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Selling with Property Guys- legal problems??

[OP]
Jr. Member
Aug 27, 2007
107 posts
1 upvote
Canada

Selling with Property Guys- legal problems??

We thought we would sell our home using Property Guys as many people in our area do but recently when mentioning this to someone I was warned that often legal problems can come up (even years after the sale) due to problems with the house that you would be protected from if using real estate agent. Does anyone have any insight into this?

Thanks!
140 replies
Deal Addict
May 18, 2006
2832 posts
55 upvotes
Kanata
I would think this would be taken care of by your lawyer, they will handle all the legal issues. I'm not sure what a realtor would protect you from, they have to disclose issues with the house but if the home owner doesn't tell them they have no idea.

We are selling our home privately as well, it means more work for our lawyer but it's still a lot cheaper then the realtor's fees.
Deal Expert
User avatar
Dec 11, 2005
18677 posts
1091 upvotes
The whole root of these problems is the property disclosure statement.

If someone buying your house makes you sign a disclosure document, put anything and everything that has ever happened to the house in it. Anything that goes wrong that was not in this statement and could be traced back to your ownership, they could call you on.

The ideal situation is to get the buyer to agree to simply doing a home inspection, and having no disclosure statement at all. It is certainly not required.

Absent of a property disclosure statement, buying a house is like buying anything else, buyer beware, and you are not responsible for it.

Oh - and there is nothing an agent can do to protect you from any of this, whoever said that has no idea what they are talking about.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
Deal Addict
Nov 2, 2005
2812 posts
511 upvotes
Ottawa
Don't fall for the scare tactics coming from the real estate industry. A Realtor adds nothing to the process in terms of legal protection. The only people they protect are themselves. They will advise you on pricing, marketing and get you the exposure you need to sell but not $20K worth. When you enter negotiations they will use pressure tactics to make sure that the deal closes and as quickly as possible. The sale must complete at all costs!These tactics are used to maximise the probability of getting their greedy little hands on the commission.

If you have concerns about future legal issues then you should discuss this with your lawyer, not RFD. This, after all, is what you are paying him for. Make sure that any agreement that you sign is preferably reviewed first by your lawer or at least have a clause written in them that makes it subject to review by your lawyer.
Newbie
Oct 12, 2010
2 posts
8 upvotes
Moncton
Hi Rroo,

My name is Andrew and I work for PropertyGuys.com.

I can tell you that realtors are not lawyers. The big stack of "legal" documents that they guide you through the process of signing are almost entirely about protecting their comission, not your bank account.

Here's what you can do, to protect yourself:

Insist on a home inspection. These cost anywhere from $300 to $600 or so, and are worth every penny.
Use a lawyer for all of your paper work instead of an agent. They've spent a lot of time mastering real estate law and most importantly they typically cost less than $1,000 and you're going to need them to close the sale on the property anyway. In many places real estate agents just need to pass a two week course.

It makes us so sad to see people pay a real estate agent tens of thousands of dollars to have you sign form letters that offer you less protection than a t-shirt in a hurricane. Whichever service you decide to go with, use a lawyer and a home inspector. If you actually read the paperwork the agent is making you sign its full of clauses about how they still get paid even if you find your own buyer - not how the agent has certified that the property isn't a lemon, in fact it is full of language which removes them from responsibility for inspecting the home.

If you need more help, or are just looking for more information feel free to call one of our local offices with questions.
Deal Addict
Dec 6, 2006
2058 posts
492 upvotes
I would just add that you make sure you hire a Registered Home Inspector who has some certification with OAHI and carries Errors & Ommissions insurance. Anybody can hang a sign and call themselves a Home Inspector so it can be equivalent to navigating a mine field.
http://www.oahi.com/
Newbie
Mar 29, 2009
97 posts
19 upvotes
York
I always like the anger directed at agents in these posts by people who have no idea of the role of the agent. The agent is there to act as the facilitator for the sale of your property not to be a lawyer or home inspector. They provide sales / marketing advise, have training in the legal terminology and process of offers and help co-ordinate everything. You wouldn't ask a home inspector to price your home or your lawyer to inspect it - everyone has their role to play. If you think, as a seller. that you can take on the part of an agent then go ahead but be aware that agents do have legal liability despite the post from the Property Guys employee. Agents carry Errors and Ommissions insurance so if some incorrect information gets passed on then they can be on the hook. I know agents who have been involved in legal cases over incorrect lot size, driveway use and even the failure of deals closing.

Here are some other things to keep in mind :
  • What will your costs be since you have to pay Property Guys upfront and then the clock will be running everytime you want an opinion from your lawyer.
  • Who is going to let you know what potential buyers think of your house? Will you feel comfortable calling up someone who has looked at your house and asking for feedback?
  • Who will let you know what is going on in terms of other sales in the area so that you know exactly how your property is priced in relation to the competition?
  • How will you handle the situation when a potential buyer wants a discount since no agents are involved. Remember if the purchaser is buying privately then they think they should be getting some of the savings.
Newbie
Oct 12, 2010
2 posts
8 upvotes
Moncton
The anger you describe is rightly deserved in many cases.

