The trouble with BRAs

Jennifer and her contractor husband sold a house in Oakville for big bucks a year ago. They rented, and are now smitten by a heritage property listed for half the price down the QEW. Here’s the question: “I actually posted a few nights ago about the unique property that we are interested in and whether I should get independent (i.e.: buyer) representation for an offer.  There were no comments but it was at the end of that blog entry’s comments so I think it just died,” she says. “Anyway, my husband and I really need some advice and soon.  I have definitely concluded that we need an agent of our own – and a really good one that will thoroughly look into the situation and be solely on our side.  What do we do?”

Good point. Let’s talk about some of the things realtors would rather you not know.

First, you should always have your own agent when buying. Always. No exceptions. Some people think if they just deal with the seller’s (listing) agent they’ll somehow get a better deal since he’s getting all the commission, and will be mellow as a result. This is crap. You’re going into battle naked.

Remember the listing agent is getting paid by the guy selling the house, so guess where his loyalties lie? Even when a ‘dual agency agreement’ is signed and the dude is morally and ethically bound to be fair to both parties, you still need morals and ethics. Money has a way of erasing both.

No, you need an agent to mouse around and advise you on recent comparables in the hood, how many days this listing’s been on the market, its past sales history and any other information he can uncover. Then you want a champion fighting for your position when the offer is presented, to negotiate and bargain, without being (like you) horny and distracted. Even before that, your agent will help you draft the offer, ensure the strategy is right, and include conditions to protect you, like asking for a survey. There’s no guarantee the listing agent will successfully do any of that.

OK, so you need one. What’s it gonna cost you?

Nothing. Unless you sign the wrong paper. The seller pays the freight, at least until recently. With a traditional MLS listing the vendor agrees to peel off 5% or so of the sale price and give it to the agent. If there are two agents involved, they split it (and split it again with their brokers). But since the MLS system has been opened up to discount marketing companies, there are now cut-rate commissions, flat deals and FSBO (pronounced ‘fizzbow’) variations.

Partly to cope with that, and partly because greed is good, the real estate industry has come up with one of the worst ideas since Justin Bieber, the BRA.

It’s called the Buyer Representation Agreement. Do not sign it, unless you have too much money and enjoy supporting realtors. And please try to ignore the ongoing efforts of real estate boards to ensnare you, with come-ons like this:

Why Should I Sign a Buyer Representation Agreement?

  • Reassurance of the duties the brokerage owes to the buyer.
  • Included in those duties is full disclosure of all property information known to the brokerage.
  • Peace of mind that your best interests will be protected.

If you’ve failed to throw up yet, watch this:

.

Well, if all agents were ethical folks, professionally adhering to their code of conduct, then why would a BRA be necessary? They have a fiduciary responsibility, after all, to disclose all relevant information to their clients, to fulfill their duties as required by regulators and to live up to the standards demanded by their sponsoring companies and brokerages. Why should you, as a potential buyer, sign some document so your agent will do what he’s supposed to?

Because it’s not about trust. Or service. Even duty. It’s about money.

There are three ways a BRA can bite you in the ass. They all have to do with commission.

First, you (the buyer) could be liable for the entire commission on the purchase of a home if the vendor decides not to pay, if there is a dispute over the amount, or full payment is not made at the time of closing for whatever reason.

Here’s what the BRA says: “The buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller. The buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller, the Buyer will pay the Brokerage the full amount of commission indicated.”

Second, you (the buyer) could be nailed for commission if you end up buying (or even renting) any property whatsoever if you don’t do it through the guy who made you sign the BRA. Even if you do it months after the agreement expires. Even if another agent shows you that property.

Here’s what the BRA says: “The buyer agrees to pay the Brokerage such commission if the buyer enters into an agreement within 90 days after the expiration of this agreement (Holdover Period) to purchase or lease any property shown or introduced to the Buyer from any source whatsoever during the term of this Agreement, provided, however, that if the Buyer enters into a new buyer representation agreement with another registered real estate brokerage after the expiration of this Agreement, the Buyer’s liability to pay commission to the Brokerage shall be reduced by the amount paid to the other brokerage under the new agreement.”

Third, if you (the buyer) enter into an agreement to buy a house, then get cold feet and back out, or decide you can’t actually afford it, or face death from your wife if you complete the deal, you’re screwed. Now your agent can sue you (along with the seller) since the agreement makes you liable to pay the commission as if the closing had taken place.

Here’s what the BRA says: “The Buyer agrees to pay such commission as described above even if a transaction contemplated by an agreement to purchase or lease agreed to or accepted by the Buyer or anyone on the Buyer’s behalf is not completed, if such non-completion is owing or attributable to the Buyers default or neglect.”

See what I mean? This agreement is toxic.

So, find an agent experienced in the hood, Jen. But if he whips out a BRA, walk.

187 comments ↓

#1 dylan on 11.13.11 at 7:30 pm

Super post tonight

#2 nsqt on 11.13.11 at 7:33 pm

Why am I not surprised that real estate agents have stooped to a new low………..anything to get all all mighty commission……

#3 MarcFromOttawa on 11.13.11 at 7:43 pm

1st

#4 45north on 11.13.11 at 7:47 pm

B.R.A. very solid post Garth!

Somehow I got distracted by the bouncy video.

What are those pipes in the background? They look like drain pipes but they’re not what I expect.

#5 gladiator on 11.13.11 at 7:48 pm

I’m sorry, Garth… Do you mean that there are people who would sign such a document without even reading it and understanding what they are doing – all this while making one of the biggest purchases in their lives?
Second, TREB must be put to the wall and stoned for encouraging buyers to walk into this trap…
Property virgins dealing with RE industry are like monkeys playing with hand grenades – I have no better analogy for what I’ve just read and seen… OMG!

#6 DirkTheDaring on 11.13.11 at 7:49 pm

First.

#7 Devil's Advocate on 11.13.11 at 7:52 pm

Garth:

RE: Advice against Exclusive Buyer Agency

Good luck getting an agent to show you a FSBO or “mere posting” that might otherwise be the perfect property for you.

Fact is the ONLY way “mere postings” will work is through Exclusive Buyer Agency. And you want that contract for why else would an agent put themselves on the line with no assurance of compensation?

Your advice will be hugely welcomed by the real estate community Garth for if it was adopted widespread it would spell the instant death of the “mere posting” discount brokerage business model as agents will refuse to work with those buyers who refuse to sign a BRA and that would include those very discount brokerages who’s listings buyers might want to buy.

Nobody is going to work for free.

#8 Dad on 11.13.11 at 7:52 pm

Son, aren’t you glad your uncle is a lawyer?

#9 Devil's Advocate on 11.13.11 at 7:58 pm

You can not force an agent to work for free. Ultimately none will. And without incentive there is not motivation.

I ask your readers; “How many of you would go to work for an employer who says “maybe I will pay you, maybe I won’t”?” And if you considered it don’t you think you might want an assurance of payment in writing?

And you are also confused it is not the Seller who pays the Buyers Agent remuneration. It is the buyer who pays although that Buyers Agents remuneration comes from the proceeds of the sale to simplify the transaction through the conveyancing process. But make no mistake the Seller has inflated the price to reflect that Buyers Agents remuneration that comes from the sale.

#10 Hoof - Hearted on 11.13.11 at 7:59 pm

1111sssssssrrrrzzzttttt

#11 meslippery on 11.13.11 at 8:01 pm

That should be front page news in all the papers.
Wow.

Thanks Grath

#12 Devil's Advocate on 11.13.11 at 8:11 pm

This is one can of worms I don’t have time for. I look forward to reading the comments though with a good stiff wisky close at hand.

Somewhere along the way Garth there must be assurance the buyers agent will be paid or there will be no buyers agent as you recommend there should be.

No matter what form that assurance takes believe me the buyers agent will ensure it stands up in court where in any event none want to be forced to take it. The thing about a lack of Buyer Agency Agreement is that the buyer is left in the dark because believe me, if you think they are working without assurance of remuneration YOU are the Greater Fool my friend.

Don’t you think it better that these obligations be tabled and agreed to up front?

The fact is a Buyer Agency Agreement protects both parties.

#13 amazing on 11.13.11 at 8:11 pm

Finallyyyyyyyy……..friszzzssttttt!!!!!!!! yeahhhhh!!!!

#14 Angela on 11.13.11 at 8:13 pm

I bought a condo in Kitchener, Ontario many years ago and the realtor told me that as a part of their licence/contract with ReMax or the local RE board or whoever they were with they had to have me sign an agreement like that, they were legally required to and not allowed to represent me otherwise. I signed it, but I was also co-workers with this woman at a 9 to 5 job so I didn’t think she’d sue me into paying her if a deal went pear-shaped, she’d have to see me every single day after, just not worth it for her. Of course I was young, stupid, and had 7% down.

But anyway, if it’s the brokerage or RE board forcing agents to get clients to sign it I’d think it would be difficult to find a realtor that wouldn’t have you sign one, they’ll make it sound like a legal requirement.

#15 vyw on 11.13.11 at 8:15 pm

Garth: You should hold a news conference and expose this. It’s a racket.

#16 45north on 11.13.11 at 8:21 pm

Here’s an article on the US housing market, basically it says that the boomer generation is way ahead of the next generation:

http://www.npr.org/2011/11/13/142275958/gen-x-takes-the-housing-hit-boomers-only-grazed

Canada is 5 years behind the US. Look at the chart and just add 5 to the bottom axis. That is 2006 in the US is 2011 in Canada, 2011 in the US is 2016 in Canada. It’s not that hard to add 5.

#17 Vomit on 11.13.11 at 8:22 pm

B.R.A. = Sneaky Mouth Vomit

#18 Dave in Alberta on 11.13.11 at 8:25 pm

1ssstttttttt !!!! Your blog should be mandatory reading for all high-schoolers so they have a clue when they enter adulthood. Great truth you write, Garth. The world needs more of you.

#19 wtf????? on 11.13.11 at 8:31 pm

I’ve never paid anywhere close to a full commission…..heres how……the agent brings the offer and I tell them to ‘F

DELETED

#20 diharv on 11.13.11 at 8:31 pm

In today’s Province newsrag Cam Good is quoted as being against putting restrictions on foreign ownership , specifically the HAM. Surprising ! Nice shot of the Rolex on the parasite’s wrist however.

#21 Daisy Mae on 11.13.11 at 8:38 pm

Devil’s Advocate on 11.13.11 at 8:11 pm
“This is one can of worms I don’t have time for. I look forward to reading the comments though with a good stiff wisky close at hand.”

*********************************

Just please be quiet. You are so full of it….absolutely disgusting.

And it’s ‘whiskey’…not ‘wisky’.

#22 Devore on 11.13.11 at 8:43 pm

#7 Devil’s Advocate

DA strikes again with his salesmanship!

There are ways to outline compensation other than a BRA. The BRA clauses are way too heavy-handed and completely favour the agent, despite CREA’s insistence that they are for the buyer’s protection.

#23 Seven Stars and Orion on 11.13.11 at 8:46 pm

Garth has surely thrown down the gauntlet this time.
Guy takes all comers, never blinks.
I intend to let my facial hair grow starting tomorrow.

#24 tf on 11.13.11 at 8:49 pm

I am simply amazed by the audacity of the real estate industry. When I sold a home 3 years ago in Victoria, I used a discount broker to do so and at one point a real estate agent for a buyer withheld an offer until I signed a contract of agreement. This “agreement” would have myself, the seller, guaranteeing that the buyers agent received her full commission, payed by me, the seller. Plain and simple extortion. I contacted the BC Real Estate Board and was advised by same the the sleazy tactic was in fact ethical as long as the buyer was aware of the agent’s actions.

#25 Vick on 11.13.11 at 8:50 pm

@#16 45north

Thanks for that article. The following chart shows another serious generation gap headed our way.

http://i42.tinypic.com/5np74.png

#26 VomitComit on 11.13.11 at 8:55 pm

Carefully watch the video at the 1:10 minute mark.

“Toronto Real Estate Board
Serving Greater Toronto REALTORS”

I think Garth repeatedly suggests we keep in mind the theme of always knowing who works for who, and what the incentives are. Like an independent fee-based financial advisor vs someone who takes a commission when selling certain financial “products”.

If you read this blog you have no excuse to fall for this kind of BS. It’s so blatant I’m shocked it’s not illegal.

Garth please keep some kind of blog when the dust settles on the real estate thing. We need your advice, and what you’re offering here goes beyond real estate.

#27 walter safety on 11.13.11 at 9:04 pm

I’ve only used an agent to buy but i expected him to get paid and i’m sure it was written into the deals . So the BRA looks like just a new commission schedule among other things.
So if you don’t sign a BRA is the comp in the standard real estate form .?

#28 Beach Girl on 11.13.11 at 9:14 pm

Never heard of that one and I have bought 8 houses in my lifetime.

I might be first, but don’t care.

#29 Hoof - Hearted on 11.13.11 at 9:18 pm

Is it time to curb foreign real-estate buying in Vancouver?

http://www.househunting.ca/theprovince/time+curb+foreign+real+estate+buying+Vancouver/5703433/story.html

#30 Nostradamus Le Mad Vlad on 11.13.11 at 9:19 pm


“The trouble with BRAs. You’re going into battle naked. If you’ve failed to throw up yet, three ways a BRA can bite you in the ass.”

Pleeze. We were out having a lovely brunch in 386 km/h winds, with the temp. at about -60. Gorgeously sunny day, then I read the above. Now I’m in the process of barfing the keyboard up!
*
#15 vyw — Exposing it is a good idea, but because the bought, paid-for and controlled m$m are in cahoots with one another, Garth wouldn’t get the publicity it needs.
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9:14 clip Broke Brokers; Vampire Banxters Drinking the blood from all of us; The US impatient with China? They haven’t done anything! 9:48 clip G20 and other financial infrastructures.
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China – Iran – Russia Iran apples for membership, not trusting the west; Phobos-Grunt Where is the Russian satellite? Belligerent Merkel chides Obama over Iran nonsense. Even she can see through the deceptive lies; Flu Shots contain more than 250x mercury; US and Cdn. politicos are the biggest threat to stability; Citizen Spies “Citizen spies are the hallmark of totalitarian regimes . . .” Precisely what NAmerica has now; Facebook and the CIA “The Associated Press reported November 4 that the CIA has an entire center dedicated to monitoring Facebook and Twitter.”; Wisdom Wars Good armies vs. cultures.

