New Real Estate Fees from Brookfield Global Relocation Services (Royal Lepage)

[Grunt_031]

We are getting the short end of the stick on this one. Effective 1 Dec 2009.

From my email:

Please note that as of December 1st, 2009, the maximum reimbursable rate for real estate commission within your employer's IRP program will change.

What does this mean?

If you currently have a contract with a REALTOR® signed before December 1st 2009, you will be reimbursed at the rate in table 2 attached, as per the maximum reimbursable rates prior to December 1st, 2009.
For all contracts signed after November 30th, 2009, including new contracts and contract extensions, the real estate commission will be reimbursable up to the maximum rates listed in table 1 attached. Please ensure that you take the new maximum rates into account when signing, renewing or extending any contract.

Yours truly,
Brookfield Global Relocation Services

Table 1 – Rates in effect for contracts signed, amended or extended after
Dec 1st, 2009

Province Rate
Alberta 3.500%
British Columbia 3.500%
Manitoba 3.800%
New Brunswick 4.400%
Newfoundland and Labrador 4.400%
Northwest Territories 4.000%
Nova Scotia 4.400%
Nunavut 4.000%
Ontario 4.100%
Prince Edward Island 4.400%
Quebec 4.400%
Saskatchewan 3.800%
Yukon 4.000%

Table 2 - Rates in effect for contracts signed, amended or extended before
Dec 1st, 2009

Province
RCMP and
Government of
Canada Canadian Forces
Alberta 6%* 6%*
British Columbia 6%* 6%*
Manitoba 6%* 6%*
New Brunswick 5% 5%
Newfoundland and Labrador 5% 5%
Northwest Territories 6%* 6%*
Nova Scotia 5% 5%
Nunavut 6%* 6%*
Ontario 5% 5%
Prince Edward Island 5% 5%
Quebec 5% 6%
Saskatchewan 6%* 6%*
Yukon 6%* 6%*

*On the first $100, 000, 3% on the balance

How can DND let this large of a change happen? My Realtor says that they will not go that low for the fees, it is not worth it to them .  Next, they will want us to use Comfree or some other discount do-it-yourself company.

 

[Michael OLeary]

Looks like Royal Lepage has sold a bill of goods to the CF that will result in most or all sales only going to Royal Lepage agents, they'll try to make up in volume of "exclusive" sales what they would have lost in profit margins to outside brokers and agents with the better rates.

The losers: sellers who will have agents from other agencies steering clients away from their properties. 

And the pièce de résistance ... wait for it .... don't anticipate the word of command .... the possible remedy to any outcry will be to generously "allow" members to top off the commission out of their own pockets.

 

[armyvern]

Looks like Royal Lepage has sold a bill of goods to the CF that will result in most or all sales only going to Royal Lepage agents, they'll try to make up in volume of "exclusive" sales what they would have lost in profit margins to outside brokers and agents with the better rates.

The losers: sellers who will have agents from other agencies steering clients away from their properties. 

And the pièce de résistance ... wait for it .... don't anticipate the word of command .... the possible remedy to any outcry will be to generously "allow" members to top off the commission out of their own pockets.

And you've hit the nail on the head with that comment because you can bet you butt that Royal LePage agents will "accept" selling/buying commissions that low ... but no-one else is going to.

Eeerily enough, this all brings it back into perspective for me of my posting from NB to Ontario a few years ago (after the were somehow 'awarded' their 1st contract for relocation services) ... when the ex & I were consulting with our Royal LePage Relocation Consultant that pers really tried to make it seem like we "had to use a Royal LePage Real Estate Agent" ... Words like "it's to your benefit", You're claim will work much smoother," issues with selling/buying/claiming will be non-existant", "we have the contract for relocations".  We said we weren't interested ... she said "but your supposed to" to which time I said "You have the contract to relocate us, not a contract stating we have to use Royal Lepage agents to buy/sell our homes" --- my dad "IS" one of you (but he worked a different agency).

I often wonder how many other troops have been suckered into utilizing a Royal LePage agent since this contracting out started; and to date, I still make sure to tell my pers heading over to begin process' for relocation that they are still allowed to choose their own agent/agency even if RoLeP should try to tell them different.

Eerily too, they sure don't seem any less slimy to me given this latest little "twist" that seems to force us towards utilizing their agents for sale/purchase exclusively.

