You did what?  Did you just say that?

If two wrongs don’t make a right, maybe three do?

Here’s a story I wish I didn’t have to tell…

I feel a little guilty telling this story, but at the end of the day, the participants are not my clients, did not hire me, and having met them for only forty minutes or so, I don’t feel as though I can’t tell a story whereby I change the names/dates/places/numbers, even if it involves them…

This experience was a head-scratcher, and had me saying, “Ummm….what?” far too many times.

I should have known right from the get-go how it was going to turn out, but I really, truly hoped that the “sellers” of this east-end house would do the right thing.  I put “sellers” in quotations because they are sellers in theory only, as the story will detail…

A few weeks back, I received a phone call from a very nice young lady who wanted help selling her house in the east-end.

She and her husband were splitting up, and the obvious first task in the process was to sell the house.

She asked me to find all the sales on her street in the past two years, but as luck would have it, my MLS query pulled up only one house: theirs.


In two years, this is the only sale on your street?  Your house is the last house to sell?

Wait – you’ve only owned this house for a year?


Why didn’t you tell me this at the onset?

Well, I suppose we all know what challenges lay ahead…

I met with the young couple, and I immediately saw why she was leaving him.  “Good for her,” I thought.  It’s not easy to make that decision, but in the space of a forty-minute meeting, her husband put her down, snapped at her, and talked down to her about 6-8 times.  The way he snapped seem to make her jumpy, and I felt like telling her, “I think you’re doing the right thing.”

They bought the house for $380,000 one year ago, so the first thing I said to them was, “You know that you’re going to have a tough time coming out ahead, right?”

Unfortunately, they didn’t see it that way.

“A guy I know says that he would pay $450,000 for this house!  He said to call him!”


If that were really true, which it’s clearly not, then why did you call me?  Why don’t you just sell to him for $450,000 – an 18.4% annualized return in an area that’s likely gone up about 3-4%, and call it a day?

And therein lies the problem – this area they lived in had likely only appreciated about 3-4%, and even if you assumed a 5% increase, it would still only put their house around $399,000.

There are disposition costs associated with the sale of any asset, and real estate is no different.

The very first topic of conversation this day, and pretty much any time I meet potential sellers, is the commission rate, which is 5%.

As I told these sellers, some people work for 6%, some work for 3.5%.  Some work for $1.00.  But I work for 5%, and I spent a good ten minutes discussing who I am, what I do, who my company is, and why they should hire me.  I actually told them, “Either list with me at 5% or list with the guy at $1.00 – but be very weary of the fly-by-nights who work for 3.5%.  They’re more dangerous than the guys at $1.00!”

We discussed the area that they lived in, the agents that work in it, and ultimately they said they wanted an “aggressive downtown/midtown agent” to work the heck out of their suburbia home.  I thought they were doing the right thing, and thus we moved the discussion to price.

I told them that if they listed the house at $419,900, and got an offer in that ballpark, that they could get out with their commissions and land transfer tax paid, and maybe even with some money in their pockets.

At the end of the day, I can’t help the fact that two people want to sell real estate inside of 12 months, and I can’t help the fact that there’s costs associated with doing so.  Hey – I wish it was easier on them, and I wish their house was worth more!  But I can only work with what I’m given.

We discussed pricing, and the husband kept working up the ladder – “What about $429,900?  What about $439,900?”

He wanted to list the house at $449,900, and I very honestly and bluntly said, “There’s no point.  Your listing won’t even exist at that price.  You paid $380,000 for the house last year, and every agent and every buyer knows that.”

What else am I supposed to say?

I told them that $419,900 was the price, and that I would market the property to investors looking for income (there was a basement apartment and they lived in the ‘owner’s suite’) as this would be the most likely demographic for the home.

We agreed to meet again one week later and sign the paperwork, and as I was leaving, I told them “You should talk to your mortgage broker about the break-fees, as they’re going to be high.”

