Fuck you, Real Estate Broker!! (long)

The BBQ Pit
1

Mrs. Dante and I toyed with the idea of selling our house a couple of months ago, and we had a prominent local real estate broker come over to give us an estimate on our home. Let me tell you about his presentation.

He came over to our house with a DVD and a bag of microwaveable popcorn. And a pot of chrysanthemums. How delightful. The DVD was of himself describing how he would market our home, replete with cheesy catch phrases. While watching this badly acted travesty (I kept expecting a porn scene and a heavy bass line soundtrack to break out), he noisily ate popcorn (IRL, not on the DVD). Chomp, chomp, smack, chomp.

Then it was blah blah blah, sign this, blah blah blah, exclusive commitment until October, blah blah blah, my commission is 10%, blah blah blah…

So you know what we did? We signed it! That’s right, put our John Hancock’s right on there just as happy as you please. Why? I have no clue. I have a bullshit tolerance of nearly zero, and I still signed this damn contract. He cast a glamour over us, I suspect.

A few days later, we comes to our senses, and call and tell him we’ve decided not to sell our house. No problem, keep us in mind. No sweat.

Cut to two days ago. A couple of things have changed. Firstly, we’ve educated ourselves on what a real estate broker is supposed to do. Secondly, 10% commission!? You crazy. We want out.

So I call the office and speak to Bob, the broker’s lackey. I inform Bob that we are in the house market again, but we have no wish to use this broker’s services. As follows:

Dante: We’ve decided to use another broker that was recommended to us. So we would like to be released from the contract we signed.
Bob: Why?
Dante: Well, as the Ontario Real Estate Association’s website recommends, we’re using someone who is familiar with the area in which we wish to move.
Bob: As opposed to someone who’s familiar with the area you’re selling in?
Dante: Um, sure, why not.
(When I’m not in the mood to argue, I just agree with everything, even if it makes me sound like a congenital idiot. I don’t care much about Bob’s opinion of me.)
Bob: Well, I’ll have to call the broker and discuss it with him.
Dante: Fine, you or he can call me back and let me know.

Yesterday, His Bobness gives me a call back. This is almost word for word, with a chunk deleted, because it’s repetitively repetitive.

Bob: Dante, I’m going to be in your area, so I’d like to stop by and go over this with you.
Dante: Go over what? There’s nothing to go over. Either he’ll release us from the contract or he won’t.
Bob: I’m going to be in your area around 7:00. Is that good for you?
Dante: Um, no. Were you listening to what I just said? There’s nothing to discuss. I thought I had made that clear. I just need a yes or no answer from him.
Bob: Well, we just want to make sure you’re making the right decision.
(Yeah, that’s what he’s concerned about.)
Dante: I don’t see where my decision making process is any of your affair. The fact is the decision’s has been made. I just need a yes or no answer.
Bob: You mentioned that you had another broker that you wanted to use. Do you mind if I ask who it is?
Dante: Yes.
Bob: Sorry?
Dante: Yes, I do mind.
Bob: Well, I just want to talk to the broker…
Dante: Look, I don’t seem to be getting through to you here. This matter is not open to discussion, negotiation, or alteration. We don’t want to use your services at all, and certainly not at a 10% commission level.
Bob: Who told you 10%?
Dante: The broker did.
Bob: You must have misheard him.
Dante: That could be entirely possible, however I doubt I’m misreading the sheets of calculations wherein the broker commission level is calculated at the 10% level over and over again.
Bob: Well, it must be some kind of misunderstanding.
Dante: I’m sure it is. The broker understood us to be suckers, and it turns out that’s not the case.
Bob: I’m sure he was just joking.
Dante: Hysterical. He just joked himself out of over $10,000. So just have him call me with a yes or no answer. I’m going to hang up the phone now, because I don’t want to talk to you anymore.
click

My wife is looking at me with her mouth agape. For one, she can’t believe I talk to people like that. She’s much nicer and less confrontational than I am. Second, she can’t believe this idiot didn’t get the hint! We start talking and laughing about it, and I’m giving her his side of the conversation. Then, the oddest thing happens…

Dante: I can’t believe this asshole was so persistent. You know, it wouldn’t surprise me if he just shows up anyway.
Mrs. Dante: There’s no way. Not after that.
knock knock knock

We look at each other. We look around for the familiar three camera set-up that most sitcoms use. Nothing. I go to the door. Yep, it’s Bob. He’s holding promo material. And a pot of chrysanthemums. No, I’m not kidding.