#31 Beach Girl on 11.13.11 at 9:26 pm

Obviously not first, but 6 of the houses were rental homes, with 2 units in each. Always found real estate people engaging with a smell of desperation.

What a horrifying life. I liked it when they told me I had to sign a deal by 12 pm. What is that bullshit about. I said well send it back cheaper then, I have to watch Corrie Street. Said blow this buddy, if I am buying it is when I want to.

#32 FTP - First Time Poster on 11.13.11 at 9:29 pm

Garth what is your opinion on purchasing multi family units? The apartments I’m looking at have anywhere from 6-8% Cap Rate. With the slowdown in RE now apparent, this leaves little room if rents continue to decline. Any thoughts?

All depends on the property. Send me the listing. — Garth

#33 Maxamillion on 11.13.11 at 9:30 pm

Definition of a Real Estate Agent:

DELETED

#34 jess on 11.13.11 at 9:34 pm

An agent wanted me to sign one of those anti poaching contracts. I said what for all you do is send me the same thing i can see on mls? Well no, our company often times see properties before they come on the computer so you would have an advantage and avoid multiple offers etc… groan…no thanks.
====================

High & Low Finance
Distortions In Baffling Financial Statements

http://www.nytimes.com/2011/11/11/business/accounting-for-financial-institutions-is-a-mess.html?pagewanted=1&_r=1

#35 Beach Girl on 11.13.11 at 9:34 pm

On a roll tonight, but when you see Real Estate people in the newspaper or on their business cards, they look 20 years younger than their true image. Must be the stress. Makes me laugh.

#36 Realtor's seem to charge a lot! on 11.13.11 at 9:35 pm

I have to say that the Realtors have the market tied up. If you try and pay less than the standard commission, then the buyer’s agent might not show the house. If you try to make a deal with your agent, if they were to get both sides of the deal, the agent has to disclose this to the other agents making offers. Which might make other offers / agents walk. All this in the pretense of being open and honest.

But… it was OK for an agent to work on their own behalf, to buy the house and waive their commission…. had one or two of those offers when I sold my house.

When I sold my house I felt totally over a barrel but I treated the whole thing as a necessary evil. That is forking $40,000 commission over for literally 20 hours MAX of work. (My agent got both ends.) My home sold after one open for over ask because, 1) it was a hot market, and 2) we (my husband and I, not the realtor) did EVERYTHING necessary to get it ready. Painting, decluttering, staging, baking cookies, and paid for ALL of this.

The agent put it on MLS, attended the one open, and he took multiple offers 3 days later. I was happy with my agent, thought he did a good job as he got more than asking, but still not sure it was worth $40,000 plus HST.

Maybe it was…. but certainly I felt I had no option but to pay the full commission regardless the amount of actual work done by the agent.

I think there should be some min/max prices, plus a percent of amount they get over asking. Not just this flat set percent of sales price. Paid hourly… or something. .. It seemed like relatively easy way to money to me….. esp on the west side of Vancouver.

#37 From Mississauga with love on 11.13.11 at 9:38 pm

For those that say it is fair to sign the BRA agreement and that you cannot ask the realtors to work for free, don’t forget that they are salesmen. And any salesman in any industry will tell you that they always work on deal that do not materialize. You win some and you lose some. That is a fact. Now, are you saying that they should be guaranteed a commission once someone decides he wants to look around? What happened to the famous 10:3:1 rule? You call 10 leads, 3 agree to discuss it with you, and one closes and you get your commissions. But apparently in the real estate industry, you have the right to a commission from every lead…..

#38 Good to be out on 11.13.11 at 9:40 pm

My question is why now? Has this been a big problem in the past? I don’t think so. My thinking is that a B.R.A. is a pre-emptive strike by real estate boards to protect themselves at a time when the writing on the wall clearly suggests tougher (less lucrative) times lie ahead. Real estate agents made a lot of easy money during the rise of the bubble, and are now concerned that a slowing or declining market will result in lower commissions and require more time to complete a transaction in order to earn their commission. Therefore, they are looking for recourse (through the B.R.A.) to guarantee an income even if a deal falls through.
Of course nobody should work for free. But as a commissioned salesperson (real estate, car, investment broker…take your pick) that is the risk you decide to take. The upside is a potential above average income if you are a good salesperson. The downside is the opposite. If you are not prepared to lose a few deals then you should probably be working at a job that pays a straight hourly or monthly salary.
The correct way for this problem to get resolved is to allow natural selection to occur. That is to say let competition determine which agents survive and which ones don’t. Like in any business cycle, it’s pretty easy to make money during the good times (all boats rise in a rising tide), but in a down market it’s an entirely different matter and usually only the best survive.
These days there is probably one real estate agent for every house listed for sale. It’s become that lucrative over the boom years. Now we’ve probably topped out and we’re headed down the other side. I say let the winnowing out process begin. The answer is not a B.R.A, which is just a self-interested effort by real estate boards remove risk and pass it on to the house owner.

#39 JohnnyBravo on 11.13.11 at 9:42 pm

Excellent post, Garth. Thanks for generating awareness of this.

This BRA sounds almost too insane to be true. Now, a contract is not legally enforceable if it contravenes the law, right. I wonder if some of what’s in the BRA may simply not be enforceable in court? Any thoughts, or knowledge of any such challenges? Did TREB’s lawyers dot all the i’s and cross all the t’s?

#40 Kits on 11.13.11 at 9:43 pm

Hi Garth,

Your post proposes that the selling agent may be dishonest but assumes that the buying agent is honest and will look after the buyers best interests. If your proposition is that “money is the root of all evil” (joking) is accurate then the commission that the buying agent will receive also has the ability to colour that agent’s advice.

In other words, the buying agent is financially motivated to conclude a sale as quickly as possible (read: with as little work as possible). It is arguable whether it is in the best interests of the buying agent to jeopardize a sale for legitimate reasons despite the fact that it is his or her job to do so in the appropriate circumstances.

Plain and simple – buyer beware. I have concluded very successful RE purchases where I entered into a dual agency and placed a low offer on the table (granted, the transactions were in the US where there is a buyer’s market … although the same can be said about some Canadian jurisdiction). It was remarkable to watch the seller’s agent work his or her magic. The key is knowing your price/terms and sticking to them. Do not get emotional about the property and educate yourself before making an offer!

Cheers

#41 I'm stupid on 11.13.11 at 10:23 pm

I agree with you completely about the bra agreement. Maybe in a perfect world hiring your own agent will change the end result. The truth is that money has a way of throwing ethics out the window and even your own agent will be want you to pay the highest price. More money payed means more commission. If you don’t ask the correct questions I can assure you that the majority of agents will not give you any more than compatibles, time on the market and rental potential. My advise is no matter if you use your own agent or the listing agent always make yourself seem as the dumbest person there. Unethical people tent to try take advantage of people when they think they are more intelligent.

#42 HouseBuster on 11.13.11 at 10:26 pm

Occupy CREA!

#43 Keeping the Faith on 11.13.11 at 10:26 pm

Devil’s Advocate #9 and #12 …
SHUT-UP!!!
You had the last 2 decades, it’s now time to pay the piper.
It’s tough to stomach when the tables are turned isn’t it?
… and when your industry gets discovered for what it really is … a scummy, scamming, group of thugs that even Berlusconi would be embarrassed to be associated with.

Take your tough medicine DA and by the way … SHUT-UP!

#44 Barfman on 11.13.11 at 10:28 pm

Uh oh. Its not looking very good around my monitor here.

#45 Mike Rotch on 11.13.11 at 10:28 pm

218 sue on 11.13.11 at 5:43 pm:

Re: Distilling your drinking water, maybe not so good. This was a fad back in the 70s. I believe it fell out of favour because if you take the multi-valent metals out of the water, the water just ends up leaching the same out of your bones, into your blood, and eventually removed by the kidneys…..not so good for bone health. This is why most bottled water is remineralized after whatever else they do to it . Besides, stills consume ridiculous energy per unit yield of pure water…..bad for environment, bad for your pocketbook, and possibly bad for your health. Three strikes it’s out, I’ll drink the free shit out of the tap, thanks!

Re: Cancer being more prevalent:

Ever think that part of that is that people are living a whole lot longer than they used to? I mean back in the first half of the last century, there were more wars and more industrial accidents. There were no antibiotics, there were no vaccines for awful things like polio. With all this, your chances of biting it before age 40 were a whole lot higher, so the big C maybe didn’t have as much time to show up. Hell, given the chemicals that people used to put in their cars, and spray on their food, I wouldn’t be surprised if cancer rates would have been comparable over comparable life expectancies.

Note that cancers also used to be less detectable and “natural causes” isn’t very specific.

#46 Jody on 11.13.11 at 10:29 pm

Wow! Sign a BRA, what a bunch of low life scum realturds are, just makes me see them as an even bigger bunch of tossers.

#47 jas girn on 11.13.11 at 10:35 pm

We are so messed-up as a society. All in the name of money. Wtf.

#48 From kits on 11.13.11 at 10:36 pm

thank you for the tip on BRA

#49 Corey on 11.13.11 at 10:48 pm

AWESOME! Thanks!! I’m on my 2nd home purchase and already feel like the Realtors ™ have too much power (info) and control (money). We use them ’cause we have to, they use us ’cause we have money.

Great post, love the matter-of-fact details.

#50 Mike Rotch on 11.13.11 at 10:48 pm

Regarding today’s entry, are these B.R.As. a fairly new phenomenon?

I have only purchased one house, about four years ago and my guy never mentioned one of these.

I did have an opportunity to “freeze him out” and enter a double-agency agreement as I ended up finding the place I actually bought through an open house ad.

In the end, I decided that since I ain’t the one paying these arseholes, what’s it going to hurt to send in my dog to present the offer and beat down the vendor.

(Hell, the guy had patiently showed me several properties, never encouraged me to do anything stupid like spend above my budget, and seemed as honest as a realtor gets…..in the end, he probably only cleared like $130 an hour and took all the risk for it)!

Unless I was a veteran buyer, I can’t imagine dealing with the devil, or his advocate without professional help.

#51 Bobby on 11.13.11 at 10:57 pm

A couple of years ago I was looking at making an offer on a home listed with a discount broker. I had called the realtor I had used about this place and he arranged the showing. Up until this point the realtor had probably done 5 hours work for me if you included driving to the sites.
He stipulated that if I made an offer he would put in a clause to get full commission as he would otherwise only receive $2500. I laughed and said that $500 an hour was more than adequate for what he had done. Otherwise I would take my business elsewhere. He agreed.
I certainly would never sign a BRA as you are assuming a liability for which you have little control. I see a time when most realtors, buying or selling, will offer their services on an hourly basis. That way they will not work for nothing. Unfortunately, for many of the less able agents, and there are many of those, it will be the end of their real estate career.

#52 Xindai Shan on 11.13.11 at 11:01 pm

3 Questions related to this quote.

“Here’s what the BRA says: “The buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller.”

The BRAs I have seen even hard code the comission the buyer’s agent is entitled to – i.e. 2.5%, with the “deficiency” paid by the buyer.

1) In the case of dual agency – if an agent knows the amount of commission the seller is going to pay (as a %), does said agent, if asked, have any obligation to report to the buyer what that number is? I am guessing not, but I imagine that dual agency situations with BRAs must be ripe with abuse. A little commission padding on a BRA could cost the buyer thousands.

2) Why can’t a buyer insert a statement into a BRA saying “Whatever the seller agrees to pay out of the proceeds of the sale of the home” instead of a hard coded commission percentage?

3) Are there good agents that work without BRAs? (and don’t say the men!)

Paging Dr. Freud on this posting. :)

#53 NYCer on 11.13.11 at 11:07 pm

WOW amazing post. Things I never knew. Although I know never to sign a BRA, never knew these details were in there. Thanks!

#54 Devil's Advocate on 11.13.11 at 11:14 pm

#21Daisy Mae on 11.13.11 at 8:38 pm

wisky, whiskey thanks for pointing that out although I never touch the stuff anyway. Heyyyy wait a minute that’s Rye right? Yup never touch the stuff so don’t have much occasion to see the word.

#22Devore on 11.13.11 at 8:43 pm

B.R.A. or no B.R.A. the choice is yours but the agent you choose may well not be as it ultimately comes down to their choice not yours under what terms they agree to work with you.

Ya, ya I know there are plenty of agents out there to choose from and that is, to be true, absolutely correct. There are indeed plenty of agents to choose from – far too many as a matter of fact, many who are more than happy to cut their fee to get your business. That’s the beauty of a free market. We are right now at a point in the market cycle where we have achieved the absolute peak of agents in the face of fewer sales than we have seen in years. It’s competitive, real competitive, out there – damned competitive! Did I tell you how competitive it is? It is real competitive.

Another fact: Some agents discount their remuneration – and so they should.

And yet another one for you, in case you haven’t heard: You do get what you pay for.

The thing of it is the recent go around with the Competition Bureau and TREB is precisely what is prompting the move toward Buyer Representation Agreements, and that there isn’t a damned thing Melanie Aitken and the Competition Bureau can do about that. Not a damned thing. Man it sucks when you don’t ponder all the potential consequences. Thank you Melanie for instigating a perfect situation that facilitates the implementation of a something we should have implemented long ago. Bravo girl! Sellers have long signed an agency contract to secure the services of a REALTOR why should Buyers be any different? Try not signing a Seller Agency Agreement and see how far that gets you. Oh wait a minute – “mere postings”! Right on and there we go back full circle. Beauty!

Those who refuse to understand “Buyer Representation Agreements”, or “Exclusive Buyer Agency Agreements” as they are called out West, are not our prospective clients (“our” being established, full time professional REALTORS® – ya go ahead, have a field day with that “professional” thing again as I know many of you will. But then there must be some good reason for the distain you feel toward us. Oh wait a minute – could it be the all too willing desperate agent you hired and were able to beat up on their fee who did such a poor job? Hell if they can’t protect their own fee how possibly could you expect them to protect YOUR money?).

Again, I simply offer the other side of the story some ought to consider (need to consider really) – but they won’t and that is really just fine actually. It is “just fine” because they who don’t will gravitate to those agents who are so desperate they will work without one and together you will result in one another’s demise. Sorry if that sounds harsh and rather “boastful” (you had to know I’d sneak that one in Garth) but that’s just the way it will unfold and there are those of us who look forward to it as we do so need less of both.

We don’t need your business. But Garth is right… “you should always have your own agent when buying. Always. No exceptions” in other words you need us – really you do. And you heard it from your very own illustrious leader himself. So please, go hire one of those you have whittled down and broke because they absolutely need your business. Might want to wonder why they need it so bad though. And then tell us how that worked out for you. And you wonder why it is you have such a low opinion of REALTORS®.

