This is a new feature on the Edmonton real estate blog called Real Stories. With our clients’ help and permission we are posting some of their true real estate experiences here on the blog. This first installment is about a couple who relocated to Edmonton. Enjoy!
Ian and Nicole were relocating from Hamilton, Ontario to Edmonton in 2006 and were referred to us by a Realtor in Hamilton. As most people know the real estate market in Edmonton in 2006 was crazy – stories of homes being sold in minutes, with multiple offers, for thousands over list – with prices increasing 50% by the end of the year. This was a difficult market for anyone to buy a home, especially someone relocating.
As with all our clients, we don’t only search the MLS when looking for potential homes, we search FSBO (for sale by owner) web sites such as Comfree and Welist as well. As it turns out there was a home marketed on Comfree that met Ian and Nicole’s needs.
When we arrived at the home, there were numerous buyers interested in the property; some were even sitting out front of the home scrambling to write offers. We showed the home, wrote an offer, presented it, and had it accepted before the other buyers even completed writing their offers. When we left the home one couple threw their paperwork on the ground and drove off in disgust – perhaps they should have had an agent working for them!
In the end, the seller agreed to pay our fee, Ian and Nicole purchased a home in one of the toughest markets for buyers, and they purchased it well under market value. The sellers realized the opportunity they missed by negotiating their biggest asset on their own and tried to pull out of the deal on a few occasions. Since we used the purchase contract put out by the Alberta Real Estate Association – a fair and neutral contract – as opposed to the contracts provided by Comfree which favour the seller, we were able to make sure the deal closed. Ian and Nicole had made money on their new home before they even took possession.
Ian sent the following recommendations based on his experiences:
- Have the house inspected – it absolutely pays to have your eyes opened about the house you spent 10 minutes looking at before putting that huge offer down. Having to replace windows, furnaces or walls due to mold can change your outlook on your dream home.
- Hire a good lawyer – the difference between a good real estate lawyer and a bad one is probably $200, this is NOT where you want to save money. Weeks of stress and potential litigation could have been avoided in our purchase had both sides hired good, real estate lawyers (hint: our lawyer was great).
- Have a good real estate agent represent you – For buyers, it’s a free service and it allows you to tap into a great knowledge base. For sellers, know that you can get caught with your pants down on the biggest sale of your life. If you end up selling your house for $40K below list, was it really worth it to save $12K on commission fees? I can’t count how many properties we looked at that were pending, then available, then pending, etc because people were writing and accepting bad offers that were falling through, costing everyone time, stress and money. It’s best to have someone skilled and knowledgeable represent you and protect your interests.
would you care to explain how, exactly, the comfree contract legally benefits the seller instead of both the seller and buyer? I’ve bought and sold with both the AREA contracts and comfree ones, and legally I haven’t seen a difference.
Is comfree for everyone? Definitely not. If you don’t have your laurels about you and aren’t prepared to do hardline negotiations, an agent is probably better. But we managed to sell a property 20k above list price with it (and no, our listing price was not underpriced). For people with savvy business sense, legal knowledge and negotiation skills, comfree or a FISBO is a viable and profitable option, I think.
Thanks for commenting, that is an excellent question and I would love to answer it. I have dealt with thousands of contracts over the past 19 years and a number of Comfree ones as well. The comfree contract is biased to the seller. It favours the seller because once the seller has accepted an offer, and the buyer thinks they have a firm deal, the seller still has the ability to accept other offers and cancel their agreement with the seller with minimal notice. This practice generally only takes place with the AREA contracts if the contract is subject to sale of another property.
As for selling 20 over your list price…congrats. Were you under priced? I’ll take your word for it that you weren’t. I have yet to see a single example (although I hear they exist and I’ll wager yours included) of a Comfree sale that beat the price you could have received on MLS even using an average REALTOR. If you want send your address and the date of sale and I’ll run the numbers, but until then I’ve seen far more examples of people leaving money on the table using Comfree. I am however glad they exist. I shop for my investment properties there and I regularly work with my buyers to buy comfree properties as you can read in the above Real Story for numerous reasons, including the fact that the owner won’t be able to make the most out of a multiple offer situation (if they are so lucky to stir one up). If you actually received accurate stats from Comfree I’d wager that 50% or better of those properties are sold by agents and the commission saved is not nearly how its represented but that’s life. You have to take the good with the bad.
It’s an interesting story, but it reads more like a poorly written infomercial for realtors. I think most people are aware of what realtors bring to the table, but realtors are always wanting to shove the “benefits” down your throat. I think many realtors are threatened by the fast-growing FSBO services–especially ComFree. We just moved to Edmonton from Victoria in August 2006, and I have a great ReMax realtor (Darrell Morrow!) to thank for getting us into a beautiful home in McGrath (Riverbend). Neither our selling realtor not Darrell had to remind us of their “value”.
The title of this section, “Real Stories” is the essence of what these people experienced during their purchase. I think that this is a great story. Thankfully, we don’t’ have to deal with these issues in the Toronto area as often as it appears you do in your neck of the woods.
