This Week's Feature
This week, I am away in British Columbia's beautiful Cariboo country and I wasn't sure what my internet access will be like so, in the interest of maintaining my re-commitment to weekly columns, I'm preparing ahead.
Like many columnists - including my favourite daily blogger, I'm resorting, in a way, to the age-old trick of re-running. To be fair, I haven't published it on here before - but I did write it quite a few years ago. About a year ago, I did document how I was venturing into the world of freelance writing.
Below is a feature piece I wrote, originally for The Vancouver Courier, a thrice-weekly newspaper in Vancouver. It was an in-depth story about a company called "e-realty."
For now, have a look at the piece - I'll share later how that process went in further adventures in the freelance trade.
And if you don't hear from me in week, either I've fallen off the weekly column wagon or I was eaten by a moose.
The quiet, East-side street is barely disturbed by the faint tap-tapping of metal on metal as the stake pierces the ground and announces its wares. The deed complete, the man in the shiny suit slips back into his long, white car - leased, of course - and heads to his next target: a split level, four-bedroom bungalow with a North Shore view. He is scarcely around the corner when the telltale chirping is accompanied by the vibrations upon his hip. A smile forms at the corner of his mouth. A potential buyer.
Across Vancouver and the Lower Mainland the scene is repeated daily, weekly and monthly and has been on the rise since 2001. 'For Sale' signs in front of houses, town homes and condominiums are scarcely planted in the ground before the offers start flowing in, often before an open house can be held and very often selling for more than the listed asking price. It doesn't take long to sell a home these days, which makes it a great time to be a seller.
It makes it an even better time to be a realtor.
With homes selling at lightning speed, the real estate industry looks like a pretty attractive career path. Nearly eight thousand realtors in Greater Vancouver are experiencing a market where just about everything sells - it's a realtor's dream.
But not all sellers are as thrilled about the services traditional real estate agencies have to offer, especially when it seems that homes are practically selling themselves.
"With the market being the way that it was, we just did our own investigation and realized that it's not worth it to pay a realtor fourteen, fifteen, sixteen thousand dollars to put your house on the market for seven days," says Shawn Hart, a retail manager who sold his east side Vancouver home without a traditional real estate agent.
Like an increasing number of homeowners, Hart, 30, turned to an alternative means of selling his house, in this case a Vancouver company called erealty.ca.
As the name suggests, erealty.ca uses the Internet as its primary vehicle for connecting not only with its clients but also its clients with potential buyers. "It really came about once the [Multiple Listing Service] decided to put their listings on the web for public view. That's when the light went on," says Ian Martin, erealty.ca's Vice President of Communications. That light has continued to shine more brightly: since the company started operations in 2001, its number of clients, sales - and its visibility - has risen steadily.
The process seems simple enough. One of the key ingredients to marketing a home is getting listed on the Multiple Listing Service (MLS), a service that has always been provided by traditional realtors. Since 1998, however, the MLS has been available on-line, in Vancouver at www.realtylink.org.
Since then, some surveys suggest that real estate is one of the most often accessed information for buyers on the Internet.
"The viewer-ship is staggering in terms of the number of hits they get per day, per month," says Martin. Clients of erealty.ca are provided access to the MLS, creating their own real estate advertisement that's placed alongside every other listing and seen by thousands of potential buyers - and realtors.
Once a buyer is interested in an erealty.ca listing, contact is made directly with the seller, who shows the home him or herself. Jessica Grant, a research assistant at UBC and another erealty.ca client says, "The hardest thing for me was preparing for the open house. And that's probably what scared me the most."
But according to Hart, showing his own home turned out to be not scary at all. "People came in, they introduced themselves, asked the questions they wanted to know and it was a really fun day," he says. In many ways, having the seller show the home makes sense.
"Who better to show it than the person who owns it?" Martin concurs. "I know when the garbage is picked up. I know where the schools are. And the great thing is they dictate their own schedule." Sellers are able to plan as many or as few private showings or open houses as they think necessary.
But the biggest attraction to erealty.ca is likely the money sellers save on real estate commissions. On average erealty.ca estimates its clients save in the neighbourhood of $8,500 on their home sale.
