This is one of the worst cases of Realtor negligence I’ve ever seen.
And the worst part is: the buyers probably thought they were getting a deal…
This one really bothers me.
I think about it when I go to bed at night, and during that strange period when you wake up in the morning – when you’re half-asleep, and trying to decipher dreams from reality. You know those first five minutes? When you get into the shower, start to wake up, and realize that some of the things in your head were actually dreams?
I wish this was a dream, but it’s not.
I’ve written about “the house” on my blog once or twice in the past year, always referring to it rather anonymously.
Since I’m about to rip into an unnamed licensed Realtor, I’m going to be as anonymous as possible, and simply call it “the house.”
So let me give you the conclusion to the story, or rather the impetus for this post, right at the onset: An out-of-area Realtor, with no experience, and no knowledge, sold a house to his/her client for about $150K more than it’s worth, and more than they could have had it for only months earlier, while the whole real estate industry stood by and said, “How the hell did this happen?”
Now, let me start from the beginning…
The house was listed in May of 2012 for $999,900, with a hold-back on offers.
The seller was looking to break the bank, and had lofty expectations – over $1.1 Million.
I showed the house to young couple who hated just about everything about it. They loved the area, the street, the lot size, the space, and the backyard/parking, but didn’t much care for the house itself. As we’d soon learn, my clients were not alone. It seems the whole market agreed with us.
The house not only failed to solicit multiple offers and a $1.1 Million sale price on “offer night,” but it failed to receive ANY offers at all.
The seller, in what would prove to be his first of many ridiculous decisions, wanted to raise the price from $999,900 to $1,099,000. The listing agent balked (I have special knowledge of this situation), and said, “If you’re going to do that, it sure as hell won’t be with me as your agent.” Trust me when I say that the listing agent, who is one of the most experienced agents in Toronto, didn’t “need” the business and the headache that came with it.
So after 34 days on the market at $999,900, even though the seller had no intention of accepting an offer of even the full-asking price, the listing was terminated.
In July of 2012, the property was re-listed with a different real estate brokerage, at $959,000. Once again, there was a hold-back on offers, and the seller was hoping that the lower price would generate a flurry of activity.
There was no flurry.
There wasn’t even a flake.
The property sat on the market into October, still priced at $959,000, until the listing was terminated. And just so the conclusion to this story has even more oomph, consider that for two full months, any buyer out there could have paid $959,000 for this house. Or less. Or much less. Just let that soak in for a bit…
After the July listing, some really, really weird stuff started happening.
The property was re-listed later in October for $879,000, once again, with a hold-back on offers. Once again, the property failed to sell.
The property was re-priced at $929,000, where it sat for a month, before it was once again dropped to $879,000 with a hold-back on offers, and then it was re-priced again at $929,000.
Do you follow? Because it’s getting tough to keep track!
By this time, the property was a running joke in the real estate industry. Every agent knew it simply by the name of the street, ie. “Did you see what they did with Yonge this week?” It wasn’t a question of, “Which property on Yonge,” because we had all been keeping track of the saga. Even our clients were keeping track! One of my clients told me he had emailed the listing agent each time the price was changed, and continuously asked, “I’d love some insight into your ‘strategy’ if you have time.”
Over the course of almost three months, the price had been changed over, and over, and over, never resulting in a sale. There’s that saying, “You only get one chance to make a first impression.” Well, in this case, the owner and Realtor were thinking their 8th and 9th impression might catch a buyer’s eye.
But just when we thought things couldn’t get any crazier, they did.
The seller, having been at $879,000, then $929,000, then $879,000, then $929,000, once again raised his price – this time to $999,000.
There was absolutely no logic involved.
He couldn’t sell the house at $929,000, so what made him think he could sell it at $999,000?
We figured this was like a captain going down with the ship. Or, he was smoking some exceptional drugs.
And before 2012 was up, having seen the unthinkable transpire, the seller gave us one last hurrah in December when he raised the price again – this time to $1,050,000.
It had been seven months, with no sale, at a variety of prices and “strategies,” and the seller figured, “I think my house is worth $130,000 more than the price at which I wasn’t able to sell it a few months back!”
