TORONTO — The harmonized sales tax about to take effect in British Columbia and Ontario is proof of Benjamin Franklin’s assertion that “in this world nothing can be said to be certain, except death and taxes.”

Funerals are just one of many services and goods previously exempted from provincial sales taxes that will be subject to the HST starting Canada Day, as governments in both provinces switch the tax burden from corporations and to consumers.

However, exactly what’s going up in price and what’s not depends entirely on which province you live in.

The single sales tax, which combines the five per cent Goods and Services Tax with provincial Retail Sales Taxes, will be 12 per cent in B.C. and 13 per cent in Ontario.

Energy costs will be the biggie for most Ontario consumers, with an immediate jump in the cost of electricity, natural gas and home heating oil because of the HST.

Ontario motorists will be among the first to feel the pinch when they fill up at the pumps. Gasoline and diesel fuel, which had been exempt from the province’s eight per cent sales tax, will be subjected to the 13 per cent HST.

British Columbia is maintaining its exemption for the provincial sales tax portion of the HST on gas and diesel, and won’t apply the HST to electricity or home heating fuels. However, B.C. has a carbon tax on energy that will rise to 4.82 cents a litre on July 1.

The tax on alcohol is actually decreasing, but the prices won’t. The provincial taxes of 10 to 12 per cent will be lowered under the HST, but other fees and taxes will rise because of what the provinces say is their social responsibility to maintain minimum prices for liquor.

The HST will not apply to purchases of resale homes in either province, but will apply to new homes costing over $400,000 in Ontario and those over $525,000 in B.C. New home buyers in Ontario will receive rebates up to $24,000 to lessen the impact of the HST.

There are so many other differences to the way B.C. and Ontario are harmonizing sales taxes that retailers who operate in both provinces will need two rule sheets to figure out what’s taxed and what’s not.

Internet fees will now be subject to the HST in Ontario, but were already hit with both taxes in B.C.

British Columbia will apply the HST to cable television fees and local residential phones, both of which were already taxed with the GST and PST in Ontario.

Green fees at golf courses will be subjected to the HST in Ontario but not in British Columbia.

Ontario has exempted newspapers and prepared meals and drinks costing under $4 from the HST, but British Columbia did not.

B.C. will apply the HST to snack foods, catering services, over-the-counter medications and food-producing plants and trees.

Ontario will apply the HST to legal services but they will remain exempt in B.C.

B.C. will subject shoe repairs, tailoring, wedding planning services and veterinary bills to the HST while those services remain exempt in Ontario.

Taxes will go up in both provinces on services such as lawn care, snow removal, dry cleaning, hair cuts, massages, personal trainers, gym memberships and home service calls. Home renovations and real estate commissions will also rise because of the HST.

Home insurance was exempt from the GST so it will not be hit with the HST, but will still be subject to the provincial sales tax.

Other items previously exempt from the PST but now subject to the HST include hotel rooms, taxis, domestic air, rail and bus travel along with campsites and hunting and fishing licences.

Also rising will be the tax on magazine subscriptions, some theatre tickets, ski lift fees, rental fees for hockey rinks and banquet halls and lessons for everything from ballet to soccer. However, music lessons will remain exempt from the HST.

Music and videos downloaded as MP3 files will also be subject to the HST after previously being exempt from the provincial sales tax.

Cigarettes and other tobacco products — and nicotine replacement products — will also be subjected to the HST after being exempt from the provincial sales tax, as will vitamins.

There will be no HST on vital documents such as health cards and birth certificates or on driver’s licence and vehicle plate renewals, although personalized vanity plates will be subject to the HST in Ontario.

Used cars, which were previously exempt from the five per cent GST when sold privately, will now be subject to the 13 per cent HST in Ontario and a 12 per cent provincial sales tax in B.C.

Both provinces negotiated some exemptions from the HST with the federal government, which wanted the tax applied as widely and with as few exemptions as the GST.

Consumers will continue to pay only the five per cent GST on children’s clothing and footwear, children’s car and booster seats, diapers, books and feminine hygiene products.

