What Can You Get Away With In This Market?

GettingAwayWithIt

A lot, apparently.

And with every passing day, sellers and listing agents are pushing the boundaries more and more, and getting both more creative, and more brave.

It’s a seller’s market, and it’s red hot, so buyers have to make some concessions.  But let me give you three examples of where I think enough is enough…

GettingAwayWithIt

We don’t live in a perfect world.

Far from it, in fact.

We have big problems, and little problems.

And when we take little problems, and turn them into big problems, like the President of the United States Tweeting about his unfair portrayal on a satirical late-night show, instead of, you know – running the country, it often feels like things are getting worse and worse.

In the world of Toronto real estate, the vibe thus far in 2017 has been extremely negative.

The outlook is “positive” by definition, in that prices will continue to rise – that’s always been the measure of a “good” market.

But buyers have never been more discouraged, and it’s not just because of prices.

Prices are one of those “big problems” I alluded to above.

Nothing impacts a buyer’s search greater than price, and nowhere can a buyer be hurt more than by that holy dollar figure.

We often have the “little problems” in real estate, like that unpaid hydro bill the seller left behind – only $120, which is annoying, but small relative to the purchase of an $800,000 asset.

Lately, I’ve been seeing a lot of these “little problems” popping up where they shouldn’t, or in many cases, being intentionally or deliberately saddled upon the buyer, by the seller, or the listing agent.

Have you ever closed on a house and found garbage left behind by the previous owner?

That’s one of those “little problems” and while it’s really annoying, and inconsiderate, it’s not going to kill you.

Many times, the listing agent will apologize and try to make things right.

Many times, the listing agent doesn’t return your call or email.

I always say that it all washes out, in the end.  What goes around comes around.  Bad things happen to bad sellers, and bad agents, on a long enough time horizon, and agents and buyers/sellers that treat people fairly, and with dignity, ultimately persevere.

A house came onto the market last week that was clearly an estate sale, as it had that “feeling” that somebody was living here up until a few weeks or months ago.  It’s always sad to see; it’s like time just stopped, and the evidence remains.

This house was in very poor shape, and it was full of items from the departed owner.  Most of the appliances were decades old, and probably didn’t work, and while this was far from a hoarder house, it wasn’t exactly empty.

The backyard, and the area where there looked to be a back parking pad, was full of debris – old bricks, wooden planks, broken fence pieces, etc.

This is the kind of property where, as a buyer’s agent, you have to ensure you include a clause specifying that the seller has to remove all these items before closing.  The old “broom swept condition” clause is not sufficient anymore – you have to detail that every single piece of furniture, junk, debris, and any and all items on the property that are not included in the “Chattels & Fixtures” portion of the Agreement are to be removed.

So here I am, on Sunday afternoon, minding my own business, when I get an email from the listing agent of this property, as follows:

Furniture

Well how ’bout that.

The house is full of junk and garbage, and the listing agent is emailing all the buyer agents to let them know that the seller “prefers” offers were the furniture remains.

And let’s be clear – this is not “furniture;” this is garbage.  None of these items would ever be used, by anybody, except the person who lived in that house.  The Salvation Army or Habitat For Humanity would never take these pieces, and I believe that the “furniture” the listing agent is speaking of, refers to EVERYTHING on the property, including all the debris.

So is this the kind of market we’re in?

Is this what you can get away with in this market?

The seller and listing agent are dealing from a position of strength; they know that they’ll have multiple offers on this property, probably 5-6 as a floor.  So they know that a buyer, in competition, will do just about anything to get the property, and thus they’re saying, “Take this house, and all the sh!t that comes with it.”

And what is a buyer to do?

Say “no,” and risk the seller and/or the agent going to the next highest bidder, and seeing if he or she will play ball?

A contrarian viewpoint here is that it’s a seller’s market, it’s a free market, and we’re capitalists – so go for the jugular if you can.

But I think some basic human decency goes a long way.

And it’s no coincidence that this email was sent at 12:48pm, when offers were due at 4pm.

I have another incredible story from this past week, and any agent reading this will be quite familiar with the uproar this caused.

Then again, so too will many of you would-be buyers, who were either told about this, or saw it yourselves.

“Bully offers” are a rather contentious topic right now, and for good reason.

When a property is listed on Monday, January 23rd, and the listing reads, “offers will be reviewed on Tuesday, January 31st,” we would all like to think that offers will, in fact, be reviewed on that day.  But we all know there’s a 50/50 chance a bully offer will come in on Monday the 23rd or Tuesday the 24th, with a 3-hour deadline, and the listing agent and seller will decide to move the “offer date” up.

No buyer likes to get that call or email from their agent saying, “Hey, I know we thought we had another six days to mull this one over, but they’re taking offers on 123 Smith Street tonight, so you guys have to make a quick decision.”

But that call or email is happening every single day in this city.

Or, at least, that call or email should happen whenever there is a bully offer.

You see, the listing agent, when reviewing or deciding to work with a bully offer, or “pre-emptive offer” for those of you that like to call garbage-men “sanitation specialists,” has to inform every agent who has, as the rule goes, “expressed an interest in the property.”