Bob: I just wanted…
Dante: What the hell are you doing here?! (Truly, I’m irked)
Bob: Well, I wanted to come over and…
Dante: I remember you saying that. I remember me saying no. Yet, here you stand.
Bob: I wanted to discuss…
Dante: Bob, we have nothing to discuss. Seriously, please leave.

Off goes Bob.

So now I’m just waiting to hear from the actual broker. Wish me luck.

:apologies to the hamsters for the length of this post:

2

Why did he even bother coming at all? He could have just sent you the DVD and the popcorn. Fuck the chrysanthemums. :rolleyes:

This is my favorite part:

I’ve never bought or sold a house, but we plan to in a year or two. Now I know what I’m in for! Good luck to you.

3

It sure sounds like you’ve been treated badly here, but you did sign a contract. IANACL, but you could end up owing a double commission here. I strongly suggest that you see a local Toronto attorney ASAP.

4

Exactly what I’m trying to avoid. I need to get it him to put it in writing that we are released from the contract. So far, no luck with Lackey Bob, but I’m hoping we’ll get a call from Bad Broker tonight one way or the other. If he won’t release us from the contract, then we’ll just wait him out.

5

I’m been a real estate agent for almost 17 years now. The scenario you describe is puzzling on a few levels. I am a commercial, not residential agent, and I operate in the US not in Canada, but from what I understand in talking to Canadian agents the markets are not vastly different.

10% commission is not unheard of in selling very low priced or otherwise distressed properties that will prospectively take a lot of work to to sell relative to the commission, however, in normal everyday house listings in good neighborhoods the typical commission range is 5%-7% depending on overall price, neighborhood etc. I suspect this is why the assistant was stunned when you said 10%.

WIth respect to the exclusive representation contract you signed it is a contract and unless you can come to some agreement with the agent with a written release you may need to seek legal counsel. I think talking with the head of the office your agent works for might be useful at this point.

BTW although you make Bob out to be clueless in you scenario, I really didn’t hear him doing anything untoward in your description other than trying to handle the situation, and save the listing for the agent. I can understand him being confused between the agent’s 10% commission, and your somewhat bizzaro logic in describing to him why using an agent in the area you wanted to move to was a preferred choice for selling you house in the local market. Poor Bob.

6

Dante, it looks like you may have been the victum of a high-pressure salesman, something that the real estate field does not have a monopoly on.

First, I must admit my bias. I am a Realtor[sup]TM[/sup] and licensed real estate salesperson in the state of Wisconsin. And I don’t carry popcorn or DVDs to new clients unless they ask me to. So here’s a bit of advice and some tips from my perspective, some to your advantage, some maybe not.

First, if you signed a legal contract, you may be liable for certain fees, including commissions on the sale of your house whether sold by the original listing agent or not. This makes it unlikely that another broker would want to take the listing, since if he knows about the first deal, he knows you won’t want to pay twice. But he has ethics to consider and may have broker-to-broker arrangements already in place with prohibit (or at least strongly discourage) one broker from stealing the customers of another. This has all the earmarks of a nightmare at closing with everybody yelling at everyone else. Not good for any party.

The bad: You really should read the contract before signing, and ask about anything you don’t understand. A listing contract is a serious legal document that might cost you a lot of money. And the amount of commission is not set by statute, but is negotiable between both parties. If the broker says “everyone charges that amount,” he is in violation of anti-trust law.

For that reason, I will not discuss if 10% is high or low. I will only say that some properties are harder to sell than others – vacant land often is, as banks won’t lend as readily – and the actual selling price has to be considered, which I don’t believe you mentioned. I am less likely to agree to a low commission for a $50,000 property than a $500,000 property, and for really low prices, such as trailer lots selling at $3,000, I would ask a fixed fee which could be greater than 10%.