That’s when the husband told me, “Oh don’t worry, we’re pretty sure it’s only like a couple-grand.”


How do you figure?  This really worried me!  I told them, “Why don’t you call the mortgage broker or bank and get a printed, signed statement with your break-fees?  It’s one thing for them to tell you; it’s another thing for them to actually show you.”

Fast-forward one week, and I’m about two hours away from going to sign the listing papers, when I get an email from the seller, in short, “David – you were right about the mortgage break fees, thanks so much for getting us to clarify.  It’s going to be very expensive to break our mortgage, and therefore we’re going to list it with another agent who will work for a reduced commission.  Thanks again.”


Hey, I’m not complaining because I lost out on the business.  This wasn’t exactly my target area, but to be honest, I felt so bad for this young lady and the situation that she was in, and I really wanted to help.  I just didn’t understand the logic behind saving $4,000 in commission and listing with a crappy agent who might get $25,000 less for the house.  We discussed the commission, services, brokerages, and everything in between, and I thought they saw the trade-off.  I just wanted to help; call me naive…

Earlier this week, I checked MLS to see if the listing was up yet – and it was!

Guess what day it came out?  Saturday.


You listed on a Saturday?  I wrote a blog post about this once; I can’t understand why an agent would list a property on a Saturday when nobody is looking at hot-sheets, new-listings, and updates.  Why not wait until Monday when agents are busy in their offices?

Well, I soon realized that the day of the listing was the smallest of their problems.  They didn’t take my advice and list at $419,900, nor did they list at $429,900, or even $439,900.

No, they listed the house that they purchased for $380,000 one year ago for a whopping $499,000!


Yes, that’s right – a 32% increase over what they paid!

Man, I felt bad seeing this.  Honestly – it’s not the business I “lost” that I’m upset about, but rather the fact that this lady wants out of her marriage and out of her house, and she’s never going to get out when the house is listed at this price.

You can advertise all you want, and drop flyers from the sky, but you’ll never find somebody to pay $25.00 for a twenty-dollar-bill.

The agent they listed with was…..ummm…..”questionable” to say the least.  They might be saving 1% or even 2%, but what do you get for that?  No service, no experience, and judging from the listing price – no honesty or guidance.

But wait – there’s more!

The listing said, “Seller offering $3,000 bonus to assume existing mortgage.”


The existing mortgage is at 3.89% and current rates are at 2.99%.

Over the course of a 25-year-mortgage, this difference amounts to almost $60,000!

Who the heck would pay $3,000 for a $60,000 future obligation?


Who gave them this idea?

Sellers need guidance and good advice – ALL sellers, even the most savvy.  It was clear that these sellers didn’t understand simple numbers, and simple logic.  Nobody is going to assume an existing mortgage for a paltry $3,000 ‘bonus’ when they can save $60,000 by going to any bank or mortgage broker.

I feel guilty, to be honest.

I feel guilty that I’m not working for these people and showing them how real estate is actually bought and sold in Toronto.

Their listing doesn’t even exist.  It may be on MLS, but it’s about 25% over-priced, and as you might expect – there are no photos.


No photos?  I thought even the worst agents in the city would still take blurry photos on their Blackberries!

How can you sell an over-priced house with no photos or marketing, where you want the buyer to assume a massively inferior mortgage?

You can’t.  It’s that simple.

Ummm….what are they going to do now?

My guess: stay on the market until Christmas at $499,000, and then re-list in January at the same price.

Trust me – it’s not the first time I’ve seen this happen…


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  1. CB says:

    Where do you find a 25 term on a mortgage? If the mortgage is a typical 5 year term and assuming 4 years remain and they put 25% down, then the difference in interest cost would be less than $3,200. If they put 5% down the difference is less than $9,000. To say the spread is $60,000 as you did is wrong and misleading. Is this an honest mistake?

