29 Nov

Bonds tell tale of sound recovery

General

Posted by: Kimberly Walker

Bonds tell tale of sound recovery

Paul Vieira, Financial Post · OTTAWA — The fixed-income market, considered among the best of forward-looking indicators, suggests the economic recovery is picking up steam in Canada and the central bank may deliver another rate hike as early as March of next year.

Yields across the curve have reached levels last seen in June and July when the Bank of Canada commenced a short-lived rate-hike campaign. And at that time, there was no talk of the U.S. Federal Reserve needing to inject hundreds of billions of dollars of additional liquidity into the U.S. economy to jump-start the recovery.

Two-year bond yields, a great indicator of where the Bank of Canada’s benchmark rate might be headed, have jumped nearly 40 basis points in barely a month since the last central bank decisions.

Meanwhile, yields on five- and 10-year government of Canada notes have moved upward 46 and 33 basis points, respectively, since the beginning of November, which mirrors activity in the U.S. Treasuries market.

“We have seen a heavy-duty selloff in recent weeks, right up and down the yield curve in Canada,” said Douglas Porter, deputy chief economist at BMO Capital Markets.

Experts say this is a combination of heightened inflation expectations and this week’s stronger-than-expected consumer price data in Canada, signs of an improving U.S. labour markets, and a realization among investors that yields are just too low.

And whereas most Bay Street economists had forecast that the Bank of Canada rate wouldn’t resume movement until July, the fixed-income market has now priced in 50-50 odds of a rate increase of 25 basis points, to 1.25%, in March.

The rise in yields also emerges as the Fed kicks off its US$600-billion asset purchase plan — designed to pull down borrowing costs — and Europe’s debt woes re-emerge, perhaps prompting investors to park cash in safer government debt, such as Canada’s.

“Clearly, the bigger issue of where the market believes the U.S. economy is going and, ultimately, Fed rate policy is going seems to have had much greater pull on bond yields — and it is higher,” Mr. Porter said.

Eric Lascelles, chief Canadian strategist at TD Securities, said Canadian bonds have, like their U.S. counterparts, sold off in recent weeks after investors bought debt in the preceding weeks leading up to Fed’s decision to pursue further easing.

“But in fairness, that sell-off in the United States has not been as large, so there certainly is a made-in-Canada phenomenon at play as well.”

In its last rate statement, in which the benchmark rate was left unchanged, the Bank of Canada made significant downward revisions to its growth outlook, and pushed back the date, by a year, as to when economic slack is absorbed and inflation is set to hit the preferred 2% target.

But October inflation data indicated consumer prices rose on 2.4% on a year-over-year basis, much stronger than expectations, while core inflation — which strips out volatile-priced items — rose 0.3% month over month, the biggest such increase since February. Core inflation now stands at an annual rate of 1.8%, which is just below the Bank of Canada 2% target and above the central bank’s forecast.

Other fixed-income watchers, meanwhile, indicate traders are growing more confident about the global recovery based on better U.S. data. There have been five straight months of private-sector job creation above the 100,000 level — with November expected to continue the trend — and U.S. initial jobless claims dropped this week to their lowest level in two years.

On top of that, annual growth in corporate profits is set to hit 30% this year, and third-quarter GDP growth, at 2.5% annualized, was above expectations.

“Housing remains a serious Achilles heel, but the U.S. consumer is in increasingly better shape in terms of wage growth and confidence, and corporations are starting to use the trillions they had set aside for the double-dip recession that never came,” said Hank Cunningham, fixed-income strategist at Odlum Brown. “So the bond market decided yields were too low.”
Read more: http://www.financialpost.com/news/features/Bonds+tell+tale+sound+recovery/3885352/story.html#ixzz16fujO52L

19 Nov

Too Many Clowns – No Financial Plan

General

Posted by: Kimberly Walker

Too many clowns with no financial plan

Garry Marr, Financial Post · Wednesday, Nov. 10, 2010

You have to be a real clown not to have a financial plan and be saving for your retirement. Right?

Not really, you would just be among the approximately 80% of Canadians who don’t have any sort of comprehensive financial plan, according to the Financial Planning Standards Council.

Who are these people? They are people such as the 51-year-old rodeo clown I met this past week who goes by the name Shorty Leggs — and has no RRSP and isn’t too interested in starting one.