As for "topping off" out of my pocket - priceless. Of course they will. Cause they'll still pocket all the other pockets with funds left as straight profit to their own "Company" for all they get paid to move me that I don't spend (or ... in many cases know/wasn't informed about). I pity the Pte moving who can't figure out their textbook of a only-lawyer-readable/understandable moving package.

 

[Grunt_031]

CANFORGEN 199/09 CMP 085/09 251339Z NOV 09
INTEGRATED RELOCATION PROGRAM
UNCLASSIFIED


REF: CANFORGEN 158/09 CMP 068/09 041649Z SEP 09



AS WAS PROMULGATED AT REF, BROOKFIELD GLOBAL RELOCATION SERVICES (GRS), FORMERLY KNOWN AS ROYAL LEPAGE RELOCATION SERVICES, WAS AWARDED THE NEW CONTRACT TO DELIVER THE SERVICES OF THE INTEGRATED RELOCATION PROGRAM (IRP). THIS NEW CONTRACT TAKES EFFECT 01 DECEMBER 2009


THE CONTRACTOR S OBJECTIVE IS TO ENSURE THAT ALL CF PERSONNEL ARE PROVIDED WITH PROFESSIONAL GUIDANCE AND ASSISTANCE THROUGHOUT THEIR RELOCATION PROCESS. PERSONNEL WILL RECEIVE COUNSELLING AT BOTH THEIR ORIGIN AND DESTINATION, AND WILL BE PROVIDED A LARGE NUMBER OF SUB-CONTRACTED THIRD-PARTY SERVICE PROVIDERS (TPSP) TO CHOOSE FROM. THIS TPSP GROUP WILL INCLUDE REAL ESTATE AGENTS, LAWYERS, NOTARIES, HOME APPRAISERS, HOME INSPECTORS AND RENTAL SEARCH AGENTS


ALTHOUGH SERVICE DELIVERY CHANGES SHOULD BE TRANSPARENT TO ALL PERSONNEL, SOME OF THE IMPROVEMENTS TO THE CONTRACT ARE NEVERTHELESS HIGHLIGHTED:


TPSP RATES HAVE IN SOME CASES BEEN CHANGED. MOST NOTABLY RATES PAYABLE TO REALTORS HAVE BEEN SIGNIFICANTLY REDUCED. PERSONNEL SHOULD ENSURE THAT THEY CONSULT THEIR BROOKFIELD ADVISOR ON THE NEW RATES PRIOR TO ENTERING INTO AGREEMENTS WITH TPSP NOT ALREADY ON THE SUB-CONTRACTED LIST


A RELOCATION CHECKLIST HAS BEEN DEVELOPED THAT OUTLINES ALL SERVICES THAT ARE AVAILABLE TO BE PROVIDED BY THE BROOKFIELD ADVISORS. PERSONNEL WILL BE REQUIRED TO ACKNOWLEDGE ON THIS CHECKLIST THAT THEY HAVE BEEN COUNSELLED ON ALL RELEVANT ASPECTS OF THEIR MOVE THROUGHOUT THE RELOCATION PROCESS


BROOKFIELD GRS HAS STREAMLINED THE ADMINISTRATIVE TASKS CURRENTLY BEING HANDLED BY THEIR ONSITE RELOCATION ADVISORS BY REDISTRIBUTING THESE TASKS TO AN ADMINISTRATIVE SUPPORT CENTRE (ASC). THIS IMPROVEMENT WILL ENHANCE CUSTOMER SERVICE BY ALLOWING THE ADVISORS TO CONCENTRATE MORE ON THEIR CONSULTING ROLE, AND


THE VOLUME OF HARD COPY DOCUMENTATION HAS BEEN REDUCED. ALL REQUIRED DOCUMENTATION WILL BE AVAILABLE ONLINE


BROOKFIELD GRS IS PAID AN ALL-INCLUSIVE ADMINISTRATION FEE FOR EACH RELOCATION FILE. THIS FEE HAS BEEN REDUCED COMPARED TO THAT OF THE PREVIOUS CONTRACT AND IS THE ONLY FORM OF COMPENSATION BROOKFIELD GRS WILL RECEIVE PER FILE


RELOCATING PERSONNEL ARE REMINDED THAT IT IS THEIR RESPONSIBILITY TO ENSURE THEIR RELOCATION ADHERES TO THE IRP POLICY DIRECTIVE. BROOKFIELD GRS WILL ASSIST WITH THIS OBLIGATION AND THUS PRIOR TO ENTERING INTO ANY CONTRACTUAL AGREEMENT WITH TPSP, PERSONNEL MUST FIRST CONTACT THEIR BROOKFIELD ADVISOR


