Have you recently come across a Realtor claiming “Your Home is Sold Guaranteed or I will Buy it for Cash”? Yes off course. This is the latest some Realtors Gimmicks! In today’s market, let me explain how?
In the hot overwhelming real estate market in GTA-Ontario during 2016/2017 we use to see “Sold Over Asking Prices”, “Record Sold” , “Sold the highest in the Market” or so. Yes that was what upsetting most of the buyers in the market and led the provincial government to intervene finally and introduce 16 measures to cool down the market. But those days are gone, so what is the latest. Let first of all agree some Realtors are very innovative when it comes to what they call it for themselves marketing techniques but not really for the consumers, why because it has elements of misleading which is totally against the consumer protection act in fair market.
So, how it works? Realtors would enter into listing agreement to sell your property at certain program based on target sale over period of time, for instance your property estimated market value is $1.0 million, the Realtor would have two ways to pursue the technique and all depends on what type of seller you are. For those sellers are always looking to sell high and above market price believing in today’s GTA market would help, the Realtor got the right trap fits this seller by agreeing to list above market e.g. $1.1 million for 3-4 weeks if not sold would reduce the price to $1.0 million and then if not sold again in 3-4 weeks would reduce to $0.9 million in another 3-4 weeks which likely would sell or otherwise the Realtor would buy it at end of 90 days as promised, looks fine so where is the trick, this sort of agreement is binding for 90 days and charging high commission e.g. 5-7% overall which is way above your market including 2.5-4.5% for listing and 2.5% for cooperating brokerage, which the Realtor would convenes you because of taking high risk by guaranteeing buying the property. In this case when the Realtor buys it, the full high commission goes to one Realtor only.
So is it possible the Realtor to be able to buy all properties promised to buy. The probability to do so is low since any property with 10% and more below market sells fast, the other option is a network of investors lined up with the Realtor ready to buy at discount for guaranteed profit in near future, and possibly private lenders may finance the purchase of the property for short term at high rate in order to be flipped within one year time.
However for those sellers agreeing to list at market fair price or below market price, the probability of selling it is very high within the 90 days time frame but still the commission charged is very high in the market. Some Realtors recommend for property improvement in term of staging and renovation at sellers cost, but still they would convince the sellers with the program and might not be fully transparent about the comparisons sold prices which is still not available at our market and its hard to adjust with regular person.
Apparently, I become to know this program is branded, registered and taught by coaches to Realtors who subscribe to this private club for fees and way to double trouble their income. Unfortunately, many top Realtors adopting this program and its totally legal and no ban on it by regulator just like multiple representation practice which made top Realtors even richer. So you tell me would this be a decent sales pitch or a misleading for the sellers who deserve to get each dollar they earned from their lifetime investment.