I was literally writing this blog post in my head as the scene unfolded.
This story is about two things:
1) Good agents versus bad agents
2) Getting emotional when you can least afford it
Not everybody will agree with everything in this story, but what can I say? Toronto real estate is not for the faint of heart…
How can I tell people not to get emotional in the Toronto real estate market? It’s like telling me not to hurt myself at the gym as soon as I get back from whatever injury I was previously nursing.
It’s just going to happen.
But when you do get emotional, at the wrong time, and for the wrong reasons, you need to snap out of it quickly, or risk making a mistake.
And most importantly, your real estate agent need to be the one to spearhead that process.
As I said in the introduction, this story is about both emotion, and the idea of a “good agent” versus a bad one. I could have lead with a title referring to either, but in the following story, the emotion was the precursor to the agent’s bad decision, and the whole scene was overshadowed by a competing agent’s good decision.
A listing of mine, for which I’ll change all the details in the following story, sold the other night.
This was not a brand-new listing, it was not under-listed, and there was no “offer night.” That’s important to note, as it explains some of what went down.
On Wednesday afternoon, I received a call from a buyer’s agent saying she would likely be bringing an offer on the property. We had been chatting back-and-forth, she was asking “the right questions,” and I knew that her client had been at the open house on both Saturday and Sunday, with her father, taking measurements and mapping out where she would put her furniture.
The offer came in around 3:00pm, and it had an 8:00pm irrevocable.
The irrevocable was very short, and so I told the agent, “I won’t be able to get back to you before 8:00pm, my client works late, and it’s just too quick. But based on your offer, you know we’re signing this back, right? So the ‘deadline’ doesn’t mean much here; I’ll get back to you around 10pm.”
All that was true, and it was fair. Some deals happen faster than others, but there was no reason to give us a 5-hour irrevocable, on what wasn’t a fantastic offer. If your offer is exceptional, and likely to at least meet the seller’s expectations, and hopefully exceed them, then by all means. But in this case, it was odd, so I was up front about my time commitments, and that of the seller.
Around 6:30pm, another agent sent me a message saying she might have an offer as well. I knew this agent, and I had worked with her before in the past, so when she said, “I’m probably going to have an offer,” I didn’t take it the same way as I do these days when a rookie agent has a good showing, gets all excited, calls to say he’ll have an offer, and then falls off the face of the earth.
I called my client and left a message, saying that we had an offer, and might have a second, and to call me when he was free at work.
At 7:30pm, the second agent registered her offer, and I called her to chat.
Her offer was around the same price as the first offer; neither were fantastic, and both really represented “starting prices.”
She was skiing in Mount Tremblant, but had the can-do attitude, and was ready to work.
I told her, “Your offer looks like a starting point, and that would be fine, if we weren’t in multiple offers.”
“I know,” she said. “My client wanted to start out with this, and there’s room on the price, no doubt. She loves the property, and she wants it. How are you going to handle the offers?”
How are you going to handle the offers. That’s a great question, and that’s key.
If you’re a new agent, take note. You need to ask the question, and you need to listen to the answer.
“We have two offers,” I told her. “Both represent starting offers, and I’d have done the same if I were in your position, and there weren’t multiple offers. But we are where we are, now. So let’s be fair. Let’s have both agents to back to the two buyers, and ask them to put their best terms on paper.”
“That’s great, David,” she said. “I’m so happy you’re on the other end of this deal.”
It’s not hyperbole, folks. This is verbatim. It sounds familiar to Monday’s blog post, and that’s not intentional here. To echo some of the comments from Monday’s blog, this really is a relationship business.
“It won’t take me long to get back to you,” the agent said. “My clients are out to dinner in Toronto, waiting patiently for my call. I’m on my hotel-bed in Tremblant, with the laptop out. Let me see what I can do about the price, the deposit, the closing date – I’ll get back to you.”
And that was that.
I got on the phone and called the second agent, exchanged pleasantries, and basically told her the same thing.
“So we have two offers now,” I said, “And I think the fairest way to handle this is to simply have both buyers put their best terms on paper, and we’ll reconvene shortly. I’m not here to grind anybody; I’m a fair guy, and I feel bad that only one buyer can be succesful tonight, but that’s the way it goes.”
