The Listing agent and another agent at the brokerage took on listing for the Sellers. They also took on some prospective Buyers under a Customer Service Agreement.
Five other potential Buyers were represented by other real estate agents.
On 16 July 2019, the Seller entered into an MLS® Listing offering the Property for sale for $799,000.00 from July 16, 2019 to December 31, 2019, with a holdover of 90 days. The total commission rate was 3.25%, of which 2.25% was to be paid to a buyer’s brokerage, if any.
Under remarks for Brokers was the following:
“offers welcome any time by email as long as they contain a 24-hour irrevocable period, the prescribed Schedule “B” and a Form 801”.
Listing posted on August 4, 2019, at approximately 8:30 a.m. Then, a few hours later at 1:28 p.m., the “remarks for brokers” section was edited to say that:
“Seller Will Review Offers On Aug 14th At 7 Pm. Pls Register Offer Before 5 Pm Thr Office. [sic]” (“Offer Date”), with the provision that “Seller Reserves Right To Receive The Pre-Emptive Offer [sic]”.
First Buyer
6 August Offer
$940,000.00 purchase price
$45,000.00 deposit
Conditional upon financing, until 14 August
Signback
$952,388.00
deposit terms from “Upon acceptance (Next business day)” to “Upon acceptance”.
Buyer accepted the First Offer, with the Seller’s modifications, including a purchase price of $952,388.00, at approximately 10:15 p.m., on August 6, 2019.
Next Day
Buyer’s agent texted to say that he was unable to secure financing and wished to withdraw his offer. The Buyer did not provide a deposit upon the acceptance of the First Offer.
Second Offer
$920,000.00
$45,000.00 deposit payable upon acceptance.
irrevocable until 1:00 p.m. on August 9, 2019
conditional on financing.
Offer not accepted
Third Offer
August 12, 2019,
$900,000.00
$45,000.00 deposit due upon acceptance
irrevocable until 11:59 p.m. on 12 August 2019
unconditional
not accepted
Subsequent Discussions
The Listing agent texted to say:
“Seller was not accepting any offers until the Offer Date.”
A few hours later the Listing agent called to say that:
Property had been sold.
The successful offer was from Listing agent’s own Buyers
unconditional,
purchase price of $931,800.00
acceptance was confirmed at approximately 10:58 p.m. on August 11, 2019.
This, of course is still three days ahead of the Offer date.
Second Buyer (showing)
Second buyers saw the property on August 6, 2019. Their agent was not informed of the first offer or the Listing agents own buyers or that the Seller was considering an offer in advance of the offer date of August 14, 2019.
Third Buyer (submitted offer)
The Third Buyer submitted an offer on August 13, 2019. Their agent was not informed of the first offer or the Listing agents own buyers or that the Seller was considering an offer in advance of the offer date of August 14, 2019.
Fourth Buyer (showing)
The Fourth Buyer booked a showing of the Property on August 8 or 9, 2019. Their agent was not informed of the first offer or the Listing agents own buyers or that the Seller was considering an offer in advance of the offer date of August 14, 2019.
Fifth Buyer (showing)
The Fifth Buyers agent showed them the Property. Their agent was also not advised of the early offer and the Listing agent’s own buyers, or that the Seller was considering an offer in advance of the offer date of August 14, 2019.
Decision by RECO Discipline
Date:16 June 2022
Agent breached Sections 3, 4, 5, 17, 37(1), 38 and 39 of the REBBA 2002 Code of Ethics.
Fine: $8,000.00 and requirement to take 2 courses
Compliance Time: 15 September 2023
Specifically, the Listing agent failed to comply with the Code of Ethics:
- failed to promote and protect her seller clients’ best interests and failed to treat all potential buyers fairly and honestly when she failed to advise the Complainant and other buyers who had expressed interest in the Property that her own buyers had submitted an offer for the Property in advance of the August 14, 2019 offer date, contrary to sections 3, 4 and 38 and 39 of the Code of Ethics.
- failed to inform the Complainant and other potential buyers in writing that her brokerage was providing customer service to a buyer who submitted an offer for the Property, contrary to section 17 of the Code of Ethics.
- failed to ensure that the written direction from the Seller to entertain offers earlier than August 14, 2019 was accurately posted in the MLS® Listing before the Property was sold and failed to update the MLS® Listing to reflect the fact that an offer was being entertained on August 11, 2014, contrary to sections 3, 4, 5, 37(1), 38 and 39 of the Code of Ethics.
COMMENT
Well, that went well for the Listing Agent. She really got “off the hook”.
Certainly, if there is one way to “work the system” that was it. Lots of experience and manipulation and she did very well:
1, Kept everyone in the dark,
2. Managed to double end the deal in secret.
3. Managed to keep her our clients in the dark.
So, who made the big money here? The Listing agent! What about the first Buyer? In fact, put him on hold and remember that he agreed to $952,388.00, or $20,588.00 more than the ultimate sale price.
OK, one more thing, don’t tell anybody about any of the other Offers and leave the MLS in place so everyone will think that there are still a few days left.
Also, be sure to keep your own client in the dark. Don’t tell them they have to sign anything. Let’s just move your own Buyer into place. They may have $20,000.00 less, but I am absolutely sure that they are the “best people”, unlike those 5 others, who were waiting patiently.
So, what would the price have been on the Offer Date? $975,000.00, or more. Remember we are still waiting for bids from the others!
Also, what about the Seller? Were they scammed? Was this a breach of fiduciary duties, disentitling the agent to commission and forcing them to come up with the difference in price?
Now, we have the RECO Decision. Very, very weak!!!!!
This agent KNEW exactly what they were doing because they carried it out with precision and we have one winner: the Listing agent.
Brian Madigan LL.B., Broker