Just when I think, “This is it, I’ve finally run out of ideas for my blog,” I have an 11pm phone conversation with a client, and an idea hits me.
After a failed bully offer attempt on Thursday night, I told my clients, “We’ve dipped our toe in the water here, guys, and that’s more than any other buyer has done.”
We’ve felt the temperature of the water, and we know what’s going on under the surface of the pond.
We’re now equipped with more information than any other buyer out there come offer night…
Whatever you do, don’t confuse this with “one foot in the pool.”
That means something entirely different.
If my clients had one foot in the pool, it would mean they’re non-committal; they’re just kind of sitting on the edge, with one foot in, one foot out, contemplating taking the plunge.
Having dipped their toe in the water, they’ve gotten a feel for what it’s like.
Let’s say you’re a would-be buyer, for a moment. You’re working in this crazy Toronto market, you’re looking at a house, and you would just love to get some inside information.
Would you like to know:
1) What the price floor for the house is?
2) A price at which the sellers would not sell?
3) The listing agent’s expectation on price?
These are all variations of the same thing: you want to know what price this house will sell at on offer night.
But let me ask you two more questions:
4) Would you like to buy the house without any competition?
5) Would you like to buy the house for less than you might on offer night?
You’ll undoubtedly answer “yes” to all five questions, and that’s the very reason why people make bully offers.
As the fourth question explains, when you make a bully offer, you often have no competition.
We made our offer at 8:35pm tonight, and nobody else came to the table. The listing agents didn’t page all the other agents though, so who knows what would have happened if they did.
As the fifth question explains, when you make a bully offer, sometimes you offer slightly less than you might on offer night. Sometimes buyers will “try their hand” at a given price, knowing that if the seller accepts, they’ve just earned some found money, and if the seller doesn’t accept, they were planning on offering more on “offer night” anyways.
That remains to be seen in our case, but as we just learned when the listing agent called me to say, “Thanks so much, but we’re going to wait until offer night,” we’ve got ourselves the answers to the first three questions, and thus some valuable inside information.
This is a live bid, so I’m not going to give out the real prices, but let’s say this house is up for $678,800.
Our offer tonight was for $835,000, which we would have been very happy to pay.
A cynic will suggest that “there’s always a chance you get it for less on offer night.”
Yes. That’s true.
But those chances aren’t always good…
In this market, properties almost never sell for “less than you might think,” so suffice it to say, two savvy, experienced, informed buyers, and myself, did not submit a ludicrously-high offer tonight.
But in having our $835,000 offer turned down, we learned, as those three questions suggest above, what the sellers expect, and what the listing agent expects on offer night.
That offer also opens the door to dialogue with the listing agent that you wouldn’t otherwise have.
During the first conversation, after you’ve clicked “send” on your email, you talk about your offer, why you’re making it, how you hope they accept it, and why you think the price is spot-on.
The listing agent has to offer something in return. He or she isn’t just going to grunt into the phone, and hang up. A conversation will ensue, and during that conversation, you’re going to pick up something.
During the second conversation, after the listing agent has said, “That’s a great offer, and I appreciate your efforts, but we’re going to wait until the 29th as planned,” you’re going to chat once more. And during this subsequent chat, you not only pick up a few indications of what they think on the value, or the interest, or the sellers’ demeanor, but you also establish some rapport.
As I said in Monday’s blog about “presenting your offer in person,” quite often, listing agents will look for a familiar face in the crowd.
Being the proverbial “first horse to the trough” often helps out on offer night.
I’ve been in situations before where I don’t have the highest offer, but where the listing agent says, “Look, you were the first one here with an offer last week, so I think it’s only fair to tell you….”
I don’t know if it’s fair, but I’ll sure take it!
It’s getting your foot in the door – yet another analogy, I know. But whether you’re the first horse to the trough, or whether you’ve jammed your foot in the door, either way, the listing agent will often reward the person who made an unsuccessful bully offer attempt the week before, either out of respect for the efforts, or out of some sense of loyalty.
And all the while, you’re already ahead of the game.
You know that the sellers are looking for more than $835,000.
You know that the listing agents value the property at more than $835,000.
And in a market where the damn house is priced at $678,800, knowing how the listing agent and the seller feel about the price is powerful intel.
It’s also information that the rest of the buyer does not have access to.
Somewhere out there is a buyer who values this house at $825,000, and maybe if he or she knew that the sellers had turned down $835,000, they would up their offer.
But come offer night, their offer of $825,000 loses to your offer of $835,000, or your improved offer of $842,631 – whatever you go in with, and had they known what you knew all along, the situation might have played out differently.
Not every bully offer has to be accepted, in order to be “successful.”
My clients and I were successful tonight in gaining some insight into a very difficult market.
And as I told them when we stood outside on the sidewalk, contemplating this venture, “All it takes is an hour of our time, so what have we got to lose?”
We dipped our toe in the water.
And on offer night next week, we might end up going for a celebratory swim…