And I waited.
I waited for a response.
But there was an almost-deliberate-feeling pause, before she spoke up and said, “Our offer has expired.”
And folks, I knew exactly where this conversation was headed.
Didn’t I tell you at the onset that I was basically writing this blog in my head as it happened?
“Yes, I know,” I told her. And again, I waited.
“Our offer…….you see……expired, at 8:00pm,” she explained. “And it’s now 8:10pm,” she added.
“Yes, I know,” I told her. “But I told you at 7:30pm that we had a second registered offer.”
“Whhell,” she said, with that overemphasis that stems from displeasure, “My client is a little hurt.”
Hurt? Geez, I hope it wasn’t her signing-hand…
“She’s upset,” the agent explained. “And she’s not prepared to do anything tonight. We’re going to sleep on it, and we’ll come back to it tomorrow.”
Here’s where the emotion became quite apparent, but I speak not of just the buyer, but rather the agent too.
And as a result, I might add – immaturity, misguidance, and in my opinion, inexperience.
“I’m sorry she feels that way,” I told her. “But we are where we are now – with two offers. This house will be sold tonight, either to your buyer, or the competing agent’s buyer.”
Ignoring everything I just said, she asked, “Why didn’t we get a sign-back before the offer expired?”
“The offer expired at 8:00pm,” I told her. “It was submitted after 3pm. That was a short irrevocable, and I told you my client wouldn’t be able to work with the deadline, and not only that, the deadline was meaningless given you expected a sign-back.”
She then told me that I never communicated this to her, so I asked her to hold on, I went into my Outlook, and forwarded her an email:
3:29pm: “Hi Jane, my seller is teaching until 9:30pm and home thereafter. We won’t be able to respond before 8:00pm, but I’ll do my best to get back to you tonight. David.”
Once again, completely ignoring what I had just said, she told me, “My client is really sore. She’s a first-time buyer, and this is certainly not what she expected.”
Expectations. Wow. If there’s one lesson to learn about expectations in the Toronto market – don’t have any.
“I can’t help that,” I told her. “But what I can tell you is that we’re going to look at both the offers shortly, and the door is open for you to resubmit your offer.”
“Why would I do that?” she asked me. “You didn’t choose to work with our offer the first time around!”
And this was when I began to realize that while some of the hurt was coming from the buyer, perhaps not all of it had originated there.
A good real estate agent checks his or her emotion at the door. You can’t let the situation, or another agent, rattle your cage.
I can’t tell you how much sh!t I have to eat in a given week, when dealing with agents I don’t like, or who can’t do their job, or who are obnoxious for no reason. But I keep calm, and I kill them with kindness. You simply have to in this business, and in this market.
When a situation doesn’t go your way, you accept it – immediately.
And when your buyer, or seller, gets emotional, you calm them down. You help them to see things the way they are, however they are. The situation might not be what they want, but emotion causes buyers and sellers to make poor decisions. An agent’s job is to keep them focused.
But here it seemed we had an agent that was encouraging, or fostering the emotional state that the buyer was in.
If I had to guess, I’d say they shared an equal amount of soreness at this point.
“I’m trying to help you here,” I told her. “Your client was at the property, at both the Saturday open house, and the Sunday open house. It seems like she really liked this place!”
“Oh she did!” she told me. “She absolutely loves it.”
“Well then please go back to her, and see what she wants to do.” I said, since this was the only rational, logical thing for a buyer’s agent to do in this situation.
“I’ve already spoken to her,” she told me. “And I know how she feels.”
She wouldn’t even make the call. She wouldn’t even talk things over, with her emotional, confused, first-time buyer. I couldn’t believe it. I started to wonder who was making the decision here.
And then she added, “You could always sign our our offer back.”
Wow. She was completely out to lunch.
An agent from Halton, 2-years into the business, running amuck in the Toronto market. Go figure.
Remember when I said it was important to note that the other agent asked, “How are you going to be handling the offers?”
This is a buyer-agent recognizing the situation – that there are competing offers on the property, and that the listing agent is in the dominant position, with leverage, and asking how the listing agent is going to handle offers.