I feel that Sheldon’s comments about ‘the poorly written infomercial’ are not accurate. We real estate agents bring much more to ‘the table’ than most people know about or experience in one real estate transaction. Sure, we try to stress benefits, but the benefits in the initial post were written by Sara’s client. It’s the experience that Sara wrote about that most people will enjoy reading and obtaining some insight into a real estate transaction.
I hope that Sara continues to write about ‘real stories’. All too often in our industry, it’s the ‘horror’ stories that get the ink and the real stories are never told.
All the best!
Mark
Mark, this was written by a realtor–read it again. The clients did NOT write this. The article would hold more water if it were submitted by the clients.
1. The article is written by the realtor/s on their own blog
2. As there are advantages and disadvantages with comfree etc., there are similar advantages and disadvantages with realtors
3. Edmonton and Calgary are flooded with realtors who wants to close the deal quickly, use unfair means, and use tactics that do not fall into ethical regime. So, we better not comment what is good or bad
4. If I have to sell a $450k property I will think twice to pay $16k to a realtor or spend $500 with comfree -> especially in a sellers market. This is obviously giving lot of heat and grief to realtors as more and more people are using comfree and saving tons of money
5. Needless to say there are advantages with realtors, but how do you find who is good or bad. You only realize after your experience
Thanks everyone for your comments and opinions! I would like to set the record straight here… First, the story was written by me, and sent to our clients for their comments and approval. The three recommendations were written by Ian himself, which I think is great – unsolicited advice from a satisfied customer. Second, we’re not saying that every agent is better than doing it on your own – we can’t speak for an entire industry. We are saying that we (Coldwell Banker Johnston) are a better alternative to selling privately, and proving it with true stories from our clients. What matters in the end is not how much you pay someone to help sell your home, it’s how much money you end up with in your pocket when all is said and done.
Every realtor I have talked to in town claims that thery are a better alternative than the fellow realtors in the town.
And Everyone had a good story. Whom to believe?
Hi Sheldon,
Thanks for your response. I can’t help but wonder at some of the termonology in it, though. You wrote: “It favours the seller because once the seller has accepted an offer, and the buyer thinks they have a firm deal, the seller still has the ability to accept other offers and cancel their agreement with the seller with minimal notice.”
Specifically, the word ‘acceptance’ and the words ‘thinks they have a firm deal’ are a bit generic here. When we finally did receive an offer we liked, and both we (as sellers) and our buyers BOTh signed the contract, it was legally binding. We had no conditions, etc we could have backed out of it. On both AREA and Comfree contracts, it’s entirely feasible to write in conditions about ‘financing to the buyer’s satisfaction’ and other things that would easily allow a buyer to back out of a deal–making it actually more biased toward a buyer. My guess is, based on the buying we have done of properties through realtors, that it’s the open “multiple offer” scenario that you feel benefits a seller. We told people we were accepting offers for a week…accepting OFFERS–not signing. During that week, we were able to call, back and forth, to our various buyers and effectively create a bidding war for our property. I know from experience that realtors push clients to only put forth offers that are open for, say, 72 hours. This pushes the seller to accept an offer more quickly and helps a realtor avoid a multiple offer situation. Let’s face it–most realtors want a deal closed up quickly. The book “Freakonomics” offers a great insight on this in one of its early chapters.
I would argue for selling a home, using comfree is wonderful because of the benefits it allows the seller (as described above–the ability to essentially force a bidding war, which benefits the seller). For BUYING, I have, and would absolutely continue to, use a Realtor. They’re going to try to get a seller and his realtor to accept an offer quickly and get it locked up to avoid a multiple offer situation. But when I sell my home, regardless of what realtor I use, the realtor internal code of ethics is going to make my realtor ‘play’ by the other realtors rules, which means we’ll get offers from buying realtors that are only good for 72 hours to try and force my hand. With comfree, I can play by rules that ultimately benefit me most as a seller, and that are completely legal and ethical. We were upfront with our buyers, and were happy to show them written contracts with offers so they knew we weren’t lying about price offer increases. I seriously doubt we’d be able to have a week or more of open offers (where we tell buyers, point blank, if they want an offer to have a chance, they need to give us space on its timeline) if we had sold with a realtor.
I know this might come across wrong but your comments have a number of incorrect perceptions.
I’ll deal with the terminology first. I don’t have time to clarify all these items as this is one of my hobbies and lol not my full time job.
Your comments regarding acceptance is wrong. You weren’t accepting offers, you were entertaining offers. There is a big difference and this points out that sometimes buyers and sellers who don’t have training in the correct terms can be of different minds when there isn’t a common understanding of the terminology. Using the correct terms are one of the ways to prevent problems in a contract.
In relation to my comments on the contracts. The comfree contract allows a seller who accepts a conditional offer to exit that contract with notice to the buyer. Once either contracts conditions are removed both contracts are equally valid. There is positives and negatives to both contracts but from a buyers perspective I believe it would be clearly defined as biased towards the seller. If you feel comfortable as a buyer using the Comfree seller purchase contract that is fine but I think if you understood real estate contracts and negotiation you would probably want a different contract as a buyer.