God I love the smell of a free market in the morning.

I don’t know Garth, would this be boasting or disclosure?

Ya, ya I know… Did you really expect me to sit on the sidelines on this one?!?

#55 2deep on 11.13.11 at 11:16 pm

@ devils advocate

I’ve dealt with Realtors who insisted on buyers brokerage and I’ve walked away from them to deal with Realtors who don’t. Not every realtor is trying to take your money any way they can.

Just think if this logic pertained to any other industries. You would never get to test drive a car without having to buy from that dealership. Want a roofer to quote your roof? Only with a P.O.

Most businesses operate in a competitive marketplace where competition weeds out garbage like this. Canadian realtors have a cartel that would never be allowed in other industries.

#56 TED23 on 11.13.11 at 11:22 pm

Sorry Garth,
Again you are misleading your people, The BRA has been in use since 1995. Its not a NEW DOCUMENT AS YOU STATED It’s not an industry required document. It is a compliance document by RECO in Ontario and in other provinces by the regulatory bodies in other words the Provincial Governments who make up the rules and have them enforced against the people. Agents can and are fined for not having BRA on file when audited by RECO. Perhaps you should look into this more as you appear to be off course a little.

I did not say BRAs were new, but recent attempts to get the public to buy in are. As for the BRA being required by industry compliance guidelines, you are blowing smoke. This is from RECO’s web site: “Must I sign a representation agreement with a brokerage/salesperson? Answer: No. A brokerage (usually through their representative) is obligated to provide you with a written agreement outlining real estate services being provided, any fees, etc. that is signed by the brokerage and presented to you for acceptance and signature. You are not obligated to sign this agreement if you do not wish to. You may also ask the brokerage to make changes to the agreement before signing it.” — Garth

#57 Devil's Advocate on 11.13.11 at 11:27 pm

“The upside is a potential above average income if you are a good salesperson”. – #38Good to be out on 11.13.11 at 9:40 pm

Do you really want a “good salesperson” to sell you a home? This is EXACTLY why you want an Exclusive Buyers Agent. I don’t think you could, or should want to, “sell” someone a home. “ Help” someone find the right home and make the right decision on what to pay for it etc – now that makes sense.

Treat a client right and they will patronize your business for many years themselves and refer many of their friends and family to you. There are transactional REALTORS® and there are service based REALTORS®. A “transactional based REALTOR®” is interested only in the next deal. A “transactional based REALTOR®” cannot afford to ask you to sign a Buyer Representation Agreement because they are afraid it will scare you away from doing business with them.

What you have to ask yourself is; what else is a “transactional based REALTOR®” not telling you for fear he/she may not close the deal?

#58 [email protected] on 11.13.11 at 11:30 pm

https://www.theglobeandmail.com/life/home-and-garden/real-estate/done-deals/staging-in-north-york-draws-bids-in-days/article2232648/

xx ROYCREST AVE., TORONTO

ASKING PRICE $865,000

SELLING PRICE $860,000

PREVIOUS SELLING PRICE $555,000 (2008)

TAXES $4,589 (2010)

DAYS ON THE MARKET Four

The Agent’s Take: “It was totally renovated, from top to bottom, it looked like new,” says Ms. Preje, who filled the vacant interior with furniture, art and decorative accessories. “The house looked homey and presentable, so people know where they can put the TV and sofa, and where they can relax and where they can eat.”

Thats living – TV sofa and eating!

#59 TED23 on 11.13.11 at 11:31 pm

Not Board rules. Not Real Estate Industry Rules

https://myweb.reco.on.ca/members/publicdocs/RegBul%20-%20Representation.pdf

#60 Devil's Advocate on 11.13.11 at 11:40 pm

#552deep on 11.13.11 at 11:16 pm

What you don’t seem to understand is; just because you sign a Buyer Representation Agreement does not mean you have to pay the REALTOR® if they fail to find you a home as set out within the terms and conditions of the BRA. What that agreement does mean is; if your REALTOR® does find you a home and you do buy that home they will be paid an amount you previously agreed to pay them if they were successful doing as you contracted them to do.

Here is another interesting twist many have not considered: The Buyers Representation Agreement sets forth the remuneration the agent will be paid upon successful completion of the transaction. Today in this buyers’ market many sellers are offering bonuses to as alluring incentive for REALTORS to sell their homes over others. In the case of a Buyers Representation Agreement your agent has agreed to a predetermined amount and nothing more. Anything over that remuneration agreed to in the BRA that a Seller may be offering your agent is yours and NOT your agents.

Thus a side benefit of the Buyers Representation Agreement, to the benefit of the buyer, is that they can be reasonably sure that their agent will not have incentive to “sell” them a house that may not be the perfect fit only because it is offering a BIG BONUS – and let me tell you there are some VERY BIG BONUSES being offered by some sellers in this competitive buyers’ market.

Get it now?

#61 Marc L on 11.13.11 at 11:43 pm

Thanks Garth for the great info. I have bought 5 RE properties in my time. I have never been asked to sign a BRA. I have always had good realtors. Good to know for future reference.

#62 nonplused on 11.13.11 at 11:44 pm

Excellent post tonight Garth, that’s good stuff to know about the BRA. I’m opposed to covering anything up with a BRA. Beauty and honesty deserve sunlight.

I can see the argument some off the responders have made with the train of thought that the buyer pays both commissions through an inflated house price. But from a technical point of view, it is the seller that actually delivers the cash, since that is where all the proceeds from the mortgage show up. And it is also the case that if a home is “under water”, most realtors won’t list it unless the seller posts a bond. In this case it is definitely the seller who is paying, because the house may sell for less than the mortgage and the seller has to come up with even more money. But either way you look at it, realtors need to get paid by somebody, and it doesn’t really matter who as long as everyone pays and receives what they thought they were going to. So arguing over whether it is the buyer or the seller who pays is a bit pointless. There will be a 5%/3% skim no matter what.

I think this whole thing about who pays the commissions is a distraction. Some of these realtors work a client really hard before they get a commission. For example, my realtor sold my house for $2000, with a gentleman’s agreement that when I buy, I consider using him as my agent, which I will do. But that was 3 years and many viewings ago. (He still wanted to pay the buyer’s agent 5 and 3 (2.5 and 1.5% to the buyer’s agent), because he felt that if you cut that commission agents would tend to shun your listing.)

I also had another agent (representing me as a buyer) take a haircut on his commission to get the deal down to the CMHC limit of $175,000, back when there was such a thing as a CHMC limit. That would have been around 1998. My how things have changed. A $175,000 CMHC limit today would mean no houses can be sold except with 20% down.

The take away from this is that buyers can negotiate the buyer’s agent’s commission, and sellers can negotiate the seller’s agent’s commission, so to me that means we each pay our own agent’s commission. But so what? We’ve hired this guy/girl to do a job for us on commission, he/she doesn’t get paid until they satisfy us, and some of their clients (like me) are tediously slow to decide. How much more fair could it be?

Anyway, I think we can just agree that we all pay our own agents, and that paying your own agent is fair, and move on.

Notice that in my experience, having a buyer is much more lucrative to a realtor than having a seller’s listing, but also a heck of a lot more work. It’s actually the buyer’s agent who gets the house sold by bringing the viewings and all that. All the seller’s agent does is pound a sign in the front yard and put a few photos on MLS. You can pay for staging if you like, but it doesn’t pay you back. Everyone knows they will furnish it themselves, and probably paint it too. The buyers are much more interested in whether the house is junk or not.

#63 Rich Renter on 11.13.11 at 11:44 pm

If he whips out the BRA walk, but if it’s a she well :)

#64 Glen B on 11.13.11 at 11:45 pm

Informative post today Garth.
Thanks

#65 Dan T on 11.13.11 at 11:45 pm

I was asked to sign a BRA when looking for a rental in Toronto, it seems all realtors are asking you to sign it.

Has anyone had success negotiating the term of these agreements?

Can you imagine this applied to other industries? Imagine the GM sales guy you visited coming after you for his commision cause you backed out and bought a Honda.

#66 Joe Q. on 11.13.11 at 11:46 pm

@ #55 2deep on 11.13.11 at 11:16pm

Agreed completely. Imagine going into a car dealership and being asked, before even sitting in the driver’s seat, to sign a contract saying you’ll pay this particular salesman a commission no matter where you end up buying.

#67 Devil's Advocate on 11.13.11 at 11:49 pm

You have to admit, my last two comments by any other name would smell a lot sweeter. You can not deny they make sense… no?

#68 The thing in the basement on 11.13.11 at 11:51 pm

16 – 45 North – so it was gen-x’ fault afterall!

#69 Good to be out on 11.14.11 at 12:07 am

#57 Devil’s Advocate

My point is simply that a “good salesperson” will make more money than a lousy salesperson. Whether they are ethical or not that is another question. You seem to suggest the two are somehow related (perhaps in the RE industry it’s a given).

Any realtor who does not put the customers needs first in a market that is saturated with agents will have a hard time finding and keeping clients. That tells me “service based” agents (as per your disinctinction) are going to fair far better that “transactional based” agents, who will soon be going the way of the dodo.

#70 Snowboid on 11.14.11 at 12:10 am

24 tf on 11.13.11 at 8:49 pm…

Same here, after our success buying with a discount realtor in the US, we listed our Island home with a highly recommended discount agency.

When the first offer came in, it came with a section and separate agreement ‘demanding’ we pay an extra $ 4500 to the buyers’ agent (for a total of nearly $ 8000). We countered crossing out the section on signing a separate agreement. The place still sold, but don’t know if the buyer was asked to pay more.

We have had excellent work done by our agents in past with investment properties, but the way real estate is bought and sold is changing drastically.

Based on our US experience where almost everything was done via the web and Docusign, I don’t think the full commissions are justified anymore. Even our agent in Arizona told us the same. Finding what we wanted to look at was easy because of their excellent website.

Only time we saw the agent was when we looked at ten homes, then on close of escrow to hand over the keys.

#45 Devils Advocate…

“You do get what you pay for”

Sorry, that is utter BS. The last two agents we used from discount agencies, one as a buyers’ agent in AZ and one as a sellers’ agent in Victoria were by far the best agents we have ever worked with.

You are correct that there is major competition within the agent community, but the day of the full commission agent/agency is coming to an end – we will certainly never deal with one again.

#71 Sm on 11.14.11 at 12:26 am

Thanks for this information Garth!

#72 MixedBag on 11.14.11 at 12:35 am

When I think about the insane commissions Real Estate agents get, I get apoplectic. What other job can you get into without any education or training and make tons of money? Get paid for your work, yes, but at these prices?! And if there are any problems with the contract, the lawyers are liable, not the agents (as one RE lawyer told me).

@ #36 Realtor’s seem to charge a lot!
40K to sell one house? That’s an annual salary for some people. Ohh, I’m feeling ill. No wonder the industry attracts all sorts.

We bought our house private sale, and we did well. Do your research, hire an inspector, make sure your offer is conditional on financing, have a good lawyer, and you should be fine. If you don’t think you have the ability or cojones to do this, then go ahead and get a Buyer’s Agent, but again, do your research on the Buyer’s Agent. (Frankly I’m not sure what it’s worth to research a buyer’s agent, but it must be better than picking a name out of the phonebook…. right?)

Good luck!

#73 Ralph Cramdown on 11.14.11 at 12:39 am

So the guy who gets paid more if I spend more, who gets paid the same amount if he spends five hours on my behalf or fifty, who’ll likely be working with the vendor’s brokerage again sooner than with me again, who’ll announce to his colleagues “I sold a house!” even if he was representing the buyer, who represents himself as a buyer’s agent because he can’t spell poorly enough to get himself listings, he’s working for me?

#74 Peakoilist on 11.14.11 at 12:40 am

Garth. you’ve certainly stirred the pot tonight
great work as always !

#75 JRoss on 11.14.11 at 12:42 am

DA

“Treat a client right and they will patronize your business for many years themselves and refer many of their friends and family to you”

I agree.

So why would you require a BRA?

Extra credit: answer in less than 500 words.

#76 Aussie Roy on 11.14.11 at 12:48 am

Aussie Update

Austerity for Christmas, how nice.

Billions of dollars in spending cuts will be announced when the Australian Government releases the latest official assessment of the national economy before Christmas.

http://www.news.com.au/business/slash-and-burn-swan-plans-to-cut-billions-in-spending/story-e6frfm1i-1226194304990#ixzz1deS0uixe

Bad debt ups, comsumer spending down.

According to the data released on Friday as part of the bank’s compliance with risk and lending rules, Westpac saw impaired loans run up by the hotel and food hospitality sector rise by $71 million to $205 million. It also recorded a small increase – of $5 million to $54 million – in the money it has set aside to cover debts that it may not recover.

Big increases in impaired loans year on year were recorded by construction companies (up $69 million to $180 million) and the finance and insurance industries (a rise of $63 million to $213 million). Westpac has also raised its specific provisions for likely loan losses for those sectors

http://www.theage.com.au/business/spending-slide-spreads-westpac-20111113-1ndqm.html#ixzz1deSPLVLQ

House prices never go down?.

WITH Melbourne’s property market in a deep freeze, vendors are dropping their asking price by as much as 25 per cent to wrap up a sale.
As the level of property sales hits it lowest level in more than a decade, home owners have responded, with some slashing hundreds of thousands of dollars from their asking price to attract a buyer.

http://www.news.com.au/money/buyers-in-the-drivers-seat-as-owners-offer-discounts/story-e6frfmci-1226193644092

With financial advice like this, how could you go wrong – LOL

Profits and peace of mind await young investors.

Buying a property in your early 20s is one of the smartest decisions you will ever make.

http://news.domain.com.au/domain/real-estate-news/a-portfolio-with-your-first-pay-packet-20111111-1n9xb.html

Sellers don’t know what to do, so they take their realtors advice.

