Don't Trust A Home Sale Guarantee!
You’ve probably heard the ads or seen the signs or around Toronto...
“If I don’t sell your home in 30 days, I will buy it from you for cash.”
This is usually followed by a large asterisk (*) and includes something along the lines of:
“Terms and conditions apply. Contact agent/broker for more details”
And that’s where they’ve got you. This is what I call a Bait & Switch and its illegal in Canada so I wrote this blog post so you won’t get caught up in the hype.
Realtors®, being entrepreneurs, are often solely responsible for their own “brand” and agent marketing and as such are often looking at new ways to bring in more contacts to their sphere of influence. Some agents hold seminars while others cold call, some farm a particular neighbourhood while others use online platforms to gain exposure. Through all of this there are ads, posters, videos and other materials used to show the agent as an expert and a trusted advisor. This part of the business allows each agent to set themselves apart in a competitive and cut throat market, while ensuring that the public can trust what all real estate ads state.
Agents also sometimes like to include what they call “Value added services” to showcase themselves as offering more than the competition and a better choice for your real estate needs. Some offer a staging consultation, professional photos & or videos, marketing ads, websites and more. These offerings are not scams, they can be wonderful depending on your needs and all should not be overlooked, they will make your life easier. The “Home Sales Guarantee” can be seen as one of those “value added services” but in my mind is not the reason to use an agent to sell your home.
Back to the Guarantee...
When someone sees the guarantee they almost always say “How can the agent afford to do that?” or “Hmmmm there has to be a catch” and in most cases they’re right. The catch is that the listing agent is only going to sign a listing agreement with the home sale guarantee if it’s in the market price they have already determined for your house as well as numerous terms and conditions that can delay the closing, limit total payouts and more.
If you want more money for your home or aren’t willing to complete the various steps outlined by the agent/broker (which may cost you even more than the original commission) then you will find out that you “are not eligible for this offer”. Surprising, isn’t it?
They won’t explain this until you are already in their office or you have an agent in your home “inspecting” it. By this point you will have given them tons of personal information about your home and personal circumstances so they could “help” you. This type of agent already knows before you arrive for your meeting that your home most likely will not be eligible for the home sale guarantee but has been trained on how to handle your objections once they have you in their office. They will tell you about how they’re the greatest agents and begin their sales pitch, because let’s be honest, this is what they expected to happen in the first place.
This my friends is called a Bait & Switch.
The Competition Bureau of Canada states that Bait & Switch selling is:
“A store attracts customers by an advertisement for a bargain-priced product. Once inside, the customer discovers that the product that was advertised, the “bait”, is sold out or otherwise unavailable.
The “switch” occurs when a salesperson pressures the customer into purchasing a higher-priced product as a replacement, or if customers find themselves induced to make other purchases while inside the store.” 1
Remember, the duty of a real estate agent is to our clients whether it be marketing their home to potential buyers or showing homes to interested buyers and the like. We are not here to “earn” money, we are here to protect our clients interests in the highest form of agency relationship possible in Ontario.
So I say to everyone who is skeptical, always ask questions and remember that you are never forced to sign up with someone. If your gut tells you that it doesn’t feel right, then your gut is probably right. Don’t worry if you don’t find the “right” agent on the first try, this is a huge transaction and should be probably based on more than a “guarantee” gimmick or sales tactics.
The Toronto Star wrote an article on September 5th 2014 that outlined some of the questions to ask an agent who offers this guarantee including:
- At what price will they buy your home?
- How is that price established?
- After how many days of listing will they buy your home?
- How many days after that will the transaction close? 2
These are only the tip of the iceberg, so remember to write down your questions and do some research online. You will thank yourself down the road when you are working with an agent who understands you and your needs and who will be there when you need them the most.
If you still have questions, contact The Real JMcG today! Call me at 416.922.5533 or email me at email@example.com now.
Did you know?
The Real Estate Council of Ontario (RECO) established guidelines for producing advertising that ensures consistency and accuracy of information included. A copy can be found here for you to see:
http:// www.reco.on.ca/wp-content/uploads/ AdGuidelines-vFeb2014web.pdf