I was right.

But having said that, I can’t say I’m happy about it…

If you look back at my predictions for the Fall 2014 real estate market, you’ll see that I suggested prices will rise, the market will be insane, and we’ll start to see “offer nights” on condos again, which up until now, had seemed arrogant, and misplaced.

Being right, isn’t always a good thing.  I’m not happy to be working in a market with no structure, and no stability, and it makes it really tough.

The toughest part: bully offers…

Did I blink, and completely miss this show?

I was searching for images on Google related to “The New Normal,” and I shouldn’t have been surprised to see that this crappy NBC sitcom, cancelled before the first season ended, actually existed for a short time.

When will the big three – NBC, CBS, and ABC, understand that sitcoms are over?

HBO, Netflix, AMC, FX – these guys control TV!

Unless, of course, you’re a mindless redneck, south of the border, who likes slapstick humour for twenty-two minutes, with a laugh-track (so you know what’s funny…).

I find it tragically ironic that the new normal with television shows, is for a mindless sitcom, that never should have been produced, to die out before the first season finishes, just like the mindless sitcom, “The New Normal.”

That’s ironic.

“The new normal,” as it pertains to bully offers in the Toronto real estate market, is kind of sad.

Actually, no, wait – it IS, in fact, ironic.

Just think about how we got here…

Once upon a time, we used to list properties for sale, and if a buyer liked the property, he or she would make an offer.

Then we got to this point where properties were listed for sale, a scheduled date to review offers was set, and buyers proceeded accordingly.

Then we began to occasionally submit “bully offers” to try and move up the offer date and gain an advantage as a buyer.

Now, the bully offer is simply expected.

It’s ironic that we’ve revered back to the point where a property is listed for sale, and you know full well that despite there being a set offer date for one week from now, that property WILL sell within 24 hours of being listed.

That is ironic!

A client of mine, who we’ll call “Jake,” has been looking at semi-detached houses in the Allenby area through the summer, and into the fall.

Of the two houses we really liked, both sold via bully offers, and even of the houses we didn’t like – a few of them were sold, how we Realtors are now saying, “pre-emptively.”

When a great house was listed on Monday for $849,000, I told him, “We have to see this right away.”

I sent him the listing, and told him that offers were going to be reviewed on Tuesday, September 23rd, but suggested that if we really liked the house, we submit a bully offer.

Jake said to me, “Well isn’t a bully offer just the new normal?”

Alas, Jake coined the phrase, not I.

But it’s a damn good phrase, and it accurately sums up what’s been happening so far this fall.

Today marks the end of the third week of the fall market, and already I’ve seen record-breaking prices.  But whereas in the spring, the prices themselves were what made our eyes pop out, this fall, it’s the way the houses are being sold.

Most of the good houses, as the title of this blog would lead you to believe, are being sold via bully offers.

And the truly ironic part is that both the listing agents and the sellers expect it!

We used to be surprised by a bully offer!

“Wow, really?  You like our house that much and you want to scrap next Tuesday’s offer night, and submit your offer of 120% of the list price today?”

Not anymore.

Today, I feel as though listing agents are under-pricing as they did before, setting offer dates as they did before, but fully expecting bully offers to come through the door the first night.

Last week, I saw the best house I’ve seen in Riverdale so far this year, listed at $1,295,000.

Now obviously I’ve seen bigger and better, ie. the houses listed at $2,000,000, but what I mean is that for a 3-storey semi-detached, this house was a show-stopper.  The best house I’ve seen in year(s) plural.

It came as absolutely no surprise that the house sold for $1,500,000 via bully offer, after 48 hours on the market.

How could it not?

How could a buyer “risk” waiting until the scheduled offer night, to compete with others, for a property that he or she will be living in for the next quarter-century?

I would have bet any money that this house wouldn’t last until “offer night,” nor should it have.

As for Jake, and the $849,000 house we saw on Monday, we tried to bully, but it was to no avail.

I sent my offer to the listing agent (I can’t tell you the price, the address, etc, as offers are next week), and she called me back and said, “The sellers want to wait until the offer night, sorry David.”

