The Friday Rant: Define “Negligent”

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.


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  1. derek says:

    Now I am sure listing agents that sell properties are in a different ball game, but the ones I have used to try and find a decent rental here Toronto would be put to shame by the stars of Sesame Street. In the end I did all the searching and am paying someone to sign the paper work. In general I have been appalled in the general lack of knowledge that these agents have about the properties, never mind the disgusting state they are presented in. I’m not sure that MLS works for rental properties. Good old local agents that know the area and that have been in the house first to check it out is the way I would prefer.

    Whoever bought this house (if it was as bad as suggested – and boy can I believe it) must have had ulterior motives? For instance the case surrounding Vitaly Malkin. I wonder how many people have followed this gentleman’s example? Automatic immigration if buying a house over 800 k? Now I am not saying there is anything wrong with being able to buy a house of this value if earned by legitimate means and if you actually chose to live in Canada but if the house is just a means of laundering money – or getting cash out of China / Russia / Middle East etc, before the proverbial fan gets hit, well maybe thats another question? I’m sure that the average Canadian is happy for his or home to rocket up in value but when the top of the roller coaster is reached it will be interesting to see. I have decided to invest my spare money into a house in the US. Houses are generally undervalued. Some areas in Texas for example were not affected by the housing crash too badly and levels have come backup to where they were before the crash. In general prices are expected to climb by 30% over the next 3 to 5 years. Just imagine buying a well constructed 4 bedroom house, in a great area for 350 k and you get year round sunshine. A nice investment and holiday home.

  2. Ricky Roma says:

    You know what they call the buyer’s agent in my industry? “Supah-stah!” Hello Gold Circle J*rk, President’s Council send me on a trip to Brampton call me Shelley “The Machine” Levene I am back baby woo hoo pink cadillac!

    Here’s a question: Is there any ‘fiduciary’ duty of the agent to their client? okay, so both agents are going to keep their mouths shut and take the bank…so where’s the next ‘layer’ of protection for clients? Does your sales manager look at the transaction? On the sellers side, that guy is going to keep quiet, no? On the buyers side, oh, one and the same, owner operator chief bottle washer, eh?

    How about the lawyers? I’m quite certain they don’t care and there is no mechanism for them to know anyway.

    So as much as it looks ‘bad’…that’s the way it is. It ain’t right, but we can stand all moral and righteous…while that agent is yukking it up somewhere on a beach in the Caribbean…

  3. Tina says:

    David, Sometimes some buyers fall in love with a property and will pay the price. My uncle knowingly paid $1,230,000 for a property that was was worth way less. His reason was he walked in there and he knew this was the one. I begged him to not rush it and lets keep looking and he refused. Now he’s a happy owner of a house that can easily sell for 1.6 Million, and it’s only 4 years later. To him the location and the view was worth the extra $150,000. Our job is to show them the recent sales in the area and if they choose to ignore it, we can’t be blamed and maybe that’s what happened to the house in your story.

    1. ScottyP says:

      No matter how much his clients may have loved the house, the agent still should have negotiated a lower price. The two are not mutually exclusive.

    2. JasonTangTO says:

      I don’t know the rationale between the buying agent and the buyer but it could be very likely the buyers were willing to pay that price for the house regardless of it’s history.

      Remember, it’s also the agent’s responsibility to take the order of the client who may just really have loved the house and wanted it at the time it was listed at 1.059M$. The agent may be considered to have failed his/her duties to not act in the client’s interest (which was to make the offer and acquire the house).

      This was a lesson I learned in my first (near) transaction. The clients really wanted a unit that was in disrepair and over their budget and I thought I was acting in their best interests by insisting on certain conditions to protect them which ultimately prevented them from acquiring the unit. The clients fired me when they didn’t get the unit because they were willing to go thru with the price and waive the condition and said I wasn’t servicing them to their needs.

      1. jeff316 says:

        “The agent may be considered to have failed his/her duties to not act in the client’s interest (which was to make the offer and acquire the house).”

        We saw an wonderful house in our price range that was not only an absolutely slapdash reno but also being sold by a realtor who had failed to close a deal for the property over the past two years that it was on and off the market. Red alert red alert red alert…

        When we passed on it our real estate agent was relieved for the reason you posted above. It was his professional opinion that buying that house would have been a disaster for us (and for him) but also worried that he was obligated as per the BRA.

  4. George says:

    Property sales/listings information is not readily available. That’s the first issue. The second issue is that the buyer did not demand this information from their agent.