“I’m about to the retire,” he told me between his assignments at the Royal Agricultural Winter Fair, where his job is to entertain the crowd and also to distract the bulls if a rider is in danger.

In the past year he suffered major injuries in two separate incidents that resulted in a total of six cracked ribs. “I didn’t have any insurance so I kept on working. Insurance companies won’t even touch me.”

And he’ll keep working, just not as a clown. He plans to start training race horses. “I don’t think about it,” he says, referring to retirement.

The FPSC’s data will tell you’s he’s probably not as content and happy as he would be if he had a financial plan. I have to tell you I didn’t sense a trace of sadness in that clown about his financial choices.

I have a few friends, some of whom I might describe as clowns, who conduct their lives the same way. They haven’t contributed to an RRSP in years and they don’t bother with Registered Education Savings Plan for their kids. I’m not sure they’ve even heard of a tax-free savings account.

Are they really in that much trouble as they live for the moment?

According to a study done for FPSC, about 60% of people with no financial plan worry about their financial situation, compared with 44% who have a comprehensive plan. About 13% of those with no plan said they expected to retire to the lifestyle they want versus 44% for those with a plan.

“A big part of this is the focus on instant gratification. People’s concept of living for today has been skewed to meaning to not even give any consideration to the fact that at some point in their future they might not have a job and at some point there will be other demands on their pocketbook,” says Cary List, FPSC chief executive.

He thinks there is a fear factor to financial planning because most people think it means giving something up and they don’t want to do that. But who says you can’t have a selfish financial plan — I wouldn’t — that is designed to make sure you die with as little cash as possible and use as much of it as you can in your own lifetime?

“Financial planning is not just about retirement planning,” says Mr. List, adding it can be used for other life goals, including some short-term gratification. “Planning is not synonymous with saving and having X million dollars when you die.”

All that’s true but there is a certain percentage of the population that doesn’t bother to plan because they have no disposable cash to plan with, says Benjamin Tal, a senior economist with CIBC World Markets. “You can’t ask people making $20,000 to contribute to an RRSP,” says Mr. Tal. “The focus should be how many that make a reasonable amount money and still don’t contribute [to RRSPs and other investment vehicles]. That’s really a lack of planning.”

Moshe Milevsky, a finance professor at the Schulich School of Business at York University, says there might me some method to the madness of people who are not saving any money for retirement.

“There is 20% to 30% of the population whose standard of living will actually go up once they retire,” says Mr. Milevsky, adding Statistics Canada data supports the notion that if you are earning median wage or lower and you retire, the Canada Pension Plan and Old Age Security might provide a better standard of living than you had before.

Those people find themselves retired but without the expenses that involve going to work and the costs of a mortgage and kids. “Relative to what you experienced at 55, 65 is better,” Mr. Milevsky says.

But if you want more? You can always keeping working, as least as long as you’re able. It’s at that point when no financial plan might have the biggest impact on your life. “What do you want the last 18 months of your life to look like? Are you willing to live in a nursing home provided by the province or do you want something better,” Mr. Milevsky asks.

Is that something you want to clown around about or are these clowns having the last laugh because they live for today?
http://www.financialpost.com/news/many+clowns+with+financial+plan/3814594/story.html#ixzz15GeJeQ5L

Have a great weekend!

 

16 Nov

Low Interest Rates Not For Much Longer

General

Posted by: Kimberly Walker

I wanted to give everyone a bit of an update on where the market is at present……Since November 1st 2010, we have seen 5 year bond yields go from a low of 1.98% to yesterday’s high of 2.37%, a 0.39% increase in a very short period of time. Based on published rates (3.59%) spreads have been squeezed to 1.22% and down to 1.02% if you consider quick close specials presently at 3.39%-3.49%. Over the last 6 months spreads, based on published rates has been in the 1.65% to 1.75% range.

 If we look at historical spreads over the last 6 months, existing published rates should be at 3.99% to 4.09%. Whether the spread compression at this level is sustainable, I can’t say at this time, however, we are well below this year’s average spread.

 What does this mean for rates? Rates are artificially low for what the spreads are, and we don’t expect them to stay for much longer. Our 5 year quick close at 3.49% may not  last very much longer.

12 Nov

Is retirement chained to your home?

General

Posted by: Kimberly Walker

Is retirement chained to your home?

Garry Marr, Financial Post · Tuesday, Nov. 9, 2010

Canadians plan to take longer to pay off their mortgages, maybe even 35 years, but they don’t expect it to affect their retirement plans. Something in that plan just doesn’t add up.