SPOOKED by low clearance rates and the higher costs of staging an auction, hundreds – potentially even thousands – of home owners are now choosing to sell by private treaty or take their properties off the market rather than risk putting them under the hammer.

http://www.theage.com.au/victoria/vendors-go-private-as-auctions-get-a-hammering-20111112-1nd3j.html#ixzz1deTEqF12

China

Wow what a shift in house price expectations – graph.

http://www.businessinsider.com/chinese-expecta-property-prices-to-fall-in-november-2011-11

Asia not immune to eurozone crisis

THE chief of the International Monetary Fund said today that Italy’s financial reform is key to reducing the impact of the eurozone crisis, and that no country is immune to the consequences if the efforts fall short.
After meeting in Tokyo with top Japanese financial officials, including Finance Minister Jun Azumi, IMF chief Christine Lagarde said Italy must restore political stability and implement financial reforms to provide “clarity and credibility” and restore confidence.

http://www.news.com.au/breaking-news/asia-not-immune-to-eurozone-crisis/story-e6frfku0-1226193550183#ixzz1deTrACfm

#77 Crash Callaway on 11.14.11 at 12:49 am

B.R.A. more creative pocket hopping by these vampires!
When dealing with realtors I urge everyone to:
– have garlic around their neck at all times.
– employ the no reflection cast in the mirror test
– demand to meet them during daylight hours only

#78 Disciple's replacement poster for this coming while he's on vacation on 11.14.11 at 12:52 am

Hi all. I will be sitting in for Disciple this week while he’s on a much needed vacation. Please let me know if there are any topics that you would like me to expand on, such as:
a)vibrational medicine and curing your pets with cancer
b)diet secrets of your real rulers
c)ways to hypnotize and control Mr.Turner
d)why anthropologists have made up the existence of
Dinosaurs
e)how you can create crop circles using binder twine
and duct tape
f) how we can expose westernman’s true identity
using mind control techniques of the elites.

I have some other topics that will be a surprise , so stay tuned this week.

#79 Nostradamus Le Mad Vlad on 11.14.11 at 12:55 am


Loansharks going after veterans; Agenda Nothing happens by accident; Trilateral Takeover With a possible bank run in the Eurozone, let’s have another takeover; Romney Another economic dimpleshit who can’t see beyond the next quarterly profit; Saving Private Europe To do so, democracy was sacrificed; 3:07 clip Ever wondered why universities jacked up costs for no reason? Corporatocracy; Not Democracy That’s why the west has become a fascist, jackboot-controlled dictatorship and Austerity isn’t democratic — it’s force-fed to people.

Link in “. . . contractors and builders in Connecticut are reporting that banking families are vacating their houses. Suddenly and without explanation, whole families are leaving the state.” Would this be in union with the supposed bank run in Europe? Build Your Burger Now in charge of Italy; Read the head, then understand how karma always works itself out; Oz slides, Yuan going down, Incompetent Bureaucrats, Bullish week for gold; BoA and JPM Both conspiracy theories? Shill Alert Fear factor; Fake coins Gold and silver.
*
3:03 clip From 60 Minutes, Tara the elephant and the dog were close companions. Recently, the dog was killed and Tara carried the body home; 1:39 clip Carlsberg clip; Yeti Sir The best evidence from a trash-tabloid; Candid Pix Like father, like son? Palestinian medical discovery serves humanity; HAARP / Weather Control? If it suits TPTB’s purpose, let it be done.

10:59 clip US govt. hacks websites and modifies bloggers’ comments; Carbooon Monoxide is not only good for plants and trees, which give off oxygen for us to breath, it may also be good for us; Syria Getting closer to Iran.

#80 OwlEyes on 11.14.11 at 12:55 am

Vick – thank you for the link to the graphic. Did you take a look at this (pretty amazing) article that is indicated on the graphic?
http://www.scag.ca.gov/housing/pdfs/trends/agingbabyboomers_GHB.pdf
“We argue that the United States is currently experi- encing a short-term housing market bubble that is nested within a longer-term, generational housing bubble of greater magnitude. The recent housing price boom has been remarkably strong. From 2000 to 2005, the median sales price reported by the National Association of Realtors rose 48.6% nationwide, and in some areas, such as Califor- nia, the median sales price rose 117.1%. Only in 2007 did prices begin to slip in particular metropolitan areas and nationwide. This price run-up had a two-edged effect that substantially increased the home equity of existing home- owners while at the same time making housing less afford- able for would-be home buyers. The result is a sharply increased generation gap, with the baby boomers largely gaining, while members of younger generations face higher affordability hurdles.”
Note that this US paper was likely written well before the publication date, Winter 2008.

#81 monte in van on 11.14.11 at 1:04 am

Great post. Have been reading the blog about a month now and today’s has drawn about the most emotion from me yet. (anger) Coming from a city where realtors drive Bentleys (and put the open-house sign on the roof of the Bentley), I find this post so infuriating. Like they need to find other ways to screw people over? It makes me hate realtors even more than I already do.

As a health-care practitioner, and having had 4 bad real-estate experiences in the past year (trying to buy), I have often said this: If I bend the rules, screw-over, lie to, cheat my patients or just plain do a crappy job, my name gets published in lovely quarterly journal, I lose my license and I can no longer practice. (there goes my income) What happens to RE agents? Nothing. So the crap continues. Its the most disrespectful profession one could be apart of. And as they make more commission, they just get more arrogant and bend the rules even more. Thanks Garth, for now, I am not looking at RE but if we ever start looking again, I’ll remember to stay away from the BRA.

#82 Excellent on 11.14.11 at 1:06 am

Excellent. This is really good news.

Buyer Representation Agreements (BRA’s) will firmly establish liability under the law for the actions of Realtors. Eventually.

The sword cuts two ways. By imposing onerous and biased obligations on buyers, the agents assume a higher duty of performance and in that process can be held more accountable to customers they purportedly work for.

This seems to be a defacto agency agreement that will impose upon sellers the obligation to prove which side of the transaction they truly represent. In a serious court challenge, no more than hourly wages would be paid out in the event of a disagreement thus establishing the true worth of an agent in a sale that failed.

Realtors will end up being hourly paid as a result.

Excellent.

#83 Aussie Roy on 11.14.11 at 1:17 am

Aussie Update

Comments on this article paint an interesting picture.

Finding the bottom of the market poses risks

This article is hilarious! I love the juxtaposition of

”Our market is very sophisticated and buyers are adopting a more businesslike approach rather than basing their decisions on emotions,”

and

”But I think people will reflect on this time and think late 2011 would have been the perfect time to step up [to a larger home],”

Fear of missing out on capital gains is an emotional factor, not a business one. You say people will make their decisions in a businesslike matter then you pluck their emotional heartstrings to take them the other way.

But it’s nice to see in the face of sovereign default, dwindling commodity prices and globally weak consumer confidence that some people still have the pigheadedness to pretend we’re going to go back to the good old debt fuelled boom days!

http://smh.domain.com.au/real-estate-news/finding-the-bottom-of-the-market-poses-risks-20111111-1nbju.html

#84 cxcroney on 11.14.11 at 1:25 am

Garth “There is no guarantee the listing agent will successfully do any of that”

Believe me, that holds true for most buyers agents as well.”Good” realtors know when to disclose and when not to disclose information or required services depending upon the sophistication of their seller or buyer. Most realtors just cross their fingers and hope that all goes well with the deal and they don’t get reported to their governing council. Ignorance is bliss.

#85 Grimbot on 11.14.11 at 1:27 am

For anyone who would like to see the actual legislation i.e. The Real Estate and Business Brokers Act 2002, here is the link:

http://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-c/latest/so-2002-c-30-sch-c.html

#86 Math is Fun on 11.14.11 at 1:34 am

Awesome!!!
Thanks Garth.
I can’t see why Global won’t run this story?? Lol.

#87 Thetruth on 11.14.11 at 1:36 am

Shouldn’t the onus be on the consumer?…

why would a customer sign anything he/she doesn’t understand?? If they are lacking in knowledge/know how, then the onus is on the customer to do some research. This sense of entitlment is crazy!

Real Estate agents make the money they do because customers allow it. End of story. No customers then no money for RE agents.

On another front, a Canadian developer is starting a $15,000,000,000.00 development project in Manhattan. He is a greater fool!… ya right ;)

Still on another front… if there is no correction in housing in vancouver or toronto by 2013, can we assume there will be none? I have been on this blog for years and the same opinions keep getting posted albeit by different people. People come here for a few months and then disappear…others take their ‘opinion’ place.

Of course, i must point out that i firmly believe that population growth and psychology drive housing prices…and immigration isa huge factor. Vancouver and Toronto are the most ethnic diverse cities on the planet!

I’ve noted garth doesn’t like to talk about immigration…i think i’ve caught onto something…

You going to be working for Bob Rae anytime soon?

#88 Grimbot on 11.14.11 at 1:44 am

I read the Real Estate and Business Brokers Act 2002, and unless I missed something there is nothing in the act that states that a real estate company has the right to charge a buyer anything for their services.

So….it would appear that a BRA is simply another way that the real estate industry is trying to suck money out of consumers. If a buyer is stupid enough top sign a BRA…then they will suffer the consequences.

#89 Where's The Money Guido??? on 11.14.11 at 2:19 am

DELETED

#90 bcpaul on 11.14.11 at 2:23 am

With the information available online (and free) in the last 10 years, realtors are mostly pointless.

#91 Not 1st on 11.14.11 at 3:12 am

Garth, 2 br condos are touching the 150k mark here in calgary on the outskirts. Is it time to buy? Houses haven’t fallen much yet.

#92 edmonton guy here on 11.14.11 at 3:25 am

IN many Areas Like EDMONTON here I can see why the Agents want to create some money making scam-the real estate agents are probably getting hungry. Plunging prices, sales volumes slowing & then the new MLS discount pricing that’s been forced on the monopoly. WIth two bedrooms plunging to 2005 Level Prices here in Edmonton it’s not a surprise to me to see this desperate act called the B.R.A. being created!
Check out how cheap condos are getting in Edmonton! http://www.mls.ca/PropertyDetails.aspx?&PropertyId=10851500&PidKey=-2089951325
realtors must be desperate! How will they pay for their expensive New BMWs Audis & Lexus’s???

#93 Devore on 11.14.11 at 3:32 am

#52 Xindai Shan

2) Why can’t a buyer insert a statement into a BRA saying “Whatever the seller agrees to pay out of the proceeds of the sale of the home” instead of a hard coded commission percentage?

Most people would think that.

But it’s a contract. You can strike sections and amend it before signing. The the standard BRA, you’d want to cross out most, if not all of it, which is why it’s a useless document to a buyer.

#94 Devore on 11.14.11 at 3:41 am

#52 Xindai Shan

In particular, you’d want to remove exclusivity clauses, especially the ones that extend past the contract term (usually 3 months). You will also want to carefully review any clauses dealing with paying commission, including the amount as well as when it or a deficiency has to be paid.

Realtors are commissioned salesmen, they should know better than anyone that not every lead results in a sale, and sometimes you spend a lot of time on a client who doesn’t buy anything. And no one is asking them to work for free. If they don’t like the realities of working on a commission, they should form a union and get their brokers to pay them a salary, or start their own realty agency.

#95 Daisy Mae on 11.14.11 at 5:36 am

Corey: “We use them ’cause we have to, they use us ’cause we have money.”

****************************

No….we don’t HAVE to use realtors.

We CAN do it ourselves.

And maybe we should start doing just that.

#96 Daisy Mae on 11.14.11 at 5:45 am

Devil’s Advocate on 11.13.11 at 8:11 pm
“This is one can of worms I don’t have time for.”

*****************************

For a realtor who “‘doesn’t have the time” you seem to have plenty of it. LOL

#97 SB aka Mr. B. on 11.14.11 at 6:30 am

Not looking to buy, maybe to rent or live in a trailer. This place is priceless. Where else can you read and be so prepared. Been reading the blog a year now. Priceless stuff here.

#98 Nisha on 11.14.11 at 6:36 am

hi

This is Nisha

Thank you for your informative article and blog discussion.
I have been looking for yours blog . This is to good .
I am very gratefully for sharing this information’s on”
The trouble with BRAs”…………thanks

#99 Alain Savard on 11.14.11 at 8:01 am

Great post Garth. Did you ever consider opening a real estate company for buyers only? People like Jennifer could hire you at no extra cost on any MLS purchase and you could coach them through everything. Toronto is probably the biggest city in North America that is without such a company. All 50 American states have such firms and so do Halifax and Edmonton. You would be the perfect guy for it. Can you imagine, Garth Turner REALTOR…

#100 jerry on 11.14.11 at 8:03 am

I remember the chagrin back in the 80″s when as a former but only briefly engaged real etate agent, I (we) were always upset when “buyers” would see houses through you, make a desion and then run back home and call up some relative who just got their real estate license. ZAP! Went your commission. There used to a be saying that “buyers are liars”. They would work with an agent seeing tens/20′ of homes. Then poof! “Oh we decided to give the sale to uncle Bobby.

I understand where the BRA comes from but I would never sign it unless I removed all of the burdensome clauses.

#101 Occupy your savings! on 11.14.11 at 8:13 am

RE: No Fail
I was hoping you would get on that topic someday. You helped my cause bigtime, thanks G-money.
I was thinking Bonds for the non-flux factor (consistency) if holding YTM and not looking for capitol gain… unless the overnight drops I suppose but the ETF you mentioned is probly a nice play. Learning.
Spoke to a friend of a friend financial “guru” guy about something like this and he looked at me like I was from Mars and speaking chinese. Being a total newbie at this stuff as I am, it’s tough to find help putting a plan in action without sounding like a moron (guru) or being talked into something off track of what I’m trying to do (nice lady at the bank), which is using the tax rules to my advantage and finding valuable places to grow my savings. Where do good financial adviser guys hide? lol.

BTW is it normal to be offered mortgages and loans everywhere I go, before I even start talking? I hope they aren’t giving all the out of work RE agents adviser jobs.
OCCUPY YOUR SAVINGS.

#102 TurnerNation on 11.14.11 at 9:01 am

In world economic news: Italy, Greece runnning under UNELECTED “Transitional” governments. Did you catch that?

Where have you heard ‘transitional’ previously…oh yes, in the countries that were bombed to smithereens: Libya, Afghan, Iraq all got unelected, puppet, ‘transitional’ governments.

Liks I said, the 2nd and 3rd World countries get bombed (WMD), and we are economically bombed.

Think back for a second: Europe was liberated after WW2, then plunged back into decades of brutal communist control, then ‘freed’ again in 1990s, and then plunged back into forced, harsh EU control.

Now Europe is on its knees again (as it was post WW2). Do you see the pattern? Do you still believe in ‘democracy, freedom’? Sure we can vote, but they provide the choices. It’s their man or woman, or nothing.

Here in Canada we were given only two choices – an easily controlled race (the yammering Dion didn’t count), and they knew Stevie would trump Jack. It was a forgone conclusion. But we believed it was a random election. No it wasn’t – it was the 4th such election in a row – kept spinning the wheel until their man won. Harper who as leader of the fringe Reform party in early 90’s was apparently invited to the elite Bilderberg meetings. He was being groomed even back then, I guess. But you still believe recent events are all random coincidences, correct?

