Do two wrongs make a right?
If that’s the case, then perhaps all is fair in the absolute chaos that exists in the 2022 real estate market, particularly when it comes to pre-emptive offers, aka “bully offers.”
For those currently residing in a cave, perhaps one on the moon, a “bully offer” is an offer which is submitted, often by surprise, ahead of the scheduled “offer date” for a particular property.
123 Jones Avenue is listed for sale on Wednesday, January 19th, and the MLS listing specifies “Offers Reviewed On Tuesday, January 25th @ 7:00pm.”
When a buyer views the property on Wednesday afternoon, drafts an unconditional offer for an exceptional price, and sends it to the listing agent at 9:15pm on Wednesday night, with an 11:59pm expiry date, that’s a “bully offer.”
These have been a part of our real estate market now for probably fifteen years, although they’re more prevalent now than ever.
Wanna know what else is more prevalent than ever? Shennanigans!
A cynic might suggest that to expect “fairness” in a market designed for chaos is unreasonable, I might be inclined to agree.
Those of you who have been reading TRB for a while might remember my 2015 video series, “What If The Whole World Worked The Same Way As The Toronto Real Estate Industry?” Our second video was one that simplified the concept of the “offer night” and the “bully offer” by showing what it would be like if we sold other products like this…
Like I said…..a cynic would suggest…
However, experienced market participants will tell you that this is no longer rocket science. We can work with “offer dates” and “bully offers” in harmony if we accept some very basic rules.
Well, there’s really only one rule, and it’s one that is broken all the time.
Ready for it?
If you set an offer date and you change that offer date, you MUST notify all interested parties.
Pretty simple, right?
More the point, why wouldn’t the listing agent for a house or condo notify interested parties? Isn’t that working in the best interests of his or her clients?
You are a listing agent and you list a house at 123 Fake Street for sale on Wednesday, January 19th with a scheduled offer date for Tuesday, January 25th. On Thursday afternoon, with the property only on the market for 22 hours, you recieve a “bully offer” on the house that is so good, you simply can’t pass it up. Your seller-clients agree.
What do you do?
It’s so simple, folks. And not only are agents failing to do this, but they’re going out of their way to excuse themselves in advance! More on this in a moment.
What you do is this: you email every buyer agent who has booked a showing with the following:
Thank you for your interest in 123 Fake Street
A pre-emptive offer has been recieved, and the seller intends to work with the offer.
The offer is irrevocable until 11:00pm this evening.
If your buyers have any interest in the property please call me immeidately at 416-275-0035.
Thank you for your understanding.
You can say whatever you want in this email.
Sometimes, in a really tough market when buyer agents are feeling the pain, I’ll throw in something like, “This situation is not ideal, but also not unforeseen, so thank you for your understanding and good luck in this busy spring market!”
Why not? Kill ’em with kindness, right?
Or maybe that’s just me.
I had three offers on a listing last week and I treated all three of the buyer agents with the care and professionalism that I would want an agent on my team to receive. One agent was scrambling to get his buyer on paper at a number that wouldn’t come close to working, and I told him, “Save your energy for another day. Tell your buyer that it’s getting too pricey and that he should walk. You’ll be his hero.” I saved him three hours and multiple phone calls with a young 20-something buyer who was going to be blown away by a competing offer. The agent thanked me, and now I have a friend.
So why don’t other agents treat each other the same way? I have no idea.
When it comes to bully offers, I often personally call agents who have shown my listing to let them know that we’re “working with” a bully offer, and they’re always upset. They always complain. It would be a lot easier for me to just send emails, but that personal connection helps build trust for future deals. There’s zero downside here, folks. You are your reputation in this business.
But when you call buyer agents and let them know about the bully, or simply email them, it does that other thing that’s important. That thing that we’re paid to do. Umm……what is it?
Oh yeah: sell the goddam property!
Why we need to make it a RULE that a listing agent needs to notify interested parties about a bully offer, is beyond me!
If a listing agent is working hard for his or her client, and they decide to work with a bully offer, the listing agent calling or emailing twenty-five other buyer agents is bound to produce a second offer, or a third, or fourth, or twelfth.
But many listing agents don’t do this!
As I said, many of them will actually post their intentions to be lazy, break the rules, and do a shitty job for their sellers on the MLS listing.
