Have you ever read one of my blogs where I take something great, or special, or touching, or optimistic, or just a nice break from the cutthroat world in which we live, and then I turn it on its head?
This is going to be one of those blogs.
Everybody is talking about last week’s Toronto Star article about the family who “won” in multiple offers despite the fact that there was, supposedly, an offer of $150,000 more on the table.
Let me be “that guy” and tell you why this is one-in-a-million shot, and how things usually go down on offer night…
Did you read the article?
As far as today’s blog goes, I only need refer to the article as, “the article.”
There’s only going to be ONE article about a family buying a house in the 2017 G.T.A. market for significantly less than the highest offer.
And as far as water-cooler conversations have gone in the past week, about real estate, this is “the” article.
If you have no idea what I’m talking about, read this:
And if you’re too lazy to read, well, I’m sure the headline is sufficient.
The story is great, I’m not going to lie.
Read it, and you may feel slightly better about mankind, if only for a moment.
But since I live in the real world, and not a fantasy one, I figured I’m well-qualified to explain to you why this won’t happen again.
Lightning doesn’t strike twice in the same place.
Unless you happen to be this guy:
And that’s a fake video. So even when lightning does strike twice in the same place, there’s bound to be a red flag.
So with the Toronto Star story from last week, can’t we just assume this comes with an asterisk?
I have no doubt that the story is true – that the sellers really did accept an offer that was $150,000 lower than the highest.
But the way the story is written, and the way it’s being shared on social media and even in the mainstream media, is giving people false hope.
I mean, just look at the headline, which adds, “……THE REASON WILL LEAVE YOU HEARTENED.”
It reminds me of those click-bait ads that litter the sidebar of websites we frequent, like this:
Well, I guess there’s a lot of competition for your interest and attention among the media these days, so perhaps I can’t blame The Star. And I know from my days writing for “The Grid” that the columnists don’t write the headlines.
I know many of you will agree with my opinion in today’s blog, but many you will also think I’m somehow taking away from the greater good by dumping on the contents of that article.
But come on – as soon as you saw the line, “After six weeks of missionary work in Uganda last year,” did you really need to continue reading?
I wish this was the world we lived in, and I wish this was the market we operated in.
But it’s not. Not even close.
There’s bound to be some NIMBY’ism here.
You can say, “David, I think that’s a fantastic story, and there’s no reason for you to dump on it,” but if you’re not willing to turn around tomorrow and sell your house for $150,000 less than the highest offer, well, then maybe you don’t have a leg to stand on.
Because in reality, I have never, not once in 13 years, seen a seller-client take less money on offer night.
Less money, with a qualifier?
Sure. It’s been known to happen, and let me me explain why.
Let’s say you have an offer on your condo of $420,000, conditional for 5-business-days on financing, and you have an unconditional offer of $410,000.
You could take the $410,000 offer, and you might not be wrong to do so.
Let’s say you have an offer on your house of $1,110,000, with a $150,000 certified bank draft on the table, with a trustworthy, well-known agent sitting in front of you, and you have an emailed-in offer of $1,120,000, from an agent who didn’t present in person, said he’ll “try to get a cheque tomorrow,” and who’s website URL says “Page Not Found.”
You could take the $1,110,000 offer, and you would definitely not be wrong to do so.
So there are situations where you win without the highest offer, but those have qualifiers, or asterisks.
And in this market, most of the time there is no “picking” from the listing agent – there is only telling.
For example, in the first situation, where there is a $420,000 conditional offer, and a $410,000 unconditional offer, I don’t believe the listing agent would “pick” the $410,000, unconditional offer. Nine times out of ten, the listing agent will go to the agent with the $410,000 unconditional offer and say, “Great news, we’d like to work with your offer! You’re the second-highest offer, but if you’ll come up to $420,000, the property is yours.”
And nine out of ten times, the buyer will do exactly that – improve their offer, thus matching, or beating, the highest offer.
I’ve been writing these blogs long enough to know when most people are going to find fault, disagree, or in some cases – argue for how they want things to be done.