So if you’re an agent who has shown the property, or booked a showing on the property, the agent has to call you to tell you about the existence of the bully offer, and the seller’s intention to move up the offer date.

Beyond that, we can define “expressed an interest in the property” however we like.

If a buyer agent hasn’t booked a showing, but has emailed the listing agent to say, “Please keep me in the loop regarding any bully offers,” then I think that qualifies.

In any event, I was browsing new listings last Wednesday, and just when I thought I had seen it all, I saw this:

Fern2

Well, then!

There’s a new one!

If that’s not a giant middle finger waving in your face, then I don’t know what it is.

The gall of this agent, honestly.

I have no idea what he or she was thinking.

And within 24 hours, this was removed from the listing.  Apparently, there were more than a few complaints to the broker of record at this agent’s company, and I would assume there were RECO complaints, but doing something about this six months from now probably wouldn’t have helped…

So I ask again: is this something you can get away with in this market?

In this case, the answer was “no,” but it didn’t stop somebody from trying.  And if the market weren’t as hot as it was, and as fast-paced and hectic as it is, nobody would have tried this.

For my last story, I have no accompanying artwork, so you’ll just have to read like people used to do for sport…

A colleague of mine made an offer on a condo this weekend – a soft loft, that two years ago, would have garnered a modest amount of interest, but in January of 2017, basically stopped traffic in the west end.

He put together an offer knowing that there were six competing offers, as explained to him by the listing agent, and his price, terms, and conditions reflected that information – that there were six competing offers.

After a few hours, the listing agent called him and said, “Sorry, but we’re going with one of the other offers.”

My colleague asked her, “Are you working with one, or two – what are you doing?  How are you handling it?”  He was trying to figure out where he stood, and if he had a shot at sneaking back in.

The agent said, “Well with nineteen offers, you’re not really close – you’re like 6th or 7th down the line, so we’re going to work with the top two.”

My colleague just about lost his mind.

“Nineteen offers,” you say?  Asked my colleague, calmly, and matter-of-factly.  “My offer of $650,000 was predicated on the fact that there were six competing offers,” he added.

The listing agent didn’t seem to have much of a response.

My colleague simply asked, “What the hell?”

“These offers,” said the listing agent, “They just kept coming!  People submitted offers that I hadn’t even talked to; that I had no idea were interested in the property.”

In the listing agent’s mind, that somehow alleviated him of the responsibility to keep every agent informed, and up to date.

But just because a job is hard, doesn’t mean you don’t have to do it.

When I have a listing with multiple offers, each time a subsequent offer is registered, I email every single agent with an offer, and tell them.

It’s very easy.

I go to my “Sent Items,” find the last email that said there were four registered offers, with the four agents and their emails on there, then change “four” to “five,” add the new agent, and VOILA!

Ten seconds.

It takes ten seconds.

And the last time I had a property with multiple offers, this is exactly what I did.

And more to the point, when one of the seven agents with registered offers pulled out, and rescinded his offer, I went and told the other six agents, and asked them if this would change where they stood.

Nobody changed their offers, of course.

But what if you had two registered offers, and the first agent presented an offer above the asking price, and then the second agent withdrew?  Shouldn’t that agent, who submitted an offer over-asking, based on being in competition, be able to revise the offer and come in at a lower price?

“Yes” is the obvious answer.

So why should it be any different when my colleague presents an offer based on the knowledge of six competing offers, when in the end, there were eighteen?

Folks, I know it’s easy for the real estate haters to come out now be armed with the ammunition they’ve been waiting for.

My intent is not to arm them.

But my intent, as it always has been, is to be open, honest, and transparent about the goings on in Toronto real estate.

I’m not here to tow the industry line, nor am I going to pretend that everything in day-to-day real estate is perfect.

But I am trying to inform you all of what’s happening, and what you need to be on the lookout for.

Times are really tough out there, and the market is complex.

A lot of people are trying to see what they can get away with, and you need to look out for that.

If something doesn’t seem right – like a “for sale by owner” demanding that the deposit cheque be made out to him or her personally, rather than be held in a real estate brokerage or lawyer’s trust account, then walk away.

Keep reading, keep learning.

And good luck!

19 Comments

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  1. Anne MacLellan says:

    As a seller, we dealt with a less than professional buyer’s agent last year. We accepted a “bully” offer on our house and the seller had access 3 times to view the property prior to closing day. On closing day, they refused to close! We had an old chest freezer in the furnace room that they wanted removed immediately. Up to this point, they had said NOTHING …we would have gladly had it removed had they asked – we are both over 60 and could not have move it ourselves but would have hired someone to move it. We ended up having our lawyer negotiate with their lawyer and knocked a couple of hundred dollars off the price to cover the cost of removal and the closing proceeded. We were extremely annoyed be held ransom, we had even paid for a maid service to clean the house for the buyers. We complained to our agents about the lack of communication prior to the closing and their thoughtless tactics. The buyer’s agent was a young, inexperienced agent. We don’t know whether she failed to communicate to us that they wanted the freezer removed or whether she did not know they would pull this stunt. We did not appreciate be treated like the ‘enemy’. (In contrast, the seller of our new home was reasonable.)