On your point of holding your offer open for a week. It is my personal opinion based on my experiences that holding offers open for a week and trying to negotiate them is extremely risky. Maybe one of the riskiest negotiating strategies around
• Example one. I had buyers from Vancouver, prepared to write an offer 30,000 over list price on Saturday in June 2006. The seller said they would collect all offers and make a decision by Wed. The buyers were on a house hunting trip and could not wait they decided to move on another home. Two weeks later when I had another set of out of town buyers in I talked to the seller again to see why it was still advertised. He indicated that he had several offers but when he made the decision the other buyers had bought other properties and the one left was significantly below list price. Same scenario happened to a Realtor colleague of mine in October. They had 5 offers and these buyers felt manipulated and all withdrew their offers. It took 70 days to sell and sold for significantly below list price.
• Dealing with buyers as often as I do, I can tell you they hate being manipulated and if they can they will do what they can to avoid being manipulated. AS a buyer I would never allow myself to get into your type of manipulated offer bidding. First of all a there is no obligation for a seller to be honest about the number and amount of offers.
• During the heat of the summer numerous agents had employed this strategy with a mixture of success. We in consultation with our clients employed different strategies depending on a number of factors.
I haven’t read Freakanomics but I can certainly say that you will believe what you want to believe. I believe I win by helping my clients win. Further an agent has an obligation to represent his or her client’s best interests. To that end I have set up more multiple offer situations than I can count over the past two decades. In many cases assisting my clients deal with up to 17 offers. I know many of our clients read our blog and if any of them feel that I haven’t done whatever I could for their benefit they can post it here. The truth is that it wouldn’t take me a week to do what took you a week. I will say though that what your are saying about agents pushing for offers to be accepted in 72 hours are absolutely inaccurate in my experience. Buyers agents maybe but sellers agents not likely unless you don’t have a good agent. As a buyer agent my buyers want their offer presented and dealt with asap and following their instructions may utilize a time clause for the seller to review and accept the offer. I do know that when I have worked with buyers in a situation where the sellers have held out for an indeterminate amount of time we have kept shopping and have found other suitable properties and withdrawn a number of offers for that reason. You as a seller though are not obligated and probably wouldn’t inform the buyers or buyer you are dealing that all the offers have withdrawn. Great for a seller but poor sucker the buyer doesn’t have all the facts as they should. As a sellers agent I want the best for my seller. If that means waiting for months then it means waiting. If it means looking at a motivated out of town buyers offer asap then that’s what we’ll do. There is no patent formula unfortunately and that is what is wrong with the whole lets take a week approach as a blanket approach.
The whole comment about a Realtors internal code of ethics is false. I’ve never heard of such a thing. As a sellers agent I am bound by the real estate act and numerous other pieces of legislation but nowhere have I or anyone I know subscribed to a 72 hour rule. As a buyers agent I may try to get the seller to review my offer. If you don’t want to look at an offer and I am your agent I am BOUND by your lawful instruction to inform the other parties of your decision. I would also suggest that with third party representation the negotiating flexibility you as a seller enjoy is far greater just by virtue of the dynamics.
I’m not trying to change your mind by the way. It is your home and you are right to sell it any way you want. That is what is great about a free economy. You are free to choose whether you stay at a best western or a Fairmont. Each has their costs, advantages and disadvantages.
I am trying to say though that you are in error on a number of your perceptions and my intent in responding to you is provoke you into challenging all perceptions. Review your options and consider those options and their impact. Research is your best weapon whether you sell with a Realtor or on your own.
I do appreciate your comment and your thoughts on this matter and hope all worked out well on your sale. cheers
Hi Sheldon,
Although we disagree, I do appreciate both your response and your tenacity to handle criticism in your comments (not just from me, but others) with professionalism and grace. It says a lot about your character. Though it may seem otherwise, I actually find your blog enjoyable to read and think you and your partner are doing really smart marketing work here through this avenue.
Oh, and if someone had come in and initially offered us 30k over list, we would have taken it in a heartbeat! The sellers you mentioned who didn’t were pretty silly
I agree-our technique can be pretty risky, and honestly, I wouldn’t advise it to your average joe. It worked well for us, though, and much of that is due to Edmonton’s market conditions–it’s not a technique I would have done in a softer market. Negotiations require sophisticated tactics, and most people aren’t experts in this.
I will always use a realtor. I’m a smart guy and in my field I feel very competent I would even go as far as to say I am an expert; however my field is not real estate (not that I haven’t made any money at it). Lets be realistic when your car needs repair you take it to a mechanic and when you need an operation I hope you go to a professional in the field. I find it hard to believe that anyone would even consider taking the “do it your self” approach when doing probably the largest financial dealings of your life. And I honestly I find it bizarre that anyone shopping for a home would even consider looking without a realtor. Lets face it, putting aside all of the previous arguments lets find a realtor list with them, let them advertise, screen customers, offer advise and expertise. And hell if our house doesn’t sell we will still never see a bill in the mail. A word of advise:
Caveat emptor-
“LET THE BUYER BEWARE”
And while were at it Caveat venditor- ” LET THE SELLER BEWARE”