I feel like years ago, many readers would interject the worst word in the English language, “should,” and say something like, “I think the listing agent should take the offer of $410,000, and not gouge the buyer for more money!”
But when I think back to the most misunderstood, and misread blog I’ve ever written – “How To Handle Multiple Offers In 2017 (Pt2),” I was shocked to see all the readers that said, “You’re a nice guy, but if you wouldn’t rape and kill for me, then I wouldn’t hire you.”
Again, the NIMBY’ism is apparent.
People constantly say things like, “The price-gouging is disgusting! Realtors and their bidding wars are criminal!”
But when they have their house for sale, it’s somehow different.
Point being, folks, the sellers portrayed in the Toronto Star story are truly one in a million.
And since that story broke, I’ve had clients asking me about sending photos, writing letters, and making personal appearances, and now I’m some sort of grouch when I tell them, “It’s a waste of time.”
This past week, a client emailed and asked if she could write a letter to the sellers, not only because of the Toronto Star article, but because a few of her colleagues at work had done this – and one even got the house for less money than another bidder!
Now I had to be the guy who told a child there is no Santa Claus, and inform her that (gulp!) people lie!
It’s true. It’s one of the first things I was taught in real estate, and my God has it turned out to be correct.
People lie about anything and everything in real estate, when it involves a dollar amount.
How much did it cost to renovate your kitchen?
Well if you’re a pretentious snob, who competes with her friends, you tell her it cost MORE than it actually did, to somehow try to impress people.
If you’re like the rest of the world, and you value a dollar, you tell people it cost LESS than it did. You also tell them it was easy, no delays, and you loved your contractor.
How much did you pay for your condo?
How much did you sell your house for?
How much did your agent, lawyer, and mover charge you?
How many offers did you compete against when you “won” on offer night?
How much did the listing agent love the cookies you baked?
Excuse the cynicism, but I speak the truth for a living, and always have here on TRB.
And over the years, I’ve seen the lies, and watched people – often my own clients, believe them.
So when my client’s colleague says that she paid less than another bidder on offer night, I’m sorry – but I’ve heard that one before a hundred times. Because in the end, there’s no way to prove she didn’t, and it’s just too easy for her to make the claim.
I gave my clients some tough love, and I felt bad for it. They’re such a cute couple, and they’re always brimming with optimism. But I don’t allow my clients to hope and wish – it’s one thing I pride myself on. I tell the truth, even when it’s inconvenient, or when it hurts.
And to take things one step further, I personally believe that in this market, the “letter from the buyers” can work against you. It’s too easy for the listing agent to identify the buyer with the letter as the sucker, and go back to him or her for more money – even if they’re already the highest.
We bought that house on Tuesday night, FYI. Without a letter.
The truth is, most sellers don’t care about the buyers. Some do – and if you’re one of them, I encourage you to share your story below. But most, from my experience, do not.
Many sellers in this market don’t even want to meet the buyer agent!
There are a lot of email offer presentations these days, as well as some cases where the listing agent presents the offers him or herself, to the sellers, after receiving them at the front door of the house from the buyer agents.
So look, the Toronto Star story was great, and I don’t want to take anything away from that (although you’ll tell me those words are hollow).
But my job in this market is to give you the straight goods. It always has been.
And with the market appreciating as fast as it is, and with the speed at which properties sell, and the complexity of the offer process (not to mention the decision-making process for a buyer), I feel I would be doing buyers a disservice to let them think that they have a chance at getting a property, in this market, for “significantly less” than a higher, competing offer, because they’re nice people, or wrote a letter, or included a photo.
My father told me there was no Santa Claus, in July of 1986, in the parking lot of Armour Heights Public School, as I was about to board a bus to go to Camp Kawabi for a month. I was younger than every other kid by two years (something my Dad thought would make me stronger, I suppose), but he didn’t want the other kids to make fun of me for thinking there was a Santa Claus.
Shoot the messenger if you want to.
But I think I just saved a lot of buyers, a lot of time, and many lost offers, by telling something they should already know: this market is all about money.