TMW: people can vote with their feet, as Mr. Cheap discussed. It’s more work, but very much a possibility. As a side note, using an agent in my area is pretty rare because everyone knows everyone’s business and the rumor mill is better advertising than an agent would have access to!

Rather I am factoring in an increase in the sales tax. For many people, this might not be a small tax increase, since Canada has a consumption economy. Utility bills and gasoline prices will go up. All professional fees will go up. Restaurant prices in BC will go up by 7%. In BC, there was a way to avoid the 7% PST by saying that you are buying the item as a gift for a young person. Now this is not avoidable. I believe HST harmonization will have a bigger impact in BC and BC has a very bubbly real estate market. The underground economy is big in BC and taxes would literally increase by 140% for some people, which is actually fair for those who pay their income taxes. I am just saying the HST cannot be ignored as a price shock. This price shock also effect all new real estate purchases, which may have a direct impact on all real estate transactions.

Nevertheless, HST will increase efficiency in the long run. There will be probably be a short term price shock. You never know when or how bubbles will blow up. Short term price shock may be one of the factors that can break the bubble.

The two big factors for house prices (in my humble opinion) are:

1) Employment rates – If less people are working then very few people will buy and some people will lose their house. Therefore the prices will go down. If unemployment gets well into double digits then I think that will cause real estate to drop.

2) Interest rates – Most people buy house and finance a good part of the house. If interest rates go way up then the amount they can finance will go down and that will reduce demand for houses as well.

Both Ontario and BC are harmonizing the GST with PST to create HST. To me, it is a major tax increase and I believe harmonization will have a negative impact on both Ontario and BC’s economy in the short run. Maybe Ontario and BC real estate will correct as a result of that. So many variables in the economy needs to be factored in and can affect the real estate market. Economics is highly behavior based and people are not rational.

I know how you can do better. Have the agent state in writing what level of service she will provide and ensure there is a clause allowing you to terminate should you be unhappy with the service and she does not take measures to correct and exceed your expectations. Don’t be afraid to write a letter to her superiors if you are really unhappy and don’t be afraid to bring in another agent to write the offer for you. It will piss her off but she won’t have a leg to stand on if she wasn’t doing her job.

Not pleasant to deal with for sure but we’re talking laziness and borderline dishonesty that is costing you your time and money.

I think the MLS monopoly is in the middle of being broke up naturally. Either an alternative listing site will take off (one of the for sale by owner sites), or they’ll band together with a unified format and become serious competition.

I’d be SHOCKED if in a decade MLS was considered anything close to a monopoly.

There certainly will be a real estate downturn in the future (many of them actually). At a big one, perhaps this one, Mr. Turner will probably claim credit for predicting it. I don’t think I buy his entire doomsday scenario (I own a condo and would be selling it if I did), but based on the fact that fair market rent tells us what people are willing to pay for shelter. This is a basement on what we’d expect real estate to be worth (if people can own for a comparable price compared to renting they’ll probably do so). Vacation homes and McMansions in the suburbs may take a big hit, but I think the typical single family home that costs a bit more than the equivalent rent SHOULD hold up ok.

I also don’t buy the whole “buy buy buy real estate, it’s GRRR-EAT!” outlook. There’s nothing special about it (other than it being an investment you can live in : which is factored into the price). Overall, it seems to me that the current price for real estate as an investment is still too high (in Waterloo and Toronto anyways). I’d *LOVE* a GT style meltdown (I’d start buying).

Chris: That would burn me as well, but I guess ultimately the seller paid her not you (and it would have been tough to get her half of the commission out of the selling agent), so you probably came out ok (and, as you say, most importantly you love the house).

One way to avoid issues like this is to, at least at the start, only sign an agreement for a shorter period of time (perhaps 1 month). If you like the agent and they’re doing a good job you could extend it for a longer term.

Mike: I agree it’s reasonable for agents to want a signed agreement to protect themselves (and I have no problem with this, it’s a dirty trick to use an agent them screw them out of their commission). I just think agents should be honest that this is what the agreement is about (and, ideally, to actually do their job as Chris’ apparently didn’t).

I think the issue is two-fold. As someone stated, real estate agents will not provide good service if they don’t think you will buy or be reasonable in selling. Every service provider encounters a situation where there is a client they don’t want and the best way to fire them is to have them terminate you.

The larger, more fundamental, issue is why is MLS a monopoly? If anyone had access to the listings, the leverage the industry has is gone (pocket listing or no pocket listing) and agents would have to provide good service since consumers can vote with their feet. Accountants compete against book-kepers and the internet. Lawyers against paralegals and their internet. Doctors against alternative forms of medicine. Why is the public denied access to an alternative to the MLS system? I would not consider the real estate industry to be any more special than the legal, medical or accounting industry.

Does this not strike you as utterly unreasonable?

My friend made an interesting observations the other day about real estate agents. Most people tend to see them on the trustworthy scale slightly above used car salespeople. Something for the industry to think about if that is popular perception.