    1. JPD says:

      With a little digging, one can find sales listings. Like here for example:

    2. Tina says:

      My buyers always see what the other houses sold for. They don’t have to do the digging. We get paid to do it for them.

  5. Peace Maker says:

    Thank you for sharing this amazing story. Few bad apples spoil the whole basket.

  6. CraigB says:

    Sounds very much like a home that was sold through Property Guys on Thornhill Ave near Jane/Annette. Sat on the market for 6 months, and eventually sold for 40k under asking, but the asking price was $150k over what it should have been, and the buying agent was from out of town.

  7. JPD says:

    This has got to be that house at 150 Langley, right?

    I think a buyer’s agent needs to put the buyer first and I’m shocked that due diligence wasn’t done in this case but also surprised by the buyer. Buyers also need to do their due diligence by hiring an agent who knows the area and by asking for comparables. Unless they have money to burn and don’t care?

    Sounds more like a case of a sloppy agent and desperate buyer who didn’t do their own research on the neighbourhood.

    1. wikito says:

      I can confirm. I live in the neighbourhood and watched this with bemusement. the good news is that you can now sell your riverdale semi for 1.05M if you find the right buyer….

    2. Michael says:

      The buyer could have found the previous listing prices of the house themselves online, e.g. on

      1. marzi says:

        150 Langley is back on the market for $959,000… sheesh!

  8. Geoff says:

    @ Ralph I think your example usually goes the other way, on getting the sellers to accept a lower pricing. For instance, selling a house for $100K below what the seller wants is easier than selling it at what the seller wants, but only costs the realtor $2500 (2.5%) even though it costs the seller $100,000.

    As for your example David, I think all you can say is a fool and his money are soon parted remains alive and well.

  9. Ralph Cramdown says:

    You said it yourself, David. The buyer’s agent “sold” the house to his/her client. What would the agent have gained by “selling” the house for $100,000 less? The agent would probably have LOST about $2,500. The buyer’s agent is compensated as a percentage of what he can extract from the buyer. You’re shocked that some agents respond exactly as basic economics would predict?

    If this really bothers you, complain to OREA. Of course, they’ll tell you that you don’t have a dog in the fight, but if you wait until the transaction closes, you can complain along with the buyer. If you don’t, it’s just fodder for the blog. Let us know how it proceeds.

    1. @ Ralph

      Respectfully, I don’t think the agent, or any agent, looks at it in terms of compensation. I know you’ve read Freakonomics, but it just doesn’t happen that way. Would I really go out of my way to sell a buyer a condo for $430,000 instead of $420,000 because I make an extra $250? Come on, give us more credit than that.

      In this case, I don’t think the Realtor was motivated by an extra $2,500. I think it was negligence, plain and simple.

      1. Ralph Cramdown says:

        Well, perhaps it was incompetence. But this incompetence gets rewarded rather than penalized. And even though you and some of your fellow agents feel that this agent did his/her client a gross disservice, nobody’s going to name the agent, because OREA would likely penalize the wrong party.

        1. Appraiser says:

          For the record OREA doesn’t penalize anyone. Complaints have to be lodged through RECO or TREB. As for the case in question, there seems to be a great deal of speculation about what did or didn’t happen here – and not much else in the way of hard facts; so unless someone can demonstrate that negligence actually ocurred, it’s a moot point.

      2. Devore says:

        Well, it’s nice there are agents out there who will do extra work for their clients and get paid less.

        Or, put another way, the system is designed to reward incompetence.

        Freakonomics is right, on average, because agents make money on transactions, not driving people around the city.

        1. Ralph Cramdown says:

          The system wasn’t designed to reward incompetence, it evolved to reward incompetence. Back in the day (25+ years ago), the “buyer’s” agent was legally considered a subagent of the seller’s agent, i.e. they both worked for the seller, got paid by the seller and had an obligation to get the seller the best price. Some buyers felt they got ripped off, that “their” agents were telling the sellers about their bottom lines, etc.

          Reforms were enacted. It was decided that henceforth, the buyer’s agent would actually be working for the buyer, have an obligation to do the best job for the buyer, not to share confidential buyer information with the seller, etc. But the compensation remained exactly as before — paid by the seller, generally as a percentage of the price. This is nuts.

          1. Appraiser says:

            Determining who pays the commission in a real estate transaction is a complete chicken and egg conundrum, which has been theorized for years. For example, if the seller pays the commission, where did the money come from? The buyer – right? After all, without the buyer, the seller would have no money with which to pay commission.

            I prefer to think that it is the transaction that pays the commission.

