Toronto

Some real estate agents may be bending their industry’s advertising rules in order to quickly sell homes in Toronto’s booming housing market, according to Toronto realtors.

Toronto-area homes are more commonly being advertised before they appear on MLS— the multiple listing service which permits agents to see what’s for sale.

Agents say the “Coming Soon to MLS” signs they attach to homes is just another marketing tool to drum up interest.

But some agents are simply posting signs that don’t include required information to make a quick sale — and have no intention of posting them on MLS, according to realtors.

“I think some agents may be using it as a means of just selling it before it gets to MLS,” said Ora Ross, of Mulholland Ross Real Estate Team.

“Sometimes you see the ‘Coming soon’ and it goes straight from ‘Coming Soon’ to ‘Sold’ and everyone’s going, ‘Wow, how did that happen?’ If you think you’re going to be fully marketed, you want to make sure your property is going to MLS and your agent’s just not selling it to somebody to make a quick buck or to sell to their own buyer without everyone else participating.”

The Real Estate Council of Ontario can inflict penalties on agents caught violating advertising standards. The sign should read “coming soon to realtor.ca.” They should also display the registered brokerage and salesperson’s name.

“It could very well be that the seller and their representative put up the sign with the full intention to list the property on realtor.ca at the specified time. However, if a buyer comes in with an offer before the listing is posted, the seller has every right to accept it,” said Kelvin Kucey, RECO’s deputy registrar of regulatory compliance.

One of Ross’ clients, Lisa Blankenhorn, 52, chose to advertise her Thornhill home with a “Coming Soon” sign to generate buzz.

“I believe this could shorten the process (of finding a buyer),” she said. “Rather than having a few people trickle in here and there over a period of time, it hopefully will happen within days. This approach could also impact the selling price.”

Josie Stern, a sales representative for Sutton Group Associates, said there is a strategy when it comes to advertising with a “Coming Soon” sign.

“I think it’s important not to advertise too early before it comes on MLS, because people do get bored with it,” she said. “But seven to 10 days before it comes on MLS, it just gives people a chance to potentially accumulate interested parties and if there’s another house they may be potentially in, you can divert them to something else.”

Stern said her realtor website also has a “Coming Soon” feature, which is frequented by browsers.

“We get a lot of calls from the public, realtors because we’re dominant agents in the area,” she said. “They want to be able to tell their clients first. Especially with the advent with bully offers, people want to get ready. They’ll make sure they have their ducks lined up — that their parents will see it, they’ll get the inspection report early.”

Ross recommended those selling their properties should also have an agreement with their agents to not show the house or take offers prior to the listing arriving on MLS.

Home sales soaring

According to the Toronto Real Estate Board, Toronto home sales logged through MLS in September increased by 21.5% compared to the same time last year.

The average selling price was up by 20.4% — to $755,755.

Basic economics — high demand and limited supply — continues to drive sales of all major home types, according to TREB President Larry Cerqua.

• “What we’re seeing is the limited supply,” he added. “It’s not rocket science here. And it spreads out to the surrounding areas as well. It’s bad for a lot of buyers. We really want to see the government helping out on permits, land-use, so people can build more. We need more houses.”

• As for the “Coming soon” signs, Cerqua said the signs are just a matter of taste with different agents.

“Most reps that do this, it’s kind of their marketing way of doing it, but even my own wife, who is extremely busy in the industry, doesn’t do that. If the sign goes up in Toronto, 18 offers are in by tomorrow.”

•“We don’t want people abusing (the coming soon) signs either,” he said. “(Agents) cannot arbitrarily stop a showing. If it’s exposed, you have a right to call the brokerage and set up a showing, unless the seller directly says they don’t want want showings. That’s where you get that fine line.”

New mortgage rules

New Canadian mortgage rules come into effect Monday, which target buyers with less than a 20% down payment.

•People who have less than a 20% down payment require insured mortgages. Those buyers will now have to undergo a “stress test” to make sure they will be able to afford payments if interest rates go up in the future.

•Up until now, stress tests were not required for fixed-rate mortgages longer than five years.

•For example, a buyer has qualified to purchase with 10% down for a mortgage of $527,000. As of Monday, the same buyer would only qualify for a $420,000 mortgage — equating to a 20% drop in buying power.

•Ottawa also closed a tax loophole so that only Canadian residents can use the principal residence tax exemption. The exemption allows homeowners to avoid capital gains tax when they sell a home as long as they were living in it.

•First-time homebuyers will likely feel the most impact.

•The federal government says it’s responding to concerns arising from increasing housing prices — especially in Toronto and Vancouver — which could increase defaults in the future should historically-low interest rates start to climb.

— With files from The Canadian Press

jyuen@postmedia.com