Buyers are tired of seeing a property up for sale at a given price, only to see the seller change the price later on – having never had any intention of letting the property go at the original list price.
Is this fair game? What are the “rules” in real estate?
Is this just a case of buyer-beware, or do you really, really believe that if a seller lists his or her house for $1, that they should be somehow “forced” to accept that price if it were offered to them?
The opinions on this one will differ, depending on where you find yourself in the market, but ignoring the extremes, let’s look at a couple of more reasonable examples…
(N.B. – look at the photo closely in case you didn’t get it….)
Last week, I showed a condo to a prospective buyer, which was listed at $424,900.
It was a great unit, no doubt about it. But it wasn’t unique, and it wasn’t “special.”
“Special” was the unit I just sold at Kensington Lofts, on the first day of the listing, for full-price. It was well-priced in my opinion, and my buyer-client had narrowed his search down to ONLY that building, and only a 1,000 square foot, open-concept unit. Suffice it to say – we knew within ten seconds of entering the condo that this was “the one.”
“Special” is hard to define, and it differs from buyer to buyer. But unless the unit is exceptionally unique, rarely-offered, and/or in a small building where units almost never come out, then I really don’t know how we define “special” as it pertains to condos.
The $424,900 condo I showed last week was NOT special. It was not unique in any way, nor was it a rare offering. It was just another condo, albeit a nice one, with great upgrades, a perfect floor plan, and even an outdoor space.
In the broker’s notes of the listing, it read, “Offers, If Any, Reviewed On May 14th At 7pm,” and I wondered about those words “if any.”
First of all, I really don’t think we’re in the market climate to be holding back offers on condos.
Secondly, if we did hold back offers on condos, it wouldn’t be on this one.
But most importantly, what would happen “if any” was actually zero? What would the seller and the listing agent do if there were no offers?
Think of how this works in any other industry.
Let’s say you’re The Gap, and you put out a new clothing line. It’s on the mannequin the window, it’s in the TV ads, and prominently featured in advertising. And let’s say you sell ZERO of those pieces of clothing.
What do you do then?
Pffff…….obviously. Since nobody wants to buy them, you RAISE the price!
Wait……what? You disagree?
Well no @$*!@$*$!
In the case of this $424,900 condo, after receiving no offers, the listing agent re-listed at $448,900, which I found amazing, bewildering, insane, and yet, I wasn’t surprised at all…
She called me for feedback on my showing before offer night came and went, and I told her, “It’s nice, I just don’t know if it’s something my client wants to jump on.”
She said, “Well, we’re taking offers two nights from now, so tick-tock!”
She was kind, and didn’t mean that in a condescending way. But I really wondered what would happen if they got no offers!
Ironically, she called me after the offer day came and went, and told me that the unit was still available. I asked, “So are they throwing in all the staging furniture?”
She didn’t follow.
I said, “Well you raised the price by $24,000. So what else is the buyer getting?”
She confidently replied, “Well, that was the price before. That was when we were trying for multiple offers. This new price more accurately reflects fair market value.”
Oh come on!
Two things I hate to hear:
1) “Did you know that this property was priced for multiple offers?”
My response: “Note the word ‘was’ in that sentence, since you DIDN’T get multiple offers. If it were priced for multiple offers, wouldn’t you have got multiple offers?”
2) “This price more accurately reflects fair market value.”
My response: “No, I think your first price more accurately reflected fair market value, since nobody was willing to pay that price, and your new price is higher, thus less accurately reflecting fair market value.”
Trust me folks – I’ve had these two conversations, many, many times….
So as you can tell from the title of this blog post, I’m wondering if the public considers this a “bait-and-switch.”
I mean, if a shirt in a store had a tag that read $9.99, and you brought it up to the counter, they can’t try to charge you $12.99, can they? Isn’t that illegal?
So why is real estate any different, you ask?
Well it’s simple: no seller is under any sort of obligation to sell his or her house for any price.
And that’s the way it should be.
But if your house is listed for $599,000, and you turn down a $620,000 offer, you must re-list your house for $620,001 the next day, or be guilty of false advertising.
A blog reader emailed me over the weekend and told me that her friend had offered $700,000 on a $699,900 property on “offer night,” and offer was refused, and the property was re-listed at $829,000.
In this case, the listing agent never signed the offer back; he just kept saying “bring us your best offer” over and over. He was essentially asking this buyer to bid against herself.
Can this buyer be frustrated with the so-called “bait and switch?”
The house was offered at $699,900.
The seller refused $700,000.
Isn’t this a bait-and-switch? Isn’t it false advertising?
I wish my questions were less rhetorical, folks. This is a massive grey area in real estate, but the grey pertains to ethics, and not to law.
There’s nothing illegal about a bait-and-switch; just frustrating.
When I see a condo listed for sale, with an offer date, I hesitate to even show the property. I don’t think we’re in that kind of market, and I don’t want to get my buyers involved in what I call, “Scheduled Disappointment.”
A lot of sellers in this market are delusional, and condo-sellers who think they’re selling a piece of gold (ie. they read too many articles about the housing market), often expect something that is just never coming to them, such as 115% of the asking price.
I have no problem calling a listing agent of a condo and asking flat-out, “What is the deal with this offer date? Are you just trying to expose it to the market for seven days so you can get some cold calls and do an open house? Or is your seller expecting multiple offers?”
Some agents will answer you honestly. And some waste your time and say, “Well, I guess we won’t know until offer night, will we?”
I’ll tell them, “Listen, I can sell this condo for you, tonight, for the full asking price. Is that something you’d be interested in?”
A good agent will answer openly. An experienced, reasonable agent will say, “Yeah, honestly, if you can bring me the asking price, then let’s do it. My client is just a bit overwhelmed with all this, and his mother is telling him to ask for more money.”
Or, that same good, experienced agent might say, “Look, my client wants to handle the listing in a certain way, and I know it’s tough to advise your buyer. Just show the condo, and if they like it, then we can chat further. I don’t know what to expect. Seriously, it wouldn’t surprise me to see no offers, and it wouldn’t surprise me to see a couple. You know this market – it’s nuts.”
Either answer is acceptable, depending on the seller’s expectations, and wishes. After all – we work for the sellers, when we’re listing their properties!
A clueless agent, who has no idea how to talk to colleagues, and who is over-confident for a multitude of possible reasons, will reply, “As it stands right now, we’re waiting for offer night, and we would NOT accept the asking price. This property is priced very well, and we expect that the market will respond accordingly.”
That agent just talked himself out of:
1) A showing
2) A potential buyer
3) A potential offer that could compete against any other offer
And that agent is a classic candidate to pull the “bait-and-switch.”
I’m not saying I won’t show a condo with an offer-date, under any circumstances, but I am saying that I tread carefully, and try to avoid that “Scheduled Disappointment.” If I come across the clueless agent that I described above, I might tell my buyer-client that there’s a good chance he or she will be disappointed next Thursday when the property comes out onto the market at a HIGHER price. We can still see the condo, no problem.
But beware the bait-and-switch…Back To Top Back To Comments