A new study from the Canadian Association of Accredited Mortgage Professionals (CAAMP) shows consumers are taking advantage of longer amortization lengths at previously unheard of levels. Statistics released this week show 42% of mortgages originating in the last year went for an amortization period of more than 25 years.

It’s a huge jump when you consider that just five years ago, you couldn’t even get an insured mortgage backed by the government that was amortized above that period. Now the government limits insured mortgages to 35 years.

The reason for the longer amortization periods is simple: you can qualify for more mortgage when your monthly payment is lower because it is spread out over 35 years rather than 25.

Within the same survey by CAAMP, consumers were asked about their retirement expectations. Those with extended amortizations plan to retire on average at 61.9 years old. Those amortizing their mortgage for less than 25 years plan to retire on average at a surprisingly similar 61.5 years old.

“This data on expectations does not prove that actual retirement will be unaffected by recent trends in housing and mortgage markets,” CAAMP says in its study. No kidding. “But it does suggest that consumer’s evaluations of their life-cycle options have not been materially altered.”

Are consumers being entirely realistic about their future?

Will Dunning, chief economist with CAAMP, says the percentage of Canadians retiring with a mortgage is small — small enough that it is difficult to track.

“We find a lot of people taking [longer amortizations] are making additional payments,” Mr. Dunning says, adding previous studies have shown people try “aggressively” to repay their mortgages.

Victor Fiume, president of the Canadian Home Builder’s Association, says Canada is just catching up to a trend that has taken place in other jurisdictions.

“In many, many countries across the world, paying off a home is a multi-generational kind of thing. It doesn’t happen in this generation. Lots of the stuff going on in England is multi-generational because the houses are so expensive,” Mr. Fiume says.

There is no arguing the increased flexibility a longer amortization mortgage gives, but increasingly some consumers find themselves getting into financial trouble because they have bitten off too much, says Patricia White, executive director of Credit Counselling Canada.

“People will always decide what is easiest for them,” she says. “But you have to plan in advance to make accelerated payments. You need to make some conscious decisions about how to get rid of that mortgage debt faster.”

Canadians always do better when they have direct withdrawals from their bank accounts and less discretionary power about paying down debt, Ms. White adds.

Vince Gaetano, a principal broker and owner at Monster Mortgage, agrees people who choose the longer amortization and the lower payment rarely take advantage of that extra cash flow to make additional payments later on. “It’s a very small group of people who do that,” he says.

He thinks consumers going for the longer amortization are banking on the fact their homes are going to rise in value faster than any gains they get paying their mortgage off earlier.

“Real estate over time will appreciate at more than 2% to 4% per year,” Mr. Gaetano says. “People are saying, ‘It won’t affect my retirement because I plan to retire with a home that will appreciate in value [in addition to the principal you are paying down].’ It’s not a bad strategy if you are in a market that gives you consistent appreciation, but you are not going to get that in every market in Canada.”

There is no getting around the fact the people who take a longer amortization will take longer to repay their loan. The CAAMP study found consumers going longer than 25 years, were done with their mortgage at age 53 on average, compared with an average of 47 years for those going for the less than 25 years.

If you are going for a longer amortization, you better hope your home goes up in value because you are going to have fewer mortgage-free years in which to save. It’s hard to believe that won’t affect retirement plans.
Read more: http://www.financialpost.com/personal-finance/retirement+chained+your+home/3804183/story.html#ixzz154ZIAo9g

9 Nov

REALTORS CARE® BLANKET DRIVE

General

Posted by: Kimberly Walker

REALTORS CARE® BLANKET DRIVE GEARS UP FOR COLD, WET WINTER   VANCOUVER, BC –  With predictions for this winter to be the coldest and wettest in 50 years, and the number of homeless people on the rise in the Lower Mainland, the need for the annual REALTORS Care® Blanket Drive could be at its highest in its 16-year history.

 

The REALTORS Care® Blanket Drive runs November 29 to December 6 at over 100 real estate offices across the region, collecting blankets, bedding and warm and waterproof clothing for the homeless and working poor. Over 30 charities from Whistler to Chilliwack receive, on average, more than 4,000 bags of gently-used or new items donated by REALTORS®, their clients and the public.