The average commission paid on a $400,000 home in Ontario is approximately $24,000. $24,000 seems like a pretty steep penalty for not paying a few hundred dollars up front. I'll let you figure out the equivalent financing rate agents are charging you for not collecting any money up front.

I don't know about you, but paying $24,000 for someone to provide "sales / marketing advise [sic], have training in the legal terminology and process of offers and help co-ordinate everything", seems excessive. I think it is and so do the tens of thousands of successful private sellers.

Agents make their customers sign paperwork designed to minimize their liability. Lawyers typically include title insurance as part of their services (for under $200) that protects buyers from claims against land size, etc.

The scare tactics continue.
  • When using PropertyGuys.com the buyer's lawyer sends in the paperwork, meaning that you never pay for legal services until the buyer has shelled out cash to show they're serious and you have an offer for you and your lawyer to review. The fees are the same as you would pay to your lawyer anyway if you were using a real estate agent and you can review any offer before you pass it off to your lawyer and rack up any bills. Remember even if your lawyer charges a hundred dollars an hour they'd have to spend over 200 hours working on your case before theirs fees came anywhere close to what you'd pay an agent. In fact it'd be cheaper to have someone deliver the offer by helicopter than it would be to let your agent handle it.
  • When you're selling the house yourself - you get the opportunity to speak directly to potential buyers. You get instant, immediate and most importantly, honest feedback on your property and your price.
  • Your PropertyGuys.com representative stays in touch throughout the entire process and together with a professional appraisal help you with pricing strategy - not just tell you a dishonest price to get your signature on the listing contract only to turn around three weeks later and advise a price drop.
  • Since you're negotiating directly with buyers, you can sit down at a kitchen table and work out a price without all the fake posturing. And since you're saving $24,000 in commission you have a lot more flexibility to price the property for a quick sale without taking a hit to your bottom line. The ability to be price competitive alone gives you a huge market advantage over properties listed with a real estate agent.
We've heard every excuse in the book before. We've got a list of the most common agent talking points / myths on our web site:

http://www.propertyguys.com/site/myths
Deal Addict
Dec 10, 2008
1660 posts
546 upvotes
Kitchener
We bought our current house with By the Owner I think... absolutely smooth transaction, we split the money saved from not using an agent with the seller by lowering the asking price... no regrets, no problems...
Newbie
Mar 29, 2009
97 posts
19 upvotes
York
Wow - I guess I hit a nerve. I did say that a seller can take on the role of an agent if willing to accept a lot of the responsibilities but lets get some things straight. A real estate sale including the marketing, promotion and negotiations are not child's play - anyone who thinks it is simple is dreaming. Don't believe me - then why do the vast majority of lawyers use an agent to sell their properties.

Some other points from your post. I take it you are in New Brunswick and perhaps are not in touch with the Ontario market. I know Property Guys likes to push the idea that commission rates are 6% (hence your $24,000 on $400,000) but the reality is that I don't think I have seen a 6% rate in the Toronto area since about 1991. The "posted" rate for many brokerages is 5% but (just like mortgage rates) the discounted rate probably averages 4%. Also please let me know of a lawyer I can use for $100 an hour. In Ontario a lawyer who bills under $250 an hour is giving you a charity rate.

You are also really keen on this "agents have no liability" and this is far from true. Yes agents do have limited liability so that they don't get sued when a seller tells them that the 15 year old furnace is new and the leaky foundation is bone dry and this is passed on to a purchaser. Agents however can and do get sued for many reasons so please drop this "scare tactic" on your part. And also please enlighten us on what liability Property Guy's have in helping people sell houses - am I right in assuming none.?
Member
Jun 8, 2005
334 posts
2 upvotes
drewmack wrote:
Oct 14th, 2010 2:57 pm
The anger you describe is rightly deserved in many cases.

The average commission paid on a $400,000 home in Ontario is approximately $24,000. $24,000 seems like a pretty steep penalty for not paying a few hundred dollars up front. I'll let you figure out the equivalent financing rate agents are charging you for not collecting any money up front.

I don't know about you, but paying $24,000 for someone to provide "sales / marketing advise [sic], have training in the legal terminology and process of offers and help co-ordinate everything", seems excessive. I think it is and so do the tens of thousands of successful private sellers.

Agents make their customers sign paperwork designed to minimize their liability. Lawyers typically include title insurance as part of their services (for under $200) that protects buyers from claims against land size, etc.

