When I posted on Tuesday, telling the story of a girl who recently accused me of being in “cahoots” with another agent, I got an email from a reader asking me to tell another story like this.

I guess it’s funny….to everybody but ME!

But here is a story of another know-it-all young couple that knew how to make terrible decisions, blame other people, and watch the market rise out of their price range while they stood idly by…

The agents in this photo above—they are DEFINITELY in cahoots!  Just look at them!  So smug, happy, and their hand-waving is soooooo choreographed!

When you think of a “Realtor,” what comes to mind?  How about those silly pictures of agents faces on park benches, billboards, and garbage bins?  How about this chick right here:

Yeah, that’s the cliche.  Take your picture in front of a house with a “sold” sign, and the general public will just assume you’re good at what you do…

There’s one agent in Toronto that has a website about lofts downtown, and at the top of his page, he has a picture of himself doing pushups!   Wow, pushups and real estate are like peanut butter and jelly…

I truly believe that in real estate—in a real estate relationship between agent and client, there are three important facets that must be present for the relationship to be successful: 1) Respect, 2) Trust, 3)  Understanding.  The client needs to respect the agent, and see him/her as an experienced professional, who is more than just a paper-pusher who they use to make an offer.  The client needs to trust the agent, his/her opinions, knowledge, experience, strategies, ideas, tastes, likes, and dislikes.  And finally, the client needs to understand that the agent is the agent, and the client is the client.  If the client knew so much about real estate, then the client would be a Realtor.

So a little over two years ago, I was working an open house at 12 Vanderhoof Avenue in Leaside.  Now please understand, that this was not MY listing, it belonged to an agent in my office.  I work the open house to meet potential BUYERS.  If and when the house sells, I get nothing, unless my clients do the buying.

So I meet a young couple who want to come back that night with their parents, and sure enough, they are interested, and want to make an offer.  “Do you have an agent,” I ask, like anybody with a week’s experience in real estate.  “No, we don’t.  Would you mind helping us make an offer?”

Would I mind?

Would Barry Bonds mind hitting homeruns?  Would Tiger Woods mind winning the PGA Championship?  Would Tom Cruise mind brainwashing innocent young former stars from Dawson’s Creek?

The house was a semi-detached, 2-storey listed at $449,900.  It was in need of a lot of work, but the price was right!  Renovated semi’s were selling for over $550,000, and this one at 12 Vanderhoof had a private driveway!  Very rare for semi’s.

I figured the house would fetch as much as $475,000, but this was the first week of July so the market was beginning to slow down.

I did my homework, and I printed off the last eight sales of semi-detached homes on Vanderhoof, factoring in the respective appreciations, and I made an excel spreadsheet of every semi to sell in the spring market that year in 2005.  For arguments sake (since I don’t have those numbers here with me in Mexico), let’s say that 30 of the 40 semi-detached houses sold for OVER the asking price, and that the average list-to-sale ratio was about 104%.

I gave all this information to my clients, and told them tomorrow we would focus on our strategy for the offer.

This was my first mistake.

The next morning, she called me (I’ll use she and he instead of their real names), and told me that they’d like to make an offer of $442,000.

“Did you have a chance to read over the information I gave you?” I asked, already knowing that I was about to have a long battle with an uninformed real estate know-it-all.

“Yes, we both read it over last night, (sure, SHE read it while he played Nintendo in the other room.  She wore that pants in that relationship), and we’ve decided that $442,000 is as high as we are willing to go.”

“Well, I can tell you with absolute certainty right now, that you will not get this house for $442,000,” I said.  “In my opinion, this house is going to sell for $465,000.”

“Well we are willing to take that chance, cross our fingers, and hope that something CRAZY happens and we luck out.”

There is no luck in real estate.  None.

Now keep in mind, that this happened two years ago, which means I was two years younger, two years less experienced, and two years more “eager.”  Real estate years are like dog years—two years in this business is like 5-10 years in most others.  Had this situation happened today, here is what I would have said:

“This house IS going to sell for over the asking price.  There is ZERO point in putting in an offer below asking.  If somebody else wants to do that, great, let them.  Their agent is probably from Markham, and has no grasp on the market here.  But I do.  I grew up here, and my company thrives here.”

“I am NOT going to submit this offer for you at that price.  If you’d like to continue, please, feel free to use another agent.”

“Think of this scenario: next month, when you come down from whatever planet you are currently on, you will make an offer on a house listed at $429,000, and compete against THREE other buyers.  You will offer $445,000, and you will get this house.  However, along comes two naive, know-it-all buyers at the last minute, and submit an offer, bringing the total to FOUR competing offers.  Everybody will raise their offer price by $5,000 due to this other offer, meaning you will pay $450,000 instead of $445,000.  This couple offered LESS than the asking price, even though they had no shot at this house.  They artificially drove up the price of the house.”

“Is that what YOU want to do in this case?”

“Either buy this house, or don’t buy it.  But don’t needlessly drive up the price, and don’t waste my time.”

That is what I would have said today.  Two years ago, I agreed to meet them at her downtown Toronto law office to sign the papers.

