Edmonton Real Estate Market

[jason403]

Commissions based on price need to die for most of the price range. I could imagine selling $2M houses might be more effort, but 99% of houses are price, post on MLS, then negotiate sale. Realtors take way too much rent out of the housing market.

 

[cmd uw]

That industry can and needs to die.

Absolutely. I can't wait for the who MLS 'racket' to be busted....it's coming.

 

[Avenuer]

Absolutely. I can't wait for the who MLS 'racket' to be busted....it's coming.

What do you mean by 'racket'? Are you referring to how if you sell privately you can't have your listing included on the MLS?

 

[westcoastjos]

I figured he meant Racketeering so to speak.

 

[thommyjo]

Real estate is such a joke. The commissions are robbery and rarely reflect the workload, especially in markets like Toronto. Realtors have conflicts if interest and totally inflate prices for personal gain.

Someone come disrupt the crap out of this industry already. Realtors should go the way of taxi drivers and travel agents soon. A small, helpful, well trained core will survive to serve certain niches. But the vast majority of sales should be able to be done without an agent. Ive bought and sold twice now. Often knew more about the house and neighbourhood than our agent cause we were more invested. Only place they really helped was in the legal side and connections to other professionals for brokers, home inspections, etc. All that can be automated in the future.

 

[IanO]

4th most affordable major city in N.A.

https://resources.oxfordeconomics.com/hubfs/Housing_affordability_fell_in_Q2_and_is_likely_to_worsen.pdf?utm_source=Taproot+Edmonton&utm_campaign=7113fde02f-TAPROOTYEG_PULSE_2021_10_26&utm_medium=email&utm_term=0_ef1adf0932-7113fde02f-420411302&mc_cid=7113fde02f&mc_eid=b81cde227f

 

[kcantor]

my first guess is that most people that complain that realtor's fees are too high aren't realtors.

my second guess is that most people don't know how much realtor's actually earn.

it's kind of like complaining about the cost of a good lawyer (and trust me, it is way more expensive to pay less for a cheap lawyer).

average house prices in edmonton are probably 400k and average commissions probably $12k? both the selling and the listing broker will split that so 6k each. about 20% of that will go the brokerage firm so you're down to 4.8k. any reasonable broker is probably spending another 20% on signage, licensing, advertising, fees (including mls fees so you're down to 3.6k.

at current volumes, edmonton will sells in the range of 15,000 homes this year and has 3,800 realtors so, keeping with averages, that's 4 homes per realtor with a selling side and a listing side so lets use 8. 8 times 3.6k is a gross annual salary of 28,800 per year with no benefits or pension.

granted, the good realtors will do better than that and the poor ones - or the part time ones - will starve to death but even then, a good realtor only has to see your property sell for an additional 3% to more than cover 100% of the fees and the expenses they cover, never mind having providing value legal and valuation and lending expertise etc. don't forget that everything that isn't being paid for out of the realtor's fees (including time at open houses and showings and attending to meetings with lawyers and lenders) needs to paid for or done by the selling owner.

 

[TAS]

my first guess is that most people that complain that realtor's fees are too high aren't realtors.

my second guess is that most people don't know how much realtor's actually earn.

it's kind of like complaining about the cost of a good lawyer (and trust me, it is way more expensive to pay less for a cheap lawyer).

average house prices in edmonton are probably 400k and average commissions probably $12k? both the selling and the listing broker will split that so 6k each. about 20% of that will go the brokerage firm so you're down to 4.8k. any reasonable broker is probably spending another 20% on signage, licensing, advertising, fees (including mls fees so you're down to 3.6k.

at current volumes, edmonton will sells in the range of 15,000 homes this year and has 3,800 realtors so, keeping with averages, that's 4 homes per realtor with a selling side and a listing side so lets use 8. 8 times 3.6k is a gross annual salary of 28,800 per year with no benefits or pension.

granted, the good realtors will do better than that and the poor ones - or the part time ones - will starve to death but even then, a good realtor only has to see your property sell for an additional 3% to more than cover 100% of the fees and the expenses they cover, never mind having providing value legal and valuation and lending expertise etc. don't forget that everything that isn't being paid for out of the realtor's fees (including time at open houses and showings and attending to meetings with lawyers and lenders) needs to paid for or done by the selling owner.

I think it goes without saying that realtors would not be complaining that their fees are too high. Why would they do that? Maybe that they are not high enough?
Certainly brokerages are part of the issue.


Respectfully, you were a bit off on the fees. Commission for a $400,000 home is not $12k. It's actually $16k or 33% higher than what you used in your example.
It's 7% for first $100,000 ($7,000) and then 3% for the rest ($9,000) .

As well, if you are a buyer's realtor, you do not have any costs for signage and advertising as that would come from the seller's realtor and I would argue that your figure of 20% of total commission for that is high - signs are reused I hope and a lot of homes aren't advertised beyond MLS.

 

[thommyjo]

my first guess is that most people that complain that realtor's fees are too high aren't realtors.

my second guess is that most people don't know how much realtor's actually earn.

it's kind of like complaining about the cost of a good lawyer (and trust me, it is way more expensive to pay less for a cheap lawyer).

average house prices in edmonton are probably 400k and average commissions probably $12k? both the selling and the listing broker will split that so 6k each. about 20% of that will go the brokerage firm so you're down to 4.8k. any reasonable broker is probably spending another 20% on signage, licensing, advertising, fees (including mls fees so you're down to 3.6k.

at current volumes, edmonton will sells in the range of 15,000 homes this year and has 3,800 realtors so, keeping with averages, that's 4 homes per realtor with a selling side and a listing side so lets use 8. 8 times 3.6k is a gross annual salary of 28,800 per year with no benefits or pension.

granted, the good realtors will do better than that and the poor ones - or the part time ones - will starve to death but even then, a good realtor only has to see your property sell for an additional 3% to more than cover 100% of the fees and the expenses they cover, never mind having providing value legal and valuation and lending expertise etc. don't forget that everything that isn't being paid for out of the realtor's fees (including time at open houses and showings and attending to meetings with lawyers and lenders) needs to paid for or done by the selling owner.