I REMAIN CONFIDENT THAT BROOKFIELD GRS WILL DELIVER RELOCATION SERVICES TO THE SAME VERY HIGH STANDARD THEY HAVE IN THE PAST


SIGNED BY MGEN W. SEMIANIW, CMP

 

[dapaterson]

Real Estate agents have gotten fat over the past few years run-up of real estate prices, seeing significant unwarranted growth in their fees, utterly unconnected to the work they actually do.  Their anti-competitive nature, blackballing anyone who competes on price, is about to bite them in the ass.  In military communities realtors will have no choice but to participate - with hundreds of military sales every year, their bread and butter will be at risk if they don't play nicely.

In communities with a smaller military community it may well be more challenging; but this is a case of ther Federal Government using its leverage to push down prices overall - and that's a good thing.  Busting the Realtor(TM) cartel serves everyone well.

 

[Zoomie]

BROOKFIELD GRS IS PAID AN ALL-INCLUSIVE ADMINISTRATION FEE FOR EACH RELOCATION FILE. THIS FEE HAS BEEN REDUCED COMPARED TO THAT OF THE PREVIOUS CONTRACT AND IS THE ONLY FORM OF COMPENSATION BROOKFIELD GRS WILL RECEIVE PER FILE

Just to make the above paragraph very clear - Brookfield doesn't pocket the extra funds that you don't use, let's stop that crap right here.  They are paid a fixed sum.  They also don't set policy on how to manage the relocation's, they get their direction from the Treasury Board, just like any government entity or contract.

 

[x-zipperhead]

True, they don't set policy and extra funds do go back to TB.  However, under the previous contract they did receive "incentives" for an economical move.  Meaning that as they saved the government money across the CF  (i.e any left over money in various envelopes that was returned to TB) they were rewarded.  I was told this by a friend who worked for RLRS for some time before quitting in frustration.  While that was probably a well intentioned clause meant to control waste in government spending it clearly created a conflict of interest.

So, while it didn't go directly in their pocket, as you correctly point out,  it still was certainly to their advantage if you did not use all of your funds.  I would suspect the new contract has adressed that and hence the need to explicitly state that in the CANFORGEN.

I admit that I offer this as second hand info so I may be proven incorrect by someone who might know differently.

Edit for spelling

 

[CountDC]

that was the way it was explained to me too by an ex co-worker that joined them when she retired. The more they saved TB the more they were paid.

Don't count on this encouraging the real estate agents to play nice and accept the rates. Real Estate is a very tight business that does not easily give up the dollars.  Most areas will have trouble finding an agent willing to list at a lower rate and you can be sure they will not put much effort into your sale. In order for the agent to accept the lower rate they either have to take the loss themself or convince the company to take the loss.  Do the math for the agent to give it up - on a 6% listing the listing agent usually gets 1.5% - if they accept the lower rate of 5% that means they have given up most of their share and will only get 0.5%.  If that agent has a place listed for the regular rate which one is getting all the effort?


In the late 80's in Nova Scotia the rate was 6% evenly split between listing agent, listing company, selling agent, selling company. One agent convinced the company to let him list at 5% split evenly on the same lines. The broker allowed it only to teach a lesson.  The lesson was well learned, no other agents would show the place and when his 6 months expired the seller found a new agent.

Good luck to all home owners, especially if you live in a largely non-military area.

 

[X-mo-1979]

Wow.
I guess this would really affect those who are retiring out of a CFB area.

Not to mention our RCMP brothers.

 

[Pusser]

Zoomie is absolutely correct.  X-Zipperhead, not so much.

Royal LePage/Brookfield received/receives a flat rate for each file processed - nothing more.  In fact the new contract clarifies and tightens this up by saying that will not be paid for multiple files on the same individual, just because he/she has their first posting canceled during an APS (ie. open a file and get paid for each posting message, even though the first one was canceled and replaced with a second one). 

I can see consultants being paid incentives for saving money, but that would come from the contractor, not the CF.  This would encourage consultants to fully scrutinize claims in order to keep them in compliance with the contract and TB policy.  In turn this would reduce the number of claims that Brookfield would have to correct at a later date, which actually saves Brookfield money.  In other words, these sound like incentives that the contractor has put in place to encourage their own employees to do a good job.  It does nothing to increase the amount of money the contractor receives from the Government.

