Today is Friday, so as promised, here is the third “crazy story” from this incredible Fall, 2016 real estate market.
Maybe these stories aren’t all that crazy, given the climate in the market.
But on a relative basis to other markets, or even the Fall, 2015 market, it’s just nuts.
We’ve talked about bully offers for crazy prices, sight-unseen and unconditional offers, and today we’ll talk about multiple offers – for units that really shouldn’t get them…
The participant in the 2016 fall real estate market that has it the worst, hands down, is the buyer agent.
Sure, you could argue the buyer has it worse, since he or she is the one actually paying for the unit.
But buyer agents are the ones pulling their hair out every day. The buyer often doesn’t end up seeing a unit, let alone making an offer on it, but the buyer agent is running around town, working until midnight, trying desperately to sell something in a climate where even condos are selling in mere hours.
I had an east-end listing this week that came out on Tuesday, and got eight showings booked that day.
The next morning, and agent emailed me and said:
Are there any offers on XXX Street?
I have a very discouraged and frustrated buyer who refused to see any unit with an offer registered.
Please let me know, thanks!
First of all, that’s common. There are a lot of really tired buyers out there in the condo market, and it’s only the third week of fall!
But if you are a condo-buyer, and you are tired out, here’s some tough love: suck it up; everything has multiple offers these days, and quitting or pouting isn’t going to get you anywhere.
I work on the buy side half the time, and the sell side half the time. So when I have multiple offers on condos, as the listing agent, I’m as empathetic as a person can be, and I run the process how I would want to see it run when I’m on the buy side.
So I told this agent that there were no offers, and she showed the property, and brought me an offer – with a three-hour irrevocable.
Another offer came in within an hour, of course, and I actually felt bad having to call her and give her the news.
She picked up the phone – so excited, “HI DAVID???”
It’s like telling a kid there’s no Santa Claus.
In the end, her offer beat the second offer – which was a Bosley offer, I might add, but I was actually really happy for her. I could just feel her pain through the phone, and I was happy that her frustrated, discouraged buyer finally got a place.
When there’s two offers on a condo, there can only be one winner.
And I always feel bad for the person who didn’t win.
But what about when there’s more than two offers?
What about when there’s more than ten?
Clients of mine who own an original-condition, 1980’s condo told me during the summer that they wanted to sell come fall when their long-term tenants were out.
I took a look at the unit, which really, truly was 1987, to T.
I told them that if they renovated the unit, they could get high-$300’s for it, maybe even a touch over $400,000.
We priced out a renovation – new floors, new bathroom, new light fixtures, full new kitchen, taking down two walls to open up the living space, and some other odds and ends.
The renovation quote went from $25K, to $30K, and then over $40K really quickly.
My client told me that he wanted to get rid of the unit in its current condition, and he was okay with not spending $40,000 to get maybe $50-$60K more for the unit.
I told him that in its original condition, it would be a tough sell.
My honest estimate of value?
Who knows, maybe more, but maybe less too. Maybe it would sit on the market for a while. Units do sit on the market in Toronto, despite what we’re accustomed to believing, and this original-condition unit is exactly the type that might not get interest.
We brought the unit out at $329,900, with a hold-back on offers.
As I wrote in Monday’s blog – I’m not a fan of hold-backs, but the market necessitates it, and the sellers demand it.
I’m also not a fan of rampant under-pricing, but I put my money where my mouth was here; some agents would list this unit at $289,900 to try and “start a frenzy,” but I priced it just slightly below what I thought fair market value was.
I’ll give you the end of the story before we even begin: the listing was crazy.
It brought out all the crazies, and by that I mean both those willing to pay way too little, and those willing to pay way too much.
Two days into the listing, I got a call from a guy who sounded really strange on the phone, and it turned out he was a real estate agent. He knew nothing about the property, and seemingly nothing about the market – when he asked, “Is your client flexible on the price.”
I thought that was strange, given the market climate – with every condo selling in multiple offers for over the list price, and considering there was an offer date here.
I told him that no, we weren’t flexible, and that we expected at least a couple offers, and probably $340,000 plus.
Amazingly, the next day, he sent me an offer for $300,000.