You, as the buyer agent, don’t try to dictate the process, as the Halton agent did by suggesting we “sign the offer back.”
The other agent resubmitted her offer, with better terms, and with a photo of her buyer-client, and a personal note.
She was a true professional, and she understood the situation.
And in the end, we accepted her offer.
Now some of the cynics reading this might suggest that it seems I simply want every agent to push, or force, or talk their buyer into offering a higher price, or that I’m arguing an agent must do anything to get the sale.
I can’t tell you how often I talk my buyers out of making offers. An hour before the above story was going down, I had emailed one of my clients to tell her not to make an offer on a Mimico townhouse, because it seemed like she “wasn’t feeling it.” Her heart wasn’t in it, she wasn’t all-in, and it seemed like she wanted to see what detached bungalows came up for sale.
So I told her that we should hold off making an offer, and if we found something we liked more – great! If we didn’t, and the townhouse sat on the market for a month, perhaps the price would be lower, and it would be a more attractive buy.
The point of the preceding story is that we had a buyer who was in love with a property, was already mapping out her furniture, and who made an offer, only to find that the situation had changed – as it does all the time, in our market. Either she, or her agent, or both of them, then decided that life had dealt them a terrible blow; an unfair one, and they were going to take their ball, and go home.
I understand the buyer being emotional, that’s a given. But the agent? It was embarrassing.
I honestly believe the agent cost her client a property that night, and I felt bad for the buyer.
The young buyer who actually did buy the house had a great agent, and one who, if the tables were turned, likely would have dealt with the circumstances as they arose, kept her head, and lead her buyer through it.
Think back to my story in Monday’s blog; the situation was almost identical.
We made an offer on a condo, and as our bad luck would have it, a second offer came in therafter.
What did I do?
Well, I didn’t stand around kicking imaginary pebbles, like a sad cartoon character, but rather I kept my buyer-client informed, guided them through the process, made the listing agent my new best friend, and got the deal done for my client.
The above story could be about emotion, or, it could be an advertisement for why not to hire an out-of-town agent with 2-years experience. But I’ve seen experienced agents get emotional, and lose deals as a result too.
This market is a roller-coaster, and some people just don’t have the stomachs for it…
Chris
at 9:49 am
“My client wanted to start out with this, and there’s room on the price, no doubt. She loves the property, and she wants it.”
Maybe I’m idealistic and/or naive, but I would be less than thrilled if an agent purportedly representing my interests as a buyer willingly offered this kind of information to the sellers. While a multiple-offers situation obviously reduces a buyer’s negotiating power, confessing that the buyer “loves the property” and that “there is room on the price” doesn’t do much to help strengthen the position.
Andrew
at 9:52 am
Idealistic, no. But naive is correct.
That agent was negotiating with David. Her client wanted the property, and facing competition, she let him know that their low starting offer wasn’t a final price. What’s wrong with that? She didn’t tell her client to bid above the list price.
I think some people just don’t see how tough this market is. You can’t buy in a vacuum.
Chris
at 10:10 am
I have yet to be involved in a negotiation, whether business or personal, where one party has stated that they really want the item/outcome, and that the price is simply a starting point.
If you were buying a car, would you state this to the salesperson? If you owned shares in a company or sat on a board, would you be happy with the CEO stating this to a vendor or target of an acquisition?
Just seems like information that could have been withheld, without hindering further negotiation.
Daniel
at 10:31 am
Have you bought much real estate before? It’s worth noting that it is very much a different beast than almost any other form of transaction. Registered offers, buyers and sellers typically only communicating through agents, etc. Almost every aspect of the RE transaction is different than buying a car, doing procurement, etc.
lui
at 9:11 am
I agree.Only in real estate where they can get a way with some pretty shady tactics especially in pre construction sales.This is why the sales documents are designed to protect the builder and agents from push back after the sale.
Kramer
at 1:19 pm
I think it depends on the situation. If a property has been sitting for a month and you are the ONLY buyer offering that day, you can afford to keep your cards closer to the vest and act like you don’t really want it unless you get a great price. This was not the situation at hand.
