Buying a property in Toronto can be an extremely frustrating process. There are under-listed properties, bully offers, bidding wars where you have no idea where you stand and so much more. On top of that buyer reps are paid by sellers, and a lot of the important information on listings is missing. Personally, I feel like the system is broken.
It is no wonder I read posts online all the time blaming real estate agents for this mess, and rightfully so, since many of these issues were created by agents and their governing bodies. Luckily, I think we are finally getting close to the breaking point and some things MUST CHANGE or are already in the process of being changed, but if I could wave a magic wand over the market right now, here are 7 changes I would make immediately:
7 Ideas To Solve Issues In The Toronto Real Estate Market Currently
- Make Bidding Transparent – The Liberal party has campaigned on putting an end to blind bidding, but who knows if this change will ever go through. Personally, I think it is a good idea. While some may argue their sellers will get more money under the current system, and I used to believe this too, I am starting to believe this is false. Far too often you hear stories of buyers losing out on a property saying, “I would have paid that” and I think a lot of that has to do with they felt like they were bidding against themselves and had to draw the line somewhere. Transparent bidding would be more fair all around and I think could be beneficial for sellers just as much as it is for buyers. And it would make winning a bidding war feel less dirty.
- Strict Rules On Offer Dates – Still on the topic of multiple offers, the current landscape is so ridiculous. Currently you are allowed to set an offer date, then accept an offer before the offer date at any time if you just add “Seller is willing to entertain pre-emptive offers” on the listing. This is what is known as a bully offer. This makes it so confusing for buyers as these offers usually come in at 8pm on a Friday night and buyers suddenly have to rush to make a decision if they want to move forward with an offer within a few hours. On top of that you have houses listed for hundreds of thousands below what they are willing to actually accept where buyers then need to do inspections at their own cost not knowing if the seller will actually entertain what they can afford. I think the current Wild West of offer dates needs an update and here is what I would suggest if people want to go the offer date route:
- No changing your mind on an offer date – If you have an offer date, YOU MUST STICK TO THAT DATE or there should be a minimum time extension if you absolutely must extend.
- Mandatory Home Inspection – A home inspection should be a requirement of doing an offer date, performed by an approved supplier. Stop wasting everyone’s time and money, TRREB could specify which independent 3rd party inspectors are allowed for offer dates, who aren’t just going to draft up an inspection favourable for the seller and to the best of their ability provide an unbiased inspection report.
- Transparent Process – As mentioned above. But it is so important it requires it’s own section.
- Reserve Price – The list at $799k when you really want $1.2M BS needs to end. One way to do this would be to put in the minimum amount you will accept, a reserve price. If the reserve is not met then you are not allowed to have another offer date on this property for some period of time, such as 60 days. Stop wasting everyone’s time where they wouldn’t even be able to buy the home in the first place.
- Offer Dates Mandatory on MLS Websites – If websites are advertising properties, including REALTOR.ca, they should be required to indicate if the property has an offer date. This will stop Realtors from drastically under-listing in order to get a bunch of buyer leads.
- Buyer Agent Compensation Should Come From Buyers – Another controversial topic, especially after the CBC Marketplace piece last week, but buyers should pay their own agent. As it currently stands the buyer agent commission (also known as the co-operating commission) is decided by the seller. To me, this seems like a conflict of interest. Buyers are often mis-lead into thinking that they don’t pay any commission when in fact they do because they are the ones bringing the money to the transaction. One of the biggest arguments against this is most buyers can’t save for a down-payment and pay the buyer agent fees upfront, so they could make it so that the buyers agent could add this right into the offer. This would also push buyer agents to work much harder and become more knowledgeable for their clients to earn their pay.
- No More Terminating / Re-Lists – Every failed offer date usually goes the route of terminating the listing and re-listing. Sometimes they will do another offer date, sometimes they will actually put a price with no date, but either way they misleading with this practice. TRREB really needs to stop this. If you changed the price it should show on the listing. All price changes should be visible on public facing sites so the public can see what kind of games are being played on these listings. All they are really trying to do is reset that DOM counter which is just misleading to the consumer.
- Mandatory Square Footage on Listings – This would make it so much easier to do much better data analysis and the buyers could do better comparisons for price research. It costs $5 to run a sqft report from MPAC, and while they aren’t always accurate 100% it is better than a range of 200-500sqft. Also, to all the agents adding that balcony (exclusive use common element) into the square feet, PLEASE STOP.
- Restrictions on Trading Areas / Property Type Experts – Right now I can technically sell a property anywhere in Ontario. I have no knowledge of anything in Thunder Bay for example, but I am licensed to sell there. Personally I think there should be a better way. Agents should either select a specific region to trade or property type (ie. condos, cottages, etc.) than having thousands of “Jack of all trades” out there. This would help elevate the profession to a higher level and be best for the consumer.
- Tougher Qualifications For Realtors – A lot of people make fun of the fact that the barrier of entry to becoming a realtor is quite low. While I think this used to be the case, I think the new program through Humber College will solve a lot of these issues. I do however think there should be more requirements to keep your license in good standing and encourage people to take the profession seriously. If an agent is new for example, they should go through a mandatory apprenticeship for the first year. Then if agents are only selling 1 property every few years they should be required to take more education than those actively trading. The agents just treating this as a hobby should be removed and a higher standard of professionalism should be pushed forward.
How Do We Get These Changes Implemented?
If you agree with me on these things, let me know by sending me an email or reach out to your MP to see if they can push for some change. If there is enough positive feedback I will go ahead and take the next steps to try and bring these changes forward. The only way change will ever come to the industry is if it is driven by Realtors or Government Policy. Also, if I missed anything I would love to hear that also. What frustrates you most about the current system?
I just launched my new website Homing.ca. Eventually I will be doing some blogging over there too so check it out. It has some awesome tools for buyers and sellers.
Thanks for reading and have a great day!