Why you need to understand ‘cap rates’

by Olivia D'Orazio01 Apr 2015
A tougher market ahead has agents struggling to go beyond sales patter to provide increasingly high-level advice to increasingly sophisticated clients.
“I think the biggest Realtors in the city, maybe a handful, can get by on their charisma,” says David Oey, an agent in Toronto. “But the top one per cent have become sharper and stronger, aware of national and international trends. A new Realtor entering the market has to be aware of that.”
Indeed, the novel concept of simply selling a client a home is long gone. Agents are increasingly expected to be experts in all aspects of real estate – and if you’re not, your business could suffer.
“There has to be an academic approach,” Oey says. “Now more than ever, those younger generations are going to end up buying properties and if you don’t advise them properly, they’ll find something and catch you with your pants down.”
Clients can find almost all the information they need online – from listings to sold data, and everything in between. As an agent, you need to interpret the overwhelming information your clients are finding online, distilling it to the most crucial points.
“I think as real estate agents we really need to think about our role,” says David Fleming, an agent in Toronto. “Moving forward, we shouldn’t really be the gatekeepers but more interpreters (of the information). We need to consider what the public wants, what we can provide them with. The advances in tech are just too fast and fierce for us to stand firm and say, ‘no this is how it’s always been.’”
The true value of a modern sales rep is not in selling, but in advising. And failing to show your value in this way can put you in a dangerously disposable position.
“At the end of the day it’s a job and you have to be comfortable that if a CEO or landlord-investor calls that you know what cap rate is or what construction costs are,” Oey says. “And a lot of Realtors don’t know and they get by on their friends and family buying, but they’re not giving good service. They won’t get by on a stranger giving them pushback.”


  • by PEEGEE 4/1/2015 6:28:35 PM

    I'm sure I am safe is stating that most REALTORS don't know how to calculate "return" on a real estate investment properly. I do fee mentoring and coaching to teach people this because if you are dealing with real estate investors - THEY know and you have to be able to talk their language AND it goes beyond just "CAP RATE"!


Is a Toronto foreign sales tax a good idea?