Imagine working with a realtor for months as you search for your next dream home, only to finally find this “dream” home and get swindled out of $20,000.
To make matters worse, the person who swindled you also convinced you to walk away from the one person who would have helped you save that $20,000... And were rewarded even more for it!
It’s a sad, frustrating situation for the victim and a heartbreaking tale of caution for the rest of us. It’s also the story for this next installment in our “True Tales of Calgary Real Estate” blog series.
How Mac got Knifed... Right in the Wallet.
Some years back, one of our awesome realtors was helping a nice young man find a house in Calgary’s deep southeast. For the sake of the story (and this unfortunate guy’s privacy), we’ll call him “Mac”.
Our dedicated Elite Home realtor lived in the opposite end of Calgary, but never hesitated to drive to the deep SE to accompany Mac to about 8 different home viewings. After each viewing, Mac and his agent would recap the pros and cons of the property. This gave his agent the insight needed to narrow the hunt so that he could then search for homes that were increasingly in-line with what Mac was specifically looking for.
However, one weekend, Mac went alone to an open house and fell head-over-heels in love with the place.
Even though the property was listed with a real estate company, this open house was actually being staged by the homeowner (not a common situation, but some real estate companies make this option available.)
Much like an online dating profile, the homeowner emphasized every positive aspect of this home and neglected to mention any negatives… And Mac was absolutely and positively mesmerized.
After talking with the homeowner, Mac was 100% convinced that this place was the house for him.
Not only did the homeowner completely sell Mac on how awesome this house was and why Mac needed to buy it ASAP before someone else snapped it up – he also convinced Mac to buy the house without the help of his real estate agent.
But guess what! What Mac didn’t know was that the homeowner had worked out a very "special" deal with the real estate company that was listing the home.
It was a 2-part deal: If the homeowner found a buyer on their own then they would get a discount on the commission paid for their home’s sale. Furthermore, if the homeowner referred yet another property listing to this company then they would receive a nice little “referral bonus”.
Needless to say, this savvy homeowner managed to score a double-whammy with Mac.
Not only did they convince Mac to buy their house without the representation of a knowledgeable realtor; this homeowner also got Mac to list his current home with the same real estate company.
After the deal was closed and the papers signed, Mac reached out to the agent who had originally been helping him and explained what had happened. After some quick research, our trusty agent discovered that Mac had overpaid for this house by over $20,000!
Backroom Deals with Real Estate Brokers
This blog series, “True Tales of Calgary Real Estate”, is meant to share real-life stories that illustrate the tricky details of buying & selling homes in the Calgary real estate market. We share these true stories so we can help our readers learn about some of the lesser-known risks of buying or selling a home without the help and guidance of a knowledgeable, professional realtor.
In our previous blog post, we discussed how the details of a property sale’s commission are established in the initial listing contract between a seller and realtor/real estate company.
We also discussed how it’s a realtor’s professional obligation to perform the due diligence required to learn about a property’s history, and this also applies to the listing contract. If you’d like to get a bit more caught up on these things then feel free to take a read through our March 2018 blog post.
Every story we share in this series has a different lesson to it, and Mac’s story is no different. For Mac, his Elite Home Real Estate professional would have been able to immediately let him know 4 crucial things:
- That the home he was interested in was $20,000 more expensive than it should have been.
- That despite the fancy new faucets, this house desperately needed a plumbing upgrade.
- That the homeowner and real estate company had a unique kick-back deal that relied on the homeowner recruiting Mac.
- That no matter how much interest this home may have had, it’s never wise to let yourself be pressured to rush into any big purchase – especially one as important as buying a home!
All of this would have been useful information for Mac and, in the end, would have helped him be in a much better bargaining position.
What's more is that if Mac hadn’t chosen to forget about the Elite agent who had already dedicated so much time to helping him, then the agent would have also been able to help negotiate a way more appropriate purchase price.
Open Honesty About Open Houses
Some real estate companies permit homeowners to stage their own open houses, but this is definitely not an industry norm.
There are many reasons why real estate agents are typically the ones to run an open house, the biggest of which include:
• Access to appropriate advertising channels for attracting motivated visitors
• Handling tough questions concerning the listing contract, the material condition of the property, and legalities
• Administering sign-up sheets and regulating traffic flow
• A plethora of other details that the average homeowner is just not equipped to properly handle
However, there are still plenty of sellers who would prefer to put on their own open house. Most realtors discourage this for the reasons mentioned above, but some real estate companies are more lax about it.
So even though the property listing Mac went to look at was represented by an established realty company, the open house was actually put on by the very persuasive and not-entirely-forthright seller – a seller who did not feel obliged to fully disclose some very important details that Mac had the right to know about. And this is a detail that ultimately cost Mac a serious hit to his wallet and his pride.
• Never ever let yourself get pressured into buying a property, especially by the seller!
• The details of individual listing contracts can vary a whole lot and are absolutely worth knowing about.
• Once you have a knowledgeable, experienced real estate agent on your side that you should stick with them – they’re well worth it!
The above real life story of a real estate deal gone bad is just another one out of the dozens that we’ve collected throughout our many years of collective real estate experience – we have a ton more we could share!
Every single one of the situations we share in this blog series are meant to do 2 things:
1. Illustrate the many potential issues that choosing to buy or sell a home without correct representation can cause.
2. Open the door to conversations about the numerous details that each & every real estate transaction involves… And this is a conversation that we’re always happy to have with you!
Feel free to contact us to discuss your own specific real estate questions or situations – we’re always happy to help you.