The listing was terminated in late December, and we figured the seller would torch the place for the insurance money.
In February, the house was re-listed again, this time for $1,059,000. It had been nine months since the house was first listed, the seller/developer had probably lost $5,000 per month in carrying costs, and even though the house was probably worth about $900,000, the seller listed it at $1,059,000.
My client emailed the listing agent and said, “I see in your new MLS photos that there’s a red bowl on the counter. Nice addition! Is that bowl worth $130,000?”
Buyers are so savvy these days…
So just to recap: this house was listed in May of 2012 for $999,000 and didn’t sell. Then it was re-listed a bunch of times, at various prices ranging from $879,000 to $929,000, and never sold. Then all hell broke loose, the developer lost his marbles, and the price went north of $1,050,000.
So what do you think happened?
The house sold.
Yep, the house sold for $1,052,000 in February, and the agent who sold it worked for a little-known brokerage in Thornhill, Ontario.
This actually happened.
Even though the entire market – Realtors and buyers, stood by and watched this farce unwind for nine months, and even though this house proved to be an impossible sell in the low-$900K’s, the house sold for $1,052,000, to somebody who is the victim of the biggest screw-job I’ve ever seen.
Mr. Thornhill only had to run a history on the property to see just what had transpired with this house, and he’d have been able to tell his buyers “This pricing makes no sense.”
Instead, Mr. Thornhill, who clearly had never been south of Sheppard in his entire career, found this “great new listing” on MLS, showed it to his clients, and then “negotiated” the price down from $1,059,000 to $1,052,000.
This, in my opinion, is gross negligence.
Mr. Thornhill basically told his clients to pay $25 for a twenty-dollar-bill, while standing in the middle of a bank.
Maybe Mr. Thornhill was a cousin or friend of the buyer. Or maybe Mr. Thornhill was one of those “Buy your house with me, and you can have a percentage of my commission” type agents. But any way you slice it, Mr. Thornhill was so far out of his league, and it showed.
I feel bad for the buyer here. They just paid $1,052,000 for a house that they could have bought for $950,000. And don’t forget – the rest of the market had NO INTEREST in paying that $950,000! The property was rotting on the market at that price, without a buyer in sight!
“Negligence” is defined as: a failure to exercise the care that a reasonably prudent person would exercise in like circumstances.
Think about that; “reasonably prudent.”
If my own clients, who don’t work in organized real estate, can determine that the house is over-valued at $959,000, then how abundantly clear must it be that the house is over-priced at $1,059,000?
So should a “professional,” in this case, the Realtor, be expected to be “reasonably prudent?” I sure hope so, or we’re all in a lot of trouble…
Was it “reasonably prudent” to get your clients to pay $7K under asking for a house that had previously been offered for sale for $180,000 less? Or if we determine that the seller was only going to use the $879,000 price to solicit multiples, how about $130,000 less?
Would it be “reasonably prudent” for the Realtor to spend twenty-six seconds on MLS, running a property search, and seeing that the property had been for sale for nine months?
I’m of the mindset that the buyers should sue Mr. Thornhill for negligence, and although they probably wouldn’t be successful, it would be nice to see Mr. Thornhill out of the real estate business.
My opponents in this regard will argue, “Buyer beware,” or “A house is worth what somebody is willing to pay for it,” or “Why do you care if somebody overpaid?”
That’s not the point.
The point is that this Realtor did his clients a major disservice, the worst of which I’ve seen a long time. It’s negligent. It really is.
This Realtor may have well negotiated backwards, and said, “I see you’re priced at $5. How about we give you $6. Wait….we can afford $7. Yep, $8.”
In the end, I think the buyers of this house (I can’t give the location) were absolute fools to use somebody from Thornhill. My readers are ten times as smart as this agent, and probably know ten times as much about real estate, and they’ll ask, “Why couldn’t he work in downtown Toronto? All he has to do is do CMA’s on properties, look back in the history of MLS, search comps, etc.” But you’re giving Mr. Thornhill too much credit. Don’t forget just how bad some agents are.
I’m not the only one who is telling this story either. The whole industry is standing by, scratching their heads, wondering how this could have happened.