 

Earlier this year, the City of Vancouver announced that the homeless count in Vancouver has increased 12 per cent since 2008. Also, meteorologists are calling for a La Niña weather cycle this winter, meaning colder-than-normal temperatures and heavier precipitation.

 

“Add to that, the economy is still in recovery,” said Jake Moldowan, president, Real Estate Board of Greater Vancouver. “So for all of those reasons, there’s a huge need for warm clothing and blankets for vulnerable people in our communities. Charities will need even more donations if they’re to adequately respond to the perfect storm of a recovering economy, an anticipated tough winter and increased homelessness.”

 

Deanna Horn, president, Fraser Valley Real Estate Board, encourages the public to donate the best quality of items that they can – both gently-used and new. “Our charities give us wish-lists,” she said. “People coming in from the streets are looking for warm winter coats, sleeping bags, hoodies, toques and gloves. Community service clients are looking for blankets, bed sheets and everyday clothing for themselves and their children that they otherwise just can’t afford.”

 

The president of the Chilliwack & District Real Estate Board, Kyle Hislop, is confident no matter what weather conditions REALTOR® volunteers may face during their 10 days of collecting donations, they will deliver. “During our first year in 2006, we received over a foot of snow the week before the Blanket Drive and then three days into it, we were hit with another massive snowstorm. Regardless, our volunteers were determined to collect donations for our community. There’s a tremendous amount of passion behind the REALTORS Care® Blanket Drive because of the difference it makes.”

 

Donations to the REALTORS Care® Blanket Drive stay within the communities in which they are donated, or if the volumes are too large, go to charities in greatest need in neighbouring communities. Again, the 2010 REALTORS Care® Blanket Drive will run from November 29 to December 6. To find a list of all drop-off locations and charitable recipients, go to www.blanketdrive.ca

9 Nov

Coast Capital launches new mortgage product

General

Posted by: Kimberly Walker

Coast Capital Savings launched a new product that the company says will give customers greater flexibility and control.
 
The credit union’s You’re the Boss Mortgage was introduced on Tuesday November 9, and includes one of the highest level of extra payments in Canada, easy access to funds when needed and a new rate option that is supposed to integrate the best features of fixed and variable rates.
 
“Our research revealed that customers feel their financial lives are being controlled by their long-term mortgage debt and they are highly motivated to get out of this debt,” said Lawrie Ferguson, Coast Capital’s chief marketing officer. “But financial institutions don’t make it easy for them to eliminate their debt, while managing their ongoing financial needs, so our new mortgage product includes flexible payment and withdrawal features designed to place control back in the hands of customers.”
 
The new product includes the Save and Take Payments feature that allows customers to pay off their mortgages faster without penalty by making prepayments of any amount at any time, up to 30 per cent of the principal of the mortgage annually.
 
Coast Capital’s research found 40 per cent of mortgage holders in the Lower Mainland and Vancouver Island area set aside funds for emergencies rather than paying down their mortgage, while 47 per cent were unsure about whether to purchase a fixed or variable rate mortgage.
8 Nov

Canadians and Mortgage Debt Levels

General

Posted by: Kimberly Walker

Canadians comfortable with their mortgage debt levels; One third have made additional payments in the last 12 months

Canadian Association of Accredited Mortgage Professionals releases
Annual State of the Residential Mortgage Market in Canada report

TORONTO, Nov. 8 /CNW/ – Canadian homeowners are comfortable with their mortgage debt, have significant home equity and could withstand an increase in their mortgage interest rate, according to the sixth Annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today.

Highlights:

  • The vast majority of Canadians with mortgages are able to afford at least a $300 increase in their monthly mortgage payments.
  • One in three (35 per cent) mortgage holders have either increased their payments or made a lump sum payment on their mortgage in the last year.
  • 89 per cent of Canadian homeowners have at least 10 per cent equity in their homes and 80 per cent have more than 20 per cent equity.
  • Overall home equity is at 72 per cent of the total value of housing in Canada; for homeowners who have mortgages, equity level averages 50 per cent.
  • As of August 2010, there was $1.01 trillion in outstanding residential mortgage credit in Canada, an increase of 7.6 per cent from last year.

“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, AMP, President and CEO of CAAMP. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.”

Homeownership is a good long-term investment
Most Canadians agree that buying a home is a good long-term investment and are focused on their mortgages to support that investment.

