Toronto Real Estate Board official: “Realtors are not the problem”
Toronto Real Estate Board official: “Realtors are not the problem”
—Von Palmer, the Toronto Real Estate Board’s chief government and public affairs officer, addressing reporters after a news conference during which Doug Ford pledged to reduce the land transfer tax if elected mayor. According to the Star, Palmer was responding to a question from CityTV’s James Tumelty about why, if TREB thinks paying a percentage on a property’s purchase price is such a terrible burden on homebuyers, the organization isn’t pushing equally hard for realtors to lower their commissions.
I think it’s actually a very valid question, particularly in a city where houses are essentially flying off the shelves, so to speak.
Lowering the realtor commission because the price of homes are so high is not a burden for them. Do that first as an example for the politicians.
Von is absolutely correct. I seriously can’t even count how many things are wrong with James Tumelty’s theory.
First of all, the SELLER pays the agent’s commission. Not the buyer. Sure, you have to factor the commission into your net proceeds, when pricing the house. But between houses in Toronto routinely going for over the asking price, and the fact that the buyer doesn’t actually know how much commission the listing agent is earning, the commissions themselves are not an issue in the marketplace.
Second, lower commissions are the last thing that TREB needs to be pushing for. Why is that? Look up “discount realtor Toronto” on Google. You will find an abundance of agents offering 2%, 1%, and even 0.5% commission rates for full service. So, there are plenty of “affordable” options, alleviating what is supposedly a burdensome cost for the buyer. Even if such commissions were encouraged to the point that they were to become the norm, it will not have any bearing on the supply and demand factors present in the market, that put property prices where they’re at. There is only a marginal relationship, at the most, between real estate agent commissions, and prices of property. Trying to get agents to do the same thing for less money would be a terrible move on TREB’s part, and a deterrent to professionalism.
Third, Toronto is one of the only cities where the buyer of a property pays two land transfer taxes. The way it is now, on a $500,000 property purchase, you would have to pay $12,200 in taxes ALONE. That is in addition to coming up with a $100,000 minimum down payment under the new mortgage rules, paying legal and moving costs, as well as any out-of-pocket fees that may come with arranging financing. Out of that $12,200, $5,725 of it goes to the City of Toronto. That’s close to three mortgage payments – and guess what? That’s tax. You can’t finance that.
Realtors are absolutely not to blame here. I seriously think it’s shameful that this was even a suggestion in the first place.
There are REALTORS® out there already who charge very low commissions and make it work. Check out akonepercent dot ca or theDiscountBroker dot ca