I’m sure we’ve talked about this at some point in the last ten years of TRB, but as the market changes, so too do the games people play. And this fall, when it comes to listings and offers, nobody has any idea what to expect.
We’ve seen a lot of “offer dates” on listings, with a specific day and time, usually a week after the listing hits the market, on which to review offers.
But we’ve also seen a lot of “soft offer dates” as well.
What the heck is a soft offer date? I think many of you already know, but let me explain…
I’ve never actually seen that movie.
It’s one of the most famous movies to come out of the 1980’s, and as an amateur film buff, I’m aware that it was the first big-budget, mass-produced “buddy cop” movie that gave birth to the whole Lethal Weapon series, not to mention Eddie Murphy’s subsequent Beverly Hills Cop franchise, and yet I have still never seen it.
Well, I know what I’m doing this Saturday night after my wife falls asleep at 9:30pm…
“48 Hours” is a term that’s being thrown around a lot in real estate these days, and the context in which the term is used has changed.
“It’s forty-eight hours,” an agent will say, in reference to a listing, which is a short-form of, “The listing came out today and while there’s no set ‘offer date,’ they’re asking for any offers to have a 48-hour irrevocability.”
That’s a mouthful. And who has time for that, in a busy market?
The term is also being used as a verb, if you can believe it.
“We’re bringing Pape out on Thursday,” one will say. “We’ll probably just forty-eight hours it.”
Grammatically blasphemous, I know. But those in the know, know.
What the hell am I talking about?
Why am I being confusing?
Because I’m trying to introduce you to what it’s like in the fall, 2017 real estate market, where the grey areas have a grey area.
Remember back in the spring, when every house that hit the market had an offer date?
List on Tuesday, “hold back” offers until next Monday, review them at 7pm, and likely end up with some insane 25%-over-list premium?
Those days, for the most part, are behind us.
Yes, we’re still seeing houses sell for 25% over list, and yes, we’re still seeing a majority of freehold homes listed with “offer dates.”
But we’re also seeing houses listed without offer dates. And that is where things get interesting.
Consider that without a set offer date – without that text, “Offers Graciously Reviewed Wednesday, October 18th At 7:00pm By Email,” there are still a lot of ways the buyers and their agents could interpret the listing.
1) Offers anytime. The property is over-priced, strategically, thus the sellers are just hoping for some good karma.
2) Offers anytime. The property is priced fairly, and the sellers are hoping that the lack of an “offer date” will spur a buyer, or two buyers, into action.
3) Offers anytime, with a 48-hour irrevocable. The property is priced fairly, but the sellers wondered if they should have done a “hold back,” so they want a couple of days to hang on to offers.
4) Offers anytime, with a 48-hour irrevocable. The property is under-priced, and this is just a shorter version of the “hold back on offers.”
I’m sure there are some hybrid versions of those four examples, but for the most part, you get the picture.
What this means, ironically, is two things – both of which represent me taking a shot at the average Realtor:
1) Listing agents have to actually figure out what a property is worth, unlike the spring, when you’d just laughably under-list, and let the market price the house for you on offer-night.
2) Buyer agents have to actually figure out what a property is worth, to advise their buyer how to act, unlike the spring, when you’d just wait until offer night and find out how many offers you were up against.
If I could put a more positive spin on it, I would say this: there’s now an opportunity for buyers, to find an inefficiency in the market.
Now, before I delve into some examples, let me explain the legal part of this to you.
What does, for example, REBBA 2002 have to say about the 48-hour irrevocable?
Just like with offer nights, bully offers, and the rest of it.
Once again, we find ourselves in one giant grey area, trying to navigate our way through it.
Have a look at this:
That’s your typical “48 Hours” clause in the MLS listing.
And there’s always some nonsense about “Seller is Travelling” because you don’t want to say, “Offers Anytime With 48 Hours Irrevocable So We Can Shop Your Offer To Other Agents And Hold You By The Balls.”
So if you’re a buyer, or a buyer agent, and you see that “48 Hours” clause in the listing, what is your responsibility regarding what you put in your offer?
The answer, as you may have guessed, is a big, fat, NOTHING!
There is nothing that forces you to provide 48 hours irrevocability in your offer.
Just as when there are “Offers Reviewed Wednesday, October 25th,” and you’re free to submit a bully offer on Tuesday, October 16th when the listing hits the market, there’s nothing to stop you from making an offer on a listing that requests/demands/specifies there need be a 48 hour irrevocability, with only 4-hours to review the offer.