Reducing the maximum reimbursable amount for real estate fees is not out of line.  The volume of business the Canadian Government does with realtors across Canada enables it to wield some economic clout in order to achieve its aims.  That is all that is happening here.  It's not even the first time.  The original max amount was 6%.  That was reduced a number of years ago because we could.  This is a common business practice.  Just go to Home Depot and look at the prices of materiel, then ask at the contractor desk how much contractors pay - provided they buy it by the truckload - the cost is considerably less.  That is all that is happening here.  Any realtor that is on the "list" held by the consultants, has agreed to work for these rates and they're not all Royal Lepage agents.  Whenever I've moved, I've never heard of a compelling reason to use an agent not on the list and I haven't always used a Royal Lepage agent.

Any discussion on how the Government is saving money with IRP is misguided.  Saving money was never a goal for IRP, nor has it been achieved.

 

[armyvern]

Zoomie is absolutely correct.  X-Zipperhead, not so much.

Funny thing is, I was told the exact same thing as X-Zipperhead by my sister-in-law ... an employee of the 'former' RLRS, now Brookfield Global.

Perhaps, this new contract is when that changed?

 

[x-zipperhead]

Royal LePage/Brookfield received/receives a flat rate for each file processed - nothing more. 

No doubt that is the case now.  The message is clear.  Has that always been the case?  My experience was in 2004.

I can see consultants being paid incentives for saving money, but that would come from the contractor, not the CF. 

That's not what I was told by an RLRS employee after my 2004 move. (nor CountDC or Armyvern).  However, I assume you probably have more direct info on this.  I would argue though, that a conflict of interest still exists in that my consultant stands to benefit if I do not take advantage of all of my funds.

I probably sound like I have an axe to grind and that's because I do, like many others I would assume.  I saw $5000 in my custom envlope go back to TB instead of towards a benefit I intended.  This was due to decisions I made based on the poor guidance and advice received from my RLRS consultant.  Ironically, she would have received some form of bonus for this $5000 in "savings".  It doesn't matter if the bonus comes from the government of the contractor, the member is still the one who gets scr**ed in some cases.

Any realtor that is on the "list" held by the consultants, has agreed to work for these rates and they're not all Royal Lepage agents.  Whenever I've moved, I've never heard of a compelling reason to use an agent not on the list and I haven't always used a Royal Lepage agent.

The problem is, as Michael O'Leary pointed out, that your selling agent  is only 50% of the equation.  These days most buyers have an agent to help them.  Common practice is for the buyer's agent to split the listing agent's commision in return for bringing them the business.  You may have a listing agent willing to sell your house for a 3.5% commission but what about all those buyer's agents out there?  In a large market, where the government doesn't represent a large segment of the listings, will those buyer's agents be persuading their clients to buy your property where they can split 3.5% or to other similar (non-military) properties where they can split 5-6%.  . 

 

[Blackadder1916]

Before sending all the hard-done-by realtors to the poorhouse or accepting crocodile tears that they can't list a military members house at the new rates, perhaps some simple arithmetic is in order.

In comparing actual dollar amounts of the old rates (*on first 100k/3%on remainder) to the new rates (a set percentage of the 'entire' selling price) the following is interesting.

(used average house prices for these cities)
Read in 4 columns: city,  avg price,  old rate,  new rate

Ottawa        $306,000  - $11,180 - $12,546
Calgary      $395,000  - $14,850 - $13,825
Fredericton $141,000  - $6230    - $6204
Halifax        $234,000  - $9020    - $10,296

Though there are some significant differences in the outcome between the old rates and the new rates, there are some locations where the realtors actually come out ahead (and judging by some of the previous comments, that may be a good thing for soldiers).  It is probably in the west (AB, BC) that realtors will feel more of a pinch, but (IMO) considering what they do for the money, I'm not going to hold any charity benefits for them.

 

[Wookilar]

I've been watching this one closely myself and remember the days of the "performance bonuses" that were paid to the RLRS team leaders. Not everyone got the bonuses. I'm one of the irritating guys that actual reads the fine print  ;D (no wonder I'm liking this staff work shtuff )

I have asked a bud of mine in Edmonton and a friend here, both have been selling real estate since they got out, about the new percentages. Neither was concerned at all. One told me his income tax will barely change lol.

I like the fact the bonuses are gone for good now (well, for the duration of this contract). It's the improper (overzealous) application of door-to-door moves that are still going to be an issue.

Wook