The HST will not be charged on basic groceries, rent, condo fees, prescription drugs, some medical devices, child care, municipal public transit, most health and education services, tutoring, most financial services and legal aid.

However, even though condo fees are exempt from the HST, purchases by condominium corporations will be subject to the tax, so condo fees are expected to rise.

The price of going to the movies or a sporting event in Ontario is actually expected to drop with the introduction of the 13 per cent HST because those outings were hit with a 10 per cent PST plus the GST.

Buyers backed away from Canada’s housing market in May, driving sales lower in what is traditionally the busiest month of the year for the country’s real estate agents.

The housing market has been key to Canada’s economic recovery, as low  interest rates and pent-up demand drove buyers into the market after months of stagnation in 2008. But with interest rates likely heading higher in the second half of the year, many buyers who would have preferred to buy in the fall or early winter chose to buy sooner.

Tougher mortgage rules imposed by the federal government in mid-April also prompted buyers to act sooner, the Canadian Real Estate Association said. Meanwhile, tens of thousands of homeowners have seen the rampant demand and listed their houses for sale to take advantage of high prices.

Sales fell to 8.5 per cent to 40,393 units in May compared with April. Sales remain elevated by historical markers, but are 15 per lower than last fall’s peak.

Prices were essentially flat in May, gaining 0.5 per cent to an average national resale price of $346,881 – the highest on record.

  Ottawa — Bank of Canada governor Mark Carney has had a busy time of it since taking over as the country’s central banker 27 months ago, mostly tackling the financial crisis, mapping out the road to recovery and reassuring Canadians that at the end of the day the bank’s extraordinary policies would work.

The one thing he has yet to do during his term, however, is raise interest rates. That might be about to change on Tuesday. If he does pull the trigger – and that is what most analysts expect – it won’t be after grappling with competing forces that convey two starkly different messages about the economic outlook.  

“We are at point where it is a tug of war between structural issues that are facing the eurozone and a very strong economic cyclical backdrop,” says Stéfane Marion, chief economist at National Bank Financial.

 Weighing on the governor are the economic data, which call out for a rate hike – as much as 50 basis points, some reckon. The data have been consistently strong and surprising to the upside. Job creation is in full swing, with a record 109,000 workers added to payrolls in April; consumers are buying up goods at a healthy pace, tax credits or not; corporate profits are rebounding to pre-recession levels; and inflation is creeping closer to the central bank’s preferred 2% target. The sterling fundamentals prompted the central bank last month to ditch its conditional commitment to keep its policy rate at a record low 0.25% until July, leading traders to price in a nearly 100% chance of a rate hike on June 1.

 That was until sovereign debt worries exploded in Europe, once Greece formally asked for international help days after the last Bank of Canada rate decision. That sparked an across-the-board retreat in global equity markets, down 9.3% since the beginning of May, as traders sold stocks and poured into risk-averse U.S. treasuries and other government securities on fears that another credit crunch was at hand. Mr. Carney is likely aware of this better than most, given his capital markets background from Goldman Sachs.

 The most worrying sign on Mr. Carney’s radar screen might be the small but steady increases in the cost of borrowing among banks, a signal European lenders are finding it tough to access cash from their peers on concern over how much Greek, Portuguese and Spanish debt they hold.

 In the end, the consensus is Mr. Carney is leaning toward a rate hike – a modest one, though, of 25 basis points. The thinking is, an ounce of prevention now is worth a pound of cure later.

 “We can’t look at things in a vacuum, because there are so many other factors besides Europe’s issues” says Jonathan Basile, an economist with Credit Suisse in New York who closely watches Canadian markets. “The truth is the macroeconomic evidence is outweighing the financial risks right now.”

 The last time the Bank of Canada raised its benchmark rate was in July 2007, by 25 basis points to 4.5%. At the time, former governor David Dodge said the economy was operating above its production potential, and inflation was likely to stay above its 2% inflation target for longer than forecast.

 Little did Mr. Dodge know that the U.S. subprime crisis would morph into the worst financial crisis since the Great Depression, roiling markets and economies around the world. This is why Europe’s recent fiscal woes have triggered a case of nerves, and might prompt Mr. Carney to rethink any rate move.

