Sometimes, you only want something because somebody else does, or because you can’t have it.
I might have been convinced that this was the case when I first heard that there was another offer on the condo I was contemplating buying, but two weeks later as I sit here and type this, I know all along that this condo was meant for me…
I knew the inevitable conversation was coming; I just didn’t know what to expect.
There are a dozen people that I could have talked to about this “Decision,” none of which are named LeBron, but in the end I decided that I had to speak with somebody that I know would talk me out of this if it were a bad decision.
I called my Dad.
My Dad isn’t a pessimist, but he certainly does pick up on the drawbacks, red flags, concerns, and anything in between. He’s a lawyer, after all.
My Dad asked me questions like, “Would you rather have this condo, or your brother’s house?” I explained to him that I wanted the condo lifestyle and I wasn’t ready for home ownership, and that a condo better-suited my 24/7 work habit, at least for now.
He asked me, “Would you sell this to a client?” I told him that if I had a client like me, then yes, I would.
He said, “Would you pay $725,000 for it? What if it comes to that? How about $700,000? What’s your breaking point?” I told him that I would cross that bridge when I came to it.
And he even asked me, “What would you do if this condo was worth $500,000 in six years?” I told him, “Then I’d lose $200,000, and I’d learn my lesson.”
After a twenty minute discussion, I thought my Dad would probably say, “Well, it’s up to you, buddy.” But he didn’t. Not even close.
My Dad told me, “David, go out and buy this condo. And be aggressive. If this is the one, then go out and get it.”
That’s all I needed to hear.
The condo was priced at $659,000, and I knew that the other offer would be strong.
Nobody looking in this price point who makes an offer after one day on the market is going to offer anything less than the asking price; or at least they wouldn’t if they were my client.
I knew that the listing agent would likely go back to the other cooperating agent and let him know that there was a competing offer, and that he had an “opportunity” to increase his offer, and I figured that most people would likely come up $15,000 – $20,000.
As a licensed Realtor, I get a 2.5% commission on any property I sell. This is common knowledge, right?
So by offering $660,000 on this property, and “throwing in” my commission, I’m giving back $16,500 to the seller.
But hold on a minute – a sales commission has associated GST, and thus that $16,500 is actually $18,645.
By offering $660,000 and waiving my commission, I was effectively offering $678,645.
I was looking to close the deal on September 7th, 2011, which would be right after Labour Day weekend while I’m away, but would mean I’d have to sell my current condo in August – also while I’m away. I figured that my colleague could list my condo while I’m in Idaho, and it would be super-easy to conduct showings for eight days with me not living there!
I faxed over my offer around noon, and gave the seller until 11:59PM to decide. The seller was located overseas, so I knew I wouldn’t hear back from them until at least 9PM. The time difference was twelve hours, so while all this was going on, the seller was sound asleep without a clue in the world that he would wake up to receive multiple offers on his condo on the very first day of the listing.
I kept my mouth shut (for a change…) around the office as people mulled about and I never once blurted out “I’M BUYING A CONDO!” I don’t believe in jinxes, but I didn’t want anybody knowing my business until the deal was final.
I went to the gym and ran my very own Tour De France as I took out all my anxiety on the stationary bike, and then I went home for a nice quiet dinner with my lady.
I found a tremendous amount of irony in the situation, since I was now experiencing what my clients go through. I usually have 3-4 offers on the go per week when the market is busy, sometimes more, sometimes less. Many buyers have to offer on several properties before they eventually buy, so closing 50 deals per year could mean making 150 offers!
My clients don’t know exactly what I’m doing while they’re waiting anxiously and patiently for me to get back to them with a status update about their offer. Sometimes I’m working with other clients, sometimes I’m at the gym, sometimes I’m buying groceries. Hell – I could be taking a nap on the office couch for all they know!
But here I sat on a Wednesday evening trying to enjoy dinner and watch a repeat of Law & Order: SVU for the third time, all the while wondering about my offer – just as my clients always do!
9PM rolled around, and my girlfriend was more antsy than I was. She asked me, “Why don’t you just email the listing agent and ask ‘Hey, how’s it going?'”
So I did, and he told me, “We should have an answer soon.”
