An interesting development in Picton, Ont., provides a glimpse into a possible future business model for real estate brokerages across Canada.
For the first time that I am aware of, a law firm in Ontario has established its own real estate brokerage to handle the needs of the local community. Henderson Williams Realty Ltd. is owned by Wade Williams, Kelly Henderson and Matthew Page, three partners of Henderson Williams LLP, a local full-service law firm.
Recently I spoke to Wade Williams, one of the partners in both the brokerage and the law firm. He told me that the brokerage was formed to give clients in Ontario’s Hastings and Prince Edward counties greater choice, service and value in buying and selling real estate.
The firm is based on the Scottish model in Edinburgh, where lawyers effectively control most of the real estate sales market.
Williams recently became a registered real estate agent. The broker of record for the firm is Mary Jane Wells. With more than 14 years of experience as a Realtor in the region, she has a keen knowledge of the local real estate market.
When I first heard of the new brokerage, I wondered how Ontario lawyers could own a firm of real estate agents. It turns out that there is no prohibition here on cross ownership in this type of arrangement, either with the Law Society or with the Real Estate Council of Ontario (RECO).
Henderson Williams Realty is licensed with RECO, as well as being a member of the Quinte & District Association of Realtors.
The firm offers its clients a selection of pricing models tailored to the services they need. It works on either a traditional commission basis, a flat fee structure, an hourly rate or, according to Williams, “another fee structure we haven’t even thought of yet. Our clients tell us what they want and we work to find a fee structure that meets their needs.”
The sales reps are salaried employees who do not work on commission. This allows the Realtor to provide advice and recommendations free of the immediate financial pressures associated with traditional brokerage commission sales systems.
In an interesting twist, the firm will act for either buyer or seller, but not both. As a result, the agents will not “double end” a transaction and collect two commissions.
Clients of Henderson Williams Realty are free to use any lawyer of their choice and are not steered to the law firm. Similarly, clients of other lawyers are free to use the Henderson Williams realty firm.
Not everybody is happy with the start-up realty firm. Some local real estate agents are unhappy about the firm’s intrusion into their marketplace and have stopped referring clients to the Henderson law firm. A number of them have even refused to show listings of the Henderson brokerage to their buyer clients, although this may contravene their duty to their clients and their provincially mandated Code of Ethics.
Despite this, Henderson told me that they have had a “really busy” summer, concentrating on builder sales, waterfront cottage properties and vacant land.
“The phones are ringing off the hook,” he says.
I asked Henderson whether the Henderson Williams Realty business model would work well in a larger market like Toronto. “Absolutely,” he told me.
Food for thought, I think, and a possible glimpse into the future.