Many mortgage holders are making voluntary additional payments: 16 per cent have increased monthly payments during the past year, 12 per cent have made lump sum payments, and 7 per cent did both.

Canadians are exercising caution when taking out their mortgages, with a majority choosing a fixed-rate (66 per cent). A five-year fixed-rate mortgage remains the most popular option in Canada. Despite the fact that variable rate mortgages have become much less expensive compared to fixed rates, the majority choice is still fixed rates: this decision is based on people’s individual assessments of risk, not just the cost difference.

Potential rate increases won’t be a problem
The CAAMP study found that a vast majority of Canadians have significant capabilities to afford higher payments if and when mortgage interest rates rise. 84 per cent report that they could weather an increase of $300 or more on their monthly payments.

Most of the people who have low tolerances for increased payments have fixed rate mortgages, by the time their mortgages are due for renewal, their financial capacity will have expanded and their mortgage principal will have been reduced.

Also, Canadians have been able to negotiate better than posted mortgage interest rates. For five year fixed rate mortgages arranged in the past year, the average rate is 4.23%, which is 1.42 points lower than typical, advertised rates.

Of the 1.4 million Canadians who renewed their mortgage in the past year, 72 per cent were able to renegotiate a decreased rate: on average, rates are 1.09 percentage points less than the rates prior to renegotiating.

Canadians have significant equity in their homes, strengthening the housing market
Canadians’ home equity is impressively high. Among homeowners who have mortgages, the average amount of equity is about $146,000, or 50 per cent of the average value of their homes.

The amount of equity take-out in the past year is unchanged from last year with around one in five homeowners, or 18 per cent, taking equity out of their home, at an average of $46,000. The most common purpose for equity take-out is debt consolidation and repayment (45 per cent) followed by home renovations (43 per cent), purchases and education (19 per cent) and then investments (16 per cent).

The report is authored by CAAMP Chief Economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in October 2010.

The CAAMP survey report contains a wealth of industry information, including consumer choices and borrowing behavior, opinions on current “hot topics” related to housing and mortgages, regional breakdowns of responses, and an outlook on residential mortgage lending.

For a copy of the report, please visit www.caamp.org, ‘Mortgage Industry’, under ‘Resources’.

Have a great day!

2 Nov

Fraser Valley Real Estate Board News Release, Nov. 2, 2010

General

Posted by: Kimberly Walker

News Release: November 2, 2010

Fraser Valley housing market “getting back to normal”       

(Surrey, BC) – Fraser Valley’s real estate market moved towards balance in October as inventory continued to decrease and sales and prices remained stable.

 

A total of 1,014 sales were processed on the Fraser Valley Real Estate Board’s Multiple Listing Service® in October, a decrease of 3 per cent compared to 1,044 sales in September and a decrease of 40 per cent compared to 1,704 sales in October of last year.

Deanna Horn, FVREB President, says, “With help from near record low mortgage rates and a steady decrease in the supply of homes, we’re getting back to what I call a ‘normal’, balanced market.

“However, sellers should be aware that demand for homes is strong, yet selective. Buyers in the Fraser Valley recognize that selection, although dropping is still generous and they’re looking for properties priced competitively. Even with carrying costs remaining stable, the affordability threshold is a factor.”

The Board received 2,125 new listings last month, a 12 per cent decrease from September and a 25 per cent decrease compared to October 2009. The Board finished October with 9,561 active listings, 4 per cent fewer than in September and an increase of 9 per cent compared to the 8,807 properties available in October 2009.

Horn adds, “When supply and demand move into balance, prices can become a real ‘sticking point’ underlining the importance of hiring a professional REALTOR® who knows your local market and can provide detailed comparisons to ensure your home is priced competitively.”

The benchmark price for Fraser Valley detached homes in October was $505,759, down 0.3 per cent compared to September and 3 per cent higher compared to $491,128 in October 2009.   

The benchmark price of Fraser Valley townhouses in October was $319,058, a 0.9 per cent decrease compared to September and a 2.2 per cent increase compared to October 2009 when it was $312,339.

Year-over-year, the benchmark price of apartments increased 0.2 per cent going from $240,048 in October 2009 to $240,542 last month and 0.4 per cent higher compared to September 2010.   

Information and photos of all Fraser Valley Real Estate Board listings can be found on the national, public web site www.REALTOR.ca. Further market statistics can be found on the Board’s web page at www.fvreb.bc.ca. The Fraser Valley Real Estate Board is an association of 2,925 real estate professionals who live and work in the communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission.