  2. Kyle says:

    After reading this i also feel bad for the couple. Selling a home is an emotional roller coaster. I imagine doing it while going through a divorce just makes it that much worse. It is possible that the sellers are being motivated by something other than greed and ignorance. I wouldn’t be surprised if the guy is purposely throwing up road blocks (i.e. unrealistic price demands) to hang on to whatever he can hang on to.

  3. JC says:

    I think we all know sellers who are their own worst enemies.
    You can lead a horse to water and all that…..

    A friend of mine listed his home for sale with another Realtor (thank you!) and proceeded to argue with him on every suggestion he made about Staging/prep-work, as well as feedback that was gleened from the few agents that would give any. Things that were in his power to change – wouldn’t do it – “they’re making that up!”, and even refusing showings on days when he wasn’t up to being out for 30 minutes saying “if they really want to see it they’ll come another day”… Client from hell-type stuff.

    Plenty of ummm…what? -type discussions went on.

    Big surprise – the place didn’t sell. He’s waiting until the spring, assuming he’ll get more and that I’ll list it. I know he’s wrong on at least one of those points! 😉

  4. Geoff says:

    We’re getting a little off topic with the question of whether all realtors add equal value, or even if realtors add value in general. In my experience it’s like anything else – competent realtors will add value, and incompetent ones won’t (like an incompetent dentist who breaks your tooth). There’s good and bad in every profession.

    On the actual posting, I mean these are two people who couldn’t make a short marriage work, and now the basic claim being leveled against them is that they can’t think of the long-term results of their actions when trying to get out of something the rushed into?

    To quote Jack Nicholson: “Dr. Green, how can you diagnose someone as an obsessive compulsive disorder, and then act like I have some choice about barging in here? “

    1. @ Geoff

      Yeah, we got waaaaay off topic!

      I could have written this post and not included a discussion on commission, because that took us away from the point.

      The point, as it was intended, was that these sellers made a wrong decision at every single fork in the road, and it goes to show you that “hope” and “need” are still present in seller’s irrational minds.

  5. Amral says:

    Keep us posted on the final price,this should be fun

  6. JC says:

    Not exactly on topic, but since someone raised the “houses sell houses” idea up above…

    What I find ironic about people that want to sell their own houses is that it’s often the same people who pay someone else to walk their dogs and raise their children.

    1. Ralph Cramdown says:

      What’s ironic? Child care and pet care are typically available for less than $10/hour, whereas house selling typically costs >$100/hour. Most people selling houses fit in between.

    2. Ralph Cramdown says:

      P.S. If you’re willing to buy and sell real estate at dog walker’s/child care worker’s wages, please forward contact information — I may have need for you in the future. I’m serious.

  7. […] response to a great blog post This entry was posted in Toronto Real Estate, Toronto Real Estate Blog, Toronto Real estate Blogs […]

  8. Vlad says:

    David, I must take exception to the statement “a crappy agent who might get $25,000 less for the house.” Yes, the agent made tons of rookie mistakes. However, at the end of the day, even the best agent in the world cannot offset the price, the location and the house itself. Agents don’t sell houses; houses sell houses.

    1. @ Vlad

      You’d be surprised. I know you take what I say with a grain of salt, but a different agent CAN and DOES make a difference.

      I can tell by your email address that you work in financial services. Let’s assume that you have two friends, both working as investment advisors. One of them is experienced, and an “expert” at what he does. The TSX is up 14% this year, but his clients have seen a 22% return. The other friend is new to the business, a slacker, comes late to work, drinks like crazy on Friday/Saturday night, and works just hard enough to not get fired. His clients have seen a 6% return this year. BOTH of these guys have made their clients a return, just as “anybody” in my business can get a house sold. But compare to the market average, and you see that the first investment advisor has a value, and the second does not.

      This is obviously a long, long topic of discussion, and I think most people either see the value, or don’t, and cannot be swayed.

