Who is your real estate agent looking out for?

Who is your saskatoon real estate agent looking out for

If you’ve visited my blog before, chances are you’ve caught on to the fact that I’m very concerned about a practice which is occurring regularly which I believe is deceptive and hurtful to both buyers and sellers. It goes like this; the agent lists the seller’s property and promises to give the home full exposure to the market including all kinds of advertising and more importantly, MLS® service. He then does whatever he can to hide the listing from the market while he makes his best effort to sell the property himself, hoping to pocket the entire commission. Perhaps he lets a few of his best buds from the office in on the game, but for the most part he tries not to let anyone know it’s for sale unless he or someone else from his office has the chance to show it to the buyer.

Why should you care? Well, if you’re a home buyer it robs you of the opportunity to see and consider homes which were supposed to be listed MLS®. It limits your options. If you’re a seller, you should care because these practices are almost certainly going to cost you money; lots of money. Every agent knows that there is a pretty direct relationship between the number of prospective buyers for your home and the price at which your home will sell. If an agent pulls this trick on you, he has no shame. He is a deceptive, selfish person who thinks nothing of stealing from you. He certainly has no regard for the fiduciary duty which he owes to you as your agent.

At first, I was reluctant to bring it up. Now, I’m like a raving lunatic who can’t be stopped until this evil practice is dead. J Please forgive my rambling but I do take this business very seriously.

I did a little research today on Saskatoon and area real estate sales dating back to February 15.

Here’s what I found.

  • A seller is more than twice as likely to receive an offer which is above the list price if the buyer is represented by another real estate company (or brand). Last week the average overbid exceeded $6,000 and we’ve seen offers as high as 15% over list price in the past few weeks. As a home seller, you probably want to maximize the chances that it will happen for you.

  • Where a listing sold for less than the asking price, the average discount was just .4% if the buyer was represented by a different real estate company (or brand). The discount jumped to 2.4% when the same company (or brand) represented both the buyer and the seller. On a $250,000 home, the difference amounts to an additional $5,000.

I believe that this massive disparity is the result of agents who engage in the practice I’ve described. I can’t think of another reasonable explanation and I’m seeing it happen every day.

There is nothing wrong with entertaining offers from buyer who is working with your agent, or your agent’s company. However, if there aren’t any agents from other companies inquiring on your home, you may want to find out if your agent is playing “hide the listing.” We are currently experiencing the hottest real estate market I’ve ever seen. Make sure your agent is helping you take advantage of it, and not robbing you blind.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

85 year old woman gets surprise of her life lease

Old Woman

I heard a story today that left me so incensed, that I couldn’t resist repeating it.

Some time ago, a local church built “a 15 story high-rise building offering enriched housing for seniors.” Apparently, the building is managed by “a voluntary board (hereinafter referred to as the board) independent of the church. The building contains 109 suites, 36 are subsidized rental units and the remaining 73 are “life interest lease suites.” For those unfamiliar with the life lease concept, a buyer buys the right to use the unit for their lifetime. When they are finished with the home, it’s sold back to the original owner, usually a non-profit organization, and the price is determined based on terms outlined in the lease document.

Here’s the story as it’s told to me by the daughter of a senior couple (hereinafter referred to as John and Mary) who purchased a life lease in the building. I have not seen the documents involved in this transaction.

It seems that in 1989, John and Mary had reached their senior years and decided that they were ready for condo living. They purchased a life lease for $83,000 and happily settled in. At the time of the purchase, their lawyer expressed some concern regarding the ambiguity of the resale clause which stated that John and Mary were obliged to sell their interest back to the board when they were ready to sell at a price “hereon depending upon the conditions prevailing” at the time of the sale. Apparently, the documents do not indicate what “conditions” the price is dependent on. I expect most would agree that “real estate market conditions” would be the obvious inference. Comfortable that they were dealing with the church, John and Mary felt good about moving forward. They did.

In 1998, John passed away and Mary was a widow at 78 years of age. Sometime in early 1999, Mary gets a call from the board. As she tells the story, she’s allegedly told that her documents have to be updated to remove John’s name from the life lease. Mary is all too happy to oblige and signs the documents placed before her with the understanding that the only alterations to her original agreement are the names.

Mary’s most recent statement from the board is dated January, 2005 and it shows the “current market value” of her unit being $100,300. Between 1989 and 2005, the average selling price of an east-side condominium has increased 62%. For some reason, Mary’s unit has only increased by 20%. Further, it seems that some provision in her contract entitles the board to 50% of her equity gain. If true, this reduces her total return to just 10%.

Mary’s daughter is not pleased. She’s particularly troubled by the claim of entitlement to half of Mom’s equity, so she starts digging for paperwork. Lo and behold she comes across the original purchase agreement, and the updated agreement which was executed in 1999. She’s unable to find any clause which specifically addresses a sharing of the equity, but she notices that the first and second agreements are not the same. Where the initial agreement stated that the selling price was “hereon depending upon the conditions prevailing,” the second agreement has additional wording which states the price is to be determined at the “sole discretion” of the board.

It seems that the board has also contracted themselves with an “irrevocable assignment” to act as her attorney to deal with and make all decisions related to the disposition of the property.

Of course, I’m not a lawyer so I suggested that Mary’s daughter might want to meet with one real soon.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate