Monday’s blog was depressing, wasn’t it, folks?
Well good news – we’re about to change all that!
Because I have personally decided, in a naive and fruitless attempt, to change the real estate industry, one day at a time.
I’m about the least religious person you’ll ever meet, but I truly believe in “do unto others, as you would have them do unto you…”
What do you think is the biggest problem with how offers are reviewed in the 2017 Toronto real estate market?
I know, I know – where do we start.
In order of importance?
Start with the most audacious?
In Monday’s blog, I detailed how bully offers are running rampant, and many agents aren’t informing other buyer agents of the existence of a bully offer, and in some cases, not updating MLS or other agents for days, as they continue to show the property.
I also touched on the “old way” of reviewing offers, which I’ll get into in a moment.
But the way I see it, there are seven major problems with how multiple offers are reviewed in 2017:
1) Bully offers
2) Not keeping agents informed as to number of offers
3) Timing of presentations
4) No defined “rules”
5) Multiple rounds of bidding
7) Respect for other buyer agents
I’ve had six listings so far in 2017 that have gone into multiple offers (they all do, these days…), and starting in January, I decided that while the bar in organized real estate continues to plummet, I would seek to raise my own bar to a higher level.
So first and foremost, and this is important, I have noted on all my listings, “Sellers Will Not Consider Pre-Emptive Offers.”
Now before you anoint me, let me be honest and say that this isn’t entirely selfless. I firmly do believe that you always, or at least 90% of the time, do better on offer night. The idea that the buyer, submitting the bully offer, “won’t come back” on offer night is an empty threat. Sure, they might buy something else in the next 5-6 days before offer night, but in this market – it’s not like they’re flooded with options!
But in the spirit of respecting my colleagues, their time, their efforts, and trying to reduce the mania involved in real estate, I really do think that if you write, “Offers Reviewed On February 21st, 2017 At 7:00pm,” you should actually review offers on February 21st, 2017, at 7:00pm.
It’s madness out there, folks.
You just can’t trust the listing when it says there’s an “offer date.”
And many of you reading this, right now, can personally attest to this.
Bully offers are wrecking havoc in the industry, and so I’m putting my foot down.
There will be no bully offers on my listings.
I will honour the set “offer night,” as I respect the time and effort that other buyer agents put into their clients’ search, but more importantly, I feel for the buyers out there that, God forbid, want to wait 24 hours to see the new listing, but find out the next day that it sold.
Now the rest of my points above, #2 through #6, can be explained through the following.
On the morning of my “offer night,” I send out an email to every agent who has booked a showing on the property.
I “BCC” all the agents, and email them the following:
Thank you for showing 175 Homewood Avenue, #2404.
If your client is not interested in this property, simply delete this email, and all the best in the spring market!
For those with clients interested, here are the particulars:
- There are currently zero offers registered.
- Offers will be reviewed tonight at 7:00pm, by email to firstname.lastname@example.org
- Please register your offer by 6:00pm.
- Bosley requires a deposit cheque to be submitted herewith; please provide a scan or photo of the cheque with your offer.
- It will be a “one shot deal,” highest and best offer will be accepted, no second rounds, do not hold anything back.
- The Status Certificate is available – please email for a copy.
- Seller’s desired closing date is March 31st
- Front desk will have an updated number of offers throughout the day, or email email@example.com
Any questions, please let me know!
Is that really so hard?
I talk a lot about “the bar being lowered,” but honestly, folks – you guys reading this blog are savvy, but you’re also logical, practical, and rational.
Why would any agent not send out an email like this?
In reality, this happens for maybe one out of one-hundred “offer nights.”
That email above clearly explains everything that the buyer agents need to know, and answers all the questions that buyer agents ask, all day, throughout the whole day.
When are offers?
Where are offers?
What closing date does your client want?
How will you be reviewing offers? Is there a second round?
Can I check in with your office during the day to see how many offers there are?
And so on.
It’s so simple, and yet here I am, patting myself on the back for doing it.
It’s also worth noting that I specifically explain: “It will be a “one shot deal,” highest and best offer will be accepted, no second rounds, do not hold anything back.”
Most agents won’t tell you this. They’ll hmmm and hawww about how they’re planning to handle offers.
The reason I do this is twofold:
1) I think it’s fair, especially with 15 offers.
2) I think when you make it explicitly clear that there’s “no second chance,” you always get one person who throws the boat.
I don’t want prospective sellers reading this blog to think I won’t work on their behalf if I say, “I won’t send people back to improve,” but trust me when I say that this method nets you the same, sometimes more.
And above all, folks, I put my money where my mouth is.
Last week, I had eight offers on a listing, and we took the highest offer of $501,000, when there was a $500,000 offer behind it.
Sure, a lot of agents would have sent them both back.
But I couldn’t.
Because I said, in advance, explicitly, that I wouldn’t.
And reputation is so important in this business, although most of the new agents, and the fly-by-night agents, and the 905 agents, don’t realize this.
If you screw somebody in this business, they’ll remember it.
And what goes around, comes around. You’ll see these agents again, and again, and vengeance in this business does not come in simply “getting even,” but rather it lasts forever.