They came in low, which was responsible not knowing there was another bidder. Having been told there were multiple offers, the agent was communicating to David that they were serious and would be willing to pay more and to keep them in mind and not pull any trigger without letting them in the process. Nothing wrong with that, and I’m sure it was in line with the buyer’s instructions/wishes at that point.
And as I’m sure you know, this is completely different from any other negotiation situation (cars, business, etc.). Don’t make me explain why Chris 😉
Chris
at 1:35 pm
As I said to Daniel, I realize that Real Estate is different from other negotiations; however, in any and all situations, are all actors not expected to work to maximize their personal benefit?
Maybe the buyer did instruct their agent to verbalize their sentiment? If so, well, so be it. However, if I were in the buyer’s shoes, I wouldn’t be thrilled at my agent disclosing that I “love the property” and that my price “is just a starting point”. Seems to indicate not only a willingness to negotiate, but that I would part with significantly more money than I had initially indicated.
Maybe it’s the verbiage that gets my back up? If the agent had said something along the lines of “my client is highly interested in this property, and is willing to negotiate price” I wouldn’t take exception to that.
I guess it’s just the misalignment of incentives and lack of transparency in the entire situation that has me a bit concerned. But alas, I’m not the buyer, and if they’re aware of how everything went down and are happy, well then all’s well that ends well I suppose.
Kramer
at 2:32 pm
To put some structure around it, I think the question needs to be “What exactly can David do with THIS information in THIS situation”?
The other perspective requires knowing exactly what that buyer was thinking… just because everything played out as it described above, it doesn’t mean she didn’t get the property for $15K less than what she was willing to pay.
And if she hadn’t made that statement, could she have gotten it for $20K less instead of $15K less? I don’t know. If David comes back and says “Congrats, you were the higher offer… and your client loves it, so now let’s negotiate.” the buyer agent can come back and say “Woah, negotiate? You just said we’re the highest offer, so good luck getting much more from us… regardless of how much my client loves it.” And I think there is an understanding in there so those words don’t need to be exchanged.
I guess I can just easily think of 5 things her agent could have done to actually hurt her in THIS situation, and making that statement isn’t one of them.
I think it does require some touch and feel re: what to disclose in your attempt to get the desired outcome for your client. In this situation the agent may have played it perfectly.
Chris
at 3:17 pm
At no point was I questioning David’s actions. His job is to represent the seller and, theoretically, extract maximum value for the sale of the home.
But the buyer’s agent’s responsibility, theoretically, is to extract/preserve maximum benefit for their client (benefit can be more than just price though).
However, as I’ve said, the misalignment of incentives may not always make this so; the buyer’s agent is incentivized to see their client buy sooner rather than later, thus generating a paycheck. The buyer’s agent benefits when their client pays more, thereby resulting in a higher commission.
Perhaps, the buyer’s agent in this scenario acted exactly as the buyer wanted. Perhaps, the buyer’s agent disclosed some extra information due to this misalignment of incentives. We really don’t know, and probably never will.
All I can say is, personally, were I to find myself in this situation, I would not want my agent sharing the kind of information that this real estate agent shared regarding her buyer clients.
Geoff
at 2:52 pm
re: “As I said to Daniel, I realize that Real Estate is different from other negotiations; however, in any and all situations, are all actors not expected to work to maximize their personal benefit?”
Undoubtedly the realtor felt she was acting in the best interest of the client who wanted the house, over incremental savings. Obviously, the best case scenario is the house for the lowest cost, but houses are commodities, not products – you really can’t comparison shop (well maybe at new home builds, but they’re out in Oshawa or Newmarket or Mordor or wherever they are).
Chris
at 3:22 pm
It is usually fair to assume good faith, however, given the misalignment in incentives, I am not 100% positive that the realtor was acting in the best interest of her client, as opposed to in her own best interest. As I said to Kramer, we will likely never know for sure.
With regards to the second part of your statement, did you mean to say that houses are not commodities? The definition of a commodity is a product that is interchangeable with others of the same type (a barrel of oil, bar of gold, etc.).
