# FSBO vs. R/E agent



## Userkare (Nov 17, 2014)

I have an estate house in Toronto that was valued by an independent appraiser in July. Then a R/E agent that I interviewed a few weeks later gave me an opinion of tops $100,000 less. I don't which one is correct, but then a house is only worth what someone is willing to pay for it. 

So, this week, I'm outside trimming the overgrowth, when one of the neighbours approaches me and introduces himself; he asks if I'm moving in. I told him that it is an inheritance, and that we already have a home in Ottawa; that we would most likely be selling it once the estate is probated in a month or so. He seemed to know the previous recently deceased occupant, and somehow how I was related, and that I had a son - who he asked if he might want the house ( he doesn't ). By now, I thought he just wanted to "shoot the sh*t".

He then asks me if the house was worth an amount he named that was about $25K higher than the original appraisal. I told him "I wish!", and that the R/E agent told me I was more likely to get about $100K less than that. He says "SOLD.. If that's the amount you're asking, I'll take it". Arghhhhh, my big mouth! I had no idea he was interested, or I would have agreed with his price $25K above the appraisal, and let him knock it down $25K - $50K and think he was getting a real bargain.

If it isn't all just bullsh*t, and I have a ready-to-go buyer, it would seem silly now to give the listing to the R/E agent, and have him parade all kinds of clowns through the house who really aren't serious buyers; then offer me even less than the R/E agent's low number. On top of that, the agent would take a commission that could be ~5% if there's a buyer agent as well. "A bird in the hand" as they say.

What's involved with a FSBO transaction different from one through an agent? Of course, I would let the lawyer handle everything, but what would a R/E agent do after bringing an interested buyer to the table?


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## dougbos (Jun 4, 2012)

Did you sign an actual contract with him that says that you are utilizing his/her services?


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## OnlyMyOpinion (Sep 1, 2013)

Once your realtor brings you an offer that is accepted their job is done. If they are good they don't do much more than list at the right price and provide compelling pics and writeup. It's buyer's agents who bring the customers through and 'coach' them to make an offer.

As Doug asks, is there an expectation to list with that agent - is there a verbal or written agreement?

Did the agent do a market analysis to provide their estimate or was it just off-the-cuff? Do you know how 'good' this realtor is? A good realtor should be pretty close on price. A bad one may not know or may lowball to ensure it sells quickly.

Are there no other beneficiaries to the estate? If there are, then the executor must try to get the best price they can, i.e. probably listed and see what the market will give you.

If clear of these issues then it is really your decision whether to take the bird in the hand.
Depending on the conversation you had, it could still be appropriate to tell the neighbor that because you are taking some chance with the one-off sale you'd like an extra 5 grand to cover your costs, etc.


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## Userkare (Nov 17, 2014)

Thanks for the replies.

I didn't sign any contract with the agent. If I had, I would have told the neighbour that he would need to deal through him. He would then get a commission for doing almost nothing but show up for an interview.

I read somewhere that I should interview several R/E agents before deciding on one - the one who I think would do the best job for me. This was the first agent that I talked to; he seemed very knowledgeable and had a great personality. Knowledge and personality notwithstanding, part of the selection process would be for the agent to give an idea what asking price they would recommend; that came in an e-mail, and that's as far as it got. His suggested listing price did seem rather disappointing after that initial appraisal of $100K higher. My lawyer said that I shouldn't even have gone that far, because I don't yet have the legal authority to put the house up for sale; but I still don't see the harm in interviewing perspective agents as long as I fully disclose that nothing can be done until the paperwork is in place.

The sole beneficiary and I would like that we don't have to make the long trips to check the house over the winter months; we would probably have to hire someone for that and clearing snow. If this was this past April, I might expect a bidding war on it immediately after it listed, but the new reality is that it might not be all that easy to sell. There are so many factors to consider, I don't think anybody, even the best R/E agents, can truly predict how long it might take and how much we would get.

I also didn't make any firm commitments to the neighbour; just that when I mentioned the price the R/E agent suggested, he jumped at it. I told him I'd come see him first when I had the paperwork to sell the house. It would seem like I suddenly am getting greedy if I asked for more money; he could walk away. What I absolutely can do is stay 100% firm on that price. It's to be sold as-is regardless of any condition found by a home inspection.

So, if the seller agent's job is fully done when a buyer is found, then there's no extra benefit to get an agent involved in this sale if it proceeds. That's what I expected, but wasn't fully certain.


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## STech (Jun 7, 2016)

How confident are you, the appraiser or RE agent aren't in cahoots with the neighbour?


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## Userkare (Nov 17, 2014)

STech said:


> How confident are you, the appraiser or RE agent aren't in cahoots with the neighbour?