Yep, the handlful of people who run this planet do a fine fine job with their agenda. god save the queen, our ruler.

Our role in this mess is already planned, as was EUs’. I see blog dog Carney is climbing the banker ranks. I wonder which card he will next play.

#103 househornyhousewife on 11.14.11 at 9:05 am

Garth,

I have to say that I partially disagree with you on this one (and by the way, I am definitely NOT an agent).

The only point that you mentioned that I don’t agree with in the BRA is being held liable for the entire commission if the seller defaults. This is essentially guaranteeing a seller’s debt and no one, except for the financing parties of the seller should be doing this. This point is completely unethical and I wonder if you cannot contest this in court … seems fishy to me. I know I definitely would never sign an agreement with such a clause.

However, the other two clauses are not so unethical. For one, the buyer is not liable for said commission after the expiration of his contract IF he has signed another agreement with another realtor with the same commission amount. This is because it clearly states that the amount paid to the new realtor will reduce the liability of the previous commission. I can understand why they would want a buyer to sign this:

Let’s say you use an agent and he or she finds you a great place and helps you bid on it and works his or her ass off trying to get you the property etc.. … then, being an unethical buyer (yes these exist as well), you decide to allow your contract with the agent to expire and you don’t renew, deciding instead to finish the deal yourself and to finaigle (sp?) a lower price or a lower seller’s commission to get the sale or whatever. This would obviously not be very fair to the agent now would it ?

And as to the cold feet thing, well I am in complete agreement with the agents on this one (what ?! did I just say that ?!). A deal is a deal and there are many “gringos” out there who decide to change their minds on a mere whim. If you sign on the dotted line (ie. a promise to purchase), you are liable and it’s about time people are held responsible for their actions. If you want to protect yourself against cold feet then write in a ton of conditions which will keep you in control (see how well that gets you the sale !). Why should an agent have wasted their time and effort because you decide you no longer want to go into the deal. If you don’t want the house then close and put it back on the market (your agent would be in heaven because he stands to make more commission).

Let me tell you Garth that as a potential buyer looking for a new place I have had to deal with moron sellers who don’t want to sign a contract with their agent. Then they play hard to get with buyers like me and say,”Do you want to come and see my house … for the right price I would definitely let it go” or some such nonsense. The agents think that a seller simply doesn’t want tons of people traipsing around their home and would prefer a quick, clean deal but instead we all get our chain yanked for a while.

I no longer visit any place unless the seller has an agent (or they deal with my agent) and unless they have an official contract with them and are seriously listing their property. This isn’t kindergarten but many people behave that way so that’s what legal contracts are for.

Of course the market is quite different over here where I am looking for my new home and properties will sit on the market for some time before being sold.

Those photos of the buyers kissing each other or getting the golden keys from the agent made me want to hurl ! The closing on my current place (oh so many years ago) was basically two couples, a notary and their agents sitting at a table with long and disgusted faces after having waged serious war (we won and got the place for just under what the evaluator thought it was worth .. as opposed to the sellers’ made up dream price).

And something important worth mentioning is that the buyer’s agent is not necessarily always working for the buyer. All buyers should keep this in mind. Both agents are getting paid by the seller and both agents will get the same commission on the deal. Therefore, your own agent is in a bit (?) of a conflict of interest here and one must keep this in mind. I myself have an excellent agent with true blue ethics (she can actually even be a bit naive at times which tends to annoy me but I prefer to work with someone like this rather than the opposite) but I am well aware of which side her bread is buttered on and I act accordingly (she knows what I want her to know).

Garth, you are right about one thing and that is that you are indeed going into war when bidding on a home. One must use strategy, acquire information that is not readily available (ie. covert operations), and remain as emotionally distant from the situation as humanly possible (impossible, of course, thus the need for an agent). Once everything is over and you are finally in your new home and everyone has left the building then and only then can you jump up and down and feel contented …. that is, until you find the first problem of many, lurking behind the walls (that the inspector couldn’t possibly have seen). Welcome to your new home and may you have many years of fixing, maintaining and renovating it to suit your needs.

Owning a home is not for the faint of heart that’s for sure.

HHHW

#104 Aussie Roy on 11.14.11 at 9:14 am

Mish – Aussie update

The Australian economy is toast. Forget about GDP and distortions of it thereof. Australia’s housing bust will linger for years, and as I expected it has spilled over into retail spending and now the service sector.

This certainly is not unexpected (at least by me), as a natural progression of the housing bust. Moreover, Australia faces a “double whammy”.

China is slowing and that will effect commodity prices as well as Australia’s export sector.

Those thinking Australia will be immune from recession because of China have another thing coming. Indeed, Australia will bust even if commodity prices stay firm

http://globaleconomicanalysis.blogspot.com/2011/11/australia-in-recession-spending-slide.html

Yet another Westpac Bank loss and of course taxpayers pick up the tab.

Adelaide Zoo has received a massive bail out package, with the state government increasing its funding and striking a deal with banking-giant Westpac over debts.

In addition to the funding increase, the government will also loan Zoos SA $2.6 million to form part of a settlement over debts the zoos hold with Westpac.

In return, Westpac has also negotiated a sponsorship deal with both Adelaide and Monarto zoos, slashing Zoos SA’s debt from $25 million to $7.5 million.

http://au.news.yahoo.com/a/-/latest/11649899/adelaide-zoo-gets-government-bail-out/

#105 TurnerNation on 11.14.11 at 9:15 am

Let’s see if this blog can withstand the inevitable attacks…the previous hacking attempts bear all the hallmarks and signatures of Al-Realtors.
Now, this blog is hosted from Uranus.

#106 albertaguy on 11.14.11 at 9:27 am

Write your MP if your sick of degrading lending standards

http://www.gailvazoxlade.com/resources/letter_to_mp.html

Find your MP here

http://www.parl.gc.ca/MembersOfParliament/MainMPsCompleteList.aspx

#107 Beach Girl on 11.14.11 at 9:41 am

Unfortunately newspapers are going extinct, I suspect RE people will as well. There is really no need for them.

Now lawyers who I hate will always be with us.

I remember when a girlfriend snagged a lawyer into marriage. I asked her if she was insane. She thought she won the lottery. I said when this is over he has more resources than you ever will. Boy, did she get screwed.

I think most doctors are drug addicts. Look how white and pasty they are. Bad marriage material. Always the geeks in high school.

My doctor makes Casper look tanned.

Having a good day.

#108 GTA Girl on 11.14.11 at 10:01 am

http://www.cbc.ca/news/canada/toronto/story/2011/11/13/tor-glass-walled-condos.html

Glass condos called Throw-Away buildings.

This is a disaster waiting.

First Canadian place retrofit of new glass is costing $130 million.

I can see lawsuits, condo board failures, insurers jumping off risk, and zilch in resales.

Disposable condos

#109 bigrider on 11.14.11 at 10:18 am

Simple question. Where the hell did 5% and 6% listing commissions come from anyway? 800k home and somehow 40 grand has to be paid out to a guy with a sign and the other with a four door car to drive people around in?

Surely Garth, you must find the commission rate objectionable, no?

#110 Devil's Advocate on 11.14.11 at 10:42 am

#75 JRoss on 11.14.11 at 12:42 am DA

“Treat a client right and they will patronize your business for many years themselves and refer many of their friends and family to you”

I agree.

So why would you require a BRA?

Extra credit: answer in less than 500 words.

(76 words) It is a step in the process which very well qualifies a new buyer we have never worked with before. We do not discriminate and do ask all buyers, new and repeat, to sign an Exclusive Buyers Agency Agreement with terms and conditions specific to each. All include a guarantee of unconditional release that may be exercised by the buyer if ever the buyer is ever dissatisfied, for any reason, with the services we are providing.

#82 Excellent on 11.14.11 at 1:06 am Excellent. This is really good news.

Buyer Representation Agreements (BRA’s) will firmly establish liability under the law for the actions of Realtors. Eventually.

The sword cuts two ways. By imposing onerous and biased obligations on buyers, the agents assume a higher duty of performance and in that process can be held more accountable to customers they purportedly work for.

This seems to be a defacto agency agreement that will impose upon sellers the obligation to prove which side of the transaction they truly represent. In a serious court challenge, no more than hourly wages would be paid out in the event of a disagreement thus establishing the true worth of an agent in a sale that failed.

Realtors will end up being hourly paid as a result.

Excellent.

Bring it on! Hourly billing would entirely negate the need for a Buyers Representation Agreement. Bring it on! It would also negate the opportunity for unrealistic buyers and sellers to dabble in the market. Bring it on! As it stands a REALTOR is not owed one cent for potentially days upon days worth of work and thousands of dollars in marketing expense that do not culminate in a sale.

I think the point made earlier by a few posters speaks best to the matter: One should deal only with an ethical person on both sides of the equation. If you truly believe there is no ethics within the real estate community you should buy and sell real estate without the use of one of the industries practitioners. And if an agent suspects you an unethical person they should refuse to do business with you BRA or no BRA.

We do refuse business on occasion. Even with an Exclusive Buyers Agency Agreement it is just not worth it. Can you imagine sitting in a car for hours on end with such an individual? Fortunately a side benefit of the business is we do get to choose who we do and who we do not work with. The BRA is a good first test of that character we are looking for in a client. Their assurance from us on the other hand is a complete devotion to their house search wants and needs with no expectation of payment unless we get the job done to their complete satisfaction within the terms and conditions of the BRA. If at any time they are for any reason not satisfied with our services we will release them without any further obligation from that agreement. Why would we want to work with someone who does not want to work with us? We are talking about a very emotional aspect of people’s lives here. Seriously. You have no idea what this job entails at times. The emotional rollercoaster some of our clients go through often make me think we need a doctorate degree related to marriage counselling (divorce), financial planning (bankruptcy and foreclosure), grief counselling (probate sale), psychology and a whole lot more. We don’t need to add to that emotional upheaval by forcing someone to fit our style who does not fit it and wants out. And yes “that sword does cut both ways” – if ever find we are uncomfortable with a client we have entered into a contractual relationship with we will cut them loose at the earliest possible convenience.

#111 Daisy Mae on 11.14.11 at 11:10 am

MIXEDBAG: “Do your research, hire an inspector, make sure your offer is conditional on financing, have a good lawyer, and you should be fine….”

********************************

My son did just that, on numerous occasions, and did just fine — both selling and buying.

#112 Bottoms_Up on 11.14.11 at 11:11 am

#109 bigrider on 11.14.11 at 10:18 am
——————————————-
If you think about it, yes, $10,000 (per agent) is a nice payday, but how many hours do they have to put in to sell the place, and possibly how many homes are they working with that aren’t selling or that never sell (or how many of their buyers never buy)?

$10,000 (pre-tax) represents a modest income if this payday comes along once every two months.

The real crime here is the $20,000 that is paid to the brokerages for lending the agents some ink and office space.

#113 Bottoms_Up on 11.14.11 at 11:14 am

I touched a large BRA a couple years ago, and I think next time it’ll be much smaller (clause-wise, that is).

#114 Devil's Advocate on 11.14.11 at 11:15 am

#109 bigrider on 11.14.11 at 10:18 am Simple question. Where the hell did 5% and 6% listing commissions come from anyway? 800k home and somehow 40 grand has to be paid out to a guy with a sign and the other with a four door car to drive people around in?

Surely Garth, you must find the commission rate objectionable, no?

In British Columbia the most prevalent rate is 7.0% on the first $100,000 and 3.0% on the balance of the purchase and sale amount that being split, essentially, four ways between listing sales, selling sales, listing office and selling office. On a $500,000 property that is $19,000 in BC vs. $25,000 or $30,000 in Ontario.

The commission is ALWAYS negotiable right up to ratification of the contract of purchase and sale. (HINT: negotiate the commission when you have a deal in front of you not long before some hypothetical deal might happen. Your REALTOR will have more incentive to contribute to facilitating the deal and you will not have beat them into a demotivated state before the commence working for you)

#115 jess on 11.14.11 at 11:16 am

A good lawyer who communicates your options

back in the 90’s
my last home i did a fsbo . An interested buyer came along with mom and dad .
Three weeks later i listed. Much to my surprise the offer came from this same fella who was represented by an agent. My agent brought back a low ball trying to convince me this was a good offer. Not! Back and forth higher and higher until I accepted an offer. However, my lawyer told me i was 500 short on his bill and that i could pay him later. I called each of the real estate agents to split this cost. Both said no way. Okay told my lawyer i am not going through with the deal. The independant agent (100% er) laughed and said I have the money in escrow too late. Really . I called the buyer and told him the situation and that he may luck out and buy it cheaper from the bank. By 4 that day my lawyer had the money. My guess is that they must have thought i wasn’t bluffing.

#116 Kilby on 11.14.11 at 11:19 am

#29 Hoof-Hearted
Interesting Vancouver Province article….And the comments that followed. There is a candidate running for municipal office in Vancouver that is using the affordability issue in her platform.

#117 Bottoms_Up on 11.14.11 at 11:22 am

#78 Disciple’s replacement
——————————
lol, that is some funny buckin xhit man.

Actually, I’m slightly concerned about whoever is posting under ‘disciple’. I’m pretty certain they could benefit from the use of modern-day medicine.

#118 Bottoms_Up on 11.14.11 at 11:26 am

#65 Dan T on 11.13.11 at 11:45 pm
—————————————-
Agents are a ‘dime a dozen’, so to speak. Therefore you have all the clout in the negotiation as to what to include in the BRA. If your agent doesn’t like it, walk down the street and find one that does.

#119 eddy on 11.14.11 at 11:33 am

‘First, you should always have your own agent when buying. Always. No exceptions.’

In multiple offer situations, especially if done by fax or email, the listing agent has the advantage of knowing all the offered prices and that advantage can be passed on to any buyer or buyers he represents, unethical -yes, unheard of -no

here is yet another vid about the derivatives mess-

http://www.youtube.com/watch?v=rIruCBopmfo&feature=player_embedded

#120 Bottoms_Up on 11.14.11 at 11:41 am

#60 Devil’s Advocate on 11.13.11 at 11:40 pm
————————————————-
The perceived problem with the BRA is that if one attempts to buy a house using their agent, and the deal falls through, but then in a few weeks time the buyer, on their own accord, finds a place that they end up buying (perhaps a family member is willing to sell a place to them), their agent can legally go after a commission even though they didn’t help find or buy the place for them.

