I rarely wade into these waters.
Discussing the value of a real estate agent in an open forum is never going to convince those who already have their minds made up.
And I can’t exactly blame people, since I regularly go on record saying that an overwhelming majority of licensed Realtors in Toronto are complete garbage.
So can I expect support when I talk about the value of a top agent?
I’ve written about the big-c before on a few occasions; commission.
It’s a bad word in real estate and it rubs people the wrong way.
It’s another argument I’m never going to win with the masses, and again, I don’t blame people. But if you sit back and look at it from a rational viewpoint, there must be a “reason,” right? A reason why top agents continue to transact while employing their traditional business model? To be more specific: there’s a reason why an individual such as myself continues to be supported by a loyal, established client base who are oh-so-happy to refer and recommend.
It’s not because all those people are stupid, right? Can’t it be because they see value?
I’ll leave it there because I’m not looking to sell anybody today, or convince, or turn. But rather, I want to tell a story about what happens at the, um, how do I say, other end of the spectrum…
A few months ago, I sold a rather unspectacular, run-of-the-mill condo in the downtown core. There was nothing really interesting about the location, the building, the unit, or the transaction itself. The story lies within what happened after the Agreement of Purchase & Sale was signed.
The buyer agent was as nice as they come. He was a gentleman and great to deal with.
But having said that, he was a discount agent. I don’t say that in a derogatory way, but rather I am mentioning that this was the business model of the individual with whom I worked, and the company that employed him.
Say what you want about part-time, and/or discount agents, but I’ll simply leave it here, and let the story speak for itself.
My seller-clients are experienced investors who work with a top real estate lawyer. I use the word “top” not to describe his fee structure, or the floor on which his swanky, Bay Street law office is located, because I assure you that neither describes him. But he’s a “top” lawyer because of his experience and stature, not to mention his knowledge and capability.
Working with these clients and their lawyer is an absolute pleasure. They’re so sharp, the whole lot of them. The group emails are succinct and to the point. They problem-solve. They’re quick to address issues, and they diligently respond to emails in a way that you’d expect from individuals at the top of their game.
On the day that this sale was scheduled to close, the buyer agent called me and said, “We have a problem.”
Note the word “we” in that sentence. We’ll come back to that…
He explained that the buyer was unable to obtain title insurance for the condo, and that since the sale was scheduled to close today, the buyer needed an extension.
I told the agent, “You don’t need an extension, but rather you want an extension.”
He said, “No we need an extension because we don’t have title insurance.”
I explained that they wanted title insurance, but didn’t need it. Title insurance isn’t a requirement to close a transaction, and while most people want title insurance, the presence or absence of title insurance does not and can not hold up a closing.
“David, the buyer’s lawyer can’t get the insurance done. He’s been trying all morning.”
“All morning?” I asked. “Do you mean to tell me that he left this until the day of closing?”
There was a long pause, and the agent said, “I’m not going to tell a lawyer how to do his job.”
“Well you should,” I told him. “Apparently, you should! He left this until the eleventh hour? This is his problem and his buyer’s problem, not ours.” I explained. “This has nothing to do with me and you,” I further explained. “There’s nothing me and you can do at this point.”
That’s when he said, “Yes, but we can do something because I’m asking you to get your client to provide the extension since the lawyer already said ‘no’.”
Ah, there it was.
The buyer’s lawyer requested an extension, since he messed up and didn’t get title insurance on time, and the seller’s lawyer said “no.” So their solution was to have the buyer agent try to convince me to convince my seller.
“You told me that we have a problem,” I explained to the other agent. “It sounds like your buyer has a problem because he hired the wrong lawyer.”
Call me curt, or even call me a jerk. But in cases like this, I would rather be honest and accurate than be nice.
Amazingly, the buyer did not close!
The buyer was in breach of contract because he and his lawyer simply chose not to close, and to spend more time attempting to get title insurance.
The deal closed three days later, and all was well.
Until it wasn’t, it seems…
Three weeks after the sale closed, I received another group email from my clients and their lawyer.
“It seems the buyer’s lawyer didn’t request that we transfer the deed to the parking space,” the lawyer wrote. “Shall we proceed and transfer?”
This was incredible. And not in a good way.
The buyer’s lawyer not only didn’t request that the deed to the parking space be transferred, but he clearly never noticed that the sale came with a parking space. How else could you explain this?
I’m not a real estate lawyer, but I would imagine that they have some sort of process upon closing; some sort of “checklist.” How in the world did the lawyer miss this? It’s like taking your three kids to a movie, and only coming home with two of them…
And imagine what the buyer went through as he realized what had happened?
The buyer went down to the concierge to re-program his parking FOB, only for the concierge to say, “You don’t own this parking space.” The buyer assured the concierge that he did own the parking space and that he had bought the condo and closed a few weeks ago, but the concierge showed him the ownership register, which displayed my clients’ names.
I have to think this buyer took his lawyer to task, no?
