Why your clients shouldn’t care about home prices

by Olivia D'Orazio23 Feb 2015
When determining a property’s affordability, your clients will likely bee-line to the price tag, but it’s actually the month-to-month expenses that you should be directing them to.

Talking about the drivers of the Canadian real estate market, Royal LePage president and CEO Phil Soper said it’s the monthly expenses that come with home ownership that dictates market behaviour.

“It’s not the sticker price on a home,” he told the audience at an Empire Club of Canada breakfast event earlier this month, “it’s the carry cost that drives the behaviour in the marketplace.”

In Toronto, agent Justin Kua says he recommends his clients work to pay down their mortgage debts, regardless of the interest rate. That’s especially important as many analysts believe historically low interest rates will have to rise at some point, despite at least two major banks predicting further rate drops.

“As interest rates rise, the cost of housing remains the same because of the cost of interest and the monthly payments,” Kua says. “When it comes to lifestyle changes, you’re paying one way or another. It comes down to your aggression in being able to pay down the mortgage in the first five to 10 years.”

That kind of fiscal responsibility is something all agents should instil in their clients – whether they’re first-time buyers looking to purchase a condo, or families looking to upsize.

“My advice always remains the same: make sure you can comfortably afford your monthly obligations,” Kua says. “If you’re hyper aggressive and you can take on a little bit more risk, I don’t advocate it, but everyone is different.

“You just have to make sure you can make your payments.”


  • by Commission Wars 2/23/2015 11:59:23 AM

    They should focus on the realtor fees that are built into the deal or have to pay. Imagine , Buying or selling a a average home in GTA and paying a extra $25,000-$35000. Not sure how the industry can Justify these types of fees . There are a lot of realtors charging $1,000 -$2,000 total per transaction who are Qualified ,professional,,well informed,hard working and get the job done. They are making a living and providing amazing results and not gouging the consumer for a service that basically use resales to aim for on selling and lisiting?

    I have used many vetran agents and low commission agents and never saw any real magic. Just amore aggressive ,pressure coming from the vetrans who have the experience and use that to their advantage against the in-experienced sellers and buyers.

  • by 2/23/2015 4:19:30 PM

    Not gonna happen. We get paid for results.

  • by Ruben Lee 2/23/2015 4:58:24 PM

    @Commission Wars - In the end consumers still can decide to pay more or less. To say that Realtors are gouging their clients based on the regular rates is a bit extreme, while not all, a few if not some really work for their money. Perhaps you should get to know what they have to go through to make a living providing the services they do. To undermine the type of fees that they are charging for a profession where they have been doing so for the longest time is like taking an axe to an ancient tree. Just because some Realtors choose to be paid less then the average is their right to do so like wise the choice of the consumer. In the end, really you do get what you pay for and there really is a difference in skill/service offerings. Just like you get between a Honda and a Ferrari. They both offer great services but there is always a level of distinction.

    In regards to your last quote, to each his own experience I guess, some because there aren't that many - don't use any magic or anything out of the ordinary, it's called skill and how they make use of this ability is what makes them great Realtors. The unfortunate thing however is that the profession is saturated with Realtors who barely conduct their services. I remember a published study that a large majority of Realtors (something along the lines of 60-75% - probably way more) make 1.5 sales transactions a year. That's about roughly +/- 13K Gross (in the GTA) before deductions and taxes which if you ask me, is not enough to support a decent living. If Realtors are to be financially sound FULL TIME then I think it's fair to say that whatever they are doing means that they are delivering on their bottom line and that is providing the pay-worthy services that consumers "choose" to pay whether it happens to be more or less.


Is a Toronto foreign sales tax a good idea?