The good: You might be able to get released from the contract if the broker agrees. It may depend on how much of a hard-ass he is and how much negative publicity it may generate. Or you could renegotiate – he might be willing to take less to avoid losing the sale.

Now for a more helpful hint. Contact your state’s Real Estate Licensing Board (the actual name will vary by state) which licenses all salespeople and file a complaint. Also, contact the state Board of Realtors (start at http://www.realtor.org ). Here’s something few people know: a Realtor is a member of the National Association of Realtors, which is NOT a government group. You do not have to be a member to sell real estate, but most salespersons are, since they get access to MLS, forms, legal advice, and fraternal functions for their trade. But they can be expelled or disciplined and lose these privileges, and NAR takes a dim view of fraudulent practitioners, believe me.

Please don’t assume all real estate salespeople are like your guy (I’m not). There are bad apples in any barrel. And we often can do things that the average person can’t to put buyers & sellers together and make the transaction work – that may be worth far more than the few percentage points you may pay.

7

Just chiming in because I’m in Toronto and had a recent real estate nightmare myself.

I too got conned into signing a 6 month contract (I’ve since been advised to not sign anything longer than 3 months and have never had an agent refuse me on that – if it’s going to take him until October to sell your house that’s sort of a problem right there). Over the first couple of months that the house was on the market, we grew to despise our agent, but we were stuck with her.

Despite our requests that nobody come into our home without giving us notice (we had a lock box so there could be viewings when we weren’t at home), we had over a dozen times when we received no notice at all, including the not-so-pleasant experience of walking out of my bathroom in nothing but a towel after a shower one day to find three men standing directly in front of the bathroom door.

She did none of the things she had promised us (posting pictures on the internet, hosting open houses, listing us in various publications) yet we still weren’t able to get ourselves released from the contract.

She had started out sweet and charming, but became increasingly rude and condescending as time went on, to the point where we were ready to just take the house off the market until the contract was up and start again with someone new.

We ended up being lucky in that she made a rather monumental mistake that we actually contemplated suing her over, and her boss very quickly had us in to sign the release forms after that. I now deal with an agent who lives right in my neighbourhood who knows the area inside out and is a great guy to boot.

Anyway, my recommendation would be to go as high above the broker within his company as you can - a manager might actually be willing to release you just to save the company the hassle. If that doesn’t work, try the Real Estate Council of Ontario (RECO). They actually have a mediation service that might be helpful for you. They are big on fighting misrepresentation and suckering people in, and they might talk to the company for you to try and get you out.

Either way, best of luck, and if you wanted to let me know your major intersection, I might be able to recommend someone for you if you’re anywhere near me.

8

I can’t imagine he’d release you, just like that. The only way he doesn’t get some money is if you stay where you are at.

9

Musicat and astro, thank you both for the advice.

As a bit of background, our house is two years old (we bought it new), semi-detached, and about 1800 square feet. The current list price would be somewhere around $260K, or about 30% more than we paid for it. The real estate market in Southern Ontario is at an all time high, and mortgage rates are at an all time low.

For everyone who mentioned it, we are definitely aware that the Buyer Agency Agreement contract is binding and legal in all respects, and that we would have to pay him the listed commission of 2.5% on any house that we bought, whether through him or not. We had not signed an agreement with him about the sale of our home. But he did tell us that his commission on the sale would be 10%, and did all his calculations as such.

From the Ontario Real Estate Association website:

Bad Broker told us, and I quote: “I know nothing about that area, so I don’t have any preconcieved notions about what the pricing should be. That way, I can get you the best price.” It sounded reasonable at the time (yes, I’m an idiot…), but the more research we’ve done, the more we’ve found out that just isn’t true.

Now, a word about Bob. It’s difficult to get vocal inflections into a written conversation, so let me say that Bob was overly aggressive (in my opinion), and would often talk over me if I was saying something he didn’t want to hear. I understood going into the conversation that he had a job to do, and was going to try to convince me to remain with Bad Broker. However, the conversation I described in my OP was half an hour long. I could not get this guy to agree to have Bad Broker give me a call. It got very frustrating very fast. The repetitively repetitive part happened just before I said “Look, I don’t seem to be getting through to you here.”