 “The Bank of Canada wants to raise rates, but it doesn’t have a crystal ball,” CIBC World Markets said in a note to clients. “It can’t be certain that the recent financial market downturn isn’t going to morph into something more severe that would make a rate hike look out of place.”

 There’s another school of thought, though, that suggests markets have overreacted to a regional problem. In this context, it is key to remember the Bank of Canada didn’t expect the eurozone to contribute much to global growth, envisaging only 1.2% expansion this year and 1.6% in 2011.

 “The European picture will calm down and people will realize it is not as dramatic as being played out,” says Carlos Leitao, chief economist at Laurentian Bank Securities.

 Yes, he acknowledges, the debt-ridden southern European economies have tough years ahead. But other countries, led by Germany and France, are going to capitalize on the lower euro and boost their exports to emerging economies and North America, which will help offset the drag from the so-called Club Med nations.

 Besides Europe, Mr. Carney has other factors to consider.

 Canada’s sovereign debt levels are indeed much better than the industrialized world, as our politicians like to remind us. But the amount of debt held by households, measured as a percentage of disposable income, stood at a historical high of 146% – of which 98% is mortgage related – at the end of 2009, rating agency DBRS estimates. That would put Canadian households ahead of the United States but behind Britain on this measure. A rate hike would signal it might be time to live more modestly and refrain from too much debt-financed consumption (which helped fuel those nasty asset bubbles that central banks may want to pay more attention to in the aftermath of the subprime debacle).

 Mr. Carney’s other challenge is to explain why, and what’s ahead. He has come off a period where he provided extraordinary guidance to markets. Don’t expect similar language from the governor.

 If anything, Mr. Marion warns the central bank should refrain from using the type of guidance the U.S. Federal Reserve deployed in 2004, when it signalled a period of “moderate” rate hikes were in the offing.

 In retrospect, the Fed’s use of the word moderate “encouraged more financial excesses,” leading to the subprime bust, Mr. Marion says. “Carney doesn’t have to be brusque about it. He has the luxury to start slowly, and leave his options open,” from pausing should Europe deteriorate to hiking aggressively, by 50 basis points, if conditions warrant.

 Mr. Carney reminded us recently that “nothing is pre-ordained” at the Bank of Canada. He’s likely to drive home that point on Tuesday, rate hike or not.
Read more: http://www.financialpost.com/news-sectors/story.html?id=3084621#ixzz0pVYuP0cD

Ever wonder how that magical number – The Credit Score – is computed? 

Whether you’re obsessing over your FICO score or your Beacon score, you’re likely shopping for credit. The FICO score was developed by Fair Isaac & Co., which began credit scoring in the late 1950s. The point of the score is consolidate your credit profile into a single number. The Beacon score is a brand name used by Equifax, the largest credit-reporting agency in Canada. While Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed, whether you get a loan or not is a numbers game: The more points you score on your credit app, the better you do. 

There’s a reason you have to fill out so much information when you’re applying for credit. Everything counts. Your age, your address, and even your telephone number all have a role to play in whether or not you’ll get credit.

Young ‘uns and old folk are at a disadvantage since under 21 and over 65 likely means you aren’t working; no points for you. If you’re married, you’ll get a point for being “stable.” And while you might think that being divorced would work against you (all that spousal and child support), most creditors don’t give a whit.

No dependents? Zero points. You’re probably still gallivanting like a teenager since you haven’t yet “settled down.” One to three dependents? Score one point. You’re a solid citizen. More than three dependents? Score zero. Have you no self control! And don’t you know you that with all those mouths to feed you could get in debt over your head?

Your home address counts too. Live in a trailer park or with your parents? Bad risk, score zero points. You could skip town with nary a look over your shoulder. Rent an apartment? Give yourself one point. Own a home with a big fat mortgage and you’ll score major points since someone has already done some checking and you qualified for a mortgage. Own your home free and clear? Even better. You’ve proven you can pay off a sizable debt and now you have a pile of equity that the card company would love to help you spend.