The scare tactics continue.
  • When using PropertyGuys.com the buyer's lawyer sends in the paperwork, meaning that you never pay for legal services until the buyer has shelled out cash to show they're serious and you have an offer for you and your lawyer to review. The fees are the same as you would pay to your lawyer anyway if you were using a real estate agent and you can review any offer before you pass it off to your lawyer and rack up any bills. Remember even if your lawyer charges a hundred dollars an hour they'd have to spend over 200 hours working on your case before theirs fees came anywhere close to what you'd pay an agent. In fact it'd be cheaper to have someone deliver the offer by helicopter than it would be to let your agent handle it.
  • When you're selling the house yourself - you get the opportunity to speak directly to potential buyers. You get instant, immediate and most importantly, honest feedback on your property and your price.
  • Your PropertyGuys.com representative stays in touch throughout the entire process and together with a professional appraisal help you with pricing strategy - not just tell you a dishonest price to get your signature on the listing contract only to turn around three weeks later and advise a price drop.
  • Since you're negotiating directly with buyers, you can sit down at a kitchen table and work out a price without all the fake posturing. And since you're saving $24,000 in commission you have a lot more flexibility to price the property for a quick sale without taking a hit to your bottom line. The ability to be price competitive alone gives you a huge market advantage over properties listed with a real estate agent.
We've heard every excuse in the book before. We've got a list of the most common agent talking points / myths on our web site:

http://www.propertyguys.com/site/myths



Can I bring friends and family on the helicopter ride?
Member
User avatar
Jan 4, 2007
236 posts
32 upvotes
I have sold two homes recently both with an agent. I will explain why I chose to:
$400,000 listing price
Agent's commission: 4%
Buyer's agent commission: 2.5%
My agent commission: 1.5%
My agent's commission in $: 1.5% of 400,000 = $6000 less advertising and brokerage fees.

I don't think that's overpaying someone for 30-60 days worth of work.

Also people selling privately sometimes have to pay the buyer's agent commission and that number ranges from $150 to full 2.5%. I am not sure how many buyer's agents will bring their client to your home for anything less than 2.5%. Also if I am a buyer I am not paying my agent so why would I want to buy privately? Will the seller pass on those savings to me...probably not. I see listings where people list their home for the same price or more as those listed with agents!
Sr. Member
User avatar
Aug 23, 2010
988 posts
86 upvotes
i don't mind paying 2.5% to my agent for selling my house

but 2.5% to the buyer's agent is ********
Contests Won: None :mad:
Deal Addict
May 18, 2006
2832 posts
55 upvotes
Kanata
heyjoe wrote:
Oct 16th, 2010 10:29 pm
i don't mind paying 2.5% to my agent for selling my house

but 2.5% to the buyer's agent is ********

I think that's the biggest problem, it's this double commission thing. 2.5% isn't too bad but when you have to pay a total of 5% to someone that is working for another person that's what I really don't like.

I don't get why you should get a discount if you are buying privately, if you have $300K to spend what difference does it make if the home owner has to pay commission or not? You are still paying $300K for the house.
Newbie
Feb 22, 2011
5 posts
4 upvotes
Red Deer
I have looked at some of property guys propaganda and some of it is VERY misleading, if they were governed by the same rules and regulations as we are, they would be in BIG trouble! Here in central AB they are using 6% commission on the whole amount to calculate the "savings" Nobody here charges 6% on the whole amount, it is generally 5-6% on the first $100,000 and 3% on the balance. Their example on a $300,000 home is 6% which amounts to $18,000. The reality is, it would be in the $11,000-$12,000 range which translates to an exageration of 50% right off the get go. They can defend themselves by saying they didn't know I suppose...but what else are they guessing at?
The biggest stretch that they're selling to the unsuspecting public on is this notion of "pay yourself" They are basing these numbers on the ASSUMPTION that the do-it yourselfer is going to attract and accept an offer from a qualified buyer equal to that of an industry member. With 97% or more of all the properties for sale in the hands of real estate firms, where are the qualified buyers willing to pay FAIR market value MOST likely to be looking? If they just want to pay a fair price for a home, why on earth wouldn't they use an agent to do all the work for them? The fact is that the majority of people looking at FSBO's aren't qualified to buy and the rest are bargain hunters looking to save the same commission as the seller or even more.
I'm not saying that listing with property guys won't result in a good sale, but the odds are hugely against it. If the odds were in the favor of the gambler, Las Vegas would simply not exist. It is built on losers. If the odds were in the favor of the FSBO, the real estate industry would not exist. 97% of the homes for sale would be FSBO and 3% would be listed with realtors. It's not about paperwork and legal ********, it all about odds and probabilities of getting maximum dollar for the home. Stats tell us that FSBO's typically net 4-7% less and the reason is very simple. They don't attract the majority of qualified buyers becuase they're busy working with realtors.
I would like to see some stats verified by an outside source as to what % of the listings property guys are actually getting sold. They take your money up front and as such have no vested interest in the outcome of a FSBOer's marketing costs and efforts. I suspect that many FSBO's pay property guys their fee and become discouraged and end up listing with a realtor at some point. What have they saved? Nothing, in fact, it has cost them more money and TIME.

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