Geoff
at 11:21 am
I misused the word commodity – thanks for catching that! My clumsy meaning was to say that houses aren’t products, they’re unique one-of-a-kind products at the end of the day (perhaps niche products?). So people don’t necessarily want ‘a house’ they want ”THE house’ — and while there can be a number of houses that various criteria, most of us have a dream house in mind when we start looking and we know it when we see it. So losing a house over $10K can sting. That’s the emotional side of buying though I guess!
Chris
at 11:28 am
No worries; lord knows I’ve made my fair share of typos on this blog!
You’re absolutely right though, houses are not typically treated as a commodity. People want “this” house, they get emotional, etc.
It’s why in most of my posts, I’ve stated that they seek to maximize their “benefit” when buying, not simply their money. Benefit is a much greyer term, that encapsulates cost, desire for a specific house, desire to move at a certain time, and many other things.
Daniel
at 10:27 am
I don’t know what’s idealistic about your position. Making a low offer but making clear that you can work with them can be a perfectly valid tactic. Otherwise, your low offer might just get thrown out the window (i.e. no counter, agent concludes you’re not a real buyer). You then have to improve and resubmit, at which point you’re now in a weakened position.
The strategy used can actually be a really good one as it can get you some discovery of the sellers expectations with little risk of coming in too high. Further, after representing lots of room to move on price you can then negotiate closer to your original number once you get a counter. Seller is a lot more likely to accept a “low” number once they’re negotiating and signing back and forth than they are right out of the gates.
Chris
at 10:51 am
I realize that purchasing RE is very distinct from other transactions. However, to my mind, this is lends impetus to adjusting the system. After all, are the buying agent’s incentives well aligned with their clients’? They get a paycheck if/when a transaction is completed, so theoretically it is in their interest for their client to buy a home, even if it means their client overpays. The faster this occurs, the sooner they receive compensation, and the sooner they can reallocate that effort/attention to another client.
Perhaps more transparency in the process would help, and would avoid these situations where an agent with misaligned incentives to the buyer discloses information that, in my opinion, does little to strengthen the negotiating position.
Professional Shanker
at 11:46 am
The future of RE is simply an on-line structured bidding process, include whatever additional type of documentation you want (family photo, intention of move on price if you want to express this kind of detail). The cost benefit of a system like this will eventually win out – that said this is years out.
Al
at 1:20 pm
Not sure about that Professional Shanker. I don’t know how comfortable a 75 year old is in accepting an online bid on their home that they been in for 50 years.
Baby Boomers are the biggest demographic and will usually rely on humans for important transactions. That’s why bank tellers and grocery clerks still exist. I know you said it will take many years but in many years, A.I. will be running this world anyways so it won’t matter 🙂
Professional Shanker
at 3:19 pm
and AI your comment is fair, many people feel more comfortable with the personnel touch of a RE agent which I admit has many advantages and provides a feeling of comfort
Daniel
at 12:22 pm
Chris, your point that the purchasing process could be different and perhaps improved is a fine one. It remains though that your comment that the buyer agent mis-played the situation by stating their desire for the property is just incorrect.
Chris
at 12:34 pm
That’s your opinion, Daniel, and one that you’re welcome to. I respectfully disagree.
As I’ve said, my personal opinion is that I would not want my agent disclosing that my offer is just a starting price and that there “is room on the price, no doubt”, as I feel it does little to help strengthen my negotiating position. There are ways to demonstrate interest and a willingness to negotiate without resorting to the verbiage used in this scenario.
You may feel differently, and thus, if you find yourself in this situation, can instruct your agent to act accordingly. So long as it is in adherence with your wishes, I don’t think anyone would be concerned.
The question remains, though, did this client instruct their agent to disclose that type of information? Again, I don’t think we’ll ever really know, but my concern is that, due to the misalignment of incentives, I would not be entirely shocked if the agent acted of their own accord in sharing this.
jeff316
at 9:45 am
The signalling of emotional intent is pretty common in real estate transaction, particularly multiple offers. It’s a ploy to make turning down an offer riskier for selling agents, lest they alienate a committed buyer.
Hence all those yuppie homebuyers writing letters to sellers purporting how they really wanted to raise their family in that house.
