Shady things can happen in real estate if you are not working with the right realtor.  Listen to this story and tell me what you think.

The Back Story

I am currently working with a couple that is new to Calgary; they have been living here for around a year and have decide to relocate from Vancouver to Calgary for employment; not the typical situation these days.  They are a young couple with two young children and are fortunate to be selling their home in the exploding Vancouver real estate market.  Meanwhile here in Calgary we have been looking at homes in some of the nicer areas in the city.  Altadore and Hillhurst seem to be the best suited neighbourhoods for them so far.

Some would consider Altadore and Hillhurst to be some of the most popular neighbourhoods in Calgary, they provide easy access to some of the best restaurants in town, have short commutes, great public schools and are two great inner-city areas that currently have a lot of selection around $1M to choose from.  We've gone out for showings a couple times now; we have checked out some places in Altadore and most recently we visited some homes in Hillhurst.

The selection of homes that the buyers are interested in are quite nice.  We viewed several detached homes and a couple duplex style homes all over $1M. Typically when working with buyers we put a selection of homes together that they want to see and then I plot them all on a map and we go view them in the most sensible order so we are not back tracking all over the city.

When I booked the showings for our most recent group of homes I was shocked at what happened.  I went through the normal process of booking the homes online and then I received a call from one of the listing realtors.  Typically, most agents confirm the showing online via email or through a text but this realtor wanted to give me a call to discuss a 'special deal' they had going on.  It seemed odd from the start.

The Special Deal

I recently wrote another post about the fact that writing in all CAPS in a listing description  can say a lot about a realtor.  I discussed how it seems unprofessional and it is often a clear indicator that the realtor will be unprofessional in other areas too.  Not saying that all realtors who write their property description in all CAPS are unprofessional but in my experience it seems to be that way.  As a side note,  the selling realtor of the home I discuss below also has an all CAPS property description, meaning THE WHOLE DESCRIPTION OF THE PROPERTY IS IN CAPITAL LETTERS...  

Where will this lead???  

Let's resume,  I had just booked a showing into the property and the realtor had called me back to discuss the deal they had for the buying realtor (me).  When making the bookings I had noticed that one of the homes had an increased commission but I didn't notice which particular home it was, I had just finished booking 6 showings and I never let something like that effect which homes my clients view anyway, so I didn't remember.  I told him that I remembered there was a home with a bonus but could not remember which one.  He quickly told me it was their listing, the seller was offering a $5000 bonus to the buying realtor if you sold his home plus there was more. 

I see this often, especially in the current Calgary real estate market,  other realtors offering additional bonuses to the buying realtor to sell a home, with the bonuses only being discussed in the realtor specific descriptions.  I would like to think  this would not make a difference in how a realtor operated but based on the fact so many people are currently offering this bonus, maybe it does.  I would never let an extra $1000 or $5000 effect my obligation to protect the best interests of my clients.  This is not even something I would consider and I would like to think most realtors are the same way. I would never look out for my interests first, by perhaps swaying the home buyers purchase to the listing with the additional money that goes to the buying realtor.  This is wrong and the fact that there are people out there doing it is wrong too.  Could you imagine if the buyers you were working with found out?  How would you explain swaying their decision in a home over a few thousand dollars.  I would never risk the possibility of ruining the trust I have with my clients or my reputation in Calgary over a few thousand dollars but obviously there are people out there that would.

The average realtor in Calgary was only doing 4-6 deals a year during the good times the last few years;  I can only imagine that number must be much lower now.  To these realtors, who likely aren't full time and do not take the profession seriously, maybe this extra bonus would cloud their judgement.  Maybe it is just my way of looking at things or maybe it was the years of ethics training at the Royal Military College but this situation is unethical.  This does not pass the CBC test.  (The CBC test is:  If a situation was aired on CBC how would people judge your actions.) Sellers should not be allowed to offer bonuses to the buying realtors to draw more attention to their properties.

What are the sellers offering?

To continue with the story;  the selling realtor called me and asked if I had seen the $5000 dollar bonus for the buying realtor on his listing.  I stated that I had noticed one but could not remember which home it was because it is not something that I look for.  He then proceeded to tell me that the seller was also offering another bonus...  For every dollar above a sale price of $1.1M, the seller would split the amount in half with me.  So, if I brought in an offer and the home closed at a sale price of $1,130,000 the seller would give me an additional $15,000 on top of the initial $5000, plus my normal commission.  Talk about something that seems shady!  My initial thought was that we know we can get the home for $1,100,000 but then we hung up and I started to think about what was proposed to me.  The sellers wanted me to look out for myself and bring an offer over $1.1M and they were trying to bribe me by offering me half of the money over that amount back!

I'm sure to the average realtor this offer of nearly an extra $20,000 would make a difference but it is not even something I would consider.  It seems like something that we should warn people about so that the general public knows it is happening.  Working with a realtor that you trust is important, especially in this case.  If someone walks in off the street and makes an offer on this property, where the selling realtor represents both sides, what do you think will happen?  I highly suspect that the buyer's offer price will be swayed to above $1.1M so that the selling realtor can get more commission.  I can only assume that if they thought of offering it to me that they would consider taking it for themselves

Working in an industry with a negative reputation can be challenging.  Before people asked me what I did and I used to say that I was a pilot in the military, everyone's eyes and facial expressions would change and they would ask me all about it.  At that point I would tell them that I actually didn't fly in the military for various reasons but that I was a commercial pilot before joining, then the conversation always moved to "well what did you fly before?"  Now, try telling someone you are a realtor and see what their expressions and attitudes turn to.  I feel like people are thinking salesman or used car salesman.  People now say, "I don't know if I could do that, selling homes".  I tell people that I don't sell homes, homes sell themselves, I don't push homes on people or try to up-sell minimum benefits of a home to make it appear better.  I want people to love their home and to be happy they worked with me to find their home.

This transition has been tough and at first I did not understand it but as my time in real estate increases so does my exposure to situations like this.  Where sellers are offering an extra $5000 plus half of everything above a sale price  higher then $1.1M to a buying realtor to sway their decision making process.  No wonder real estate is one of the most distrusted professions, sleazy situations like this happen and no one knows about them.  Worst case, if it did effect an agents decision making process there are no repercussions.  It is basically your word against theirs.

Larger Point

This brings me to the larger point, when buying one of the most important investments you will ever make; ensure that you are working with an honest, ethical, professional who will look out for your interests, not their own when they are representing you.