We’re seeing more and more of this on new listings, and it’s really just a new spin on an old trick.
The question is: when asked to allow 48 hours irrevocable, do you actually do it?
“Offers graciously reviewed on Thursday, May 31st at 7:00pm. Please register by 5pm.”
How many times have we seen this over the last decade?
And how tired of this have we become?
Despite this long-term up-trend in the Toronto market, there have been a few peaks and valleys. At several points during the last, say, five years, the market has run hot and cold and we’ve seen the “hold-back” on offers go out the window, only to come back again once the market gains momentum.
About two years ago at this time, there was a large shift in the listing process: “hold-backs” were decreasing, as the market had cooled and sellers no longer wanted to risk under-listed their homes only to find minimal interest. More and more sellers were listing their properties with “offers any time,” and I’d say likely 50-60% of homes that woulda/coulda/shoulda held-back offers months earlier were now advertising “no hold back – bring all offers.”
Of course, the market gained some steam, and by the fall of 2010, hold-backs were common-place once again.
This also happened during 2008, and it’s happening again now.
The market has cooled a little bit in the past month. I don’t know if you can feel it, but I can.
It’s exactly that – a “feeling.” Experienced Realtors can feel it, without statistics in their face; it’s just something you can feel.
Some houses that “should” sell in multiple offers, aren’t. And some houses that “should” sell for $800,000 are getting $770,000.
Case in point: this gorgeous house in Riverdale that reviewed offers on Monday night, and “should” have sold for $925,000 – $940,000, if we were in the first week of April, that is. But it only sold for $891,000, and somebody got a terrific deal.
Yes, I can feel that the market is cooling, but that’s normal around this time of year. The only difference between this year and last year is that the cooling happened around Victoria Day in 2012, but in 2011 it took until the school year was finished.
So with the cooling of the spring market comes the decision of whether to list properties low and hold-back offers, or whether to list them at or slightly above fair market value and hope for a quick sale.
Enter: the 48-hour irrevocable.
The “irrevocable date” on an offer is essentially the expiry; it’s how long the offer has been left open.
Typically, or in an honest-man’s world, the request for a 48-hour irrevocable would have some merit, ie. the seller is overseas. But in the world of real estate, everybody’s seller is overseas.
More and more listings are saying, “Please Allow 48-Hour Irrevocable” and then follow that with some BS explanation about why the seller isn’t available, although creativity has long gone out the window. “Seller Travels For Work.” “Seller Is Overseas.” “One Seller Is Away.”
It’s getting harder and harder for the agents who actually do have overseas sellers to try and convince cooperating agents that’s the case! Who would believe it anymore? It seems like the seller is always travelling through the African rainforest and needs three business days to review the offer! But why would that seller choose to travel through the rainforest when his or her property is listed for sale, knowing that an offer could come in at any time?
In today’s market, agents are using the 48-hour irrevocable to essentially split the difference between “offers any time” and the “hold back.”
If you don’t want to have a set offer date for June 8th at 7:00pm, but you feel that there is an outside shot that you get multiple offers, then you request 48 hours irrevocable to try and stall the process, and shop the offer that you have in hand.
If somebody makes an offer today – Thursday, May 31st, and they give you until Saturday, June 2nd, you have two full days where you can try and scrounge up a second offer. You can call every single agent that has shown your property and say, “I’ve got an offer, but it doesn’t expire until Saturday, so the door is open if you and your client want to come in!”
This is when agents really earn their stripes, or piss people off – depending on how you look at it. The agent can further say, “The offer we have is awful – come in with something.” Now, that offer could in fact be terrific, but the agent is just looking for the second offer. It could be for $1, but at least the agent can go back to the first party and say, “Listen, we’ve received a second offer, so you’d be wise to increase your offer if you want to be competitive.” And all the while – he’s got that offer in his hand and irrevocable until Saturday.
So my question, of course, is this: if you’re a buyer’s agent and you see the request for 48-hours irrevocable, why the hell would you give it to them?
That’s a request, not a demand. Nobody can force you to provide a 2-day irrevocable.
If you cave to that request, you’re simply hanging your buyer out to dry.
You’re simply allowing the listing agent to shop your offer, and use you as bait.
Don’t ask the listing agent “Why do you need 48 hours,” just go ahead and give him four.
Don’t give him the opportunity to make up a story about the seller having landed on the moon, having run out of jet-fuel, and needing two days to make it back into the lower stratosphere.
The listing agent can call you back and say, “I received your offer but you only gave me until tonight at midnight! We need two business says irrevocable.”
And then you say, “See what you can do.”
If it’s a good offer, the agent will work with it. He’ll go to the moon himself and find his client.
And under law, he MUST present the offer to his client. Even if his client really is on the moon, he still has to present the offer as fast as he can. If the offer expires, so be it. They can always sign it back with a new irrevocable; they just can’t accept an expired offer.
There is one brokerage/broker in the city, who shall remain nameless, who has “48 Hours Irrevocable” on every single listing he brings out. It doesn’t matter where the property is, what the price, or the seller’s situation – the listings come out with a 48 hour request, no matter what. It bothers me to no end, and I don’t trust the guy. I wrote about him on my blog once (without mentioning anything about him – just the street on which his listing was located) and his lawyer sent me a nasty letter, so I rescinded my blog post.
We know him in the business as John “48 Hour Irrevocable” Doe, as in remove John Doe and insert his actual name. He’s referred to by his 48-hour-irrevocable garbage.
I’ve worked with him a couple times – both in multiple offers, and without, and I’ve never given him the 48 hours. Why would I? Especially in multiple offers when you know he’s reviewing the offers at 8pm and will decide shortly thereafter. If you do give him 48 hours, he’ll make you sleep on it, come back again, and again, and maybe make you take a second night just to make certain that you want to stick to your price.
Keep the power on your side, and don’t cave to a silly, needless request.
The agent MUST present your offer in due time, and can’t simply say “We need 48 hours irrevocable or we’re not presenting the offer.”
If all else fails, call the listing agent’s broker of record and ask WHY the agent isn’t presenting the offer to his client, as he should under law. Hey – sometimes you have to fight fire with fire, right?