I told him very respectfully that I thought I had explained the situation, and the expectation, and that we weren’t ready to work with this “bully offer,” given the price, and the timing.
I was shocked when he said, “So sign it back to us.”
I looked him up, expecting him to be from Barrie or North Bay, but he’s actually licensed with a Toronto brokerage. He could be a part-timer, who knows, but I was just shocked at how out to lunch some market participants are these days – buyer agents, listing agents, buyers, and sellers alike.
He ended up sending a revised offer the day after, this time for $320,000.
I also got a phone call from a woman who lives in the building, and told me that my price was “foolish,” and that she would be willing to pay $290,000, as her daughter was looking for a place to live.
I told her that $290,000 wasn’t really in the ballpark, and that we had an offer date anyways.
She told me that I had an obligation to “present all offers to the seller,” and she was right; sort of. I didn’t consider her verbal offer to be an actual offer, and I told her that if she wanted me to bring her offer – which had no basis being made, to be respectfully honest, to the sellers, then she would have to come over to the office to sign it.
“Bring it to me here,” she said. “I’m in Unit XXX.”
Suffice it to say, I didn’t follow up.
I received some more bizarre calls throughout the week, but those are the more notable interactions.
Offer day came, and having 36 showings on the property, I thought we would do well.
What we did, in the end, was absolutely insane.
I’ll be honest here – the price that this condo sold for makes absolutely no sense.
But don’t shoot the messenger; I did my job, and I did so with a level playing field, and without any gimmicks. And before you suggest it – I’ll tell you that if you consider “a hold back on offers” to be a gimmick, then you’re dreaming about a market that is so far gone, you should forget about it. Or like many, dream about when it comes back.
We ended up with twelve offers on the property.
I told every single agent that it would be a “one shot deal,” and to bring their best offer, because there would be no second rounds.
And there weren’t. I simply took the highest offer.
I made sure that every single time a subsequent registered offer was registered, I emailed the agents who already had registered offers, to let them know.
By the time we had the twelve offers, I made sure to email all the agents one last time to let them know.
And because I’m sure you all want to know what twelve offers look like, I’ll do what no other agent will ever do (actually I think Steve Fudge did this once…) and disclose all the offers.
This is in ascending order, and keep in mind that the list price is $329,900:
If you counted those offers, you’ll note that there were only eleven.
That’s because on person who registered their offer never sent it.
But I did get the offer two days later, for some strange reason.
The “Internet;” what a crazy, crazy idea!
Two interesting tidbits about those eleven offers:
1) The $320,000 offer that has the asterisk – I emailed this agent to tell him that we were receiving offers, and he said, “If you want $350,000, I’ll get you $350,000, but no more.” I told him he would have to put that down on paper for it to be considered, and he said, “If you get more than $350,000, forget us. But if you don’t, then we’ll bid $350,000.” I told him it doesn’t work that way.
2) The $350,000 offer was sent five days before offer night, with a five-day irrevocable. Question: what if there were no competing offers? Then this buyer would have paid $21,100 over list price for no reason.
Really, really strange interactions on this one, all around.
The strangest part of all this, of course, is the final selling price of $381,000.
That model unit, renovated, is worth $395,000.
Or “was” worth $395,000, since this sale clearly changes things.
The sale price was crazy.
My clients didn’t believe me when I told them.
One of them said, “I would have been happy with $350,000,” and then the other said, “Really? I would have been happy with $340,000!”
So did every condo in that building just go up 10% overnight?
Or is this an outlier?
Maybe a bit of both, to be quite honest.
And before you ask me what everybody is asking, including the media who is doing so incessantly, no, I will not tell you the demographic of the buyer, or the demographic of the three top offers. It’s a conversation I’m tired of having.
So that’s that, folks!
Three crazy stories from the even crazier fall market.
And that’s just stories from me; imagine if every active real estate agent in the city could collectively tell their tales?
I’ve never seen a market like this in my twelve years in the business, and it’s the condo market that’s really shocking.
Every damn condo is getting multiple offers.
But it wasn’t until I saw a new listing with an “offer night” in Regent Park, that I realized this is a level of heat we’ve never seen in this market.
Seriously. We’re holding back offers on condos in Regent Park now?
What housing shortage?
Have a great weekend, folks!