We have all heard that the three rules of real estate are location, location, location. It’s been this way for years. That is, until today. It’s all changed now. Now it’s finance, finance, finance.

It’s all about the money now. It used to be, “Call me for a waterfront location” or, “Call me, I am your downtown location expert.”  According to real estate experts I have spoken to, the situation today is more about helping a client facilitate the transaction, not just the location but all of it, including some guidance on finance. Some would even include an analysis of market projections and potential profits. There is some very serious money being loaned out and our financial institutions want in on every angle there is to get more for themselves in today’s low interest rate environment.

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For example, these days banks and lenders are putting terms in mortgage documents that penalize those who are thinking of selling their newly purchased property within a couple of years. To the tune of tens of thousands of dollars. If you want to flip a property in less than a year after it has been purchased, watch out! It could cost you $30,000 in mortgage penalties. In some cases even more.

Financiers have been wise to the quick flip for years but they are jealous that they are left out of the big money grab available to home buyers who sell properties quickly as the markets rise. No capital gains taxes on principal residences allow owners to walk away with tremendous financial gains.

First-time buyers are the hardest to finance for any lending institution. They can also be the most naive, so they are the easiest to prey on for riders and clauses that can punish them as buyers and be profitable to the lender.

It seems the only thing we read in the paper about property transactions is the alleged exorbitant cost of real estate commissions. Meanwhile the cost of lending fees, finder’s fees and referral fees are also higher than ever. Fees from banks and lenders are out of control!

Some of the restrictions that we all thought were in place are not in place at all and most are ambiguous. Referral fees are charged sometimes when there is no referral. Finders’ fees are charged to a lender who did not find a mortgage at all but had the client come directly to them. When it comes to disclosure of all these fees, they are indeed disclosed. They’re all in the documents signed by the borrower or purchaser, but who reads those documents? They may be pointed out by the lawyer of the buyer but it always seems to come down to, “I want to buy that house so I will have to pay the fee. Gimmie the pen, I want that house.”

The point is these fees are buried in the documents and don’t seem to come out until just before the deal is done, when the buyer is so anxious to finish the deal he will simply take it.

It is time financial costs, all of them, are set out right up-front before a deal is done. The same as the real estate commission rate. That alone would make things a lot fairer to the buyer and seller. These fees need to be uniform and clear. I mean, come on, how does a bank get to call a fee on a loan that walked in the door a finders’ fee?

The entire process of property selling and purchasing needs reform, starting with banks and lenders and including real estate fees and commissions. Not just mortgage reform, not just commission reform but all of it together.

While it is a long and heated debate with good points on both sides, it seems irrefutable to me that a standard commission rate for real estate brokers and agents is critical for the future of the real estate business. It does not seem fair or right to me that agents have to scrap with each other over commission rates. Negotiating commissions does that. It demeans the process. It shouldn’t be about commissions but rather good service and professionalism.

Just like the integrity of financial and money lending institutions.


  1. “While it is a long and heated debate with good points on both sides, it seems irrefutable to me that a standard commission rate for real estate brokers and agents is critical for the future of the real estate business. It does not seem fair or right to me that agents have to scrap with each other over commission rates. Negotiating commissions does that. It demeans the process. It shouldn’t be about commissions but rather good service and professionalism.” — aforesaid, as per Heino Molls.

    Heino, truer words were never spoken: “It shouldn’t be about commissions but rather good service and professionalism.”! However, “a standard commission rate” would fly in the face of our detractors at the Competition Bureau of Canada — I believe that they would consider it collusion.

    However, collusion as it relates to encouraged stupidity is perfectly acceptable to the Competition Bureau of Canada, as their recent past, and current arguments overtly favor: Customer Status over and opposed to Client status.

    One of the most important things I learned about this business when I first entered it and would approach FSBO’s (For Sale By Owners), is that I could list these homes and add a 5% or 6% commission on top of their private asking price and sell the home quickly. I can remember one of the first such seller’s who was absolutely shocked at what I (we) could accomplish, using our then unbastardized system, in just three business days. The aforesaid is basically how we should visualize true “value added”. Contrary to what the Competition Bureau Commissioner has tried to suggest in terms of our industry market control, everyone knows where to find a copy of their Saturday morning news paper, so exposure obviously isn’t the main reason or power behind a sale — it is only one element that works, when combined with other elements.

    The basic roots of organized real estate lie in Registrants or Practitioners being welcomed into the business or industry to work their “sphere of influence” — with some exceptions. High numbers of Registrants creates a situation where most home Buyer’s and Seller’s will likely have some sort of personal connection(s) to someone in our industry — perhaps even a close family member. This situation decreases or even neutralizes the likelihood that a Real Estate consumer would complain about the services provided by such an individual — when it was largely a social exercise or engagement. Most consumer’s would rather not complain, anyway.

    The concept of the “discount brokerage” is such that it is intended to disrupt the real estate status-quo of relationships, by luring consumers in through the suggestion of savings, as it relates to any commission that might be charged: 1% verses 2% verses 3% verses 4% verses 5% verses 6% and so on. The discount brokerage model is also intended to eliminate the need for prospecting for new business, and create efficiencys that offset lower unit revenues. Heino, however as you said: “It shouldn’t be about commissions but rather good service and professionalism.” — because, the price that any home will sell for isn’t guaranteed, and the price that any Buyer may pay for a home isn’t necessarily the right or correct price!

    Heino, this industry began with a structure that fundamentally wasn’t conducive to Real Estate consumer’s making formal complaints when they felt that they weren’t properly served and it has only gotten worse. When a home Seller is counselled to offer a lower than average amount of selling commission to a Cooperating Brokerage, are they being advised as to how this may possibly interact negatively with a prospective Buyer’s “Buyer’s Agency Contract”, and if so, why would such a Seller agree to proceed as such — especially, if they’ve been made aware of any discounts that may apply to their List Price, later, as a result of extended market time?The aforesaid is fundamental to a fiduciary responsibility — yet, I believe that most Provincial Regulatory Authorities would be reluctant to prosecute such a negligent Registrant or Practitioner because the accused would hide behind the argument they were being wrongly persecuted for offering a “competitive business model”! I have compiled statistics, for some MLS geographic areas, that show a 4% differential (reduction in average sale price) from the first 30 days of market time to the following 30 day period (30 to 60 days) and so on — net of any fictional value.

    The value in the MLS and it is a system (as CREA rightly points out) was generated in the Real Estate Consumer’s understanding that a REALTOR had certain specific important obligations and that Cooperating Brokerages were strongly encouraged to show and sell one another’s property listings. With “mere postings”, for example, both of the aforesaid key elements have essentially been removed or neutralized — yet an argument was still made for this false product. I have seen clear evidence that some listing Brokers are not even stepping foot inside their “mere posting” listing, and haven’t even had any direct contact with their Seller, whatsoever.

    This industry must make the proper arguments with the Competition Bureau of Canada or it will be further profoundly undermined towards having any, future, broad value to Real Estate Consumer’s. Consider the following statement of the then Commission of the Competition Bureau (Melanie Aiken) in the Commission’s current Amended Application to the Tribunal, against TREB:

    “20. VOWs provide the same services as traditional brokers in a “bricks and mortar” setting but more efficiently (as outlined in paragraphs 23 and 61-64 below).”

    Not only does the above outrageous statement of the Commissioner disavow any knowledge of “Agency” and “Client” status verses “Customer” status, it implies in no uncertain terms that a Real Estate Consumer is better able and better suited to disseminate Real Estate data or information than a: Real Estate Registrant or Practitioner!


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