Should A Realtor Sell His or Her Own Home?

I have sold my own primary residence three times.

And all three times, I had a colleague in my firm list the property for sale.

Sure, I was involved.  How could I not be?  I’m an agent, and it’s my property.

But I recognize the potential pit-falls associated with an agent listing his or her own home, and I’d be irresponsible, and naive, to think I’m in any position to avoid them.

First and foremost – any agent who lists his or her own property for sale automatically forfeits “Errors & Omissions Insurance.”  In my mind, this is reason enough not to list your own home for sale.  Through fourteen years in this business, I have only had to use E&O once, but it was worth the premium.  I was taken to small claims court, and I had a lawyer, paid for, who probably spent 50 hours on my case.

But forfeiting E&O is more of a technical or clerical pit-fall.  The other reasons far, far outweigh this one.

When it comes to pricing your own home, you run the risk of being far too high, or, far too low.

As with most of the reasons why an agent shouldn’t sell his or her own home, we agents would see the same issues play out with our own seller-clients!  I can’t tell you how many times I’ve gone into a seller’s home, told them the price I thought the property was worth, and had them say, “That’s crazy.  I wouldn’t pay that amount of money for this!”

Of course not.  You wouldn’t pay $1,200,000 for your home today, because you bought it for $425,000 in 2001.  That’s why you have an unbiased, unemotional, disconnected agent to tell you what it’s worth.

The same goes for agents who think their homes are worth far more than they really are.  An agent over-spends on a particular feature in a house or condo, and thinks the financial outflow automatically equates into added market value.  He or she would tell a seller this isn’t the case, but with his or her own house, there’s just no way to disconnect.

But the biggest faux-pas an agent can make when selling his or her home is being overly-involved with the process, from showings, to open houses to feedback and discussions with agents.

I know some of you might not understand this.  You might think that it’s odd for me to suggest that an agent shouldn’t be speaking to buyer agents, or that an agent can somehow “interfere” with his or her own listing, but trust me when I say, it happens.  And sometimes, it costs them dearly…

A couple of weeks ago, I went to view a property in the west end that was up for sale for $1,299,000, and the owner of the property was representing himself.

That’s fine, it happens all the time.  I don’t agree with it, and when I see the agent’s name on the listing matches the seller’s name on the listing, I just sort of sigh.

But this case was different, because when we got to the property, the agent was standing in the front foyer.

I didn’t know it was the agent/owner, and I said, “Hi, I’m David Fleming from Bosley Real Estate.  Are we double-booked?”

He said, “No, not at all.  I’m the owner.”

Right………soooo……

This is the part where, usually, the agent/owner says, “I’m just here dropping off feature sheets,” or “I was unlocking the shed,” but in this case, the agent/owner launched into the biggest sales pitch I have ever heard, all about the home.

Much of his pitch was with respect to features of the home we already knew about, or area amenities that we’d have to be from outside the city to not already know.

It was annoying, but no matter.  It’s his house, he can do as he pleases.

His sales pitch went on, and on, and on.

And as we moved through the main floor, he followed us.

Now consider that I’m in sales too.  I hate thinking of myself as a salesperson, because I don’t like salespeople.  I really, truly model myself differently when I’m working with buyers, and my buyers would back me up on that.  But knowing what salespeople are like, I was just so disgusted with this guy’s pitch.  It wasn’t what he said, but rather how he said it.  It was hollow, see-through, and pathetic.

He had only owned the house for four years, so it was obvious that he was trying to make it sound like he had done a ton of work to the home since then, to justify the assumed, eventual sale price.

I knew the person who had built this house in 2014, and I smiled and said, “This house is so familiar, I think I’ve been in it.  Did you buy this from so-and-so?”  His jaw dropped.  His mind raced.  And then he said something like, “Well, we bought the house that was here then, but we’ve created what you see now.”

Right.

He just had a “feel” about him.

You know how certain people can be completely defined by one word, noun, or adjective?  You might refer to a person as “sleazy,” and you can feel it, and picture it.  Or “greasy” is another one.

As a colleague of mine, who shared the same experience with this guy, told me a few days later, the guy just seemed like a weasel.

He spent a half hour trying to do everything he could to get our heads around a big sale price.

One of my clients remarked on the way out, “I love this house, I love everything about it.  It’s too bad, I mean, I keep saying how I love it – I’m losing any leverage I might have had!”

And here comes the punch, folks.

What happens next simply defines why an agent shouldn’t represent him or herself.

The agent/owner responded, “Any leverage you had went out the window when 123 Smith Street sold for $1,600,000.”

Boom.

He just hung himself.

He should have kept his mouth shut, but he couldn’t.

Not only because he’s simply a bad agent, but also because of his ego.

The long-time readers know where this is going.

Any time you “under-list” a property for sale, strategically, you need multiple offers on the property to get a big sale price.  That means you need “dummy” offers; garbage ones.  Listed at $1,299,000, if he was going to get $1,600,000, he needed those offers for the list price, conditional on the sale of the buyer’s camel in Egypt.  There’s no way that one buyer is going to walk in on offer night and pay $300,000 over list.  So by effectively telling buyers what he expected for the home, he pushed away any and every buyer who didn’t share his valuation.

The house he was referencing was a very good comparable sale.

It had superior and inferior features, and the location was worst, in my opinion.  But some would prefer it.

Either way, he would have, could have, should have achieved a similar $1.6M price point.

But he let us know, as we left the house, that he expected more.

What a mistake!  And if he told this to us, and he was present for every showing, plus the weekend open houses, can you imagine how many people he turned away?

It’s unforgivable.

