A juicy story and question on real estate ethics. Who is lacking here? The seller or the agent?

Basic information: Location - Toronto Type - 1 townhouse in a complex of 18 units Neighbourhood - east of downtown (a bit of a dodgy area) Sales commission split: 1.75% seller (family rate), 2% buyer Sales period: Apr-Sept 2024 Holdover: 2 months (Oct, Nov)

The beginning… My partner and I wanted to sell our townhouse as they 1) wanted to be in a proper house with a backyard and 2) away from all the issues that come with living in downtown Toronto (esp. since COVID). Fair enough. We asked our brother-in-law (BIL) to help sell the place, as he had helped us buy when we first came to Canada more than 5 years ago.

Now, he lives about 1.5hrs from downtown, and Toronto is not his market (Hamilton/Brantford is his area). He’s got a few years of real estate experience- probably around 5 years.

So he does the boilerplate stuff - finds a staging company, a photographer and created a listing. We had a good idea of the price (around 1mil) because a newly renovated unit sold for slightly more than that price recently. Ours wasn’t renovated, but we were off the street (a row behind), had more privacy, more square footage, and were closer to the garage area.

We listed mid-April (and our family relocated temporarily). First month was quiet, a few inquiries but most people held off making an offer because of the neighbourhood (feedback from realtors showing). Second and third months were pretty much dead. We dropped the price twice during this time as well. So now we are circa $950k.

I call my BIL and let him know that we need to do something different, like an open house. He was apprehensive, saying that open houses aren’t that effective. Anyway, he agreed to do the open house and went off to plan.

1st phone call (of significant note): The Friday before the open house (on sunday), I get a call from our condo president saying that each unit had received a letter with an unsolicited amount that was roughly twice the market rate (we hadn’t collected our letter yet). On Saturday morning, I call my BIL to tell him, and offered to “make him whole” so that he would be paid for any work and expenses to date (family, after all).

He lets me know that I’ve signed a sales agreement with him, and that if there is an offer within our contractual period, and no broker on the sellers side, then he is entitled to the full commission (1.75+2%). He called it “double ending” the sale, and would likely “give me a discount” because of it. I argued that the commission should be on the original price, and not the developer offer- to which he agreed. I then asked what we should do next. Keep the listing? Remove the listing? He suggests to keep the listing and see how the developers offer evolves. I agree. I ask my BIL to make an amendment to the sales agreement that includes this new possibility. Ie If the deal with the developer goes through, then he gets X commission, and if it doesn’t and he sells, then status quo. I essentially wanted to get his discounted number in writing (believing what he said was true).

2nd phone call (of note) Anyway, months go by, a few showings here and there, but no offers. Our condo board had hired lawyers and a broker to assist with the deal (for the combined units). With the developer, they agreed to draft a “letter of intent” what would include most of the major terms of an “agreement of purchase and sale”. Obviously, the letter would be non binding on either party. Updates from the condo board would come every 2 weeks and I would forward them onto my BIL to keep him updated.

One week, early Aug, he sends an email, by mistake, to me but addressing my partner’s name. “Hi X. Can you tell me what the (condo) broker’s commission is, so that I can calculate my own commission from the deal. Thanks”. My guess what that he meant to send it to my partner’s email address.

In our sales agreement, there is a clause that says if someone else sells the unit in the holdover period, then we would be liable to pay the difference between the total original commission and the new seller’s (broker’s) commission. For our condo deal with the developer, our broker’s fee would be 1.5%. So I’m guessing that our BIL would be thinking of holding us to 2.25%. (3.75% less 1.5%)

So I send an email back to him saying, “hey there, we should probably resume the conversation from last time now that it’s been a while and we have a clearer picture.

We get on the phone, and I say “hey, it’s mid August and we don’t have a letter of intent, and the lawyers are saying that we won’t have an agreement of purchase and sale (voted on by all units of the condo corp) until the end of the year (December). This is likely to play out beyond our time together and I’d like to come to some sort of an agreement on payment for services to date. The condo board have hired people to run the deal, and we aren’t in need of your services anymore.” The BIL responds saying that he has evidence (email updates I’ve forwarded to him) that says there was an “offer” made and any “offer” made during the sales period is something he can claim on. I try to tell him there is no legal offer, just a number floated out there to get all the condo unit owners talking to the developer. Things get heated, and I offer an ultimatum, “look, if I get an invoice from you that’s more than your cut of the original deal (1.75% on 1mil), then I’m going to challenge it”. My BIL responds with, “well, what is your number?”. I say, “we can come at this a number of ways… like you tell me what % of the deal you’ve done…or you can itemise your time and expenses and we can calculate it that way” he says, “look I don’t get paid that way… every 4 out of 5 hours I work is unpaid… I work on commission”. We obviously can’t agree on the call, so we agree to think about it over the weekend and chat on Monday.

Phone call #3 This call is quite short. My BIL has discussed the situation with a few people in his brokerage and he’s come to the conclusion that there is no offer. Phew. Finally some sanity entering into the discussion.

Then he’s like “well why didn’t you tell me your number before? Seems like you’re holding something back as leverage over me.”

I said “look, I wanted you to think about the effort you put in, and be honest about that, and present it to me. I’m not trying to screw you, I just have no idea myself, and it’s a number between $0 and $17.5k. So let’s talk about that”

He then gets offensive, saying that I haven’t been transparent or truthful since the beginning. That’s hurts (because he was also a friend, not just an acquaintance BIL). I hit back, saying that he was going to trigger a clause on a family member to get more than what he agreed to at the start, and more than he deserves. He hangs up the phone.

Then we text, because we are both heated. He suggests 2/3rds of the work, so $10k. I agree. Later on that week, he comes back with an oopsie, and says that he usually charges GST/HST and because it’s a weird situation, he offers to pay half if I pay half (about $700). I initially reject it, but then come back and agree to it just to close the issue. At this time, we were all heading overseas for our mother and father in laws 50th wedding anniversary holiday that was planned well before all this nonsense. I wanted to close the issue so that when we meet face to face, we don’t punch each others lights out. I pay the money, the agreement gets torn up, and that’s that.

To close the story, the agreement of purchase and sale was completed and voted on in December, well outside the holdover period.

So, all you knowledgeable people in realty on reddit. What do you think? I’m open to feedback on my side.