Do you think an agent suing their buyer is a fair arrangement in the case?

Whether this happens in reality, I don’t know, but this clause makes you guys look really sleazy.

And I do understand that the intention of the clause is to make buyers ‘think twice’ before jumping ship, but if your services aren’t up to par, or the buyer finds themself a good deal, then morally the agent really shouldn’t be entitled to anything?

#121 Devil's Advocate on 11.14.11 at 11:49 am

#115 jess on 11.14.11 at 11:16 am A good lawyer who communicates your options

back in the 90′s
my last home i did a fsbo . An interested buyer came along with mom and dad .
Three weeks later i listed. Much to my surprise the offer came from this same fella who was represented by an agent. My agent brought back a low ball trying to convince me this was a good offer. Not! Back and forth higher and higher until I accepted an offer. However, my lawyer told me i was 500 short on his bill and that i could pay him later. I called each of the real estate agents to split this cost. Both said no way. Okay told my lawyer i am not going through with the deal. The independant agent (100% er) laughed and said I have the money in escrow too late. Really . I called the buyer and told him the situation and that he may luck out and buy it cheaper from the bank. By 4 that day my lawyer had the money. My guess is that they must have thought i wasn’t bluffing.

Let me get this straight:

You were unable to put the deal together yourself with that prospect buyer. A REALTOR later did and you begrudge them their due, to which you must have previously agreed, for the good work they did that you could not have as you did not alone. Your lawyer refused to cut his bill but did agree to defer a portion to a later date. In order that you could pay your lawyer anything you needed him to get the deposit held in trust with the real estate agency (we don’t have escrow in Canada so either you are American or your story is BS). You suggested to the buyer they might be able to buy it cheaper from the bank thus indicating clearly you were headed for foreclosure. There might be a good reason you found yourself facing foreclosure in the first place Jess

Really? Are you quite sure you are in the right on this one in any way shape or form?

My guess:

They decided to cut their losses and learn from the experience not to deal with the likes of you again or if so only with a more stringent contractual agreement in place and probably a bond of assurance that there were enough funds to meet all obligations in the event they secured a sale.

My conclusion:

You Jess are most exemplary of the very reason we have Exclusive Buyer Agency Agreements and they are becoming more widely used every day.

#122 MixedBag on 11.14.11 at 11:50 am

@ #103 househornyhousewife
Nice post.

@Beach Girl – you make me laugh, in a good way.

#123 pjwlk on 11.14.11 at 11:55 am

This weekend has been very sad for me indeed. My wife, who has stood by my side tirelessly for the last 4 years while we patiently waited for a RE correction, has finally thrown in the towel. Sounding thoroughly defeated and beaten down she announced to me “There’s not going to be any big correction.” and “I feel like we’re going to be trapped here [renting] for ever”. To be honest, I’ve thought that many times myself.

The arguments I use seem less and less convincing with each passing day. Not only with her but with the rest of our family and friends as well. Although I do believe we are near the top once again, with the prospect of low interest rates for maybe one or two more years to come, any bottom in the market big or small seems to be so very distant.

Her support and belief in me was a big part of my own strength and perseverance. I hope I will not let her down in the end.

#124 Devil's Advocate on 11.14.11 at 11:56 am

#118 Bottoms_Up on 11.14.11 at 11:26 am #65 Dan T on 11.13.11 at 11:45 pm
—————————————-
Agents are a ‘dime a dozen’, so to speak. Therefore you have all the clout in the negotiation as to what to include in the BRA. If your agent doesn’t like it, walk down the street and find one that does.

EXACTLY And that sword too cuts both ways.

To all agents I say; If the industry had adopted the use of Buyers Representation Agreements long ago the whole Competition Bureau / CREA thing would be a non-issue as it would never have any legs to stand upon. Embrace the use of Buyers Representation Agreements and suddenly you will look at FSBOS, mere postings and discount brokerages in a whole new light. You will leave NO stone unturned in finding that perfect home for your client. The Do Not Call List will not apply to you because you are not selling something you are looking to buy something as is your fiduciary duty to your buyer to find them the best property possible listed or not.

#125 Devil's Advocate on 11.14.11 at 12:01 pm

Well I am done here for today. Time to head into the office. After a nice long weekend off. Hope yours was too.

The whole lot of you have only reaffirmed my conviction to the use of Buyer Representation Agreements or Exclusive Buyer Agency Agreements as we call them here.

Clearly I cannot change the lot of your minds on the matter. Hopefully though I have shed some light that causes a select few, and maybe Garth, reason to pause and ponder the benefit of a contracted Buyer Representation with a little more open mind.

#126 Devil's Advocate on 11.14.11 at 12:03 pm

BTW it’s 8:00am out here in BC

#127 Dom_Now_in_Zürich on 11.14.11 at 12:07 pm

Global review and chart on housing prices…thought some might be interested.

http://www.ritholtz.com/blog/2011/11/a-global-view-of-the-housing-bubble/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+(The+Big+Picture)

#128 T.O. Bubble Boy on 11.14.11 at 12:14 pm

So – should someone arrange a BRA-burning ceremony?

#129 sue on 11.14.11 at 12:19 pm

45 Mike Rotch

Distilling and adding magnesium back in is Dr. Blaylocks advice which I will take over a dude named “Mike Rotch”.

Also, the 1 in 300 rate was as early as the 50’s so we are not living 150X as long to explain the sudden surge in Cancer..esp among women in 30’s/40’s with breast cancer. More likely the pseudo estrogens in the food among other things…(estrogen/progesterone out of balance).

Last post..sorry Garth

#130 eaglebay - Parksville on 11.14.11 at 12:20 pm

#90 bcpaul on 11.14.11 at 2:23 am

Where have you been in the last 30 years?
The “web” has been around longer than 10 years.
The “Internet” has been around more than 30 years.

#131 Devil's Advocate on 11.14.11 at 12:25 pm

#120 Bottoms_Up on 11.14.11 at 11:41 am

To answer your question: As I previously stated in my post at #110:
“We do not discriminate and do ask all buyers, new and repeat, to sign an Exclusive Buyers Agency Agreement with terms and conditions specific to each. All include a guarantee of unconditional release that may be exercised by the buyer if ever the buyer is ever dissatisfied, for any reason, with the services we are providing.” – D.A.

Now I MUST go.

#132 eaglebay - Parksville on 11.14.11 at 12:35 pm

#113 Bottoms_Up on 11.14.11 at 11:14 am
“I touched a large BRA a couple years ago, and I think next time it’ll be much smaller.”

I did too and she slapped me. It still hurts.

#133 rower on 11.14.11 at 12:38 pm

BRA burning time, again!

I’ll go first.

#134 Kris D. on 11.14.11 at 1:33 pm

#7 Devil’s Advocate

You’re full of it. #22 Devore is bang-on, as is Garth.

The BRA is entirely for the agent’s protection.

I got taken in by a predatory agent into a stringent BRA – Yes, my fault, but at least I grew a brain shortly afterwards, and never signed a purchase agreement with that agent, lest we get further shafted.

We waited-out the period of the BRA to expire (It was a moot point – Prices were/are insane, and we weren’t ready to buy, anyway)

We also complained to the boss of the realty that employed this agent – The boss ADMITTED in private that the BRA was unfair, even unnecessary! But agents are self-employed and the boss said each agent had freedom in such matters.

The boss added, in a nice way, that we were foolsto sign the BRA – Live & learn. Yet, it doesn’t justify how agents use a concoted document like the BRA to make it seem all official and proper – At least I wouldn’t make my living cheating unsuspecting people, but that’s precisely what the BRA allows agents to do, legally.

#135 Devore on 11.14.11 at 1:34 pm

#114 Devil’s Advocate

The commission is ALWAYS negotiable right up to ratification of the contract of purchase and sale. (HINT: negotiate the commission when you have a deal in front of you not long before some hypothetical deal might happen. Your REALTOR will have more incentive to contribute to facilitating the deal and you will not have beat them into a demotivated state before the commence working for you)

Negotiate commission when you have a deal in front of you? Is this reverse psychology day? So you have found a great house, this is the one, you’re ready to buy, and now you “negotiate” the commission? I say “negotiate”, because at this point any and all your leverage is gone. And if you signed a BRA, the agent can basically name his commission, and you have no choice in the matter if you want that house.

So, honest question, please explain this process to me.

#136 Kris D. on 11.14.11 at 1:52 pm

Further to my bad experience with a BRA (#134):

My close friend bought his home without a BRA. When interviewing potential agents, the first thing he & his wife would say to the agent, “We won’t sign a BRA – You work for us on a listing-by-listing basis. Take it or leave it.”

A few agents did actually show offense & bravado & walked out – But guess what – The same agents called back in 2 days offering to work without the BRA, after all :) Try it for yourself – The BRA is a scam.

#137 Blacksheep on 11.14.11 at 2:16 pm

Kits # 40,
“The key is knowing your price/terms and sticking to them. Do not get emotional about the property and educate yourself before making an offer!”

BC Paul # 90,
“With the information available online (and free) in the last 10 years, realtors are mostly pointless.”

Daisy Mae # 95″
“No….we don’t HAVE to use realtors.
We CAN do it ourselves.
And maybe we should start doing just that.”

Devil’s Advocate # 54,
“We don’t need your business. But Garth is right… “you should always have your own agent when buying. Always. No exceptions” in other words you need us – really you do. And you heard it from your very own illustrious leader himself.”

DA,

You truly are deluded.

Please point out which part of a real-estate transaction, legally cannot be completed WITH OUT a realtor?

Please save the “what if” scare tactics.

My Brother has bought/sold multiple homes with NO real-estate agent involved. I sold my father’s home 10 years ago, with NO agent involved.

People reading this blog see things differently than the masses. Go pedal fear on some MSM blog.

take care,
Blacksheep

#138 Rob on 11.14.11 at 2:17 pm

Yes, BRAs are not new. They’ve been around for a very, very long time. What they haven’t been is common enough so that many people think they are new. So why would any agent be pushing them now? They’ve been pretty difficult to get signed in the past for the exact reasons you state. The reason for them being encouraged now is because agents, unlike many professionals, do not charge any sort of retainer or fee agreement while providing a service. This agreement ensures that the agent will get paid. It’s really no big deal for the vast majority of honest buyers and sellers out there who are truly satisfied with their agent’s representation. Where it is needed is with the shady buyers (there are a lot) who treat agents like tools to use and then throw away. These are the same people who take their kids to Toys R Us to let them play with everything for hours, rip open boxes, and then leave without purchasing. Yes, a small percent of folks out there but you know what they say about a few rotten apples.

So what should you do with an agent who asks you to sign a BRA? Simple:
1) What are your options for unconditionally terminating the agreement should the agent be failing their end of the deal?
2) What are your benefits for signing one? Will they throw in an agreed discount/service in addition?

Remember, the BRA not only stipulates what their duties are but this is also a contract where YOU can negotiate with the buyer agent how much they will earn. Be creative! They don’t have to get 2.5% or whatever. You could negotiate that they will return to you X%! And yes, that would be legally enforceable for you, too.

#139 triplenet on 11.14.11 at 2:23 pm

Put your realtor on a retainer. That shouldn’t be too difficult to figure out. The realtor must provide service, you must buy or sell in a predetermined time period – 30 days??
Other businesses use that model. It works.

My investment counsel is on retainer, however they proposed it somewhat differently. I am guaranteed 7% p/a net return on any invested capital for the 2011 year. Any return over 7% – is the retainer. Returns that exceed 9.5% are split equally between us.
There are a few rules with regard to types or sectors of investment that are absolutely precluded. Easy, simple.

You just incentivized your advisor to take risk. Dumb move. — Garth

#140 Bill Gable on 11.14.11 at 2:26 pm

Superb advice and I loved the reference to having your agent ‘mouse’ around for you.

This BRA is a sucker punch to the gut of the unwary.

Thanks, Mr. Turner – I have a feeling you just saved more people’s financial lives.

#141 OwlEyes on 11.14.11 at 2:30 pm

And look at this news about the quality of condo building in Toronto….
http://ca.news.yahoo.com/torontos-glass-condos-face-short-lifespan-experts-114359149.html

Ouch! Imagine living in one of these in January as the icy winds howl of Lake Ontario. Well, on the upside you get WiFi.

#142 T.O. Bubble Boy on 11.14.11 at 2:34 pm

CBC Report — in case you didn’t already know, glass condos are built like crap, and will fall apart soon:

http://www.cbc.ca/news/canada/toronto/story/2011/11/13/tor-glass-walled-condos.html?cmp=rss

#143 Rawinder on 11.14.11 at 2:41 pm

Thank you Garth for educating the masses about the so-called “buyer respresentaion agreement”. If there is a more one sided contract anywhere out there, I’ve never seen it. It is all about what you will do for the agent, not what they will do for you. If they happen to be totally incompetent, you have agreed in advance to pay them regardless. The agreement itself is unethical and immoral.

#144 Form Man on 11.14.11 at 2:43 pm

Devil’s Advocate……..many posts..

You are really taking it on the chin today DA. The posters are correct, one does not need a realtor for a real estate transaction. Garth is also correct. BRA’s are advantageous to no one but realtors. Have pity on DA people, he is struggling to survive in a job that is fast becoming irrelevant. Combined with his myopia on the economy ( remember, he is a Conservative; destined to continually flail away, re-fighting long lost battles ) he is truly a tragic figure……….

#145 Rawinder on 11.14.11 at 2:50 pm

#123pjwlk:

Meet her half way. Start looking, and tell her that if you find something and she can convince you it’s a good deal (not by claiming it will just be more unaffordable the longer you wait) then you’ll do it.

#146 Lorne on 11.14.11 at 2:58 pm

#139 Triplet
I like the idea of a “retainer”for investment advice. Now, maybe 7% is too high in this climate…and they may take unncessary risks….but, even if you lost , you would only have those losses…not the extra 1% of your portfolio that is commonly paid to “fee only” advisers. I like the idea as I really hate paying an advisor…when I lose money…but have no problem paying when I make $. Maybe something like above 5% and you pay the advisor…and you split anything above 7%….so the advisor would then get 2%+ when they are successful…as opposed to 1% today. Seems like a win, win to me. Wonder who will be the first to offer this form of advising…I am sure there will be a lot of customers??