          2. Ralph Cramdown says:

            I agree that all commission ultimately flows from the only party bringing money to the closing table. But the seller calls the tune. The standard BRA says that the buyer will top up his agent’s commission if its less than ‘x’ but the agent gets to keep the extra if its more than ‘x.’ As we know, some listings offer more than the usual amount of commission.

            David is on the record as saying he would not show his buyer a FSBO.

            So this isn’t just an issue of who writes the cheques, though that’s part of it.

          3. @ Ralph

            There are a multitude of reasons why I wouldn’t get involved with a FSBO.

            Compensation is just one of them.

            Having said that, I would like to see every single person who reads or comments on this blog, work for free for a month, then come and talk to me about FSBO’s…

          4. Ralph Cramdown says:

            I’m not suggesting you work for free, David. I offered buyer brokers compensation when I sold mine. Others might not, in which case you’d have to seek compensation from your buyer. What kind of a value proposition do buyer’s agents have that their buyers won’t pay anything for it?

        2. ScottyP says:

          There’s little doubt that the way in which buyers’ agents are compensated leaves a lot to be desired. The system is generally geared towards rewarding quantity of transactions over quality of work, at least in the short-term. Most of the points in this thread are well taken.

          But I disagree that the system doesn’t reward hard work whatsoever. Being willing to do the extra work and drive people around the city is in large part what makes an agent a good agent. And good agents get referrals.

          As a current outsider to this game, what I see is a bunch of buyers who aren’t doing their homework. For their agent they chose a friend, or a friend of a friend, or a family member, or some random name they think they’ve heard of, or some chump who they met at a party or an open house who “seemed nice”.

          They don’t research into what makes a good agent. They don’t consider possible motives for various behaviours, and they can’t differentiate good advice from bad. They don’t know what questions to ask, or how to ask them. In short, they don’t know their stuff, so they are unable to form sound conclusions without being led around by the nose. And so they get shafted.

          Some would say that this is what the buyer is paying the agent to do; after all, who has the time to do the research on their own? I disagree. Simply put, there are smart consumers and there are dumb consumers. If you are a dumb consumer, you are at the mercy of those who would have you consume. And if you’re making the biggest purchase of your life, you *find* the time to become a smart consumer.

          Good agents should be rewarded for being good agents. In the world we live in today, word of mouth about those who are honest, hard-working and always willing to put their clients’ best interests first should spread like wildfire.

          Bad agents should crawl back into the holes they came from, and find another line of work. But dumb buyers propagate bad agents. My sympathy is limited.

          1. Ralph Cramdown says:

            ScottyP, it’s quite possible that the agent featured in this story drove the clients to see lots of properties, answered all phone calls promptly, was professional and courteous, and even negotiated a $7,000 discount! The buyers may well be thrilled with the service they received, and will recommend this agent to everyone they know.

            Personally, I don’t want an agent who works hard. I want an agent who works smart. I don’t want to pay hundreds an hour for a chauffeur with lockbox codes.

            Agents know who the good agents are and who the bad ones are. But they can’t name the bad ones and they’ve built an industry dependent on high turnover of new agents. The associations and boards get the tuition, fees and dues of thousands of underperformers, the busy agents get warm bodies to staff their open houses and find them a few buyers each, and the cost to a broker of giving a new agent a desk for a year is more than repaid if that agent even manages one deal. The consumer isn’t in a very good position to judge whether an agent is in touch with the market and a good negotiator. OREA’s new push to get customers to quickly sign a buyer representation agreement which by default has no provision for firing a bad agent… how does that help, exactly?

          2. ScottyP says:

            Interesting points, Ralph.

            I agree that determining the negotiating prowess or the nose for value of a given agent would be a tall order for even the most discerning buyer. And even the most flowery word-of-mouth can fail to tell the complete story.

            However, I still believe that a smart buyer can sniff out a dumb, incompetent, or unscrupulous agent by doing their research, asking the right questions, and having gained a modest understanding of how the industry works as a whole.

            Maybe my thinking is too simplistic, but the question really is simple in the end: “Does this agent have my best interests at heart?” Once the answer is “yes”, then you can go about seeing how smart the agent can work for you. But even the smartest agent isn’t worth the napkin she’s written her recommended offer on if she’s not willing to put her clients’ interests first.

            Maybe the smoothest of the smooth can pull the wool over the eyes of even the savviest buyer, but I’d like to think that more often than not a bad agent’s true colours will show. As a buyer, you just have to be willing to look.

    2. ScottyP says:

      Well, for “blog fodder” it sure made for a good story.

      Please continue with similar “fodder” in the future, David. This kind of insight is no doubt appreciated by the majority of your readers.