Having said that, there is a time, in the first case, when there is an offer date specified, and you can NOT make a bully offer.
That case is only when, and this is rare, the seller has specifically signed the “Seller Offer Direction Form” that says they “do not want to be informed of pre-emptive offers.”
That’s a form, believe it or not.
Because of just how crazy the market had become over the past year, we needed written direction from our sellers as to how offers would be handled.
And there is an option, that the seller can choose, to not be informed of pre-emptive offers.
It’s the only time when a listing agent can legally receive an offer, and refuse to present it.
At all other times, an offer must be presented to the seller “at the earliest opportunity.”
So what does this mean in our “48 hour irrevocable” example?
If a listing agent is in receipt of an offer that has only 6-hours irrevocable, and the listing specifically states that 48-hours are needed/wanted/demanded, can the listing agent simply say, “You didn’t provide me with 48 hours as per my listing, so I’m not going to present the offer”?
No he can’t.
So what does that mean with respect to this whole “48 hour irrevocable” idea as a strategy, like holding back offers?
It means that, as a listing agent, you’d better have a Plan-B, you’d better forewarn your seller, and you’d better act quickly when you get an offer.
And is means that, as a buyer agent, you’d better be ready to fight.
Last weekend, I was showing properties to a couple of clients in the west end.
They had decided to pass on a property that I really liked, listed at $849,900, that truly “checked all the boxes,” and was completely renovated, and with excellent workmanship.
The day after the “offer date,” the property was increased in price to $950,000, and I felt as though we had dodged a bullet.
We went out on Saturday to see five houses, four of which were dogs.
One of them, however, was great.
Great was an understatement, actually. It was too good to be true.
My clients didn’t have the required 20% down payment to buy for $1,000,000, so we were stuck looking at properties that would sell for $999,999 and under.
This house was priced at $964,800, and it was just exceptional.
The interesting part was – it hit MLS on Friday around 4pm. Who brings out a listing at 4pm on a Friday? I know many of you will argue “it doesn’t matter” as I have blogged on this subject before, but trust me when I say that once again, I respectfully disagree.
The property was also listed without any photos.
So by the time we saw the property at noon on Saturday, we were the only showing that had been booked.
Take my word for it – this house was worth over $1M, easily. How much over? $20K, $30K, $50K – somewhere in that range, in my professional opinion.
It had the same 3-beds and 2-baths as the renovated $849K house that I liked for them, but that was a semi-detached; this was fully-detached, with a private driveway, on a 25 x 150 foot lot. The backyard was insane – truly “decked out” with a covered terrace and built-in BBQ, pool, about $30K worth of custom stamped concrete, and a small pool-house that served as a gym or games room.
Suffice it to say, we jumped on it.
We reviewed the home inspection, went to TD Bank to get a certified deposit cheque, and had our offer submitted by 4pm.
The listing, of course, specified a 24-48 hour irrevocable was needed.
So having submitted our offer at 4pm on a Saturday, what irrevocable did we give them?
That’s 17 less than they had asked for, but six more than I’d have wanted to give them, in a perfect world.
There was absolutely no way I was going to let them keep this offer overnight, and risk other buyers, or people venturing through the Sat/Sun open house, making competing offers.
I told the listing agent, “My client is a first-time buyer, and a nervous wreck, and she refuses to sleep on this. You have to present this offer tonight.”
And he did.
And the seller signed, and we had a deal.
A “deal” as in an agreement, but a “deal” as in a bargain as well.
If I’m making it sound like I’m patting myself on the back here, I’m not.
This is common sense, in my opinion, and there’s no reason to give an agent 48 hours on an offer in this market, just because they want it.
If your offer expires, then re-submit a revised offer.
But let it get to that point first, before you give somebody two days to shop your offer around town.
These “soft offer dates” are present on houses and condos, low-end and high-end.
In cases where the listing agent doesn’t want to scare buyers away, or doesn’t think the property is under-priced enough and/or popular enough to result in multiple offers, you’re going to see these requests for 24-48 hours irrevocable.
Don’t give in.
As an agent, you merely need say, “My client has instructed me to present this offer with the terms and conditions that he outlined; I’m just doing my job.” Blame your buyer, if you have to, and keep the dialogue with the listing agent as amicable as possible.
But trust me when I say if you give them 48 hours on your offer, you will be competing, in more cases than not…