I am looking for a salesperson to help me sell my house. I recently contacted a brokerage that advertises that if they don’t find a buyer for your home, they will buy it. How does this work and how can I be sure that I’m getting top dollar for my property?
Thank you for your question. “I’ll sell your home, or I’ll buy it.” is a strategy used by some salespeople and brokerages when marketing to potential clients looking to sell their home within a specific time frame.
Signing on with a brokerage or salesperson that uses this marketing technique can give sellers some peace of mind that their home will be sold by a date and a price they have agreed to. This can be helpful if you are a seller who:
- wants the assurance that, regardless of market conditions at the time you list your property and the interest level potential buyers express in purchasing your home, you will receive a predetermined amount of money by a certain date; or
- does not want to be exposed to the possibility of carrying two mortgages at the same time should you enter into an agreement to buy another home prior to selling your existing one and are unable to secure bridge financing.
There are give and takes in this approach, and there are a few important things you will want to keep in mind when you are considering this type of listing arrangement.
Guaranteed price and list price are not the same thing.
The list price, or the price that your property would get on the open market, and the price a salesperson or brokerage would pay if the property is not sold may not be the same. It is common to see terms where the seller and their salesperson or brokerage must agree on guaranteed price and closing date at time of listing. In some cases, the guaranteed price can be lower than what you could potentially get from a traditional buyer/seller transaction.
Be sure to read the fine print.
If listing your home with a “We’ll sell it, our we’ll buy it” guarantee is a consideration, always remember that it is very important that you read and fully understand the agreement. In some cases, additional fees may be associated with the guaranteed purchase. I strongly recommend that you hire a real estate lawyer to review your contract before entering into such an agreement.
I also want to note that, a salesperson has a duty to actively seek out potential buyers for their client’s home and handle price negotiations in their client’s best interest.
The Real Estate Council of Ontario (RECO) expects real estate representatives and brokerages that engage in this marketing practice to dutifully uphold their fiduciary duty to act in the best interests of their client. This includes actively seeking out potential buyers for their client’s property and fulfilling promises and commitments made as a seller’s representative throughout negotiations. If the sales guarantee program/offer comes to fruition they must fully disclose their personal interest in the purchase and document all conditions or fees.
If you have a question for Joe about the home buying or selling process, please email firstname.lastname@example.org.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.