It is a useful strategy, if your client is serious.
Natrx
at 10:00 am
I agree. The buyer model is screwy in my opinion. They don’t care about the price per se. They want the deal done. Any price variation after expenses (brokerage, taxes) is peanuts. Therefore the buyer Agent’s best interest is to submit a higher bid to appease the seller and get the deal done. Not trying to get the best deal for the buyer (if one thinks about it, they are getting paid by the seller.. so that’s who their interest will be!).
Chris
at 10:17 am
Exactly. Misalignment of incentives.
EDWIN
at 10:13 am
Would you not be legally liable if you’re buyer realized you technically “lied” to them. Since the first offer had expired, there weren’t multiple offers, and they improved their offer for no reason based on false information you gave them.
Craijiji
at 11:13 am
He told the eventual buying agent there were two offers at 7:30 pm, which there were since the offer offer expired at 8:00 pm. So no, he didn’t lie to them.
Kramer
at 1:03 pm
The only way you can proceed is exactly how David did, by explaining to both interested parties how he was going to handle the situation and leave it up to the buyers from there on in. And there were absolutely two interested parties; proof: one actually offered, the other actually bought, all on the same day.
Also, it is never his responsibility to accurately relay the “INTENT” of one buyer to another after explaining how he’s handling the situation. If buyer #2 starts acting fussy and “unsure”, David cannot tell buyer #1 that buyer #2 is “acting fussy” or “might be walking away”… because what if buyer #2 doesn’t walk away but comes screaming back in 45 minutes with a new offer that the seller likes? Then buyer #1 is pissed at David.
A legally binding offer was purposely submitted by one buyer knowing full well that the other buyer could be walking away at any point after being explained how the situation was being handled. Plain and simple. This is business as usual… proof: there has never been an offer that is conditional on there being another buyer in the mix. That’s silly.
It’s also no different than if there are 20 buyers… If 20 buyers are told to come back with their best, if 7 of them vanish without submitting their best offer, it’s not David’s responsibility to tell everyone that there are now only 13 buyers and for everyone to work that into their strategy.
Professional Shanker
at 11:34 am
David, what fiduciary obligations do you have when it became clear that one buyer would not be coming back with the best and final and their offer expired. Reason I ask is because, I would want my agent (buyer from this perspective) in the future to confirm that the competing offer is still valid, as I wouldn’t come back with a best and final if there is no competition.
iwill
at 1:05 pm
That’s a great question… I like to hear David’s answer. Dave – do you have to tell the other agent that the other offer expired and isn’t coming back to the table?
Kramer
at 1:51 pm
David has no fiduciary obligations to tell Buyer #1 that Buyer #2 is walking away because he did not state that a part of the chosen process was relaying the one buyer’s intentions to the other buyer throughout the process.
When being explained the process, either agent could have said “OK, but are you going to tell us if the other party drops out?” to which David would have said “No, I will not.”
They have every right to say “This is BS, I need a play-by-play of the other buyer’s intentions. We’re walking from this process.”
He explained the process and the buyers and agents can proceed however they wish from that point onward. The buyer submitted their best offer knowing full well that the other buyer could be walking away at any point after being explained how the situation was being handled.
But for fun… what if he did tell Buyer #1 that Buyer #2 is “walking away” or “was going to sleep on it” or “was getting emotional”? What could go wrong then?
1. Buyer #2 doesn’t actually walk away and comes screaming back in with an offer that David cannot ignore because he is protecting the interests of his client.
2. Buyer #1 decides to sleep on it because there is now no rush and they’re going to negotiate hard, and then Buyer #3 and Buyer #4 show up at 10PM with killer offers.
So I don’t think that’s a better system.
You can’t be responsible for the intent of potential buyers. All David can do is state how he is going to execute things, and abide by it. You can’t account for every possible outcome when dealing with this situation. The buyers can engage (and take risk) or walk away (and take risk). The seller is also taking risk (maybe both buyers decide to walk).
