Well I was going to publish a blog about visitor parking spaces in downtown condos, but I was told that’s “too boring” for a Friday.
So, here is more fuel to the existing fire about under-pricing properties in Toronto and the potential fraud that exists in doing so…
The debate rages on…
This entire week, we’ve been unable to move past last Friday’s conversation about the process of under-listing properties in Toronto, creating bidding wars, and the ethics of Realtors, sellers, advisors, and everybody involved.
I’ve taken my share of heat over the issue, both by those who actually read what I have to say, and by those who just group me in with everybody else.
That’s what frustrates me the most about this is that readers and nay-sayers will draw their own conclusions based on words that they, themselves put in my mouth!
I see this all the time with the comments on my articles in The Grid. I’ll write something, and people will skim the article, then complain about ten different things I didn’t even say. On Thursday, for example, I wrote about “the condo lifestyle,” suggesting that if you’re in your “earning years,” you might benefit from a low maintenance condo rather than a high maintenance house. I named examples – trapping raccoons, fixing a leaky roof, shovelling snow, etc. But the typical Grid-reader, who is always looking to complain about something, posts back with “This guy doesn’t realize that condo roofs leak too!”
They missed my point entirely. And to write back and explain it, again, would be futile.
I see this a lot on my blog as well, but the readership is a little more refined.
Every time I stick my neck out, however, and put something in print that is controversial or provocative, I run the risk of having my words taken out of context, and/or used against me.
Case in point: I’ve been complaining about the whole “under-pricing and hold-back” game for years, but when I put this into print and describe how the game is played, I get jumped on and accused of being unethical for having the audacity to work in an industry where this exists.
One reader commented: “Are you joking? A realtor who knowingly participates in a scheme he believes is unethical is even worse than the “ones” who believe what they do is not fraud.”
Soooo……should I quit my job? Should I go wait tables at Jack Astor’s instead? Can you show me a single industry on the planet that is full of 100% ethical people governed by 100% ethical rules? Even charities and fundraising initiatives come under fire for poor accounting and questionable expenditures…
So my colleagues ask me, “Why don’t you just leave this alone and move on?”
Well, because that would be a cop-out.
My entire business model is predicated on being different from all other Realtors; I’m brutally honest to a fault, I take sides, I have likes and dislikes instead of just selling anything and everything, and I sweep nothing under the rug.
So let’s add another element to the discussion from last week.
Here are the buzz-words that have been thrown around:
Fraud is a tough one to swallow, because I don’t know what constitutes fraudulent activity in real estate.
But let’s have a look at something I’ve been keeping close tabs on for the last couple weeks, and keep in mind – this will score me points with the readers that respect my honesty and forthrightness, but cause those people who don’t even read what I say to simply attack me all over again.
A newly-registered building in the Queen West area has seen dozens of listings hit the market over the last few months, and one seller and his Realtor are trying to do something…..different.
They listed their 1-bedroom-plus-den condo for sale for $359,900 in January of 2012, and it sat on the market with no price reduction for seven weeks.
In March, they decided to change their strategy.
They listed the property for $159,900, and held-back offers.
I was very frustrated when I first saw this listing hit the market, as I knew what was going to happen in advance. I made a note of this, and decided to keep track of every development, because I knew that one day, I’d be blogging about it.
“Offer Day” came, and there were sixteen offers, as per the receptionist at the listing brokerage when I called.
Sixteen buyers (possibly 32 if they were couples), sixteen agents, sixteen lawyers, sixteen mortgage brokers, sixteen sets of eager parents, sixteen sets of colleagues, friends, and family – all involved in this absolute farce.
Fraudulent farce? Who’s to say…
To (almost) nobody’s surprise, the listing was terminated, and the property was re-listed this week at $358,888.
So tell me: is what the seller and his listing agent did, unethical? Is it illegal? Is it a crime?
If it is any of the following, to whom and where should we direct our objections?
I ask again, as I did last week: do we complain to CREA, OREA, and TREB? To the Competition Bureau? To the police?
But the problem with this story, if you perceive it as such, is that there is actually nothing wrong and nothing illegal about these practices. There are no rules at the real estate board levels to prevent a seller from doing this. The only issue I think this raises is “Misleading Advertising,” which it clearly is.
The seller did what he had to do as per false advertising guidelines – he terminated the listing of $159,900 and re-listed at $358,888, which was likely higher than the highest offer he received.
Did he waste a lot of people’s time?
Yes he did.
But the point one of my reader’s raised last week is this: nobody was forcing these people to partake.
Surely the buyers and their agents are also to blame for this charade, no?
Do you think that I would EVER consider getting my clients involved in this mess? Not a chance.
And I’m happy to say that not one of my buyers is naive enough to tell me, “Hey David, I’m so excited – I found a condo priced at $159,900! I think this could be the one!”
So who do we blame for this debacle?
It’s so easy to blame the seller and his agent. They’re the one that set this process in motion!
But personally, I’m fed up with inexperienced, naive Realtors who either don’t have the knowledge necessary to spot a disaster when it’s right in front of them, or don’t have the guts to stand up to their clients and say, “Do you really want to get involved with a sixteen-offer melee over a condo that is $200,000 under-priced?”
So many Realtors are afraid of upsetting their clients or losing them by actually being honest, and doing their job!
What value does a Realtor have if he or she can’t advise their clients not to do something that’s to their detriment?
Because you know – you just KNOW that somebody offered $250,000 on this condo! And you know a whole slew of people offered around $300,000, when all along, we know the seller wanted $350,000 or more. Why did these people get involved, and why didn’t their agents advise them against doing so?
Any Realtor who suggested that his or her client submit a bid on this property has not earned his or her licence. Oh, wait, I forgot – there are no qualifications to get a real estate licence. Just a beating pulse, and a few thousand dollars.
So am I adding fuel to this fire?
Or am I just providing a contrarian viewpoint and trying to get through to the real-estate-haters out there that fail to realize a market is made up of sellers AND buyers, and is overseen by an elected government?
Blog reader jeff316 said it best:
Is someone forcing private lending institutions to lend to borrowers?
Is someone forcing borrowers to lend this money?
Is someone forcing borrowers that lend this money to spend all they can get their hands on?
Is someone forcing people to bid above asking on properties?
The answer to all of these is no. We are the voters who elect government that set policy. We are the consumers whose habits, preferences and consumption trends drive market demand. We are the borrowers that borrow money. We are the sellers and the buyers that make the bids and close the transactions. We are to blame.
Buyers and sellers, in any market, are ultimately responsible for setting pricing.
In a truly free market, prices are wholly dependant on supply and demand, and the interaction of buyers and sellers.
Sure, sellers are to blame for under-pricing, misleading advertising, and sparking bidding wars.
But buyers are just as equally responsible for getting involved.
So for all the real-estate-haters that post on my blog, or other blogs, just consider the other side of this equation for only a moment. Everybody wants one person to blame for the lack of available housing in our city, whether they own a house, or not.
But there isn’t one person to blame, nor is there one industry, ie. Realtors.
The sad truth is that everybody is to blame.
And I will simply not be convinced otherwise…
Addendum: I’d love to move on from this topic next week! I have other ideas and other topics, but we keep coming back here over and over and over. There are 50+ comments on last Friday’s rant and I’m sure it’ll keep going, but I think I’m done on this topic. You all know how I feel.Back To Top Back To Comments