I arrived at some high-profile law firm called like “Johnson, Johnson, & Blaven,” and she came out in an expensive pants-suit while her husband wore a pink shirt and board shorts.  She was the bread winner, and he was her eye candy.   He looked like either an OHL burnout, or a former singer in the short-lived band O-Town.

I put the Agreement of Purchase & Sale in front of them, and I began to read through it.  She immediately grabbed it out of my hands and said, “I can read for myself,” and began to intensely scrutinize each pre-printed portion.  She decided that she had found fault with one section, and wanted to change it.

“These are Ontario Real Estate Association forms.  Everybody who makes an offer anywhere in Ontario uses these forms, and the pre-printed forms are, well, PRE-PRINTED.  They are the default.  I have never seen anybody change this before.”

As if I was speaking Mandarin, and she was only familiar with Cantonese, she proceeded to change the pre-printed portion.

What made this entire process worthwhile was when her husband began talking to me about something random and unrelated, and she actually put her finger up to his lips and said, “HONEY!! SHUSSSHHHH!”

He would have rolled his eyes at me, had he been intelligent enough to do so.

We signed the offer at $442,000, and I submitted it to the listing agent.

What was most surprising about all this, was that we actually were given our offer BACK, and asked to “improve it.”  They usually only do this with offers that are close, but in this case, there were three other offers, and I guess they wanted to milk everybody for every penny—tell them that ALL FOUR offers were being sent back, and the eventual highest bidder would pay more than he would have with only two send-backs.

I got my clients on conference call (she insisted on using her company’s conferencing system), and I told them that if they REALLY wanted this house, it was time to make a REAL offer, and come up to $465,000.

She put me on hold, presumably to talk it over with her husband, but I think she just wanted to make sure he had dinner ready by the time she got home.

She came back on the phone, and said, “We’ve decided to add ONE-THOUSAND dollars to our offer.”

I almost bleeped my bleeping bleep.

I went back to the listing agent with our “improved” offer of a whopping $443,000, and hours later, the house sold.

For $465,000.

I felt very vindicated at this point, knowing that I had a very good understanding of the market, and that I was able to efficiently gage where certain properties would sell.

But my client didn’t see it that way.

“Ooooooh…..NOW I see how this works,” she said very facetiously.  “So you talk it over with the other agent, who just happens to work in your office, and then you decide what the house is going to sell for.  Well, I’m sorry I didn’t fully comprehend how all this works…”

I began to explain to her that in a multiple offer situation, the listing agent does NOT view my offer.  Our office manager takes all the offers, and goes through them with the sellers.  Since I work in the same office as the listing agent, we have a “dual agency” situation, and at our company, we do things by the book.

“So this book told you that we had to pay $465,000 or we wouldn’t get the house?”

She was a lost cause.

I told her that I’m very good at my job, and I know Leaside better than anybody.  I knew with four offers that this house would sell for $465,000, and that if this was two months earlier, with a hotter market, it would have fetched $475,000.

“So next time, I’ll just give you an envelope full of Pesos, or a briefcase full of greenbacks, and we’ll get our house.  Is that it?”

Here is one part I was fully expecting: She told me, “You know, I KNEW this would happen.”  Of course she knew!  She knows EVERYTHING!  “I just had a feeling that you would end up in cahoots with the other agent.  How else is this Toronto real estate market appreciating so rapidly?  Agents are all in cahoots and are driving up the price!’

Yeah, that must be it.  Forget about the fact that YOU tried to drive up the price by submitting what amounted to a “dummy offer.”  Forget about our strong Canadian economy, the low interest rates, the low unemployment rates, the increasing net-migration into Toronto, and a whole host of other proven economic data that explains the booming real estate market.

Yeah, forget all that.  It MUST be that we are all in cahoots.  See that picture at the top of all those swarthy, smiling real estate agents waving at you?  They are all in cahoots…they are all my cahooting best friends, and we laugh it up while bowling and drinking every second Wednesday of the month…

She went on to explain that she worked for a high-powered legal firm, and if she was so inclined, she could “ruin me.”  I wanted to tell her to calm down, or she might burst a seam on that expensive pin-striped pants-suit she was wearing, but I remained professional, as always.

The great part about real estate, is that you get to choose who you work with.

I told her that I was unwilling to work with her from here on out, and that our buyer agency relationship was being terminated effective immediatley.  Six months later, when she walked into my open house, with her husband on a leash, I asked them politely to leave.

That house on Vanderhoof, that sold for $465,000 two years ago, with $40,000 in renovations, is now worth well over $600,000.

And my former “clients?”  About six weeks ago, I drove by the multiplex on Bayview Ave near McDonalds, and saw them lugging groceries into their rental apartment.

It sure would have been nice to get your hands on a hot, undervalued, Leaside property two years ago.

But some people know best.  And Caroline, surely the “best” move for you was to keep pouring your rent money into that multiplex while “crossing your fingers” and waiting for our hot hot market to somehow magically fall into your favor.

There is no such thing as “luck” in real estate.

But there are no shortage of know-it-alls…