We’ll never know. But I’m going to assume the lawyer avoided saying, “I messed up,” and likely provided an explanation. I’m a cynic, what can I say?
My clients didn’t fuss. They laughed, but they didn’t fuss.
“Yeah, transfer the parking deed,” they said.
And all was well.
Until it wasn’t, it seems…
Two weeks later, the buyer’s lawyer followed up again with an email to the seller’s lawyer to say that the locker deed had not been transferred. But only this time, it wasn’t so cut-and-dry.
The Agreement of Purchase and Sale didn’t include a locker.
The MLS listing did. I mean, we did offer a locker for sale with this unit.
But the buyer’s agent didn’t include this on the Agreement of Purchase and Sale, so the deed wasn’t transferred along with the unit.
The seller’s lawyer said, “Please refer to the completed APS which does not specify a locker,” and that should have been it. But you just know it wasn’t.
The buyer’s lawyer replied, “The locker is included in the status certificate.”
But this doesn’t matter.
The status certificate is just a piece of paper, and often they include mistakes or aren’t updated in a timely manner. What matters is what is included in the Agreement of Purchase and Sale, and what legal title is conveyed in that document.
The buyer’s lawyer said, “The locker was advertised on the MLS listing.”
But again, this doesn’t matter.
The inclusions section of the MLS listing could say, “Fridge, Stove, Microwave, Dishwasher, Washer/Dryer, Hot Tub, Trampoline, BBQ,” but if the buyer sees the hot tub and trampoline as a $5,000 call to 1-800-GOT-JUNK, and sees the barbecue as a rusted piece of metal, then the buyer can simply not include those in the Agreement of Purchase & Sale.
What’s listed on the MLS doesn’t matter.
What’s included in the Agreement of Purchase & Sale does.
The buyer’s lawyer went on the offensive and threatened litigation.
Then the emails were forwarded to the sellers and myself.
The next day, the buyer agent called me to ask if I could help with the situation, and here’s where some of you might choose to differentiate between “honest and accurate” and “being a jerk.”
I told him that I could help, but not in the way that he wanted.
I told him that I was going to give him some advice, and that I hoped he would share this advice with his buyer client.
I explained that in all industries, and with all occupations, there are those that are better at their tradecraft and those that are worse. In this particular case, the buyer client hired two individuals that fell into the latter category. Both those individuals advertised themselves as “discounted” in their fields, and the results should not have been unexpected.
The first individual – the buyer agent, neglected to include a locker on an Agreement of Purchase and Sale. The fact that this individual thought or hoped that the locker might be, could be, or would be conveyed regardless, simply adds another level of neglect.
The second individual – the buyer’s lawyer, did not look to purchase title insurance for his client until the very day of closing, and then walked his client into a breach of contract by refusing to close on time. He also didn’t oversee the transfer of the parking space, which was included in the Agreement of Purchase and Sale, nor was he aware that his client had any expectation of receiving a locker, which was not included in the Agreement of Purchase and Sale.
I explained to the cooperating agent that since both he and the lawyer were both advertised as discount individuals in their fields, the buyer could simply look at the cost savings associated with hiring a discount real estate agent and a discount lawyer, and compare to the cost of the result of such actions, in this case, the price of a locker.
Surprisingly, my advice wasn’t poorly received.
The buyer agent was disappointed, but he wasn’t angry.
I think that deep down, he knew that he and the lawyer had both made huge mistakes and that nobody was going to bail them out.
If the buyer chose to do so, he could learn a wise lesson from this experience. I’m not being facetious, sarcastic, or mean-spirited here. This is simply a life lesson that one can benefit from if they’ll allow rationality and logic to overtake emotion.
I’ve shared many of my life experiences over the years on TRB.
Losing my life savings on Nortel Networks at 20-years-old, for example. It cost me $14,000 in the year 2001, but what I learned from that was unquantifiable.
How about the time I got sucked into a timeshare presentation when I was on vacation with my girlfriend at 22-years-old? I wrote about that on TRB
I’ve hired con artists before. A raccoon-proofer at the family home when I was 21. A web developer when I was re-building TRB more than a decade ago. We’ve all been duped.
But we learn from these mistakes and where possible, we try to see the silver lining in that a small lesson learned today saves us from large and costly lesson learned tomorrow.
That’s the way I looked at my Nortel Networks experience of 2001. My dad told me, “This hurts, and this is an expensive lesson for a kid at your age, but this will save you a million-dollar lesson when you’re thirty or forty.”
That honestly seems like yesterday. Folks my age can relate. I know exactly where I was standing in my house at the time, and I can see the look on my dad’s face.
So the question is: will the buyer in the transaction I described above learn from this, or will he choose to ignore the lesson?
He hired the wrong people, plain and simple.
A discount, cash-back real estate agent to represent him in the largest endeavor of his life, and an out-of-town, discount lawyer to facilitate the closing of the property.
Does this seem like a good decision?
In hindsight, maybe not so much…