I’d hate to disagree with The Donald, since he is clearly an astute real estate investor and wig-wearer, but I’m on pins and needles as I wait to see what happens with this downtown condo which is holding back offers for……wait for it….twenty-four days!

That’s over exposure in my mind, and I have a few thoughts on how this will negatively affect the condo’s sale price…

Both hands, and both feet – that’s how many digits I would need to count the number of blog posts in which I’ve examined the “hold back” on offers for residential properties.

The property hits the open market on July 5th, but the owners aren’t accepting, reviewing, or looking at offers until July 14th.

Is it fair?

Is it just?

It all depends on which side of the fence you sit on.

As a seller, you want to maximize the potential sale price of your unit.  You want to expose your unit to the market long enough to allow all interested parties through the door, and you hope that two or more of them come to the table at the same time.

As a buyer, you are frustrated with “bidding” in a multiple offer situation.  You blame the sellers for being greedy and you blame the market for being too hot.  However, when there is NOT a holdback on offers, and a unit sells on the first day it’s offered for sale on the open market, you ask, “What the heck?  How come they didn’t hold back on offers?  They really sold this after one day?”

Double-edged sword, much?

A little more than a week ago, a condominium unit near Yonge/Dundas came onto the market at what seemed to be an extremely low price.  It was one of my reader/clients that emailed the listing to me and said, “How are they asking for so little in today’s market?  What’s the catch?”

I knew that this property was under-priced as there aren’t a lot of 630 square foot condos with parking and locker for $250,000 in the downtown core.  Sight-unseen, I’d say this property, which has low maintenance fees of $318.88 including all utilities and a fantastic city view from the 33rd floor, is worth well over $300,000.

Granite counters in the kitchen and bathroom, stainless-steel appliances in the kitchen, and hardwood flooring in the living room.

So what IS the catch?

The unit came onto the market on October 31st, and there was a note in the broker’s remarks that said, “Please Register And Fax Offer By 3PM, Monday, November 23rd.”

Wow.

I don’t know what to say.  Except, “Wow.”

Quite often in commercial real estate, a property will be listed on the market for $1.00 and they’ll tender offers on a given date, maybe sixty days down the road.

But that is commercial real estate where there are fewer buyers, and much bigger bucks at stake!

We’re talking about a 1-bedroom condo worth $300,000 where the owners have decided to under-list it by at least $50,000 and then hold back offers for TWENTY FOUR DAYS!

I don’t think this makes any sense.

And if I was the listing agent, I would never advise my seller to use this “strategy.”

Here are my three reasons why:

1.  Discouraged BuyersThere are already enough disgruntled, distressed, and discouraged buyers out there.  All this listing does is add more fuel to the fire.

When my client emailed me and said, “What’s the catch,” it just goes to show what people think is happening in the market.  There are “catches” and there are different “strategies” among sellers.  Nothing is quite as it seems, and take nothing for granted.

If you catch more flies with honey, then why turn buyers off with underhanded tactics such as this?

A buyer is going to say, “Do I really want to get involved in this mess?”  This is a circus waiting to happen; a twenty-four-day hold back on offers for a property that is way under market value.

Most buyers won’t have the stomach for this, and will put the listing out of their minds completely.

2.  Short Memories

Most buyers are extremely active, and they’re always looking for a place to call “home.”

I’m in contact with my buyer-clients at least 2-3 times per week.  I send them listings, give them updates on what properties have sold for (if we viewed them or made an offer), and if there is absolutely nothing to report, I’ll still send them an email and say, “It’s been a very slow week for new listings, but let’s keep the search going!”

With buyers being so active, eager, and ready to pounce on the right property, how many buyers are going to wait 3 1/2 weeks?

More to the point, how many other condos are buyers going to look at during that 3 1/2 week waiting period?

Let’s assume that a buyer views this unit for $250,000 and says, “It’s perfect – I wanna make an offer on November 23rd.”  Do you think that buyer is going to stop looking at real estate altogether?  Or is that buyer going to view two, three, or ten other condos?

What are the chances that the buyer sees something else in that 3 1/2 weeks that appeals to him or her?

How quickly will that buyer find something better than the unit still sitting on the market “waiting” to take offers?

Buyers are emotional, and those emotions run hot and cold.  If a buyer gets hot and bothered about this $250,000 unit, there is a good chance that those emotions will fizzle out after a few days or weeks.  Maybe the buyer forgets about the unit altogether, since the buyer has to wait 24 freaking days…

3.  Unstable Seller

If a seller is willing to do something as dramatic and seldom-seen as holding back offers for twenty-four days, then what else should we come to expect from the seller?

What if the seller decides to abruptly pull the unit off the market on the 18th day?  Where does that leave the buyer who was eagerly waiting?

What if the seller changes strategies mid-course?  What’s to stop him from changing the offer price or the offer date?

What if the seller receives fourteen offers, the highest of which is $315,000, and then decides, “It’s not enough – give me $318,000?”

What if the seller decides to hold back offers another five or ten days?  How long will you – the buyer – continue to wait?

It may be the seller or it may be the listing agent, but either way, there is somebody at the controls who has already made one unusual move and could easily make another.

As a buyer, do you really want to ride this train?