02.17.09 at 4:06 pm

Garth,
Apparently some of the people of Vancouver did not get your message. Last night on BCTV they had a female mortgage broker on the 5 PM news announcing that now is the time to buy due to low interest rates and prices being down.
On the 5 PM news – no less. The news headline was that real estate prices Vancouver could be ready to turn the corner back up!
Wow.
Gary T. Kelowna

Was that on GFTV – Greater Fool Television? — Garth

#98 Thankful in Victoria on 02.18.09 at 12:57 pm

Garth,
Just a quick note about the photo at the top of this update……

If the rider had been on a sport bike he wouldn’t be in this situation now would he. Hopefully George has forgiven you and we will see you on his fine program again for much longer than your previous spot. Also wondering why such a forward thinking gentleman as yourself wouldn’t own a fully kitted out KLR complete with rifle rack. Your cruiser will be lonely in the garage if you are out squirrel hunting in your Jeep.

#99 Thankful in Victoria on 02.18.09 at 1:39 pm

I should have added to my previous post something related to the subject matter. I had 2 Realtors in Victoria in 2006 tell me they wouldn’t sell a house to a friend at that time. I didn’t know either of them but as they were picking up a rental car at my office I asked them what they would recommend to a young couple currently renting but thinking of buying in Victoria. I had been following the troubles in the U.S. since 2005 but they were unaware of this fact.
I will use one of these Realtors when I do buy at a great price when this mess shows real signs of approaching a bottom and I will let them know exactly why they have been chosen and the positive effect it had on my life.

#100 Peter - Calgary on 02.25.09 at 1:53 pm

R.E. to #92
Our experience using Flat Fee Realtor in Calgary was great. Found his site thru Google, http://www.FlatFee495.com under discount real estate, and he saved us over $10000 in commission. Great advice, and great approach.

Peter