I groveled a little bit, told her how great my offer was (without saying my price, since she could have her own offer), and then she said, “David, I’m sure you have a great offer.  But I’m sure (name) from Chestnut Park has a great offer, as does (name) from Re/Max West.  You’re not the first horse to the trough tonight.”

And that was that.

I’ve always felt that it makes more sense to wait until the scheduled offer night, and this agent clearly agreed.  But the way things are selling in this market, maybe the bullies are worth considering.

Two weeks ago, again with my client Jake, we saw a house in his desired neighbourhood that had almost everything we wanted, and we decided we’d proceed with an offer.

Jake asked me, “How do you protect yourself against the bully offer?”  He wanted to know how I would ensure we don’t get beat to the punch.

“Well as soon as I’m done here,” I told him, “I’m going to call the listing brokerage, and register an offer.  That will ‘hold our place in line,’ and ensure the property can’t sell out from under us.”

Am I allowed to register an offer if I don’t have one?  Let’s come back to that in a second.

So I did what I said I would; I registered the offer, and the agent called me to say that she had received the page.  Three hours later, on a Friday night, she called me to say that they had received a bully offer, and that if we wanted to compete, they were going to look at offers at 9pm.

I have the best wife in the world.  She didn’t give me any flak for missing “homemade mac’n’cheese night” at Casa Fleming…

We submitted our offer, and lost.

The house sold for $50,000 more than we had offered, which was about $50,000 more than anything remotely possibly logically reasonable.  Or, so we thought…

My point is that in this case, the bully offer was for a number that was astronomical, and didn’t just shatter records – it obliterated them.

In the Fall 2014 market, some bully offer sale prices are representing a premium for not having to bid against other buyers, and risk losing out, whereas some bully offer sale prices are wholly accurate – like the $1.5M sale in Riverdale.

I never liked bully offers to begin with, but when in Rome.

So as Jake had asked me last week, what do we do to work in the best interest of our clients?

As I told Jake, as I put into action, and as I told the folks at my office meeting on Monday when “Bully Offers” were the topic of the week: I register an offer on any property my client demonstrates interest in.

I refuse to lose to a bully.

You’re going to ask me, “David, is it ethical to register an offer if you don’t have it signed?”

Ethical?

Is it ethical to write, “Offers graciously reviewed on Friday, September 19th at 7pm, please register by 6pm” on the MLS listing, and then sell it on September 12th without calling all the agents who showed the property?

So, the answer is, “No,” I can’t ethically register an offer if I don’t have it signed.

But to go back to that childhood saying, “Two wrongs DO make a right.”

If I’m going to work in this insane market, with no rules, no regulations, no structure, no stability, and no reason – where a house can sell in 24 hours, even though the listing for that house, on the Multiple Listing Service, where we all cooperate – then I’m going to have to get creative to protect my buyers.

If my buyers are interested in making an offer on a house next Tuesday, then I’ll register my offer now.  It doesn’t matter if it’s signed, since we can “rescind” our offer by making a phone call.

I’ve heard through the grapevine that TREB and RECO are scrambling right now to try and figure out a way to add order and reason to this bully offer fiasco, but their fight is useless.

You can’t show up to the battle after it’s already been fought.

–

Speaking of ironic – it’s 11:04pm on Thursday night, and as I was sitting here writing this very blog to be posted on Friday morning, I just got “the call” that my buyer’s bully offer on a cute little house at Danforth/Coxwell was accepted.

I think we got a great deal, and I think it could have gone for more on offer night.

And that is why I like to submit bully offers in this market.

If you get it, then you paid less than you feel it could have on offer night.  If you don’t, then you know they’re looking for more on offer night, and you gain some valuable inside information.

Call me a hypocrite, if you want.

I say that I don’t like bully offers, but I just submitted one, and “stole” a house from dozens of other buyers and buyer agents.

But I can’t change the game that’s being played.  I just have to play it, and play it damn well.

Bully offers truly are the new normal.  It’s going to be a crazy fall market, folks.