Previous Residence? Zero to five years (some applications only go to three years), score zero points since you move around too much. No land-line: zero points. How the Dickens are they gonna find you when you fall behind in payments. Since they can’t use your cell phone to actually locate you physically, it doesn’t count.
Less then one year at your present employer earns you no points. Again, it’s a stability and earning continuity thing. The longer you’re on the job, the more likely you are to be bored out of your mind but you’ll score more points. And, not to overstate the obvious, the more you make the better.

The more willing you are to make your lender rich, the higher your score will be. Since the FICO score was originally designed to measure customer profitability, if you pay off your balance in full every month, you’re going to score lower than the guy who only makes the minimum payment and pays huge amounts of interest.

Scores range from 300 to 900 and if you manage to hit 750 or above you’ll qualify for the best rates and terms. Score 620 or lower and you’ll pay premium interest if you even qualify; 620 is the absolute minimum credit score for insured mortgages.

Your credit score can change quickly. Payment history accounts for about 35% of your credit score and just one negative report can drop your pristine score into the doldrums. Since scores are updated monthly, your bad behaviour won’t go unpunished for long.

The type of credit you have counts for about 10% of your score. And your current level of indebtedness accounts for about 30% so going too close to your credit limit is another way to deflate your score. One rule of thumb is to keep your balances below the 65% mark. So if you have a limit of $1,000, you won’t ever carry a balance that’s more than $650.

Having too much credit available can also hurt your ability to borrow since the more credit you have, the more trouble you can get yourself into. If you’ve got a walletful of cards, canceling credit you’re not using can be a good thing – for both you and your credit score – over the long haul. Careful though. If the card you’re eliminating is one with a long, positive history, you’ll eliminate what could be a very good record of your repayment when you cancel the card. You’d be better off cutting up the card so you aren’t tempted to use it, while you establish a track record (six months or more) before you actually cancel the account.

Credit shopping can also cost you points. Since about 10% of your credit score relates to the number and frequency of new credit enquiries, applying willy nilly for new credit will end up costing you.  However, it’s only when a lender checks your score that this registers on your score. Checking your own credit report/score is considered a “soft” inquiry and does not go against your score.

Jeremy Torobin Globe and Mail  

Mark Carney is taking a cautious approach to raising interest rates, weighing Canada’s powerful economic rebound against the uncertainty of an “increasingly uneven” recovery across the globe.

The Bank of Canada Governor became the first central banker in the Group of Seven to raise borrowing costs since the financial crisis and recession, increasing the benchmark overnight rate Tuesday by one-quarter of a percentage point to a still exceptionally low 0.5 per cent.

Policy makers will keep an eye on Europe’s troubles, and won’t move more aggressively than they see fit, the Bank of Canada suggested, even though the economy is rebounding rapidly and inflation will likely exceed its 2-per-cent target this year. Much like in 2008 when the U.S. financial crisis pulled Canada into recession, the country’s economic health depends in large part on policy makers in other countries successfully containing homemade problems.

“Interest rates are incredibly low, given the strength of the domestic economy, but the global story is where it’s at right now,” Eric Lascelles, chief economic strategist at TD Securities in Toronto, said in an interview. “The level of uncertainty suggests there’s not a lot of confidence in the forecasts.’’ The open-ended nature of the announcement sparked a fall in the Canadian dollar and yields on two-year government bonds as investors pulled back their bets on what they had expected might be a series of uninterrupted rate hikes going forward.

By Alexandra Twin, senior writer
Wednesday, June 2, 2010

Provided by CNN Money

After the Dow’s worst May in 70 years, the threat of the stock correction becoming a full-blown bear market has intensified.

But this isn’t new territory for long-term investors. They’ve faced this precipice 29 times since World War II, according to Standard & Poor’s chief investment strategist Sam Stovall.

In 17 cases, they’ve avoided seeing a correction (a decline of at least 10% off the highs) turn into a bear market (a decline of at least 20% off the highs).

In 12 cases, they weren’t so lucky. And in three of those 12 cases it became what Stovall calls a “mega meltdown,” or a decline of 40% or more. In fact, the 2008-2009 stock market bloodletting sent the S&P 500 crashing 57% from an all-time high to a 12-year low.

But as the correction vs. bear market debate continues, what seems to be critical, at least on the technical side, is that the selling not surpass 15%. Historically, if that happens, the correction will become a bear market.

So far this current correction has avoided that 15%. At its worst, the S&P 500 was down 12.3% off the highs. As of Tuesday’s close, the S&P 500 was down 12% from the highs.

But hovering below the 15% mark doesn’t mean the selling is over by any means.

“We don’t know if the market direction is going to be up or down, but we do know it’s going to be up and down day to day,” said Randy Frederick, director of trading and derivatives at Charles Schwab.

The increased volatility increases the likelihood of more selling, particularly with the market in a mode where it retreats on both big news and a lack of news.

The threat of the European debt crisis, the weaker euro, the BP oil spill, increased tensions between North and South Korea and signs that China’s booming economy is slowing all dragged on stocks in May. But there have been numerous days in which there was little relevant news, either on the positive or negative side, and stocks sold anyway. Tuesday’s market, for example.

So correction or bear? Here’s what to consider:

Correction: If the market is in correction mode, it will probably chop around for a few months, then move higher, according to Stovall.

Of the 17 times that the correction didn’t become a bear market, stocks lost an average of 14% over a four-month period. Typically it took stocks another four months to get back to breakeven, and another four months of gains before another correction or pullback kicked in.

A pullback is considered a decline of 5% to 9.99%. They happen frequently and like corrections, are part of normal market functioning. Stovall estimates there have been more than 50 since World War II.

There were only two times (1955 and 1997) that the market “corrected,” recovered and then turned lower right away. More often, the market gets back to breakeven and then gains an average of 10%.

Bear market: S&P research shows that when a correction becomes a bear market, it tends to stretch on for 14 months and yield a decline of 33%, on average. The recovery back to zero tends to take nearly two years.

Stocks currently appear to be in a “garden variety bear market,” pushing toward a decline of 20% to 30% as the mountain of problems becomes too much for investors, according to the editors of the Stock Trader’s Almanac.

Heightened investor worry: In what could be either a bad or good sign, depending on whether you’re a contrarian, investor sentiment took a turn for the worse last week, according to the latest survey from the American Association of Individual Investors (AAII).

Bearish sentiment, or the expectation that stocks will fall over the next six months, jumped 17.2% to 50.9%, marking the highest level of pessimism in the survey since November 2009.

Also, AAII’s monthly survey showed investors pulled money out of stocks last month and reallocated it to bonds, cash or cash equivalents, reflecting global jitters and the fear of further stock erosion.

Investors held just 50.9% of their portfolios in stocks and stock funds in May, down 9.5% from April. That’s the smallest percentage in stocks since May 2009, shortly after the market bottomed. It’s also below the historical average of 60% http://ca.finance.yahoo.com/personal-finance/article/cnnmoney/outrunning-bear-market-20100602

OTTAWA – The Canadian dollar plunged to its lowest level in eight months before recovering Tuesday, sending a clear signal that Europe’s debt crisis has the potential to reach across the Atlantic and impact Canada’s mending economy.

The loonie has lost about eight per cent of its value over the last month in reaction to fears in global equity and financial markets about the lasting imprint of government debt, and now a new risk — the threat of war on the Korean peninsula.

Over the weekend, the Bank of Spain had to bail out Cajasur — the second savings bank in that country to receive public money since March 2009. On Monday, four other Spanish savings banks announced plans to merge amid concerns over solvency in the sector.

Tension in Asia has also risen since last week after North Korea was accused of the sinking in March of a South Korean warship. Seoul has called for sanctions against the North.

The Canadian dollar closed down 0.94 of a cent at 93.46 cents US on Tuesday after bouncing off a low of 92.18 cents US earlier in the day.

The loonie is not alone in seeing its value eroded. Other commodity currencies have also taken a hit in the flight to dependable and liquid U.S. Treasury bills.

The short-term impact on the Canadian economy of frightened financial markets and a loonie closer to 90 cents than parity, ironically, may be mostly positive.

A weaker dollar will give a much-needed boost to manufacturers and exporters who prosper whenever they can sell their products abroad with a currency discount.