Full package:

 

http://www.fvreb.bc.ca/statistics/Package%20201010.pdf

1 Nov

Renovated real estate

General

Posted by: Kimberly Walker

Renovated real estate

Garry Marr, Financial Post · 

It’s akin to a land rush. But instead of land up for grabs, it’s the right to sell land that is about to attract prospective real estate agents from far and wide.

And why not? Total sales activity through the Canadian Real Estate Association’s Multiple Listing Service was $150-billion in 2009. Even at a modest 4% commission — I sure didn’t get a rate that low last time I sold my house — that’s $6-billion in fees for the taking.

The only problem until this month was that CREA had built a wall around the MLS system, restricting how real estate could be bought and sold. In March, the group, which represents about 100 boards across the country, reversed course and changed its bylaws to allow all types of buying and selling models through the MLS.

The move brought change almost immediately with agents jumping into the field with offers to list property on the MLS for a flat fee and let the consumer do everything from showing houses to negotiating themselves. But CREA still reserved the right to change its rules and put in new restrictions.

This month, the group approved a 10-year agreement which the Competition Bureau, setting changes to the MLS in stone, and ensuring a slew of new options become available to consumers.

The floodgates are about to open and home buyers are going to being facing business models that incorporate everything from hourly rates to retainers to the good-old fashioned commission structure the real estate industry maintains has worked so well for years.

One-man real estate show Tyler Ross, the broker of record at Toronto-based Synergy Real Estate Consulting Ltd., is an example of the new wave. Armed with two technical support guys, he’s raring to go with a model that offers a flat fee based on an hourly rate.

“We can say ‘Pay us what you would a lawyer, an accountant or any other professional service’ and when it comes time to get a commission, we’ll wave it,” Mr. Ross says. “We couldn’t do this before March.”

His next step, and the one everybody is now eyeing, is the buy side of the transaction. Offering a flat fee on the listing side via the MLS is one thing, but how are you going to get agents to come visit the property if you offer no commission? Even private for-sale-by-owner sites are prone to offering fees to the buyer’s agent.

The typical commission for the buyer’s agent is about 2.5% of the value of the property — a rate most assume is not going anywhere. But even that is coming under attack.

Lawrence Dale, the lawyer who helped start failed discounter Realtysellers in 2001 and has battled CREA for years, announced this week he’s back in business.

His new company, Realtysellers Real Estate Inc., is offering to post your home for sale for free on the MLS–with no service. Go for the full-service model and the commission is 0.5%. How can he do it?

“That’s still $2,000 [on a $400,000] home, four times what you pay your lawyer,” Mr. Dale says, referring to a typical real estate transaction.

While no fee is obviously tough to compete against, Mr. Dale’s real challenge to the industry is his offer to rebate the 2.5% commission he would get as a buyer’s agent. He is willing to give back up to 75% of his commission to the customer.

He’s not going to be alone. “There are going to be people who get into this because they couldn’t cut it as full-service agents,” says Mr. Dale, in a gentle shot at the competitors who want to mine the same real estate gold as him. He maintains his new company will employ experienced realtors who just happen to work at a fraction of the price.

Where does that leave the full-service agent? Up until now, when you started looking for a house, you usually picked up an agent. That agent would act for you under the premise that they would get paid when you eventually bought a home. What happens if the home you eventually buy is from a seller offering a commission that can now be as low as 1¢?

There is a vehicle already in place called the buyer agency agreement, which ties a prospective home buyer to an agent for a specified period of a time. Those agreements, rarely signed these days, can include a guaranteed minimum payment for your realtor.

“It’s a guarantee if the realtor spends the time finding a perspective home owner a place to live and negotiates the agreement, they’ll get paid,” says Phil Soper, chief executive of Royal LePage Real Estate Services. “There is no structure set in stone. Every deal has the ability for a certain amount of negotiation on the way the agent involved is going to be paid.”

Given the new competition about to enter the field, even if you do go with a full-service model, something many people will always want to do, there is no saying you can’t use these discounters to knock your selling fee down and grab a bit of a rebate on your purchase.

As Mr. Soper and others maintain, the real estate community was always willing to negotiate fees. Why not take the industry at its word?
Read more: http://www.financialpost.com/Renovated+real+estate/3751380/story.html#ixzz13sHNP2Ic