Discover the hidden truth about realtor commissions and the potential impact of the IPRO entity.
Episode Stats
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Summary
In this episode of the Real Estate Central podcast, I talk about the fallout from the announcement that builders are refusing to pay the additional 2% on closing because they have a contract with a defunct entity called iPro. This means that when that 2% commission comes due, tens of millions of dollars worth of losses will be incurred by realtors.
Transcript
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big story is the one everyone's missing. This is important because you have to understand the way
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realtors are actually paid on commissions. They're paid 4% of the purchase price, 2%
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up front normally, 2% up front, 2% on closing. The problem, the undisclosed problem, where the
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vast majority of the hit is going to be taking place is when builders refuse to pay the additional
00:00:25.920
2% on closing because they have a contract with a defunct entity called iPro. It's when that 2%
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commission comes due, which is possibly with, I'm not trying to exaggerate this, but tens of
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millions of dollars that is due in Owen because we had 2,400 practicing agents in the height of
00:00:44.240
market in Ontario, in the core of where Real Estate Central took place. And we have all of
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these condos closing, the likelihood of builders who are very much hurting right now because of
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where they are in the real estate cycle and looking for any cost savings possible to deny
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the 2% because they know that IPO either won't enforce or is not a viable entity, depending on
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what happens to it, is very real. And that's not covered by insurance. And it's not identified yet
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because so many people haven't yet hit that stage and they don't realize they're not being paid.
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But that's where the true pain point will come for realtors from this scandal.