But the extent of that increase isn't really a figure available for public consumption. PropertyGuys.com Director of Partnerships Walter Melanson told CRE Online
he couldn't get into specifics about his company's market share, but he did say PropertyGuys.com has seen a large influx of sales, a growing number of which are being done with a buyer's real estate agent. In fact, these transactions now account for more than 20% of the company's overall business, Melanson said.
This increase, he said, is a "natural occurrence" given the changes that were ratified in the consent agreement between the Canadian Real Estate Association and the Competition Bureau last year, along with the fact that there are about 100,000 Realtors in Canada.
"It's an often occurrence. It's an encouraged occurrence. And in no way do we want to stop interaction between buyer's agents and sellers," he said. "And there is depending on the market area in the country a number of sellers who do opt to work with buyer's agents."
Lee Redwood, a Realtor with Re/Max Garden City Realty Inc. in Burlington, Ont., said the reason for this spike in activity is that private sellers typically need to deal with buyer's agents in order to sell their home.
"If they [sellers] didn't work with a buyer's agent, their home would never get sold. They need real estate agents. So companies like Property Guys are feeding off of the system," he told CRE Online
That's why, he said, it's somewhat misleading for any for-sale-by-owner companies to advertise their service doesn't include any commission. "It usually does," he said.
Melanson, however, said his company does offer a service free of commission if the seller chooses not to pay it. He said PropertyGuys.com empowers sellers to decide for themselves how they will sell their homes.
"Logic's on my side with this. I'm on the side of the consumer. I'm offering them choice. To have a full-service fee arrangement at 5% and pretend that's choice because of the way the fundamentals of the market move is not logical at all. Not many people would agree with that line of thinking. So yeah, people are choosing to pay commission when and if they want to."
Redwood said the current system is not built to handle sales in this way since Realtors work for free until they close a deal.
For sales done by real estate brokerages, the seller pays both the seller's agent and buyer's agent. Now with the PropertyGuys.com's system buyer's agents need to negotiate with the seller to pay their commission of 2.5%, or ask the buyer to pay them directly for their services.
"If the seller or Property Guys is not going to pay my commission, then I got to get my buyer to pay it. And how many buyers do you know that have 10 or $20,000 kicking around," Redwood said.
The lack of commission also creates another problem, Redwood said: a lack of incentive for Realtors to even show privately listed homes.
PropertyGuys.com is able to link its listings to ones posted by Harvey Real Estate Brokerage on MLS.ca for as little as $1 a listing, Redwood said. This partnership creates a situation in which Realtors must work for free, he added.
But Melanson said buyer's agents would be violating their duty to the buyer if they did not show privately listed homes.
"The title 'buyer's agent' shouldn't be held to loosely. There's duty for a buyer's agent just like there's duty with all brokerages. A buyer's agent's duty is to his buyer not a duty to his perceived problem with approaching someone who is in fact listed on Realtor.ca," he said.
Redwood said it's true that Realtors must follow the Real Estate Council of Ontario's code of ethics, which do state that they must work in the best interest of their client. But that doesn't mean Realtors are prevented from determining which homes are best for the buyer among those which are listed by real estate agents if they're comparable to private listings.
"They [PropertyGuys.com] have taken a loophole through the Competition Bureau with regard to being able to list on MLS, and now they're saying, 'Guys, it's your duty to show our listings. I don't care if you're not getting paid for it.' We paid for the MLS," Redwood said. "You can only imagine how frustrating it is for Realtors."
Redwood said sellers not working with a Realtor are also at a disadvantage when pricing and marketing their homes, as well as negotiating with interested buyers. He suggests interested buyers and sellers use his website Sundaybell.com where they can negotiate with Realtors anonymously to represent them for a reduced commission before revealing themselves.
"That way the buyer or seller is getting the representation of a Realtor, and saving money on commission," he said.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate