Let me start with a disclaimer: these are my personal views and don’t necessarily reflect the views of Bosley Real Estate. But if asked, I’m guessing a lot of Toronto realtors would agree with what I’m about to say.
Brendan and I became real estate agents because we saw and heard a lot of negative stories about Toronto realtors. It seemed there had to be a better way. From the very beginning, we’ve run our business with integrity and honesty (“no BS, no fridge magnets”). I’m sure that’s hurt our short-term income, but I’d like to think it will be good to our business in the long run. And we can respect ourselves in the morning.
Now onto the rant... True story. Prices have been changed to protect the guilty (but the net price changes are the same).
The House:
- A nice, fully-renovated home in a good neighbourhood for first time Buyers
- Listed $700,000 45 days ago
- Reduced to $600,000 within the first 30 days
- Now priced at $400,000, offers being withheld to generate a bidding war.
My Opinion
There are rules to protect consumers from misleading advertising. Advertising a price nowhere near what you’re prepared to accept sure sounds misleading to me. What would happen if a grocery store advertised milk for 25 cents, and when I went to pay for that milk, they said ‘Actually, we won’t accept 25 cents for that milk, you can’t buy milk for 25 cents anywhere in this city. We just advertised that price so you’d come to the store, but we’ll accept $1.99 for it?
I fully understand the strategy of under-pricing a house by a few thousand dollars to generate interest – we still have a low inventory of houses in Toronto, so often, it is in the Seller’s interest to ‘let the market decide’. But pricing a house by hundreds of thousands less than you think it’s worth, isn’t cool. If you aren’t prepared to accept your listing price, then it shouldn’t be your listing price. Period.
Don’t get me wrong, there are thousands of professional and ethical real estate agents out there. I work with some truly amazing people. But then there are those that ruin it for us all.
On behalf of the good Realtors out there:
I’d like to apologize to all the Buyers who will get their hopes up about this house this weekend.
I’d like to apologize to those who will spend $500 on a home inspection thinking this house is truly within their price range.
I’d like to apologize to all the Toronto real estate agents who will waste countless hours showing this property and preparing offers the Seller has no intention of accepting.
And to the Sellers: I think you’ve done yourself a disservice. I hope no one shows up for your bidding war and the game you tried to play comes to light. And for the record, your house isn’t worth anywhere near the $600,000 you think it’s worth.
It’s funny, earlier this week I got a message from someone I met at an open house 3 years ago, who regularly reads this blog. He was complimenting my approach to business, and finished his note with these wise words: “Ethics are supposed to be profitable. Ethics are the new bacon and bacon is the new black.” I couldn’t have said it better myself.
Jane says:
I’m not sure which is more offensive, the listing agent’s lack of ethics or their stupidity. There are so many things wrong with this agent’s so called strategy. To claim that they are “letting the market decide what the house is worth” is a load of crap. The market always decides whether we let it or not. And the market decided that this home is worth less than $600,000. I wonder how the agent convinced the seller that lowering the price to $400,000 would magically produce competing buyers with an extra $200,000 to spend. Too bad for the seller and for the buyer that would have come along at the right price.
I love your blog, btw!
Jeff Barnes says:
I have heard that this, and other practices go on all the time; and how about the infamous, Phantom Offer? I hope more realtors are taken to task for their lack of ethics, ie publish names of douchebag realtors.
Fed Up says:
Start with (*name removed*) in Leaside… he does this ALL the time. Wastes a lot of people’s time. Just price it fairly and see what happens
John says:
The author of this blog contradicts their self when they say “I fully understand the strategy of under-pricing a house by a few thousand dollars to generate interest…..But pricing a house by hundreds of thousands less than you think it’s worth, isn’t cool.” If buyers are willing to look at a house that is priced much lower than what other homes are listed for in a specific area, then that is their choice and foolishness to waste their own time. And their realtors should have some common sense advising their clients that if a house is priced under value, that there is probably something wrong. Who are you to decide what is ethical when it comes under pricing a property?
I am not a realtor and think the majority are all douchbags. I am happy that the rules have changed so intelligent people can buy and sell properties without so much realtor lies and bs.
mpiche says:
Houses vary considerably in price so it’s not unusual to see houses from $400,000 to over $1 million on the same street. It isn’t as easy as knowing that houses in that area sell for $X so we shouldn’t waste our time. Clients fall in love with houses that are outside their budget all the time – but the decision on whether or not to put in an offer is the Buyer’s, not the realtor’s. RE: your comment on ‘who are you to decide what is ethical’: all Ontario real estate agents are held to a strict code of ethics, as well as rules about advertising, including that we can’t mislead the public. These are the same advertising guidelines that retail establishments have – you can’t advertise a product for $X if you won’t in fact accept $X. As far as who am I to judge? I’m just an agent fed up with some of the BS and I’m tired of being lumped in with those who make our industry look bad. I’m also a homeowner, so I have been and will be, a buyer and a seller too…
Brendan says:
I don’t think it’s contradictory–there is a difference between pricing low (and taking a risk that that’s all someone offers) and pricing dishonestly or misleadingly.
Grocery stores use “loss leaders” all the time–they price, say, tomatoes below cost: they take a risk, because if they advertise them at 10 cents, and you show up, they have to sell them to you at 10 cents. The hope is that you come and buy lots of other stuff to make up for it…but they take the risk that you may come and buy only tomatoes! They COULD lose money. Either way, if they advertise them at 10 cents, it has to possible to buy them at that price–otherwise it is false advertising under the Consumer Protection Act.
If a house is priced low, the sellers are also taking a risk that someone may only show up and offer them that price–it happens all the time. BUT they decide the risk might be worth it, since MAYBE lots of people will show up and they’ll end up getting more than that. But if they have no intention of accepting the advertised price, then that is false advertising…whether the product is tomatoes or houses.
After some digging around it seems that there is a legal loophole for real estate (if anyone can find some more info on this it would be great) but whether or not it is strictly legal or not…it’s pretty douchey.
Chris Rosprim says:
Wow – if they ARE a REALTOR – then a review of the Code of Ethics is in order. If they have MLS rules there as we have here – that is a violation of the MLS rules. They need to be sent back to school. The listing price of a property indicates the willingness and commitment of the seller to sell a property at that price. A full price no contingency offer would need to be accepted or risk of legal action.
D'Ann Bartley, REALTOR® says:
I agree with Chris Rosprim’s comment. There is a distinction between a “real estate agent/licensee” and a REALTOR® who has promised to live up to the Code of Ethics. I had a listing where we were actually about a week into escrow and the seller changed his mind about selling and wanted to cancel. The buyer’s broker demanded his commission, since the offer was full price and met all the seller’s terms. Guess what, he got it, without a fight. Full price was $720,000. In today’s market, should he want to sell now, his home is worth about $450,000. Left a few bucks on the table there, didn’t he!! Anyway, that is off-topic. Bidding wars are mean, and painful to buyers. I don’t mind if they came about due to demand, but if they were artificially created and manipulated by greed, then I will not be looking to work with that listing agent, nor show any of their listings again, unless a buyer demands it.
mpiche says:
Wow – that’s quite the story! Thanks for sharing!
Brendan says:
UPDATE: no surprise…it’s still on the market. This week, the realtor FINALLY decided to knock the price down, but not by a ton–about 20K I think (not looking at it right now)
So, karma-wise, things seem to have gone according to some celestial plan…
Dennis Downey says:
This attitude of lets try this, oh it didn’t work so lets try that. People need to realize how important it is to hit the market with the right strategy the first time. Once you are on the market and you start playing game it is so transparent and people will not give you what you want.
Patricia says:
You are brave and I applaud you. You cannot legislate someone into having ethical behaviour, it is like trying to police stupidity but you can bring it to light.
Applause.