At 0.5%, erealty.ca's commission fees are very nearly impossible to beat. And in lower priced properties - if there is such a thing in Vancouver anymore - the savings on commission could be the deciding factor that allows the seller to purchase his or her next home.
The seller also has control over how much commission is offered to cooperating realtors, that is, those who may represent potential buyers. The seller can offer a flat fee or a commission of 2, 1.5, 1% or no commission at all. "We allow the seller to dictate how much they're willing to offer to the cooperating agent," says Martin. "So when they set the terms they go, okay, if I'm only going to offer a dollar, or one percent on the other side, they're pre-warned that [they] may not get a lot of activity as opposed to if they're offering one point five, or five thousand dollars or something."
In a hot seller's market - as Vancouver has been since erealty.ca opened up virtual shop - a homeowner may well decide to offer no cooperating commission, betting they will be able to make a better deal without a buyer's realtor involved. Grant says one agent did call before bringing in a client to try to negotiate a higher commission than what Grant was offering up front. Grant held firm; the agent came anyway.
Besides, if perceived interest in the property is declining, the seller can always up the commission to attempt to attract more realtors.
There's also the self-satisfaction and cocktail-party bragging rights factor, a sense of sharing success at dabbling in the heretofore-enigmatic real estate industry and coming out ahead. Says Martin, "It's like somebody who's renovated their own bathroom or something and think, 'hey, I did this and feel good about it. I saved thousands.'"
For most people, a real estate purchase or sale is the largest transaction they will ever undertake, which makes the thought of going it alone more than just a little intimidating. But unlike flying completely solo, as in 'For Sale by Owner' transactions, erealty.ca is, in fact, the seller's real estate agent.
Linda Whitehead, president of erealty.ca, notes their product is designed to alleviate the fear and mystique of the real estate transaction. "We have a fairly structured product," she says. "That's one of the biggest reasons they use us. You're going from doing it all on your own - for sale by owner - to a full service realtor. We're somewhere in between."
Adds Martin, "We're the coach on the sidelines. We're watching the field of play; we're just not on the field with them."
Indeed, apart from the MLS listing itself, the most important part of erealty.ca's service is their role in advising on offers and the sale transaction itself. "Whenever an offer is made they don't respond to it until we've seen it," Martin says. "We review it with them and then we'll consult and advise them how to respond to it."
Just like a traditional realtor.
Of course, erealty.ca is not the only way sellers are seeking to find less expensive means to sell their homes. Apart from private sales, a number of smaller or discount firms have increased their share of the booming market.
One Percent Realty has turned what has traditionally been viewed as the norm in real estate commissions on its head. Vancouverites who have sold their homes are familiar with a traditional Vancouver real estate commission of 7 percent on the first one hundred thousand dollars of the selling price, 2.5 percent on the remaining. On a $500,000 home that commission structure costs the seller $17,000 in real estate fees.
One Percent Realty, as the name implies, charges a straight 1% commission on the sale price, with a minimum fee of $5,000. On that same home, One Percent's commission is just $5,000, a significant savings, particularly if the seller is counting on every dollar as equity for the next home purchase.
Ian Bailey, President of One Percent Realty, says the key difference between their company and the so-called full service realtors is that One Percent clients are responsible for their own advertising, if they choose to do so. Other than that, he says, "We offer the same service for a fraction of the price."
The models seem to be catching on. In each of the past two years One Percent Realty has doubled its sales from the year before and this year looks to be just as promising. Erealty.ca has also achieved constant and steady growth since its inception as well. And neither's clients seem to have any difficulty attracting interested potential purchasers. Shawn Hart's total transaction time - from signing up with erealty.ca through open house to closed deal was just twelve days. Jessica Grant's sold in just five, with close to sixty potential buyers viewing the home in that short period.
It's enough to make a traditional real estate agent curse.
Finding realtors willing to comment on their competition is a challenge; a code of ethics in the real estate profession sanctions realtors who speak critically of fellow realtors, electronic, discount or otherwise.