At this point, it looks like we’re going to have to wait Bad Broker out. We haven’t gotten a call from him yet.

10

Am I reading these commission figures correctly?. 10 % to somebody from the UK seems outrageous. The usual rate in the UK is 1.5% for selling your house. I have just completed the sale on my £180,000 house and the total bill came to just under £3000. For this I got colour advertisements in two local papers , a prominent window display , a "for sale " board on the front law and the agent calling and mailing many prospective buyers. From putting the house on the market to a firm offer too six weeks.

11

This is probably a stupid question, but bear with me. I’m Australian and US and Canadian real estate practices are infinitely mysterious to me.

Why do you need a broker to buy a house? I can understand needing someone to sell you house, although people do it all the time here without a real estate agent.

What I don’t get is the broker to buy a house. Here in Australia, most people do the house-buying bit on their own. When I was looking for my next house to buy, I looked at all the real estate listings on the Internet and in local papers, found the houses I wanted to look at, contacted the (lots of different) agents who had those houses listed and had a look.

When I found the house I wanted, I negotiated price, settlements and etc with the owner’s real estate agent. I employed someone to do the legal stuff for me, which is pretty standard practice, but I found, looked at, negotiated and bought my own house. The fees for selling my house were about 7% of the sale price, and I paid a couple of thousand dollars to the conveyancer, but that was it in fees to outside people.

I know it’s harder when you want to move somewhere some distance from where you don’t live currently, but it’s not impossible.

Is there some rule in the US that you have to have a broker buy your house as well as sell it?

That being said, I do sympathise with you, buying and selling houses is such an emotional thing, that I think that even usually sensible people are more than ordinarly vulnerable. I chose an agent with a really good reputation in my area, but ended up with a sort of trainee agent working on my house and she was useless. I’d have ended up twenty thousand dollars out of pocket if I’d taken her advice, but luckily I’m a real estate agent’s daughter. :slight_smile:

12

Just responding the questions about why have a buyer’s agent. I’m sure others will chime in on this, so I’ll be brief. My license is in Illinois, so YMMV.

It’s good to have a buyer’s agent looking after your best interests. If the seller’s agent is also your agent, they cannot possibly be looking after your best interests. Additionally, in Illinois, the buyer’s agent is very typically paid out of the seller’s broker’s commission, so most of the time, it doesn’t cost the buyer anything for representation. In Illinois, it’s illegal to represent both the buyer and seller without written acknowledgement.

It is difficult to get timely information on properties, at least here in Illinois, through the paper and the internet. Many real estate companies do not represent their agents in advertising…that is, individual agents pay for advertising the properties themselves (not in all cases, but it’s significant enough). Unfortunately, a lot of these agents do not advertise in papers. They may promote their listings through direct mail and other agents, which may be adequete, depending on the local market. Additionally, websites tend to be up to a week or two out of date and by the time a consumer finds a listing, there’s a good chance it’s already under contract.

There are some really great agents that work hard for their money. I’m not going to comment on the agents about which you speak, but I wish you luck with your situation.

That’s just my 2cents.

13

Ah, then that’s a big difference already. In Australia real estate companies spend a fortune on advertising properties, and using the Internet for advertising has become pretty much standard practice, and the listings are usually up-to-date and extensive. Real Estate companies have big contracts with local and state newpapers, and a big chunk of the fee you pay to agents for selling your property goes on paying for advertising.

I can see that where it’s hard to find out what properties are available you’d need someone in the know to help you.

14

Dante, this post is primarily directed to you, but there seem to be others with misconceptions that I will try to correct and some good comments I would like to repeat.

First, you don’t need an agent to buy or sell property anywhere, at least in my state of Wisconsin (YMMV). A real estate agent is just what “agent” implies, someone who will represent your interests.

If you are selling, you probably want to list with an agent familiar with the area you are selling in. Conversely, if you are buying, you probably want an agent familiar with the area you are buying in. Lucky you if you aren’t moving far and they can be the same agent.

A typical sales contract (a listing) provides for the seller to pay commission at the time of closing. It may be a percentage, a fixed amount, or other. The contract typically provides that if all parties agree on the sales terms with a mutually-signed contract, the agent has done his job and is entitled to his commission whether the deal actually goes thru or not. (He found a willing and qualified buyer for you so he has performed exactly as promised – if one of you dorks backs out later, that’s not his fault, is it?)