This is no different than putting money into hedge funds where the manager is paid only when he exceeds pre-established targets or hurdles. This form of compensation has encouraged excessive risk-taking, since the guy in charge therefore focuses on short-term results, not on establishing a long-term portfolio which adjusts assets to the changing risk tolerance, age, financial situation and tax profile of the client. No ethical advisor would agree to this. — Garth

#147 Rogue on 11.14.11 at 3:11 pm

Garth, this is an interesting comment…nobody needs to (nor should) sign a BRA in the current circumstances.

A bit of a general overview, that will help drive my point home…

I am currently in the process to become a real estate agent. My heart belongs to a discount brokerage , but I have chosen to join a traditional brokerage (the underdog though…) for the training and the overall quality of the people employed there.

I recently finished the real estate courses, and I found them to be very easy, but comprehensive. It is a bit of a brainwashing process though. There were some litigation examples there, that made me, a future member of their profession, cramp with disgust at the outcome…

For example…did you know that the law (REBBA 2002) stipulates that the agency between a brokerage and a client can be established even without a written agreement? Visit a property with an agent, then buy it privately within a “reasonable” amount of time, and you may get sued…and you may lose, and have to pay that agent a hefty commission…the reasonable going rate for such services in your community, which ends up being higher than what you would have paid if you had signed an agreement (usually nothing, as the seller pays most of the times)…

I am not advocating signing the BRA… as stated above, I totally oppose it. If an agent is good and confident that he/she will do a good job, they will never ask you to sign one.

Now, I can safely assume that pretty much everyone (except probably the agents) would like to see them thinned out and paid less (a lot less). This could be accomplished easily, but nobody wants to pay the (small) price…

You see, even Garth is indirectly and unwillingly promoting them, by advising to use an agent when buying.

I know that most of you will not agree with my following statement, but keep reading…the only way to bring this high commission madness to an end, is to have both the seller and the buyer pay for their service.

Only by paying for a service will the motivation to NOT pay for the service arise…

See, when selling privately, it’s not the sellers that benefit, but the buyers, who want to pay less…usually 2-4% less.

When just the sellers are paying, the buyers will hire an agent, because it costs then nothing. The buyers are simply not interested in buying privately, as there are no advantages for them…

If both the sellers and buyers would pay, they would be able to negotiate better deals, and maybe not use an agent at all.

And I leave you with food for thought…

How can sellers know the best price to ask for the house? Or, how can buyers know if the asking price is fair?

…enters the stage MLS, the only database that compiles the historical prices…and guess who has exclusive rights to it?

#148 JRoss on 11.14.11 at 3:21 pm

DA

“It is a step in the process which very well qualifies a new buyer we have never worked with before.”

So if I move to Kelowna and only want to make one responsible purchase of one house to live in for the next 30 years, I have to sign a one-sided agreement that someone who levers up and buys multiple homes on credit does not. Got it. Way to support prudent buying activity. Good for you.

“and let me tell you there are some VERY BIG BONUSES being offered by some sellers in this competitive buyers’ market.

Get it now?”

Yes I do. Market clearing price is actually even lower than I expected. And I will let the seller know that they could forgo the bonus to the selling realtor by simply offering me a lower price. Thanks for the tip.

#149 John saccy on 11.14.11 at 3:30 pm

#123pjwlk on 11.14.11 at 11:55 am
Although I do believe we are near the top once again, with the prospect of low interest rates for maybe one or two more years to come, any bottom in the market big or small seems to be so very distant.

——- Well well.. I must say go ahead and buy. Tell us how it works out in the next couple of years. Patience is a virtue. All good things and bubbles come to an end. So will this one.

#150 Devore on 11.14.11 at 4:20 pm

#142 T.O. Bubble Boy

This story seems to be making the rounds!

It’s amazing that as an individual home owner I would have to comply with dozens of regulations just to build a deck in my back yard or renovate a bathroom, but developers have free reign basically when it comes to building these towers. Ditto for Vancouver’s leaky condos, and I am sure it is not just Toronto glass towers that have a limited lifespan, although we don’t get quite the range of temperature extremes here.

#151 Excellent on 11.14.11 at 4:24 pm

Sorry Devil, but you are wrong about these contracts. They are written strictly to ensure or protect commissions and income for agents in the industry and they do not offer “buyers” any more opportunity than similar situations where no contract exists.

A buyer never needs to use the services of a Realtor to purchase a home. I am glad we can agree on that point.

So if I sign a BRA the suggestion has been made that I am ensured reliable, dependable, unbiased and honest service. Does that really mean that I don’t get any of those warranties if I refuse to sign.

I think these agreements have finally put a flame to the feet of the myth that Realturd’s (r) are actually professionals.

Does my Accountant (for example) demand a contract before offering services thus ensuring knowledgeable performance only when my name is on the dotted line? Do you think he withholds critical advice if he cannot get a written deal before the work is actually even done?

Make me laugh man. That is not how the business works.

Does my doctor demand I sign a paper before ensuring me he will give quality care for my health? Does he focus on his own income first before sharing his skills? Does he ransom me when I am sick? Does he suggest I might get substandard care, even bad service if I don’t cave in and sign to his demands for services?

How about lawyers? They typically offer an initial 30 minute consultation free. Have you seen them shove documents under their clients noses before any discussions even began that are only there to ensure his fees even if I do not like the advice and walk away?

Guess why DA…….

Because those people are professionals, that is why. We trust them implicitly and rely upon the advice they offer even without a contract or bond to bind us.

We expect them to act in our best interests from the very first moment we meet them. That is just assumed. We rarely have a fear they are actually acting in the interests of someone else.

You know……like Realtors who play both sides of the Harp equally well and are mere commission mercenaries that will sell out to the highest offer. That is why, buddy boy. That is why.

You are not a professional, friend, but a harlot of housing.

#152 Devore on 11.14.11 at 4:26 pm

This is no different than putting money into hedge funds where the manager is paid only when he exceeds pre-established targets or hurdles. This form of compensation has encouraged excessive risk-taking, since the guy in charge therefore focuses on short-term results, not on establishing a long-term portfolio

And there is nothing wrong with this, because there is room and role for speculation in our markets, as long as the fund does not claim otherwise, and customers know what they are getting into. The 2/20 compensation popular with hedge funds (2% of assets, 20% of gains) encourages exactly this kind of speculation to obtain gains through risk taking and leverage, as you point out, it’s designed to.

#153 jess on 11.14.11 at 5:17 pm

devil
you painted quite a picture.
Here’ another …once upon a time back in the days of meech and bankers speeches of folly, talks of separation and high interest rates.

many business people at that time had their lines of credit yanked and were not even behind. Too big to fail meant some get 3% or walk(whaler’s wharf) . I on the other hand had 12% although, rates were tumblin ‘down to 7.5%.

My bank sent me a letter in Feb 1990 to renew since 5/yr.term up in may. Great! Only one month later line of credit called 21 days to pay and bank would not renew mortgage. Puzzled when Never late. Called the banker . Whole branch shut down. Called the broker he killed himself. Was told that the appraiser i had was being investigated for over appraising. Incidently, that house didn’t reach that appraised value until 2000.
C’est la vie. It was not my adding mistake Devil. And what work are you talking about ? The prospective buyer came on my fsbo sign without an agent. I took him though talked to his parents for over one hour. Intersting that two days after i had listed the offer came in. Do you think ten minutes of an agents time is worth $6400? Who is the greedy one here?

Definitions (2)1. Documents, real estate, money, or securities deposited with a neutral third party (the escrow agent) to be delivered upon fulfillment of certain conditions, as established in a written agreement.

2. An account held by the lender into which a homeowner pays money for taxes and insurance.

#154 Out in the woods on 11.14.11 at 5:29 pm

#66 yorel on 11.08.11 at 8:46 am
All this stuff about Harper. Would someone tell us what the other parties would have done differently? I don’t remember much discussion from them about real estate, but that’s just me.

Neilson – The Point – Rockman quotes “We see what we want to see and hear what we want to hear, dig.”

If they had done nothing we would continue to have sensible lending guidelines. If a politician wants to buy votes he can direct money to individuals rather than programs.
Who wouldn’t vote for:
$100 per child per month under 6 – only people with children over 6.
Tax credits for sports participation – only people who cannot participate.
Increased deficits for G20 bling – only no help for manufacturing jobs.
Deficit reduction – only people who didn’t know how we got into it the last time and the work we had to do to get out of it.
Neutral political support – those who would prefer bought and paid for political support with financial smoke and mirrors.
Is there any truth to rumors a MP’s 1/2 mil debt was paid off?
If we lean too far over (to extreme) we forget why we chose the middle of the road in the first place.

#155 triplenet on 11.14.11 at 5:29 pm

Re: your comments on #139

Not likely. As I said there are rules in place.
It’s my money – I make the rules.
This is investment for liquidity purposes.
There is nominal risk today in achieving 10 % returns. It’s what everyone else is not doing.

#156 Bottoms_Up on 11.14.11 at 5:51 pm

#123 pjwlk on 11.14.11 at 11:55 am
——————————————–
If you’re buying for the long-term, you’ll probably be OK, as long as you’re not in a super-over-heated market and have reliable jobs.

If you had a crystal ball, and knew today that in 2021 the average price of a Canadian home was going to be $360,000, what would you do?

#157 Disciple's replacement poster for this coming week while he's on vacation on 11.14.11 at 6:01 pm

Hey guys. i told you I would try to fill disciple’s shoes for this coming week. I have been his protege for about six weeks now. I am pretty well up to speed and am well versed in all of the current conspiracy theories.
So here goes:

Dinosaurs..what a load of crap your real rulers have spoon fed you. All of the evil teachers (this one’s for you Smoking Man) have totally snowed you and f**kd with your young impressionable brains. I mean dragging you down to see that fake display at the Royal Ontario Museum when you were in grade 3..That was so sinister, bordering on evil even. Your real rulers have rigged the education system and tell teachers to lie and invent these huge creatures for their amusement.
The truth boys and girls is that the earth is only 6000 years old and dinosaurs never existed. anthropologists are hired by the elites to lie to you also and pretend that they dug those fossils up. There are no such things as fossils..read my lips..no fossils

#158 Herb on 11.14.11 at 6:23 pm

#157 Disciple’s Disciple,

that must have been some honking big dog that buried them thar bones in them thar hills out West!

But if you say there aren’t any fossil, it has to be so.

#159 bigrider on 11.14.11 at 6:25 pm

Hey Devils Advocate.

Did you know that when applying for a personal disability insurance policy ,one of the specific questions aside from things like “do you skydive” or “race motorcycles” is , guessed yet?

“are you a real estate agent”

You smart enough to guess why?

#160 Bobby on 11.14.11 at 6:27 pm

Garth is Indeed very correct. The sole purpose of this agreement is to ensure the realtor gets his/ her commission.
How many car dealerships have you walked out of due to incompetent salespeople.
Imagine if you looked at a Honda at one dealership and the salesperson wants you to sign an agreement that effectively says that if you buy a Honda at any other dealer, you owe the first salesman his commission. It is a recipe for shoddy service. No wonder realtors like our friend DA is defending the practice.
I see a time coming where both buying and selling agents will bill the prospective buyers or sellers for their time. For example, a selling agent will offer to oversee an open house at $100 an hour. It will make both agents and clients accountable.

#161 Michael Hawk on 11.14.11 at 6:57 pm

Thank you Garth.

Thank you for ,every day, convincing me more and more that buying real estate in Canada is a huge mistake.

It blows my mind away to see how much everybody has jumped into the real estate bandwagon here in Regina. Friends right out of university “buying” 400K houses… and man, don’t even dare to mention falling prices. We all know how LOW real estate prices in SK were compared to the rest of canada before 2005. People here think that prices are only “catching up” with the rest of Canada… and given how low they were, there’s a lot of catching up to do.

Been made fun of already for suggesting that prices may fall. This was a friend’s BBQ, about two months ago. They ganged up and attacked me with their sharp edged arguments:

“What are you talking about…my family (greek) got rich through real estate” –
“Prices are just catching up in SK… don’t you know how low they always were compared to the rest of Canada?” –
“SK has a lot of natural resources, and that will create jobs, boost up immigration…. and where’s all that people gonna live.. eh?”
“Keep thinking like that, and you’ll never be able to buy. You can’t save enough money to match up the price increase in one year.”

I tried to escape by saying that I was not contemplating living my whole life in the queen city, to which they replied.. “you can buy now, and sell at anytime and make a profit”. We agreed on disagreeing, but I could tell that they felt very sorry for me.

Perhaps I should ran to CIBC, show them a letter from work with my annual salary, get a half a million mortgage, and buy right beside the airport. One of those beautiful and stylish cookie cutter structures in harbour landing… right beside walmart and lowe’s… right around the YQR apron… hear the delightful roaring of turbofans in reverse thrust mode. Wonderful… at least I’ll be able to say with pride, just like everybody else, “I’m a Homeowner !”

Perhaps not.

#162 Drake on 11.14.11 at 7:16 pm

The last house I owned I bought and sold without Realtor involvement. Glad I did. I got $80k more than any agent said they could get me (this was ten years ago in Victoria). When I moved to Ontario, they threw this BRA at me before they’d let the rental agreement go through. I told the agent to shove it, but my wife ended up signing it. So, she’s renting the place not me. They gave us some BS about signing it being a legal requirement, yeah, right. Real Estate agents are a level below snakes. I would not use a buyer’s agent regardless, you do pay. First thing I’d do is remove the buyer’s agent’s “take” as I’m effectively the buyer’s agent….and I’d have my lawyer close at hand. Obviously, I trust even lawyers more than I’d trust a RA.

#163 Toronto Condo's set to CRASH on 11.14.11 at 7:24 pm

CBC Report — in case you didn’t already know, glass condos are built like crap, and will fall apart soon:

http://www.cbc.ca/news/canada/toronto/story/2011/11/13/tor-glass-walled-condos.html?cmp=rss

Not only will they fall apart (prices) but they might really FALL apart… LOL Toronto is set for a MONSTER CONDO/housing crash. How many flippers are sweating it right now as the ticking time bomb in more ways then one will distory condo’s and condo prices. Tic toc CRASH!

#164 Hoof - Hearted on 11.14.11 at 7:25 pm

Re: BRA…

Reeks of desperation ( ie the economy is tanking)via its entrapment mechanisms.

You can already see the lawsuits, via the horror stories of little old ladies and young couples etc. getting screwed royally.

Methinks the Real Estate Boards best kill BRA ASAP.

#165 Worst investrment on 11.14.11 at 7:30 pm

CBC Report — in case you didn’t already know, glass condos are built like crap, and will fall apart soon:

http://www.cbc.ca/news/canada/toronto/story/2011/11/13/tor-glass-walled-condos.html?cmp=rss
—————————————————————— Not only are Toronto’s condos cash flow negative for years to come but they fave falling apart and costing thousands and thousands in repair costs. Flippers are going to take a huge bath on Toronto condo’s/housing. The end is near.