That’s when this situation became very “real” to me, and the thought of not getting this condo first popped into my head.
As much as I can admit now that this is the condo for me, always was, always will be; I was only about 90% convinced at the time.
I called the listing agent to try and get a vibe on things, but he didn’t give up any information. He did add, however, that the seller “preferred” to close on October 1st, since he would otherwise be paying $3,400/month in rent for the current tenant.
Suddenly it occurred to me that if I changed my closing date to October 1st, that would effectively “add” $3,400 to my offer. Or to look at it another way: would I pay $3,400 to live there 23 days earlier? Of course not.
I changed the offer to reflect a September 30th closing date (that’s a Friday), and then my girlfriend said, “Add five thousand bucks.”
I asked why, and she said, “Well, wouldn’t you tell your clients to do the same thing?”
It’s true. In fact, I would have told them to add more! I’d ask my clients, “Are you prepared to lose this condo for $5,000? What about $3,000? How about $1,000?”
I would have pushed my own client higher, but in this case, I was my own client! This is why Realtors often have colleagues transact on their behalf. It’s very difficult to keep a level head when you’re acting as your own agent!
So I took my girlfriend’s advice, and I added $5,000. I should have added more – but I’ll come back to this at the end.
I figured this was as good an opportunity as any to get out the new Canon printer/scanner/fax that had been sitting in a sealed box on the floor for the past five weeks, so my girlfriend and I put our heads together and figured out how to set up the machine…..in a mere 50 minutes.
I scanned my offer and sent it back with a September 30th closing date and at $665,000. At that price, I was also throwing in $18,786.25 in commission, so my offer could be viewed as a total price of $683,786.25.
I’m going to be perfectly honest right now and tell you that when I emailed the offer back to the listing agent, I was in a state of indifference. If I got the property, well great. If I didn’t, then that’s fine as well.
Two days later, a colleague of mine who has been in the business for 30 years told me, “David, your indifference is completely normal. We sell real estate for a living and we’re emotionally numb to the process when it’s our turn around. That’s what makes it so difficult.”
It’s true. It was difficult because I had no idea how I truly felt – at the time, that is!
It took a little over an hour for the phone to ring, and as soon as it did, I told myself, “I got it.”
I knew that the listing agent would call me if I got it, and he’d email me back if I didn’t.
I picked up the phone, and he said, “Congratulations, David, you’re moving.”
I said, “You’re kidding,” and my girlfriend sank in despair. An unemotional “You’re kidding,” isn’t the typical response of somebody who just purchased their dream home! But I gave my girlfriend the thumbs-up sign and winked, and she jumped for joy for the both of us.
I got off the phone, and remained unemotional, and somewhat unsure.
I just spent almost $700,000 on a condo, and I’d be leaving the home I’d known for almost five years.
It took two days for the reality to settle in, and when it did, I was more happy than I’d ever been in the last seven years of buying and selling real estate. This condo is absolutely, positively, perfect.
Now here’s where you might call me a liar, a salesman, or both, but I can honestly say that if I had to do it over, I would have added much more than the $5,000. The listing agent told me, “You only got it by a little; that five-k made a huge difference!”
I was trying to split hairs with my potential dream home! I should have added $15,000 and never looked back. To cut it that close – to only ‘win’ by $1,500 or some such number was incredibly irresponsible on my part. Sure, it worked out in the end, but hindsight is 20/20. I should have been far more aggressive, and never looked back. If I had a colleague handling the sale, he or she would have pushed me higher – to a price that I should have been at.
Sometimes, I’ll tell my clients “Let the price dictate whether or not you buy,” but that’s only when they’re 50/50 on the house and they don’t LOVE it. But if you decide that a property is for you, then you go for it.
Words cannot describe how happy I am to have found a place I can call “home” for at least the next 2-4 years. I outgrew my last condo very quickly, and yet I remained there far past the expiry date.
I’ve done nothing but spend, spend, spend in the last ten days (patio furniture, couch, TV, dining room table….ping pong table…), but it’s all worth it.
I need a vacation!
Oh, wait, I’m going to Idaho on Sunday…. 🙂
Have a great weekend, everybody!