But not all real estate agents are ready to pull the plug on their web-based brethren.
Jeff Benna, a Vancouver realtor with ReMax Real Estate Services acknowledges erealty.ca and One Percent Realty are an increasing presence in the market. But he's not terribly surprised. "I think there's always been discount brokers, alternative commission structures and different service packages," he says. "They're definitely a presence and their names come up a lot."
There's little doubt Vancouver's booming market has helped develop smaller and alternative real estate services. Benna, 36, acknowledges it's been a banner few years. This market, in short, benefits everyone, traditional and alternative realtors alike, which also means there's room for a variety of players in the field.
Technology too, as in most industries, has had a drastic impact on the industry. "Ten or fifteen years ago if you wanted to make a [stock] trade, what did you do?" erealty.ca's Whitehead asks. "You phoned your broker, the person would execute the trade and then confirm it with you. Now, a huge percentage of the populations sits down at their own computer and executes their own trade online. Erealty.ca is the parallel to that in this industry."
Benna agrees. "The traditional model in real estate was always the realtor is the information gatekeeper. If you wanted to know anything you had to go to a realtor," he says. "Now we're not so much gatekeepers of that information but we're interpreters of that information."
Technology and a booming market don't have everyone running from realtors, however. Carrie Gadsby and her husband David Portal recently sold their North Shore townhome to buy their first house. Even with a valuable property to sell, and knowing of the less expensive, more 'self-service' options available, Gadsby says they hired a realtor precisely because of how quickly homes are selling.
"With the market that was out there we needed to move fast," Gadsby says. With houses getting multiple offers, Gadsby says they had to make their offer without subjects, which also means they needed to sell their existing property immediately, lest they suddenly find themselves owners of two homes. "We couldn't have gotten the house if we didn't have our realtor making the deal," she adds.
"I think there's always going to be a place for a competent, professional, knowledgeable person that you can go to for advice," Benna says. "When you're talking about transactions worth hundreds and hundreds and even millions of dollars, I think [for] the layperson, if there is such a thing anymore, it's definitely worth it to get that perspective."
Lately, the traditional real estate industry too has introduced its own innovations. On August 17, the Greater Vancouver and Fraser Valley Real Estate Boards brought their own new technology online. Eileen Day, Manager of Communications for both boards says the new web-based software brings her members up to speed. Essentially, she says, the boards' new ML Exchange program is "bringing them to the same environment as their clients. It makes the working relationship with a realtor so much more effective."
With the number of home sales finally leveling off, according to Statistics Canada, it remains to be seen if these new real estate business models will continue to represent a significant threat to traditional real estate agents. But Benna says companies like erealty.ca and One Percent Realty are legitimate competition. "So hopefully, you go out and describe what you offer for what you charge and if they see value there they proceed with you," he says.
"To be quite honest, we're not looking to be all things to everybody," says erealty.ca's Martin. "We're not going to threaten a majority of the realtors. There's always going to be enough business out there for them."
Sellers can also take comfort in knowing that both erealty.ca and One Percent Realty are, in fact, licensed realtors, subject to the same licensing requirements of the Greater Vancouver Real Estate Board and the Real Estate Council of B.C. In that same vain, it is the fiduciary duty of a buyer's agent to show any property the client wishes to see, regardless of the commission being offered. Sellers, then, shouldn't worry that their listings are being blackballed.
"No. Why would I do that?" Benna asks. "That's bad for everybody. I've sold a couple of One Percent Realty listings because they were the houses that my clients wanted and they were the best fit."
Meanwhile, Shawn Hart and Jessica Grant wouldn't hesitate to go the unconventional route again. Says Grant, "We received two competing offers and we had a lot of contact back and forth. They were really excellent. Very helpful."
That's good news for Martin and Whitehead who continue to count on word of mouth to increase their presence in this still highly competitive market.
And it's one more way even barely tech-savvy consumers can harness the power of information access to open up choices in the largest financial transaction most will ever have.
Posted by davidrussellbc
at 12:01 AM PDT
Updated: Thursday, 7 August 2014 9:50 AM PDT