      I don’t want to divulge too much about this house/location/situation, but this is precisely the situation where a below-average agent gets taken advantage of, and the clients pay dearly.

      1. johnny chase says:

        All advisors suck today.

        1. Krupo says:

          Is that what you’re “advising” us to believe, johnny? 😛

    2. Carmelita says:

      Vlad, I so agree with you. “Agent do not sell houses, houses sell houses”. In my eyes, you need to have your house on the MLS and a good lawyer upon closing. These days there are services that gets your house on the MLS, so when I know I have a fantastic house in a really good area, do I need to pay an agent 5% or do it on my own, knowing I am on the MLS and I have some comcept of selling homes and closing cost, etc. I know people in places outside of Toronto, where it takes a much longer time to sell homes; selling their homes on their own and protecting an agent, should an agent have a client that may be intersted and paying that agent 3%. Next home I sell, I will be trying this, knowing I have a fantastic home in a desireable neighbourhood and I’ve sold many homes before understanding cost associated with selling.

      1. Chuck says:

        Perhaps you’d consider doing your own root canal as well?

        1. Darren says:

          That is a completely stupid comparison

        2. Ralph Cramdown says:

          At least when you’re doing your own root canal, you’re not being interrupted every ten minutes by every dentist in town stopping by to tell you how stupid you are and to offer his services… But not his services to finish the root canal even though you’re more than willing to pay him, merely a finder’s fee to find another dentist to do the job.

      2. Realtor Igor says:

        Hmm. Only houses sell themselves? Why not cars? Are cars more stupid than
        houses? Why not reinvent the buying experience at the BMW? You walk in and
        the receptionist hands you a form; you put the check mark if you want one
        of the options and you buy the ultimate driving machine without having to
        deal with people. It’s because the people that put billions of dollars into
        making the 3 series what it is are smart enough to know that good sales
        people make all the difference. Having a desirable product is just a start.
        How else would you explain the fact that prices of real estate have gone
        up? If people always paid what was previously the highest amount for a semi
        in Riverdale, those houses would still be selling for 300k. At some point
        someone hired a realtor that managed to get 320k and then 350k… I
        recently represented a buyer that ended up paying 2% less than someone else
        did one week later for a condo in the same building. My buyer also
        purchased a unit that was larger, had slightly better finishes and a view
        of Toronto skyline. The other unit had a view of the a building because it
        was on a much lower floor. Would you say that the fact I was up against an
        agent doing his first condo sale had nothing to do with my success? I’ll
        even use your argument to prove a point. There is a house on an a in demand
        street for sale by owner in Yonge and Eglinton that is has been on the
        market for 16 days with no competing properties. This house just doesn’t
        get it. It is still not sold. Stupid, stupid house with no sales skills.
        Too much of anything is a bad thing. To much HGTV made everyone think that
        everyone can sell real estate.

        1. JC says:


          Several things.
          It’s ‘blogger”.
          The “contact me” link on your page doesn’t parse and is giving a 404 error.
          One spot on your blog says you work for Right At Home Realty. Apparently you don’t any more.
          Learn the difference between “loser” and “looser” They aren’t the same, nor are they pronounced the same.
          (Don’t feel too bad, I realize English is probably not your first language and 90% of those using the Internet make the same mistake)

          1. Krupo says:

            “This is somewhat embarrassing, isn’t it?”

          2. pjk246 says:

            Hey JC can I get a link to your website so I can be critical towards you?

        2. Darren says:

          Wow. I don’t know where to begin. I can’t believe you put your name on this drivel.  You’ve been shoveling your own shitty propaganda for so long you might actually believe it.

          Real estate estate has been going up because of agents? I suppose other factors such as changing demographics, low interest rates and inflation are irrelevant as long as TREB is on the case eh? You seem to be suggesting that unless an agent is involved then a resale at a higher value is not possible. What a joke.