Many people will go looking for property to buy without a signed buyer agency agreement. Or they latch on to a nearby agent and ask that agent to look for properties for them, thinking that if they find one they like, that agent will assist in the transaction at no cost. This is the “traditional” way of purchasing. (In some states, that may be all that is available.)

Why is this not a good idea? Because, at all times, the agent is working for the seller, not the buyer. Not just for commission purposes, but for legal reasons as well. (In Wisconsin, I am obligated to provide a “Disclosure” form to the buyer, notifying him that I am NOT his agent, no matter what he might think.)

Here’s a better way to buy. Find a reputable agent in the area you want to look in and sign a Buyer Agency Agreement with him. It is likely he will ask you to obligate yourself to pay a commission only if a commission is not forthcoming otherwise. Now, you have someone working for you, and it might not cost you anything at all, since in a typical sale, the seller’s agent will split the commission with your agent.

Under what circumstances would you have to pay your agent under a Buyer Agency Agreement? If the seller’s listing broker did not share the commission with other agencies (uncommon) or if your agent finds a FSBO (For Sale By Owner) property that you decide to buy. Aha! Now you can see another good reason to use a Buyer Agent. Because his commission is assured, he can include FSBOs and even properties that he might know about, but aren’t yet on the market, in his search for your needs! An agent working only on seller’s commissions isn’t likely to notify you of anything he can’t get a commission on, obviously, so FSBOs are excluded, as are Internet-owner-advertised-only properties, something becoming more common.

Only one variation on the above: It is possible for an agent to be a “dual” agent, or represent both buyer & seller. Ethically, he is obligated to keep either party’s critical information undisclosed to the other party. He is also obligated to represent each party fairly, looking after the interests of each. He may not use “inside” knowledge from one to the disadvantage of the other. He should also make it clear that he is working under that arrangement so all parties are aware of it.

In the real world, is it possible to be this fair? Human beings being what they are, you may have your doubts. If you don’t feel comfortable with it, you may refuse one agency or the other. In my experience, this rarely happens, and the additional tension it brings to the transaction may not be worth the psychological gains (and may cost more money), but that’s your choice.

Hope this helps!

15

Elret, just a few thoughts brought on by your “length of contract” comments.

Consider the costs an agent has to market your property. Also consider the market at the moment – is it a buyer’s or seller’s? Are properties like yours moving quickly or not?

In my area, we have houses that have been on the market for 4 years. I just sold one in 13 days after it was listed, not too different. It’s very hard to tell just why one property sold fast and another cannot sell at all sometimes – luck, market fickleness, je ne sais quois-value?

Here’s my advice to you as a seller. Offer to pay your agent a greater commission if the property sells within X days. If it sells quickly, his expenses are reduced and he gets paid faster, so he has an incentive. But if you give him too short a contract, he doesn’t have time to recoup his cost. Be reasonable; if it sells, you both benefit.

Or, if it doesn’t sell in the time you expect, reduce the price. Ask your agent to give you lists of who he has shown the property to and what inquiries he has received (he should do this automatically). Every 30 or 60 days, sit down and go over how it has been marketed and what the responses have been. Listen to comments by prospects (the basement is too damp, the roof is too red, the lawn too green) and consider adjusting accordingly. If you are convinced that all reasonable marketing has been done, reduce the price. People know about it, but it is priced too high. It may be scaring off buyers.

Good luck!

16

Sorry to hear about the problems and I hope it works out. The part about him wanting to come over and discuss your decision to back out and being persistent about it is understandable. Getting a commission from selling houses is how he puts food on the table. If you are backing out, he has nothing to lose by trying to talk you out of it. Before I worked in sales I’d probably have been on the other side of the fence saying, “What an asshole!!” but now I see it from his side and understand why he went to those lengths. Doesn’t make it right but it does explain why he did it.

When we bought our home, we never considered doing it ourselves. Our agent took care of everything including finding the house, setting up the closing, finding someone reliable to do the inspection including someone to make a video tape of the sewer to find any damage from a warped slab. The total commission was 6% that was split between her and the agent who listed the house and it was well worth it. She handled all of the problems that come up during the process and we recommend her to anyone we know who is looking to buy or sell a house.

