Dealing with a Discount Real Estate Broker

30 December 2009

This month our Company completed our first deal with a discount broker from out of town. They were members of the Toronto Real Estate Board and so had listed a condo townhouse for sale that one of my salespeople showed to her client. Of course the Listing Salesperson was not available and the Owner was present for the showing. He informed our Salesperson that she would be dealing directly with him and we did not need to involve the Listing Salesperson. While we had agency responsibility to our client, we now had to provide customer service to the Owner. We had to modify our Offer to ensure that it was reviewed by the Owner's lawyer who was now to hold the deposit in his Trust Account. Normally we like to hold the deposit with the real estate company - it is insured and protection is better, but of course it involves more work for the brokerage.  Waivers and Acknowledgements went through the Owner too. The Listing Brokerage has little if any documentation and of course who cares about FINTRAC (that's another Government agency). At the end of the transaction, the Owner was happy. He paid a flat fee to the Listing Brokerage and our Saleperson did the work of both salespeople for one fee and also assumed all the liability. Of course our Client was happy - they got the property and did not have to compete in a multiple offer scenerio. That would probably have been the case if the Owner had used his own Salesperson and it  would probably have generated a higher sales price too. So while the Owner saved some commission at the outset, he put himself through more work, took on added risk that the salesperson on the other side would not try to screw him (our Salesperson was so concerned about protecting the interests of the Seller in this instance but my guess is that will be the exception) and they got a lower selling price because they had so few people through the property and those that viewed the property did not make an offer because they wanted to avoid the hassel of dealing with the Owner direct. The Competiton Bureau of Canada wants this to be a feasible option. My guess is that after a few sellers get taken in and law suits fly, that another Government Department will be called in to change the rules again.