Really, truly, this is the worst offer any of us have ever seen.

You just won’t believe it…

My friend and colleague, who shall remain nameless, told me, “I once had a guy submit an offer conditional on the sale of his 1987 Ford Pinto, but this offer is even worse.”

This offer was so bad, in fact, that a group of us poured over it together to try and understand what the hell the buyers were thinking.

This offer was so bad, in fact, that the listing agent thought it was a joke.

Let’s go over the terms and conditions:

1) Deposit.  The property was around $500K, and the deposit was for $5,000.  That’s stupidly low, but nothing we haven’t seen before at least once or twice.

2) Completion Date.  July 2nd, 2013.  This will play a major factor in a moment…

3) Conditional on Financing.

This Offer is conditional upon the Buyer arranging a new first Charge/Mortgage satisfactory to the Buyer in the Buyer’s sole discretion within Sixty (60) business days upon the acceptance of this Offer.

4) Conditional on Environmental & Home Inspection.

This offer is conditional upon environmental and home inspection of the subject property at the Buyer’s own expense, and the obtaining of a report satisfactory to the Buyer, in the Buyer’s sold and absolute discretion, within Sixty (60) business days upon the acceptance of this Offer.

5) Conditional on Insurance

This offer is conditional upon the Buyer arranging insurance for the property satisfactory to the Buyer in the Buyer’s sole and absolute discretion within Sixty (60) business days upon acceptance of this Offer.

6) Conditional on Appraisal.

This offer is conditional upon the Buyer arranging, at the Buyer’s own expense, an appraisal satisfactory to the Buyer, in the Buyer’s sole and absolute discretion, within Sixty (60) business days upon acceptance of this Offer.

7) Conditional on Solicitor’s Approval.

This offer is conditional upon the approval of the terms hereof by the Buyer’s Solicitor and partners within Sixty (60) business days upon acceptance of this Offer.

8) This is new…

Seller agrees to pay the Buyer an amount of 1% of the deposit amount, per day, for any delay beyond 24 hours for any reason whatsoever in the full and complete return of the deposit and other monies when the deposit becomes null and void.

9) This is where it gets weird…

The Seller agrees to spend sufficient time with the Buyer to train the Buyer on all operational aspects of the building at a mutually agreed upon time.

10) This is where they go off their rocker…

Upon acceptance, the Seller grants the Buyer and his her representatives the ability to initiate repair, environmental remediation and rework upon the said Property and grants unfettered access to the property.  Upon acceptance, the Seller also grants the Buyer or his agent the ability to show the property to prospective Tenants and to affix promotional signs on the property.

11) Here is where we figure out what’s going on…

Buyer: John Smith and/or Assigns

My, my.  Where do we start?

Let’s start with the conditions first.

It is utterly bizarre to have FIVE conditions in an offer for a very standard property located in central Toronto.

But it’s even more bizarre to have these conditions.

Appraisal?  That’s part of every financing condition.  This is repetitive.

Insurance?  I’ve never seen this before, and who can’t get insurance?  This isn’t a farm, and it isn’t a multiplex.  It’s as simple a house as you can imagine.

Solicitor’s Approval?  Okay, this is a regular clause, but only in, what – 10% of offers?  And mostly on commercial properties or new condos?  And note that it reads “solicitor and partners.”  So if the law clerk doesn’t give her okay, the deal is pooched?

Environmental?  Really?  This isn’t an old gas station or steel mill.

But beyond the clauses themselves, or the fact that there are FIVE of them, I can’t wrap my head around the fact that they asked for sixty days.

A financing condition is a standard five business days.

A solicitor’s approval condition is usually 3-5 business days.

A home inspection condition is at most, five business days, but a lot of the time, listing agents will ask for two days max so the property isn’t tied up.

But these jokers have inserted FIVE clauses, and asked for SIXTY days?

Do the math – this offer came in on April 17th, and 60 days would push this conditional period to mid-June.  Remember – the closing date was July 2nd.  The buyers want a 75-day closing with a 60-day conditional period?

And who are these buyers?

Well note that the buyers on the offer are “John Smith and/or assigns.”

The buyer wants to have the option of assigning this deal, or “flipping the paper” to another buyer.

And why do they want that option?

Look at my notes above – #10.  The buyer wants the ability to begin renovations on the property right away, before closing, and during the conditional period!  So the buyer is essentially trying to renovate the property to flip it before closing, take a profit, and avoid paying land transfer tax and closing costs.

Really sharp.

And point #8 – if the deal falls through, the buyer wants 1% of the deposit amount, per day, as some sort of penalty or payment for what they perceive as “being late.”  In most deals, where the offer falls through, it takes 2-3 weeks to get the deposit monies returned.  You can’t just shake a magic wand and produce the money.  The money is held in the listing brokerage’s trust account, and there is a procedure to release those funds, via certified cheque, that involves signing officers, lawyers, the bank, etc.  This clause is ridiculous.

And point #9 – the buyer wants to be “trained” on how to “operate”……what, the light-switch?  The curtains?  What other obvious tasks do we need explained to us?

Insert the metal-fitting into the buckle, and pull the strap to tighten.  To release, lift up on the buckle and it will unfasten.

This is just so damn weird.

Imagine living in your house, which you sold, conditional for sixty days, and having somebody jackhammering your basement floor at 9am on a Saturday, then walking tenants and prospective buyers through the house when you’re eating dinner.  And all the while, there’s no guarantee they’re going to close the deal.

Who in their right mind would submit an offer like this?

I’ll tell you who.

The people that provided the following cover letter with their insane offer:

Dear Mr. Smith

It is with great pleasure that I submit to you the following offer to purchase your house.

I’m writing to you directly because I believe that it is very important for you to be able to know me and to have the sense of trust and “knowing” that your house is in great hands.

My wife and I love to acquire properties with character such as yours, and to bring out the best in them; so much so that if, at some point in the future, you could proudly point to the house and say, “THAT was MY home.”  How good would that make you feel to point to the best-looking house on the street and tell others that YOU lived there?

That’s what we aim to do for your place – to transform it to the shining gem that it has the potential to be!

Our investing strategy is simple: the nicer the home, the nicer the people it attracts – and the easier we can all sleep at night.

Your home fits my criteria on many levels, and so I am pleased to present you with an Offer at Fair Market Value with the usual conditions to enable me to make this a smooth and pleasant experience for the both of us.

On a side note, would you be willing to share some advice on what’d really make your house become “Wow!”?  After all, you’re the expert on this house and the neighbourhood, and you know things about the house and location that very few people do, and we’d love to gain your insight.

In closing, I believe you will find my offer to be most favorable, allowing for both parties to benefit from a smooth, transparent, and professional transaction.

I look forward to hearing from you.

Wow.

Just, wow.

We could go over this all day, so let me ask you this: which of the following would you say is the “best part”:

1) “With the usual conditions.”  As if five conditions, with 60-day periods, are anything but insane.
2) “THAT was MY home.”  Imitation is the finest form of flattery.
3) “Fair Market Value.”  Really?  What market are you working in?
4) “knowing” in quotation marks, as if it has some hidden meaning.
5) “In closing,” as if this guy is giving a speech to the senate.

Folks, I’ve never seen anything like this offer before.

In fact, I read it with a group colleagues, and between the group, there was over 200 years combined of real estate experience, and not one of us had ever seen an offer this insane.

Maybe the buyers live their lives by one of my most hated cliches: “It’s worth a try.”

No, it’s not.

But thanks for giving me something amazing for Friday’s blog…

Have a great weekend, everybody!