Have a look:
This is illegal.
A seller cannot accept a pre-emptive offer “without notice.”
Because it’s a rule that in the event a scheduled offer date/time is changed, the listing agent must “notify all intersted parties.”
There’s a form called Form 244: Seller Direction Re: Property/Offers”
In that form, we find this:
A few things to note here:
1) The first section, in all caps, and bold: “THE SELLER ACKNOWLEDGES THAT THIS DIRECTION CANNOT BE CHANGED OR AMENDED OTHER THAN BY A NEW WRITTEN DIRECTION.” That’s kind of important, right? Kind of serious stuff? It tells us that when a seller and listing agent set an offer date/time, it means something. It’s carved in stone, unless you re-draft and re-sign this form.
2) “NO CONVEYANCE OF ANY WRITTEN SIGNED OFFERS” means that the seller will not consider pre-emptive offers, but it also means that the listing agent is not to present or convey any!
3) The second bolded section: “The Seller acknowledges that the Listing Brokerage has professional obligations to other brokerages and the Listing Brokerage will be complying with rules and regulations with respect to showing of properties and the conveyance of written offers” means that the listing brokerage has to follow the rules.
And yet, despite all three of these points, all of which are signed by the seller and the listing agent, we continue to see nonsense like this:
So how should things be done?
First of all, this is how I would draft Form 244 and have my clients sign:
This says that there’s a day/time for offers, however, the seller will consider pre-emptive offers, and reserves the right to do so.
How should this be documented on MLS?
This example shows:
1) There’s an offer date
2) When that offer date is
3) The seller has reserved the right to consider pre-emptive offers, which means they reserve the right to move their offer date – provided they notify “interested parties”
Who isn’t notifying interested parties?
And they used an exclamation mark!
This is a slap in the face to the RECO Code of Ethics but also to the Toronto Regional Real Estate Board and the MLS system.
TRREB should terminate these listings and yet, for some reason, they do not.
Here’s another one:
There are so many of these, I barely had to search.
I would add that none of these are reputable agents or brokerages, mind you.
It’s the usual suspects, and we’ll just leave it at that.
Here’s one that explains why they’re going to look at pre-emptive offers:
“Per seller instructions.”
This one is even more prudent:
“Per seller direction.”
If they’re even more prudent, they’ll upload the “Seller Direction” form as an attachment on MLS.
Here’s where things are left a bit confusing:
Is the seller reserving the right to view pre-emptive offers, or not?
You have to specify, otherwise, that ambiguity and uncertainty is going to cause issues. Plus, you have to specify, you know – because it’s in the Form 244!
I got a chuckle out of this one:
I can’t tell you how many times I receive a pre-emptive offer on a listing that isn’t very good, and I call the agent to say, “Thanks, but my clients are going to wait until offer night,” only to have that agent snap back, “You know, you said you’d accept a pre-emptive offer!” Like, we were just supposed to accept any offer? Is that what we wrote in our listing?
I don’t think the agent who wrote the caption above is coming from the same place, but the conclusion is certainly the same!
So what’s the moral of the story here?
Well, it depends on whether your glass is half-empty or half-full.
We can sit around and lament the state of the real estate industry, but in the time it takes us to do that, another seven-hundred people will sign up for real estate education at Humber College, but I digress…
I think if I’m a buyer or a buyer agent, I’m looking to take advantage of the chaos out there. It’s not the job of a buyer to police the wrong-doers or take the moral highground. In this market, a buyer needs every advantage possible.
If I’m a seller, I’m asking listing agents how they work with bully offers and trying to ascertain whether they fall into the category of lazy, unprofessional, corner-cutter as many of the examples above have shown agents to be.
In the meantime, I would encourage TRREB to take another look at this.
Anybody, agent or member of the public, can email firstname.lastname@example.org with a problem, illegality, or issue in an MLS listing.
Of course, TRREB will then send a fax to that brokerage, I suppose because fax machines are such a cutting-edge technology and all that…
On another note, was I the only one who shoveled for 75 minutes on Monday morning and drove to the office? I passed three TTC buses stuck in the snow and about a dozen cars, but no part of me said, “This is a bad idea.” I got to Bosley’s office and found the parking lot hadn’t been plowed, and thus was forced to turn back. Men are so dumb sometimes…