I can't even be 100% certain that my B-I-L didn't fake his own death in cahoots with both the Toronto and Ottawa police and the medical examiner in addition to the neighbour, the appraiser, and the R/E agent, the latter both of whom I found by Internet search.

This whole conspiracy is so that they can.... ummmmm.... ummmmm. What's exactly the end game?


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## STech (Jun 7, 2016)

Userkare said:


> I can't even be 100% certain that my B-I-L didn't fake his own death in cahoots with both the Toronto and Ottawa police and the medical examiner in addition to the neighbour, the appraiser, and the R/E agent, the latter both of whom I found by Internet search.
> 
> This whole conspiracy is so that they can.... ummmmm.... ummmmm. What's exactly the end game?



You don't need to be sarcastic. It was meant to help you. You don't like it, don't respond. Simple enough.

Point is, there's a slight chance the appraiser or RE agent might be an acquaintance of the neighbour, who might have got wind of a certain price you were told.


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## Userkare (Nov 17, 2014)

Sorry, I honestly thought you were being facetious.

As a conspiracy, it doesn't make a lot of sense. If the R/E agent knew the neighbour, and that I was an eager seller, he might have purposely given me a low number... then, after I contracted him, put a sign on the lawn, soon followed by presenting this serious buyer. It would all seem to be reasonable and logical that a neighbour would see the sign. The neighbour would get the low price, and the agent his commission. Why send the guy to approach me before even securing my business? How does he possibly benefit from me privately selling? If he was just helping his friend, the neighbour, how would he know that I would blab my big mouth and say what his asking price opinion was? I could have just agreed with the neighbour's original $25K over the appraiser's estimate. If the neighbour knew the price the R/E agent suggested, he would have come in close, but just a little lower, then feign reluctance, but grudgingly agree when I asked for higher. That would have been a proper grift. Also, what does the appraiser that I paid over $500 for his service have anything to gain by such a plot? The appraiser knows nothing about the value given by the R/E agent unless all 3 are in cahoots. 

Can you see now why I thought you were joking?


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## STech (Jun 7, 2016)

Userkare said:


> Sorry, I honestly thought you were being facetious........



Apology accepted, but I was serious. Yes it's a remote chance, but anything involving large sums of money should considered from all angles.

I personally wouldn't blindly take either the appraiser or the agent's numbers.


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## Userkare (Nov 17, 2014)

STech said:


> I personally wouldn't blindly take either the appraiser or the agent's numbers.


Unfortunately, I'm forced to accept the appraiser's estimate for the purposes of the estate tax that must be paid with the application for estate administrator; that's why I hired him. The appraiser must be accredited by a proper agency like AACI, and make a thorough inspection of the house, then compare it with similar homes recently sold in the area and determine its "Fair Market Value" (FMV). 

Basically, how can you put a value on something like a house without a degree of guesswork? The FMV is nebulous at best, yet the gov't treats that number as fact. Even if you later get a lower price for the house, the gov't won't rebate the overpaid estate tax; they say that it was the true value at the time of death. If you should get a higher price than the estimate, you'll pay a capital gain over the made-up guessed FMV number.

As for R/E agents, I would think they would want to inflate the price so as to increase their commission; my experience doesn't seem to be that case. But all said and done, the house is worth to me whatever I can get for it.


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## STech (Jun 7, 2016)

Userkare said:


> Unfortunately, I'm forced to accept the appraiser's estimate for the purposes of the estate tax that must be paid with the application for estate administrator


That's true, but it's not what you have to list or sell for. How long is it good for BTW? Toronto housing prices have been swinging hard and fast for a while now. 





> But all said and done, the house is worth to me whatever I can get for it.



Exactly. And by that same token, I wouldn't beat up myself too much about the price you blurted out to the neighbour. Ultimately the market will decide what the house is worth. You just need to decide if you want to do it yourself, or with an agent. In your shoes, and knowing what the neighbour was willing to pay initially, I'd leverage that, and meet him below that, and tell him he's getting the discount of not using an agent. Assuming you've researched a fair price for the house already.

Seems like it might become a seller's market again. The buyers are back in Toronto’s housing market


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## dougbos (Jun 4, 2012)

If the house is empty now and you mentioned you have to travel a distance to get there you should look into hiring someone to check on it regularly if for nothing else insurance purpose. You should find out from the company what their time requirements are for checking.


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## Userkare (Nov 17, 2014)

dougbos said:


> If the house is empty now and you mentioned you have to travel a distance to get there you should look into hiring someone to check on it regularly if for nothing else insurance purpose. You should find out from the company what their time requirements are for checking.


Thanks, that's a good point; I got it covered :smile-new:


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