          “I recently represented a buyer that ended up paying 2% less than someone else”

          I recently sold my place for more than comparable units without an agent. How do you explain that?

          So a FSBO house has not sold in 16 days, so what? That’s hardly damning evidence maybe it’s over priced JUST LIKE THE AGENT LISTED HOME IN DAVID’S BLOG.

          You are right about one thing, there are many people who should not be selling real estate including quite a few of the 42,000* realtors in TREB. Just as many non mechanics can change their brakes and many non electricians can install a light fixture, there are many who can successfully sell their homes without an agent.

          I certainly believe that there is value in a good agent – although I believe they are over priced – and I will be using David’s services if I decided to purchase in the future but your posting makes you look like one of the clueless agents David is often poking fun at.

          *I believe that’s the right number.

          1. I can personally attest to the fact that Darren sold his own condo, and got absolute top dollar for it.

            He did this without paying a 5% commission, or even a 2.5% fee to the buyer’s agent.

            It IS possible, but how many people can do this? Less than 1% of the general public? Less than that?

            Darren is right – I can barely put oil in my car, let alone change a flat tire. I would call CAA to change my tire, because that’s what I pay them for. I don’t want to be crushed if the jack fails, nor do I want to get my suit dirty by laying on the ground – because I’m simply not equipped for the job.

            But some people can change a tire, sell a condo, and probably stitch themselves up after a knife fight!

  9. Pen says:

    Usually these ‘bought’ listings carry a term anywhere from 6 months to a year. Unfortunately many sellers when given an outlandish price discard all common sense. I watched a listing I lost in the same scenario sit on the market for 11 months before it finally sold for $2,000 more than my suggested list price and a similar scenario is unfolding now.

    As you well know, you can’t help them all David but the unfortunate thing is that when they fail to sell they’ll paint all Realtors as useless crooks while never once taking responsibility for their bad decision.

    1. pjk246 says:

      This is why there should be a “thinning of the herd”. Honestly Toronto has far to many realtors who do jack all, are weasels, unethical, and plain stupid. That you can handle hundreds of thousands, or millions of dollars in a transaction with a high school diploma/equivalency is down right stupid.

  10. cd says:

    Good one!

  11. Ralph Cramdown says:

    If they can’t afford to sell at what the market will net them, what’s it matter how good their agent is? Next spring, maybe the market will be a bit higher and their break fee will be a bit lower.

    *I’d* gladly pay $3,000 to lock in money for 25 years at 3.89%.

    1. @ Ralph

      You hit on a key point here – that most people don’t want to sell at a loss. I feel as though everybody in Toronto feels ENTITLED to make money selling real estate, when in any other market, they’d be called crazy. If they want/need to sell, and they have to lose a few thousand dollars doing so, it might be their only move.

      This is a topic for Friday’s blog: “Selling At A Loss.”

      1. Ralph Cramdown says:

        It’s a disclosure issue. If buyers were told “Your deposit, the remainder of your downpayment and the money you borrow from the bank is going to be paying me, my broker, the seller’s agent, her broker, two lawyers, the mortgage broker, CMHC, Queen’s Park and City Hall in addition to the nice couple that’s selling you their house, plus GST where applicable” they might get the picture. But it’s usually just condensed to “I just LOVE working with first time buyers!” Plus TREB manages to publicize average numbers about three times a month, and since the rich really ARE getting richer (in a GINI index sense), that average overstates what the typical vendor will see.

        But seriously, the way you described the couple, I pictured them not actually being able to bring a cheque to closing, typically because between their downpayment, wedding costs and new furniture, they had a lot of debt and no savings built up. I could be wrong on that one, it was just a hunch. Plenty of couples in the US “separated” yet continued to live under the same roof because they weren’t financially able to fund the loss required to sell their houses.

    2. Phil says:

      You don’t lock in for 25 years in Canada. You lock in for 5 years max. 25 years is the amortization period, which is different from the duration of the fixed rate.