Professional Shanker
at 3:09 pm
100% agree that no agent from 1 buyer should be responsible for other buyer’s intentions but what stops one side from confirming at a specific point in time in the process to double check if an offer is still valid? This is why I asked what obligations if any, does an agent have to provide their client with information about the negotiation process which would be deemed important. In this case I would like to know so I could potentially recalibrate and adjust my negotiation tactics, perhaps I don’t at all but at least all information is available to make the most informed decision possible.
Also, understand and appreciate the other side of the equation when you lose a place to a late offer which was better because someone slept on the offer.
Andrew
at 3:17 pm
Lost in this thread is the fact that BOTH offers were starting offers, and neither would have been accepted. So even if offer #2 knew that offer #1 wasn’t coming back, they still couldn’t leave their bid where it was. They would have ended up at the same place if they wanted the property.
jeff316
at 9:41 am
They absolutely could leave their offer where it was.
Shaker’s post is convoluted but is a critical question in all of this.
Condodweller
at 12:14 pm
I agree as well and would be interested in the answer. Does a registered offer become “unregistered” at any point after it expires? Let’s say an offer is registered the first day a property is listed. I decide not to take it and let it expire. If an agent calls me a few days later to find out how many registered offers are there can I say one, even though it’s expired, or do you have to say none. This is a very good and pertinent question.
Jennifer
at 2:09 pm
Excellent question. Curious as well.
David – I am also curious, have you ever had a situation where an agent said they had a competing offer, but you doubted that they did. I have had friends that were in that situation, did not raise their offer and they still got the property. Either they were already no. 1 and the other person did not beat them even if they improved, conditions, there was no other “real” offer (offer of a friend?), or the other person walked away?
Michael
at 1:26 pm
This whole conversation is ridiculous. All of your comments are ridiculous. The vacuum comment was spot on!
You are all looking at the situation as if the world is a fuzzy place, and everyone loves everyone! But that’s not the way this works, David did not lie to anybody either!
Remember last spring when he wrote about his fair bidding process? So many of you turned on him, and said that he wasn’t lying, cheating, and stealing hard enough for his clients. But today, when you were looking at it from the buyer side, you were pointing out all the ways in which the buyer could have got the property for less.
This simply proves what I have learned to understand about people: everybody is self interested, and nobody gives a good God damn about anybody else, unless they are discussing openly, in which case they pretend to love everybody.
Kyle
at 2:59 pm
This and Katherine’s comment are so bang on!
Condodweller
at 12:18 pm
You are absolutely right. This is why we have rules/regulations/laws in place to maintain some semblance of fairness. Of course it doesn’t stop said self-interested party from skirting the rules to his/her benefit.
Sardonic Lizard
at 4:46 pm
“This simply proves what I have learned to understand about people: everybody is self interested, and nobody gives a good God damn about anybody else, unless they are discussing openly, in which case they pretend to love everybody.”
Truer words were never spoken.
Carl
at 2:21 pm
Just another case to show that we need transparent open auctions for selling real estate. Or is anybody willing to argue that the system that we currently have is better for the buyers and sellers, with all the secretive behind the scenes wheeling and dealing and blind trust in the honesty and competency of brokers?
Chris
at 3:27 pm
I agree. I realize that the auction system is not flawless. But, as I have stated multiple times in other posts, the current opaque system, rife with misaligned incentives, surely cannot be the best way to make what, for many, will be one of the largest financial decisions of their lives.
Kramer
at 3:57 pm
If a seller had the choice, what process do you think they would choose?
And it should be their choice. It’s their business, their product.
Chris
at 4:17 pm
If I were selling my home, I would be fine with an open auction process. This has benefits to the seller as well, in allowing for transparency and maximizing extracted earnings. If you were selling your home, would you prefer the current structure?
I should also point out that many businesses and product retailers are not free to choose whichever selling practices they prefer. As an example, look at how Ticketmaster is currently being brought to task for the myriad of secondary fees beyond the face value of the ticket. Just because it is the seller’s product, does not give them carte blanche (and yes, I realize a concert ticket is different from a house). But this starts to delve into a much deeper discussion about free markets, etc., now doesn’t it?
Kramer
at 4:30 pm
I disagree with maximizing extracted earnings.
The current process has the potential to get you the most that your customer is willing to pay.