Thankfully, his client was himself.

My clients and I stood outside and chatted, and he locked up, and came out thereafter.

A classic example of his shameless, hollow, pathetic sales pitch was on display right there on the sidewalk.  The house across the street had a “SOLD” sign, and I could see him looking at it.  He couldn’t help himself, and even though we really just wanted him to move along, and leave us be, he started to upsell his home, by putting down the other one.

“It’s a shame about that house,” he said, trying to get us to ask, “Really….why?  Do tell.”

None of us bit, so he went on.

“I think there was a serious problem with the foundation,” he said, trying to plant the seed in our heads that we shouldn’t use this house as a comparable for his, or at least add a huge premium to the sale price, for all the problems and issues he was going to roll through.

“I know they had issues with the foundation, that’s going to cost the new owners.”

“I mean, it’s great if you want detached, but does detached really matter?”

“The apartment buildings in the backyard, my goodness.  I’ve been in that backyard, it’s such an eyesore.”

“The house is a gut.  I think whoever buys it is going to gut it.  Turnkey is way better.  You don’t want to be spending time renovating.”

This went on and, on.

Finally he told us, “Well, I’m off to hang out with some neighbours up the street.  Because that’s what we do on this street.  We’re so friendly!  That’s tough to find out there today.  It’s so rare.  It’s really, really tough to find, I mean, I don’t know, I don’t know any other neighbourhood like ours that’s this friendly….”

Toward the end, he started to sound like Donald Trump, rambling, and making claims and statements that just got more and more stupid and hyperbolic.

My clients decided to pass on this house, but we paid close attention to the process.

Sure enough, at 5:30pm on the night of offers, I checked in with the listing brokerage, and do you know how many offers there were?

Zero.

The house did sell, however.  There were two offers in the end.  Or three.  I’m not sure, and there are a few other people out there that aren’t either.  And that is the second part of this story.

The story could have just ended here.  “Why not to sell your own home,” with ample evidence about an agent that couldn’t act professional, couldn’t separate himself from his own home, and let his ego and mouth get in the way of the art of the deal.

But there’s more, and this really drives home my point.

The day after “offer night” a long-time, well-respected, top-producing agent, from an other brokerage who I have known for my entire career, called me and asked to chat.

“Did you have an offer last night on XXX Street,” he asked.

I laughed, and said, “No, but I know exactly where this is going.”

“Do tell,” he said.

I told him my story – effectively what I’ve written above, and he laughed.  He said he had the identical experience in the home with the owner/agent, and that he had spoken to other buyer agents who shared their experiences, and resulting frustrations.

“This is why you don’t sell your own house,” he told me.  And it was at that moment that I began to write this very blog post in my head.

“But the bigger problem I have,” he told me, “Was that I honestly don’t know how many offers there were last night.”

He explained that there were zero registered offers at 6:30pm when he spoke to the agent, but shortly thereafter, an email went out saying there were THREE registered offers.  I was also a recipient of that email.

He then told me that he received a call from an agent from a different brokerage, who said, “I’m bringing an offer tonight on XX Street, but I haven’t registered yet.  I got this email saying there were three registered offers, and the listing agent told me I was one of them.  But I haven’t registered!  Something really fishy is going on.”

It was a classy move on behalf of this other agent, to call a competing agent, who you know has an offer on the same property, and give him the head’s up.

My colleague asked me, “Did you ever register?  Did you ever express a sentiment that you’d be bringing an offer?”

I told him that I didn’t.

“Well he kept saying you would be bringing an offer,” he told me.  “I only saw one other agent there to present, and that was the guy from XX Brokerage who called me earlier, and told me this little weasel was acting fishy.”

“I told him he had until 8:30pm to accept our offer, or I was leaving.”

That’s when I pulled my car over, and checked my call log.

The listing agent had called me at 8:15pm to ask if I was coming forward.

I began to wonder if that was just for show?

My colleague went on to detail how many times this “little weasel” tried to get him up in price, despite his form email earlier that day to all the agents who had shown the property, saying, “We will be doing a ‘one-shot-deal,’ so please bring your very best offer.”

He told me how many times the owner/agent/weasel referenced the comparable sale at $1.6M, and how his house was far better, and all the features he had.

My colleague shared my view; that the owner/agent/weasel/cry-baby had pushed everybody away, and here he sat, with only two buyers for his home, which was about to sell for well under it would have, could have, should have……………if he didn’t represent himself.

My colleague got the house for $1,440,000.  An on-paper “over-asking” of $140,000, but for a property that was under-priced, and for a property that really, truly did compare to one that had just sold for $160,000 more, it was a major discount.

“I’m taking this fucker to RECO,” my colleague told me.  “I don’t care that we got the house in the end, he handled that process so unprofessionally, and I think he downright lied.  Guys like this can’t feel that they can transact with impunity.  It just can’t happen.”

And I agree.

If this agent told people there were three offers, when there were two, that’s a major no-no, and he should be fined.  No question about it.

Either of the two agents who presented offers can request a copy of the Form 801: Offer Summary Document, for all offers that were submitted.  And if the listing agent can’t provide three forms, he’s in deep trouble.

The second part of today’s story is really just the cherry on top.

I actually think the first part helps to drive home why an agent shouldn’t represent him or herself in the sale of a primary residence.

I have a large following among Toronto realtors, and I know that many agents are reading this blog.

You might think you’re different, or you wouldn’t make the same mistake, or that you’re somehow immune to thinking like a seller, and not an agent, but you’re wrong.

Ask any top agent, and they’ll tell you – there’s no way in hell you should list your own property.