And the unsettling of financial markets has caused real interest rates to soften for mortgages and other loans. Many Canadian banks have dropped posted rates on five-year mortgages to below six per cent.

As a result, prospects that Bank of Canada governor Mark Carney will start hiking rates next Tuesday have gone from a virtual sure thing a month ago to a coin-flip today.

Export Development Canada’s chief economist, Peter Hall, welcomed the fact that the loonie’s wings have been clipped, saying that a dollar at par had the potential to take two or three points off economic growth next year — the equivalent of about $30 billion to $45 billion in output.

But the longer term implications may be that Canada’s recovery won’t go as smoothly as many had hoped. The loonie is acting as a proxy for the global economy: when the Canadian dollar is down, it means so are prospects for global expansion, say economists.

“Everything and anything that happens in the world affects Canada,” said TD Bank chief economist Don Drummond, noting Canada’s dependence on trade and on the prices of commodities it sells to the rest of the world.

The longer term outlook is that many governments, not just the poor cousins of Europe, will soon need to deal with debt burdens that cannot be sustained, and the ensuing clampdown on spending will stall the recovery.

Several economists, including David Rosenberg of Gluskin and Sheff, said the risk of a second downturn in key economies, including the United States as Washington withdraws stimulus spending, has become very real. Much like in 2008-09, Canada would become collateral damage, they said.

“For a small, open (and) commodity-sensitive economy whose entire recession in 2009 was imported from abroad and south of the border, the answer is yes,” Rosenberg said when asked whether a second dip is possible.

That still remains a minority view, although the TD’s Drummond puts the risk at about 20 per cent.

The key question is whether the European crisis is an overblown temporary crisis, or the precursor of government debt woes in the United Kingdom, the United States and other larger economies.

Scotiabank portfolio manager Andrew Pyle said he believes the fears over Europe will blow over in a matter of weeks, which will cause both oil prices and the loonie to recover to previous levels.

“I think people will be surprised to see how quickly that will happen. I wouldn’t be surprised to see us back to parity in July,” he said.

But it’s the longer-term prospects that most worries Drummond. He says the perception that the situation will stabilize if the bailout of Greece and other countries works, or that things will implode if the bailout doesn’t work, is simplistic.

“Those countries (with large debts) aren’t getting out of this any time soon . . . easy bailout or not,” he said.

http://ca.news.finance.yahoo.com/s/25052010/2/biz-finance-loonie-s-plunge-signals-long-term-risk-canadian.html

Gordon Ives is the sort of customer who keeps real estate agents awake at night: a former customer.

Last year, after several years of trying to sell his Charlottetown home through an agent, the retired banker decided to change tack and find a buyer on his own. He calculated how much a conventional sale would cost him in commissions and sliced that much off his asking price. Four months later, it sold.

Net cost to him of selling it himself: zero. Net cost to the real estate industry: about $15,000 in lost commissions – and one client who is determined never to use an agent again.

“I hate to say this because I have some family members that are agents, but it’s really not that difficult to do if you’re comfortable dealing with people,” Mr. Ives says. “This is a wave that’s starting to build, and people have to realize that change is possible.”

Agents have long looked askance at people who wanted to sell their houses on their own, but those sellers were such a small part of the market that the industry rarely worried about them. That’s changing, and fast. Facing the erosion of their business model at the hands of a Competition Bureau that is intent on opening up the industry to new players, realtors are launching campaigns from coast to coast to discourage do-it-yourselfers and position themselves as the only sane way to sell a home.

The soft sell is being done on television, with an advertisement recently launched by the Canadian Real Estate Association that tries to show all the things an agent does to help – “Need staging advice? I do that too.” The hard sell is coming in other forms, as real estate boards ratchet up the rhetoric in a bid to win private sellers back.

In Nova Scotia, for example, homeowners who put their properties up for sale without the help of an agent can expect a scary letter to land in their mailbox, making sure they understand the hazards of going it alone. The letter, which comes from the Nova Scotia Association of Realtors, warns homeowners that they are “accepting with open arms increased risk of liability, threats to you and your family’s safety.”

“Realtors protect you and your family from any ill-intended strangers that will come in to your home under the pretense of wanting to buy,” the letter advises, before it goes on to warn of lower sale prices and longer sale times.

