As realtors in this crazy market we are in, we are constantly getting asked questions about where the market is going and why it’s so hot.
One of the most common schools of thought out there right now is that it’s these darn Toronto buyers that are inflating our market, and making it difficult for ‘locals’ to get in.
Is that what’s happening? Yes, but not as much as you might think. It certainly is having an affect on our market, but it’s one of many factors. In 2014, outside agents were doing around 1.6% of the total transactions in K/W, Cambridge and Guelph. In 2015, outside agents had about 4.5% market share. In recent months, that number has been climbing and it’s hovering around 7%. This is a significant increase, but it’s not the sole cause of why our market is as hot as it is.
Out of town agents will always have some sort of market share in any community. And I get it – I think about it from their perspective. Imagine you’re an agent working in the GTA, and you’ve been looking for a home with clients for months.
Those clients realize that they can’t get what they are looking for in the GTA and they start looking in K/W. That agent knows that their client is motivated, and is likely to purchase. If they want to get paid, they have to be the one to represent them, or refer them to a local agent for a referral fee.
In my mind, the latter is the most ethical and fair way to represent your client. It’s my opinion that you need to know the market that you’re working in. It’s not fair to represent a client in an area where you aren’t familiar.
We do have clients ask us from time to time if we will work in an area where I am not familiar. The best thing I can do in that situation is to refer them to someone in that area that works and lives there, who knows it better than I do. This is a win all around I think. Our duties are first and foremost to our clients. By referring clients to the right agents, buyers and sellers can depend on those local for the most accurate, up to date information.
An issue that’s been coming up more and more as an annoyance on our end, is Toronto agents are calling us for information, because they don’t have access to the data. Many times these out of town agents are not paying to be part of our back end MLS system, and thus do not have access to the data.
This is a dangerous game to play with clients. When you don’t have access to the information, your guess is as good as the clients in terms of what price to offer on the buy side, as well as what price to list at on the sell side. None of us have a crystal ball and can predict prices 100%, but it’s important as an agent to be informed about what’s going on in the particular area that you’re selling in.
Often times when Toronto agents are competing in multiple offers here, they think they need to go far higher over the asking price than perhaps they do. Because they are used to the competition in Toronto, they treat the offer situation differently. For example, fair market value for a property in multiple offers may be only $10,000 over asking, but outside agents are encouraging their buyers to go much higher. Seeing list prices on realtor.ca is not enough data to use to fairly represent your client.
If you do decide to use an out of town agent, make sure that they at least have access to the data, and are familiar enough with the area that they are worthy of hiring.
And if you have an agent that doesn’t want to show you properties and doesn’t know the area, STOP using them, and align yourself with a local, knowledgeable professional.