17

There’s no “rule” you have to use an agent, and in some cases experienced buyers and sellers elect to do it themselves with varying degrees of success, however, some sellers find in hindsight that they lost well more than the commission dollars saved by not getting the best price possible for their house, or in the case of buyers, sometimes winding up with legal quagmires post-sale because they neglected to put something in the contract.

In the US people often use agents to look at houses for a variety of reasons. A few are:

1: An agent can assist them with narrow down the choices of housing options that fits into their desires and their budget. Well prepared agents have access to large databases of information about available properties that are far more detailed than simple newspaper advertisements.

2: The agent can also help first time buyers in the steps necessary to obtain mortgage financing and point them toward appropriate lender(s) who can most effectively work with them given their financial profile (which isn’t always perfect in many cases) .

3: House purchasing contracts in the US are often governed by an involved set of laws that touch on fair housing issues, environmental and structural concerns, and representational issues with respect to house condition etc. An agent can be useful for buyers in helping to understand what is and is not being represented and the posture they need to take in effective negotiations. The complete paperwork packet necessary to fully document a ratified residential contract can run 15-20 pages of multipart forms (or more) depending on the deal.

4: This reason is somewhat nebulous, but in some ways it’s among the most important. In a large real estate office (like mine) and in the larger real esate agent community, there is constant agent to agent communication about deals that motivated buyers and sellers will do that are not represented in the paperwork. A good agent is plugged into this informal information exchange and can find or craft deals for buyers and sellers with unusual financial or timing requirements or various other issues that need to be addressed.

The commission rates in the US are approximately the same as in AU (around 5 to 7 % but can be more or less depending on the property), but they are usually spilt between a selling agent (working with the buyer) and a listing agent (working with the seller). It sounds like the AU “listing agent” in this case is doing double duty. Out of curiosity in the AU system who is representing the buyer’s negotiation interests other than the buyers themselves?

18

It’s this kind of thing that really makes me think that the RECO could help you. Being bullied into signing a contract is exactly the kind of thing they were interested in dealing with last year when I had my experience with them. Have you checked them out at all?
And BTW, 5% seems to be the norm for most of the agents I’ve talked to in TO.

I’m in the same city as Dante (Toronto), and most houses often sell within days here. I totally know exactly what you’re saying about some properties taking longer based on different circumstances, and I certainly didn’t mean to imply that I thought an agent is incompetent if it takes them longer than three months to sell a property. In Toronto, though, every single one of the 12 agents I interviewed after ending my contract with my old agent agreed that a 3 month contract should be ample. They all felt that even if the house didn’t sell within that period of time, they were all confident enough that I would be happy enough with their performance to sign a consecutive contract with them to continue working with them, and felt no need to lock me in for a longer period of time.
I just wanted Dante to know those agents are out there, and since he does seem to be new at selling a home, he might feel less constricted in a shorter contract.

19

I thought that under the consumer protection act in Ontario you could change your mind within I think it’s 48 hours and get out of a contract. That was explained to me when I signed a contract to join a gym.

20

Elret, regional differences play a big part in many contract provisions. In my area, I would discourage a 3-month contract unless the property were priced to sell (a “motivated” seller), and I felt strongly that it would get many offers. There are properties in my area that don’t sell for several years, tho, and the sellers don’t want to reduce the price. Why? Because they aren’t in a hurry, and they hope a rich buyer will drive buy someday, like what he sees, pull out his checkbook and buy it without comparision with others. Fantasy? Maybe – but it does happen, so they can always dream. Sometimes they dream for years, then take it off the market or switch brokers, thinking the broker is the cause.

But think of the poor broker in such a case. He has to continue advertising at his expense, talking it up and showing it to interested parties. The only thing he has going for him is that eventually it will probably sell; perhaps when inflation catches up with the asking price or the seller gets disgusted. Therefore, a long contract might be the only way to handle this kind of deal.

If an agent says that it will sell quickly and you are in a hurry, offer him some extra commission for doing so. Nothing wrong with that.