It’s a new position for the industry, which is used to having a near-monopoly on sales in Canada. It is widely accepted that about that 90 per cent of all home sales in Canada take place through the Multiple Listing Service maintained by the country’s real estate boards and CREA.

But that number is an educated guess, because there is no database that includes both houses sold by agents and those sold privately. And as technology makes selling on your own easier than ever, there’s little doubt that the estimate is increasingly out of date.

While selling privately has always been an option for anyone willing to try their luck after reading a few books, it has been aided by the emergence of services like PropertyGuys.com, which launched in 1998.

The business is built on the assumption that every part of a real estate transaction can be handled by an industry professional for a flat fee. PropertyGuys helps link up sellers with appraisers who can set prices and lawyers who can handle paperwork. The time is right for owner-led sales to take more market share, argue the company’s founders, because technology makes it easier than ever to find information and compile databases that can help both buyers and sellers handle transactions without a lot of middlemen.

Starting out of his basement in Moncton, Ken LeBlanc built a national network of franchises that guide homeowners through the process of selling their homes. While the number of listings is minuscule (about 10,000) compared to what’s offered by real estate agents through their Multiple Listing Service (236,397 at the end of April), they say the proportion of listings that result in sales is about the same, at near 50 per cent.

“You’d be amazed how many people around the country still think it’s illegal to sell your house on your own,” he says.

For sellers, the fees range from a few hundred dollars to a few thousand, depending on the amount of hand-holding required, but it has been enough to push PropertyGuys to profitability. When they began selling franchises in 2005, the asking price was less than $5,000. Today, the top price is closer to $50,000, and the business has grown to include 110 franchises from coast to coast.

The biggest gains have come on the East Coast, though the company is also taking a larger share of Northern British Columbia. Ontario is a tougher market to penetrate, because the number of agents in large metro centres such as Toronto makes it initially difficult for franchises to stand out.

Kenny Singleton owns the PEI franchise, and has seen his business grow to the point that he handles about 30 per cent of all sales in Charlottetown. He’d be small player in any other part of the country – only 1,404 houses sold on the island last year. But on the island, it makes private sellers a force to be reckoned with.

His first year was the hardest. Almost every prospective customer “heard around town” that the franchise was on the brink of bankruptcy, he said. He has also had to fight for many of his listings – personal relationships run deep, and almost everyone is either related to or friends with someone who sells real estate professionally.

“That holds up for a while, but there comes a point where people realize that it doesn’t make sense to spend $20,000 to sell your house,” he said. “That’s a realization that hits people after a while, and we’ve been here a while.”

He’s convinced selling privately is a better model – and scoffs at the idea that agents will get you a better price. A house will sell at the point where buyers and sellers intersect on price. Anything else is just superficial, he says.

“If you’re looking for a two-bedroom house and I have a three-bedroom house, there’s no real estate agent in the world that will be able to close that sale,” he said. “Price is what matters, and once you agree on that, then it’s a very simple process.”

His optimism is based largely on demographics. Real estate agents on PEI tend to be middle aged or older, and growing out of touch with a younger generation that prefers online options and is more comfortable with the idea of private sales than their parents would have been.

“These kids aren’t going to use an agent,” he says. “That’s just the way this is going. The agents are older and the buyers are younger, and they’ve had the Internet their whole lives.”

Of course, real estate agents see things differently. It’s hardly a straightforward transaction, and there are significant perils to someone who makes a mistake.

“Some people don’t understand the services we provide and it’s important we help them get a better sense of the value we provide,” says Karen Edwards, president of the Nova Scotia Association of Realtors.

The problem with private sales is that you don’t know what you don’t know, says the president of the Prince Edward Island Real Estate Board. Jim Carragher insists a lot of his new business comes from private sales gone bad.

“I’m telling you that it is so terribly sad when I get that phone call at the 11th hour from someone who was trying to sell their home who suddenly realizes they have made a terrible mistake,” he says. “Their deal falls through, they already bought something unconditionally. I try to help, but I tell you sometimes it’s just too late to undo the damage.”