Of course, the agent who had that $500,000 offer called me the next day to give me an earful, but I told her that not only was her offer conditional, and the higher offer wasn’t, but that she should have read my email – specifically the part where I said, “no second rounds, do not hold anything back.”
Now, what I do throughout the day with respect to registered offers, is something I think every agent should do: I keep people informed.
Every time an offer is registered, I email in BCC all the agents with registered offers, very simply: 175 Homewood Avenue, #2404 – 6 Registered Offers.
And when the next one comes in, I email the seven agents: 175 Homewood Avenue, #2404 – 7 Registered Offers.
And so on, and so on.
Why put the onus on them to call into the office every hour for an update?
Why not keep them updated, which in turn helps to show them how much interest is in the property, and thus how much their buyers should offer?
Now, as for how I review, and accept offers in 2017, I’ve made things as simple, and respectful as possible
I take offers by email.
Sure, you might be one of the very few people who think this is “impersonal,” but it’s also practical, expedient, and efficient.
Imagine when a listing agent has 20 offers on a listing, and insists on an in-person presentation.
Agents sit outside in their cards for 4-5 hours, waiting. So do their clients.
Do you know how many offer nights turn into offer mornings?
It’s absolutely needless.
And I find much of the time, it’s because the listing agent is a sadist who enjoys the process, and is looking for a massive ego-boost. He or she takes pleasure in submissive buyer agents trolling through, with a sad rain-cloud over their heads, and presenting their offers in succession.
I see no point in that.
I don’t need the ego boost. And personally, I’d rather be home earlier, or out working on something else.
Last Monday, I took offers on two listings on the same night, both via email, at 7:00pm. I had 8 offers on one listing, and 5 offers on the other.
By 7:45pm, both properties were sold firm, paperwork signed, cheques in hand.
I worked in my office for another two hours, and then went home.
At 11:00pm, I was sitting in a rocking chair, trying desperately to get my daughter to sleep, and my colleague called.
“I’m sitting in my goddam car here, out on the street in front of the house,” he told me. “There were 18 offers, and they’re sending back the top TEN to improve their price. TEN! It’s insane! There’s probably a $200,000 gap between #1 and #10. What’s the point?”
Hey, that’s the market. That’s how it works.
I set two new price records in two different buildings hours earlier, reviewing offers in an efficient, streamlined, and respectful manner.
And my colleague, who went on to increase his offer by $8,000, only to lose by $75,000, continued to sit in his car until past midnight.
There’s a word you don’t hear that often.
It should go hand-in-hand with professionalism.
The last part to my offer process is perhaps the most simple. After my clients have signed the accepted offer, I take the time to call or email every agent who had an offer, to thank them for their efforts, and give them an idea on where they stand.
I had 15 offers on a listing on Tuesday night this week.
After we had reviewed all 15, which was about 7:30pm, I called the person with the second-highest offer, and I personally broke that bad news to her.
Do you know how a lot of agents handle this?
1) Text message, “u didn’t get it”
2) Have their assistant call you
3) Do nothing, wait for them to call/email you at midnight, then say, “Oh, yeah, sorry, we took another offer.”
I chatted with the agent who had the second-highest offer for 5-6 minutes, just about the market, and how offers are shaking out. We commiserated a little, she thanked me for how I handled the process, I told her I wish she had got it because I really liked her, and then we went on about our nights.
Then I called the agent with the third-highest offer, who I could have swore was going to be “the big winner” when I saw his offer, and spent some time talking to him as well. I couldn’t believe that not one, but two offers beat his. It was just shocking.
I called the agent with the fourth highest offer, and then I got practical.
I emailed agents 5 through 15 with the following:
Thank you very much for your offer this evening, but we will be moving forward with a higher offer.
For your clients’ information – there were 15 offers on the property, and theirs was the 6th highest.
The sale price will be published on MLS tomorrow.
Thank you again for the interest, and good luck with the buyer!
Do you know how many agents do that?
And why not?
Why don’t we let people know where their offer stood?
What’s with the cloak-and-dagger?
I think it’s helpful. Tell the agent – “Bob, there were 9 offers, and yours was the 8th highest.” It’s not condescending, it’s helpful. Maybe Bob has no clue what’s going on in the market, and this might help him move forward both with his client, and with his own business.
If a property sells for $650,000, and you offered $600,000, how do you have ANY idea whether you were 2nd place, or whether there were six offers clustered between yours and the winner, and you were actually 8th place?
I’ve never understood the secrecy.
I told the agent with the $625,000 offer the other night, “Yeah behind the $663,000 winner, there were offers of $655,000 and $651,000.”
At least he can take that back to his clients.
What the HELL is wrong with that?
So there you have it, folks.
That’s how I’m handling offers in 2017.
No Bully offers.
Email instructions on the morning of offers.
Keep agents informed on registered offers throughout the day.
Offers by email.
One-shot deal, highest offer takes it.
Communicate with your colleagues.
Respect their time and efforts.
I’m not an idealist, but there’s something about doing business in this way that makes me think if only a few people like, and respect, what I’m doing, then perhaps they will follow suit. And a few more after that, and then several others from there, and who knows – maybe we’ll get somewhere…