To me, income should be closely tied to education and time for tasks, plus relative performance vs comparables.

In many markets, houses sell themselves. Whether i use A or B realtor doesn't matter much. Many put in less than 20hrs on a listing. So 5-20k in revenue is a pretty penny.

Not to mention the education and training for realtors is quite low. Much of the job is now automated and outsourced to contractors.

I see them the same as travel agents. Super helpful if youre inexperienced or wanting a hassle free process with little effort. But not needed for the masses. It'll change. It's coming.

At the very least, the pay structure will move to hourly rates vs commission. No reason 1million dollar homes in Toronto that sell in 3 days without a visit or inspection deserve 50k in costs to realtors...

 

[kcantor]

^^
i was talking about average house prices and average fees. there are homes sold for more than 400k and there are homes sold for less. same thing with fees - you quoted the top fee that would be payable but there are many sales conducted at less than that (including foreclosure work that is done at 5% on the first 100k and 2% on the balance, listings that are done on a flat fee - and sometimes a pretty nominal one at that - etc.). regardless, the question isn't the fee but whether value was added for the vendor.

same for splits - some houses will charge as much as 50%, never mind 20%. it will drop, and sometimes greatly, for those agents that are more productive to induce them to stay. those that do become more successful will benefit from that but also become busy enough to have to employ support staff and assistants so the 20% is probably still a reasonable average.

^^^

i'm not sure the "time to sell" is the sole criteria vs the value added to the transaction if an agent wasn't utilized. if you buy a car or a restaurant meal or new set of clothes, the transaction time can be pretty short for the fees and margins the sale price will cover. but those fees and margins also have to include all of the other overhead that is incurred throughout the rest of the day/week/year. that amount has to be reasonable/acceptable for both the vendor and the purchaser. it's not different with real estate fees, it's just that they're an itemized cost like gst that's easy to focus on. on the other hand, because it's easy to focus on means you should ensure as best you can that you are "buying the best" and, as noted above, purchasing elsewhere if you're not confident that's the case and that purchasing elsewhere can be as deep as "for sale by owner" or using the services of a group like purple brick etc. whether there is net value in that depends on your own expertise and availability of time.

as for ease of sale, a vendor and an agent can both contribute to the speed and price of a transaction using everything from cleanup to staging to pricing strategies but i've never actually seen a house "sell itself". even in the hottest of markets, a home that is poorly priced can sit forever if it's priced too high and even in the coolest markets a home that is poorly priced will sell quickly if it is priced too cheap. again, while time is part of the equation, what you're really paying for is expertise

 

[David A]

Like anything, you sometimes get what you pay for. Yes, you can do it yourself, but this is not a good idea if you don't know what you are doing, don't have the skills or the time.

Most people are not in the real estate industry or know much about the real estate market - buying and selling a property is a one time or infrequent thing, but a big transaction dollar wise. Perhaps the biggest purchase someone will make.

I suppose in a very, very hot market (which it is not the case here) a person can sell quickly and get a fairly good price, so if that is your situation and that is all that matters, then good for you. However, did you really get the best price or leave something on the table? Now perhaps you don't care, but that is where the real estate agent fees can pay for themselves. Similarly, with being a buyer - on your own you do not have access to as much information and may not be able to get as good a deal on your own.

 

[thommyjo]

Y'all are use the same arguments travel agents pushed in the 90s.

The time is coming. Disruption will hit real estate. There's already some great start up doing it.

Even think of cars...most people buy them online, whether new or second hand now. They'll still test drive and whatever, but they show up knowing significantly more than people did 30 years ago.

And I bet many people will still buy homes with agents, I just doubt 20-80k commissions will continued to be paid so willingly. The model will change.

And you can say some houses are over 400, some under. But the avg price in canada is over 700 and the avg in our 2 most populous cities is over a million. So thats where I'm doing the math, it better represents the reality. 400 is even below avg for edmonton haha. So thats not a fair number to go from.

Anyone can hire a photographer, use a website, get licensed in 6 months, and be a realtor. Of course the best do a great job and serve clients well.

I just don't think less than 40hrs of work should make you 5k and upwards.

 

[archited]

For you Toronto boosters there is this from the National Post...
SIGNIFICANT DIGITS
22%: There's tough news today for the many hundreds of thousands of Canadians who wake up every day wondering, "How can we live the dream and move to Toronto?" (Wait — why is everyone laughing?) Data released by the Toronto Regional Real Estate board shows the average price of a home in the region in November was $1.16 million, up 22 per cent from this time last year. The lack of new listings was a key factor. On the bright side, at least it's not Tel Aviv, which is now the most expensive city in the world.

 

[IanO]

Some very positive news from Service Alberta today.

We have been working with them alongside groups like BILD, CHBA etc. to address 50+ working day delays on new condominium registrations.

Land titles - Overview

Find information about how land titles work and commonly used forms.

www.alberta.ca

 

[archited]

As I was saying...

Edmonton’s new condo market sees dipping sales due lack of options

Many new condo developments were converted to rentals in the past few years, making a dent in available new homes for sale

edmontonjournal.com