Leave it to the local sales reps, urges broker Marian deWever

Monday, March 23rd, 2015

Susan Doran

You can’t stick your head out from under the bedcovers without hearing about globalization these days.

The media rarely misses an opportunity to hammer home the point that due to technology, the world is shrinking and economies everywhere are increasingly interconnected.

Real estate broker of record Marian deWever in Stratford, Ontario gets that. Although she’s aware that not everyone will agree with her, she strongly believes that despite the global economy, real estate should remain a local business.

“A variety of things contribute to value that Realtors cannot possibly know without being an area resident,” even if they do online research, she says. These can range from the various intricacies of understanding which neighbourhoods and school districts are desirable and where the boundaries of these lie, to in-depth knowledge of licensing, zoning, recreational facilities, parking requirements, pricing, history and crime rate.

Every community is unique, and when agents from far-flung municipalities who know little or nothing about an area represent clients moving there, they do them a disservice, deWever says.

This goes on everywhere, she says, not just in pretty Stratford, the hometown she shares with teen heartthrob Justin Bieber. (“He’s here a fair bit,” she says, for the benefit of any REM-reading Beliebers. “He still has high school buddies in Stratford and he comes and chills.”)

Mairan deWever, who has been in real estate for 26 years, is with Home & Company Real Estate, a boutique-style operation. In her observation, “There’s an influx of people purchasing in Stratford from larger destinations, such as Toronto.”

Gwen Kirkpatrick, EO of the Huron Perth Association of Realtors (HPAR), which includes Stratford and surrounding towns such as St. Marys, agrees that like many areas, theirs has started “to experience more inter-board listings,” particularly in the past couple of years.

While questioning whether agents from outside the area – some even from outside the province (which complicates insurance and liability issues) – are able to represent their buyers properly, the association’s main concern in this regard is the significantly increased workload it faces as a result of processing the added listings.

To help with this, some regions in Ontario now have plans to pool their data, “merging the databases of various nearby communities,” Kirkpatrick says. HPAR has not jumped on to that train yet, “but we will see,” she says.

There are many reasons a community becomes a draw to outside buyers…the fact that it is Justin Bieber’s birthplace not necessarily among them. Stratford, besides having a reputation as one of Canada’s loveliest cities and being home to the Stratford Festival, is far more affordable than Toronto and some other nearby municipalities, deWever says.

“Stratford has become a retirement destination,” she says. People buy second and investment properties in Stratford too, she adds, with one common usage being conversion to B&Bs. One fairly common problem deWever has witnessed with out-of-area agents is that, not knowing Stratford’s zoning and licensing requirements, they can wind up selling properties to aspiring B&B owners that do not qualify or meet the requirements once all is said and done.

Open houses by outside agents are another issue.

“We’re unique in Stratford in that all real estate offices are closed on Sundays, so open houses are on Saturdays instead,” says deWever. “But outside Realtors will have an open house on Sunday because they don’t know the market. I’ll see the signs – it’s just comical. Everyone else was out the day before. How is that in the best interests of clients?”

Similarly, outside real estate agents representing clients in various other communities may be unfamiliar or out of their depth dealing with issues such as soil erosion, Aboriginal land claims and so on. (The same goes for outside appraisers – they may not be able to decipher comparables properly since they don’t know the market, deWever says.)

“We’ll see Toronto Realtors with their buyer clients (sellers too, but less often),” says deWever. “The practical solution is for outside Realtors to understand that it is not in their clients’ best interests. Instead they should set up a referral network. Or if they are not comfortable handing off the client, they can come with them and work with us on a referral basis – let us be involved.”

She suggests that some good places to find salespeople to refer to clients include conferences, real estate Facebook groups for the target area and Realtor.ca.

Something to keep in mind, she says, is that referrals are often reciprocated.

Many agents argue that no one likes to lose clients and that selling out of area has worked well for them. But deWever feels it’s not worth the possible consequences of being unfamiliar with the local market and having that backfire. There is also the matter of time effectiveness, as hours of driving to and fro may be involved, she says.

In her opinion, “You are far better to build a referral network of like-minded Realtors rather than take the liability” and wasted effort.

Regina Dutt of Keller Williams Black Diamond Realty in Burnaby, B.C., concurs. “Absolutely I have a referral network,” Dutt says. “I would rather send a client to a specialist in an area than fake it.”

Local sales reps, knowing the area, are able to be passionate about it and to provide a history “that is not off the Internet,” Dutt adds.

Ron Stuart, partner with Harbourside Realty in Halifax, says referrals are typically 25 per cent. But he says, like most other aspects of real estate, referrals can be negotiable and competitive. “Some agents have a focus on incoming referrals and offer a premium to get the business,” he says.

Mere postings, disliked by many in real estate, are worth mentioning here.

Stuart says that he has known sales reps who “make a business of co-ordinating with an unlicensed online advertising company to obtain mere posting listings in many if not all jurisdictions across Canada. With mere postings they can avoid agency duties. The homeowner receives little or no pricing guidance.”

On the other hand, a sales rep operating under agency duties would generally have a duty to at least examine the property, provide pricing guidance and inform himself firsthand of the property’s condition, Stuart says.

The Real Estate Council of Ontario (RECO) makes it clear that sales reps need to have reasonable knowledge of what they are dealing with. Marian deWever and others argue that this is often not possible for agents from out of the area, thus compromising their transactions with clients.

© 2015 REM Real Estate Magazine

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