#166 Smoking Man on 11.14.11 at 7:52 pm

Only place for a BRA and that’s the floor by the door

#167 Nostradamus Le Mad Vlad on 11.14.11 at 7:53 pm

#102 TurnerNation — Bang on! Great post. And there’s not a goddamn thing anyone can do about it, except to let the cycle change take care of itself. We are no more than bit players or cannon fodder.

#107 Beach Girl — “My doctor makes Casper look tanned.” — Good description of the medical profession!

#157 Disciple’s replacement poster for this coming week while he’s on vacation — Bang off! Yes, the earth is indeed only six thousand minutes old, so the batteries (AAA) it runs on are only partly done.

Keep the posts coming — disciple has taught you well!

#168 TurnerNation on 11.14.11 at 8:07 pm

realtors(r) are not the only ones with weasel contracts…remember what disciple said: they have their own language (legalese) expressly designed for trapping us!! It is no mistake.

http://www.cbc.ca/news/canada/british-columbia/story/2011/11/11/bc-travelclaim.html

Retired couple billed $50,000 despite travel insurance
Prime Link refused to pay after misunderstanding over form

By Kathy Tomlinson, CBC News
Posted: Nov 14, 2011 6:06 AM PT

“I had no treatment and I just had weak kidneys, and that is what we talked about [with the broker],” said Anna. “I am not reading [the form] or anything, because I don’t know how to read English.

“[The broker] was satisfied with the answer that we gave him, that she had no treatment and no [kidney] stones,” said Artur.

Despite letters submitted since from doctors, insisting she is not receiving any treatment for her kidney condition, the insurance claim denial letter reads, “You do have a chronic kidney disease for which you have undergone investigations which is considered treatment.”

#169 TurnerNation on 11.14.11 at 9:09 pm

Catepillar is building a new plant in Indonesia…news out last week.

Pay unionistas maybe $60-80 hour all-in for salary, benefits, pension (one month vacation, 2 weeks sick days), OR…outsource. Not a tough choice for capitalists.

The first thing taught in Macro Economics is: Capital is mobile!

Buy stocks! Companies will do well, very well.

#170 Nostradamus Le Mad Vlad on 11.14.11 at 9:18 pm


China “When Obama started insulting China, I knew things were going badly.” wrh.com; 7:12 clip “Adam Kokesh and Peter Schiff discuss Ben Bernanke’s press conference on the dwindling economy and the government making it illegal to buy and sell gold over the counter.”; US Fed US$16 tri. in secret bailouts. I can account for 15 of them! US debt Super committee / congress has to walk around scratching their heads looking very important; Post Greece and Italy comes France, Belgium, Spain, the UK, NAmerica, Oz and NZ, and Cameron Barking loudly and running scared; Crisis of Generations Students, overloaded with college debt and few jobs, moving back in with their folks; The Ragged Trousered Philanthropists Written in 1914, it describes what’s going on today; GS lawsuits Over US$15.8 bln. in mortgage slime.

4:16 clip Tom Woods on central bank stuff; Fiscal Tyranny in EU, which is what will happen here; Jobs Market Long contraction; TPTB The last thing TPTB want is to see how Iceland’s people told their govt. and the IMF – EU to go f&(k themselves; 14:56 clip Quadrillions and derivatives = a marriage in heaven; GS takes over Europe.
*
9:51 clip “FEMA Coffins Standing by for the jobless, homeless and starving.”; US drones shifted to Turkey. The two ‘quakes from HAARP were a sharp reminder to play by the west’s rules, not Islam; Obomba and Iran Give the prez. a rifle and send him to the front lines. That’s where he can talk with China and Russia, and Russia urges IAEA Russia also sees through the lies; All the polls in the m$m have Ron Paul leading, and that’s why they’ve all been pulled; Fukushima Reactors 5 and 6 playing up? 11:31 clip Dead scientists, but who killed them?

Radioactive Iodine covers Europe; UK Dictatorship Sure glad I don’t live in Limeyland anymore; 2:04 clip Ex-Detroit mayor living in luxury in Texas; IPCC “Remember when Phony Tony Blair based his “Dodgy Dossier” on an outdated student research report?” wrh.com; Fuel Shortages in Nebraska which is reaon enough to invade Iran, ‘coz they’ve got OODLES of oil; War on Terror Who is fighting it? Contaminated Gardasil may be infectious.

#171 Timing is Everything on 11.14.11 at 9:21 pm

Lawyer, mortgage broker, RE agent (realtor), Doctor, chimney repair mason, Dentist, roofer, electrician, financial advisor etc…

…Get someone you know and trust or get a referral from a trusted family member, friend or colleague….and burn your BRA.

#172 The thing in the basement on 11.14.11 at 9:22 pm

120 Bottoms – If Garths posting is correct, I read that to mean any property viewed during the time of the BRA,
not property viewed for the first time after the BRA
expires. So, if you see a completely new (to you) property the day after the BRA expires and you purchase, you owe the realtor zero.

#173 Daisy Mae on 11.14.11 at 9:31 pm

– Parksville on 11.14.11 at 12:35 pm
#113 Bottoms_Up on 11.14.11 at 11:14 am
“I touched a large BRA a couple years ago, and I think next time it’ll be much smaller.”

I did too and she slapped me. It still hurts.

**********************

Well, I guess these jokes were inevitable… LOL

#174 Andrea on 11.14.11 at 9:33 pm

Dear Garth,

Thank you for this well-written article. Such a good piece of advise. The commercials for B.R.A.s are very misleading and prey upon the naive.

I have a story to share: My husband and I sold our Newmarket home to a couple who were relocating to the GTA from Kenya, Africa. We found out that the couple was sued because they had signed a B.R.A. with an agent in Oakville previous to looking in our area. Apparently the B.R.A. was for all of ONTARIO. I am not sure if the agreement had expired and was in the hold-over period you have described above.

Would someone mind answering this?: How would a realtor find out if someone purchased elsewhere or later? And, if a home is purchased, is there paperwork that asks the buyer if they have a B.R.A.?

Sincerely, Andrea and Alan

#175 gladiator on 11.14.11 at 9:41 pm

disciple’s replacement: your posts are as imaginative and deep as a fart in a puddle. think about it…

#176 Daisy Mae on 11.14.11 at 9:53 pm

Excellent on 11.14.11 at 4:24 pm
“Sorry Devil, but you are wrong about these contracts. They are written strictly to ensure or protect commissions and income for agents in the industry and they do not offer “buyers” any more opportunity than similar situations where no contract exists.”

**********************

Well, that post was…well, EXCELLENT.

#177 Echo on 11.14.11 at 10:47 pm

For all of you making comments about the Buyer’s agent needing protection, they don’t work for free, etc, you’re crazy, and sad. Why? Because…
…the Buyer’s agent WILL br paid by the Seller when the deal closes and the funds are disbursed (duh, no one has time for all the bs that would follow if he/she wasn’t paid

….. you have ONCE AGAIN been manipulated by the real estate industry. You actually think that because this unnecessary, scam worthy document exists that non-payment MUST be problem. They win again. Mission accomplished. The herd is full of easily manipulated, I.e. conned, idiots.

Look in the mirror and say these words:

WAKE. UP. Never, EVER, give that industry the benefit of the doubt. Find GOOD, ETHICAL, agents, and give them your business. Oh, and here’s a thought – the really good ones, if you’re not a dolt, will negotiate lesser commission for you to vet the listing. I bet you didn’t know that! (or that they even COULD.) Again, you have to earn that respect. Do not EXPECT a break.

Done. Now stop defending things just because they exist.

#178 Echo on 11.14.11 at 10:52 pm

And for you newbees…
Garth has exposed this on here many moons ago, trying to protect his peeps as soon as it was introduced. He’s just teaching it again, like the great Prof he is. Stick around and keep learning.

#179 Snowboid on 11.14.11 at 10:54 pm

#160 Bobby on 11.14.11 at 6:27 pm…

Many years ago a wise real estate agent that helped us get into investment properties told us never, never allow an agent to hold open houses when selling.

He (not DA but a successful agent in Kelowna) stated these are only for the benefit of an agent, not to sell your home.

Anyway, $ 100 an hour isn’t quite what I would have in mind to pay an agent to sit in my home and wait for prospective new clients – maybe $ 20 an hour at most!

#180 Jeffery on 11.14.11 at 11:08 pm

I just bought a house…i know i shouldnt but it has a legal basement apartment. I went through a company that gave me half their commissions so i ended up getting a refund of 3800. plus the basement is rented for 1100 so the home is costing me 550 with taxes and mortgage. how can i go wrong… please tell me…o by the way i fixed the mortgage for 3.12% for 5 years….Find a hole in this please…

#181 Devil's Advocate on 11.15.11 at 12:17 am

#179Snowboid on 11.14.11 at 10:54 pm

How do you know for sure that it was not me? 0:-) (-:{

#182 Ronaldo on 11.15.11 at 1:53 am

“Remember the listing agent is getting paid by the guy selling the house, so guess where his loyalties lie? Even when a ‘dual agency agreement’ is signed and the dude is morally and ethically bound to be fair to both parties, you still need morals and ethics. Money has a way of erasing both.” Garth

The buyer of the house is the one with the cash so it makes sense that a realtors loyalty would be with the guy with the cash. Without the buyer nobody gets anything. Do you think a realtor gives a hoot if he knocks the seller’s price down by 20 grand to make the sale and collect that cash. To the realtor, it only represents a few hundred dollars less in commissions but for the seller, its a whole lot of money.

Yes, the listing agent may get paid by the guy selling the house but its the buyer who has to come up with the cash to give to the seller to buy the house in the end.

In tight markets, as we have now, when properties are difficult to sell, I don’t believe most realtors are loyal to the seller at all. He will do whatever he can to get that sale. Even telling the buyer what he figures the seller will accept. Personally, I distrust any realtor for that very reason. Been there done that. Yes, money has a way of erasing both morals and ethics in tough times.

#183 Where's The Money Guido??? on 11.15.11 at 3:07 am

Re: #165 Worst investrment on 11.14.11 at 7:30 pm

CBC Report — in case you didn’t already know, glass condos are built like crap, and will fall apart soon:

http://www.cbc.ca/news/canada/toronto/story/2011/11/13/tor-glass-walled-condos.html?cmp=rss
—————————————————————— Not only are Toronto’s condos cash flow negative for years to come but they fave falling apart and costing thousands and thousands in repair costs. Flippers are going to take a huge bath on Toronto condo’s/housing. The end is near.

Yeah that’s for sure. In another life I was a glazier and installed the first window walls in Vancouver back in the 80’s. We tradesman fought the developer (Concord Pacific-the ones being sued in TO), to do a better installation and at one point were willing to walk off the job, but, the money spoke and our company told us to go back to work or it’s the highway. So what to do, we went back to work and installed these window walls in pouring rain when we would not usually work in those conditions (raain-snow vote to go home). Try caulking in 2 inches of water, waste of time. Concord even had a contingency budget (millions) on each project to fix the windows for the first year (and there were many fixes). So they have known about this for years and have literally done nothing to address it, they just kept pocketing the coin and screw the condo owners in the future.
If you are to buy a condo in a tower, make sure it is CURTAINWALL (like the Wall Center Tower on Burrard Street in Van… the curved one) not window wall. Or better yet, just make sure they are punch windows in concrete openings (ideally 1 window, doesn’t matter how big) and not floor to ceiling windows, then you’ll get your money’s worth.

#184 Drake on 11.15.11 at 7:02 am

The NWO elite clearly put their man in charge of Greece…guess they need someone trustworthy to manage their human resources (ie: slaves). Lucas Papademos is educated in the US, Senior Economist at the Federal Reserve Bank of Boston, worked for the European Central Bank, member of the Trilateral Commission, Governor of the Bank of Greece. New leader of Italy is a long time communist. What do they share in common? I’ll let you figure it out.

#185 Echo on 11.15.11 at 10:08 am

#180 Jeffery:

Big Hole = You paid too much. To make an enormous purchase it should be an “investment”. For it to be an “investment”, it has to be about equity.

If you bought a property that you are sure will appreciate as you fight to reduce the enormous debt associated with it, fantastic. It is extremely unlikely though considering what’s coming to the Canadian market. Still, it is possible, which is why Garth still invests.

Perhaps give us details that really matter, big picture math-wise to see if you did think it through beyond monthly in pocket profit.

#186 Devil's Advocate on 11.15.11 at 3:23 pm

I have been trying restrain myself but feel I need in defense of my industry respond to the comments of yesterday’s blog where a good many posters took misinformed liberty to compare the function of a REALTOR® to that of a car salesperson. To compare the two is like comparing apples to oranges to say the least. There is simply no comparison at all.

A car salesperson is an employee of the dealership. If you are not interested in purchasing one of that dealerships inventory that salesperson is SOL.

A REALTOR® is an agent of a buyer, or seller as the case may be. If you are not interested in purchasing any given property that agent might introduces you to they can, and should, show you others. They, in fact, have a fiduciary duty to find you the best fit to your stated wants and needs above and before their own interests.

A REALTOR is an agent you contract, be it in writing or implied, to do a job for you. A car salesperson is an employee employed by the dealership to do a job for them.

Another distinction which I ought to at this time enlighten you of is that when you go to a development where the developer has an onsite sales staff that sales staff is not necessarily a REALTOR. Often developers hire salespeople not unlike a car dealership. They can not, by law, sell you anything but that developers inventory.

Do yourself a service and learn something about agency and maybe you will better understand a REALTORS function under that law of agency as it applies is such that you could hardly call them “salespeople” with respect how they must treat you. They are agents who have fiduciary duties that if they neglect the courts frown upon with a very heavy hand.

If you understand the law of agency you will gain a better appreciation for the need of a Buyers Representation Agreement. Without one it is pretty difficult for YOU to prove in court you had them under such exclusive contract and as such your particular personal interest might not be so well protected in the relationship as that agent might have more definitive preceding obligations to another if not themselves.

I am not a lawyer but of this I am quite certain and can tell you that not one of my lawyer clients has ever had a problem signing an Exclusive Buyer Agency Agreement. Don’t you think if it were so one sided as you believe a lawyer would be the first to object?

#187 Van guy waiting on 11.15.11 at 4:58 pm

So many leprechauns on this blog. Btw, smurfs are real too. Go get em!!