  2. steve says:

    Boy oh boy … things are getting sloppy out there.

  3. Appraiser says:

    Sorry David, have to say it: Would you like some cheese with that whine…?

    There are bad actors in every profession, the prevalence in real estate is no different than most others.

  4. James mather says:

    The phrase be careful what you wish for comes to mind. A hot market is great for a while until it gets out of hand and then burns itself out.

  5. Negotiator says:

    The problems in the real estate industry are not unique – this is what happens when you have a regulatory body that is not fulfilling its mandate. RECO is either under-resourced, inept, or both, but agents should not be operating in an environment where they feel so unconstrained by their rules of professional conduct that they are advertising that they won’t follow the rules.

    If this sort of behavior was being effectively policed, with strong enough punishments to deter this from happening, I think we’d see a lot less of it. That agent who posted the listing above should be put on administrative suspension for a year.

    1. Joel says:

      I agree with an increase in fines/suspensions. In the financial services industry we see people and companies losing their licenses for not following the rules on $10,000 – $100,000 trades. Here we are dealing with hundreds of thousands of dollars to millions of dollars and there is little oversight and minimal if any punishment for those who don’t follow the rules.

      1. Kyle says:

        Agreed, OREA is a sad pathetic puppet. Their idea of consumer protection is to turn a blind eye to any wrong doing until the evidence is insurmountable, then they slap the violator on the wrist and hope everything blows over, so they can return to their puppet status quo.

        1. Appraiser says:

          OREA is not responsible for consumer protection, that would be RECO, TREB and the provincial and federal consumer protection laws, of which there are many. The real estate profession in Ontario is highly regulated and subject to provincial legislation (REBBA).

          Making more and tougher rules never gets rid of the bad guys; they don’t pay attention to the rules.

          1. Kyle says:

            Thanks for the correction. It is RECO who deserves that rant not OREA. I’m not asking for more rules, what’s lacking is the enforcement of existing rules with some meaningful punishments. I agree the bad guys don’t pay attention to the rules, the problem however is that TECO doesn’t pay attention to the bad guys.

      2. Negotiator says:

        For any realtors out there – do your rules require you to report misconduct of your colleagues?

  6. Ralph Cramdown says:

    In house #1, was anyone really getting away with anything? They told bidders how they HOPED bids would be structured, and what the preferred condition would be on closing. Presumably they knew that “as is” might not command the same number of bids as broom swept, nor as “staged to perfection”.. And that fewer bids + 1-800-got-junk cost will impact price, and I guess they were OK with that.

    At the risk of just speculating and maybe being a little bit rude, maybe you disliked it because it made the property harder to price for the buyer bidders? Comparables are easier for staged, and for vacant/clean/painted because there’s more of them. But your worry (I’m guessing) is that some moron buyer that you are in competition with is going to bid the same price as it would have gotten vacant/clean/staged, eating the bin/disposal costs, or that your buyer will have to. That’s the market, right?

    1. jeff316 says:

      Yeah, agreed, I didn’t find it all that bad.

      I think what is offensive is that, regardless of whether the offer includes the “furniture”, we all know that the seller is most likely to leave it all there anyway for the buyer to clean up.

  7. Kyle says:

    “And let’s be clear – this is not “furniture;” this is garbage. None of these items would ever be used, by anybody, except the person who lived in that house.”

    LOL David, come on the furniture isn’t that bad! In fact, i think people actually pay good money for those 36″ vintage double oven ranges. Anyhow whoever buys this place simply needs to post this stuff as “free to a good home” on the Roncesvalles Facebook site and it’ll disappear in the blink of an eye.

    1. Julia says:

      Funny enough, a couple of years ago, we (finally!) got rid of an old fold out sofa we kept in the spare bedroom by taking it to the curb and expecting the city to pick it up. To our complete surprise, it was gone within hours! Yup – somebody out there thought that our old, 80s Santa Fe fabric covered sofa that’s been to both Western and Queens, was a score….

      1. Kyle says:

        The recycling economy is awesome – everyone wins.

  8. Kyle says:

    Situation 1 may seem like an additional hurdle, but for serious rational buyers it should actually be viewed as an opportunity. The more the seller turns off other buyers, the better one’s odds.

    Situation 2 and 3 are clear violations of the rules and those Agents should be disciplined and publicly called out.

  9. Paully says:

    Wow! What’s next? An extra charge on the listing for lube for prospective buyers/bidders? Yikes!

  10. Ed says:

    It is a sad state of affairs but your post reaffirms what many people think of real estate agents. Greedy, lazy, let me get my commission and move on. Obviously not all are like this but I would have to say that too many are.

    1. Chris says:

      Ed, you hit the nail on the head. Not all real estate agents are greedy and lazy, but far too many are. As home prices have surged upwards, and employment in other areas has become more difficult to attain, it’s unbelievable how many opportunistic people have flooded into real estate as a means to make a buck.

      http://vancitycondoguide.com/wp-content/uploads/2017/01/Screen-Shot-2017-01-17-at-11.16.02-AM.png

      CBC’s Marketplace clearly demonstrated how many are willing to bend the rules to their own benefit.

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