In an open auction, your customer only pays a dollar more than what second place was willing to pay.
There are other elements to consider, but based on that alone I’d take today’s process.
Chris
at 4:37 pm
https://www.nar.realtor/auctions/the-basics-benefits
Anecdotally, I’ve also seen cases where sellers have been harmed by the lack of transparency in the process, as a result of less-than-scrupulous real estate agents.
I’m hard pressed to think of many scenarios where greater market transparency is a bad thing overall.
Professional Shanker
at 4:50 pm
Agree with Kramer – current process favours the seller in terms of getting higher prices – not that it represents the most fair option for all parties involved.
Why shouldn’t the process (aside from the negative economics to the RE industry) be altered to an on-line structured bidding process?
Kramer
at 5:04 pm
How would that work? An auction lasting one week? 24 hours? How are terms of sale and conditions handled, not flexible? Im asking because I can’t picture all the details in the optimal version of it.
Kramer
at 5:08 pm
I assume you would have to screen all bidders. There’s a cost there. Still have to pay an agent or service for showings, etc. Lots to consider. Can’t even begin to think of the list.
Kyle
at 5:21 pm
Real estate auctions exist here and now. There are Auction houses just dying to sell peoples’ property. No one uses them, for the simple fact that, actual real market participants don’t think it is a better way to go.
Chris
at 5:24 pm
Kramer, CBC had a segment awhile ago where they explored how real estate auctions function in Australia (along with some very questionable practices that realtors here in Canada weee getting upto). I don’t believe it went into enough detail to answer all the questions you raised, but it may shed some light on them.
Professional Shanker
at 5:45 pm
Kramer – 100% it would be a complex system which I do not have the answers to. Screening of bidders – have to qualify them based on financial criteria, verification of documentation etc, there would of course be a cost but significantly less than 5 bps.
Seller would of course set conditions similar to now. Not discounting the complexity but I think it is the future, perhaps I am wrong.
jeff316
at 9:39 am
And Australia is up there with us as one of the more overheated markets, no?
Chris
at 10:19 am
Absolutely, Australia’s property market is very hot. However, I doubt many people would attribute the frothiness of their market to the transparent auction style of home sales. But, I’m not an expert on Australian real estate, so I could be wrong.
Katherine
at 2:49 pm
What does it say about the readership here that nobody is talking about David’s intended point, that buyers and buyer agents can make mistakes when they get emotional, and instead, want to nit-pick the double offer scenario?
Half of the comments below make assumptions. And the entire focus seems to be catching David in some sort of “gotcha.”
Somebody mentioned Garth Turner’s blog below. The comments on there are all completely negative, but on here, it seems they are trending that way as well.
Professional Shanker
at 3:32 pm
No one is trying to “catch” anyone, from my perspective I am just trying to understand agent obligations, I have not read David’s piece on fair bidding processes, perhaps I should.
I enjoy learning and information and David’s intended point of leaving emotions at the door among many others is understood and not up for continued debate IMO – he is right about that, even though very difficult to adhere to throughput the process.
Katherine – you are free to post and debate whatever subject you like – please go ahead and do this as opposed to nit picking others….
Chris
at 3:41 pm
Agreed. One single comment said David “lied”, to which two comments were posted refuting that assertion. Other comments have focused on the obligations of the buyers’ agents (not David in this situation).
So not sure where Katherine is getting the idea that the entire focus is to catch David in a “gotcha”?
As Shanker states, we’re all free to discuss whatever we like. Katherine, you are welcome to join in our discussion, or you can start another discussion about whatever topic interests you.
Finally, I must have missed any conversation of Garth Turner? Where/when exactly was this mentioned?
Libertarian
at 10:55 am
Speaking of Garth Turner’s blog, did anyone else see that he quoted David’s post from the other week about how many deals are done by agents?
He referred to David as a former realtor, not sure why he did that. Maybe it’s because David is now a broker?
Anyways, that gave me a chuckle.
This blog has been debating “the process” of buying and selling real estate for years and the two sides are always the same – one side wants it overhauled, the other side thinks no system is perfect and that ours is better than Australia’s. I’m part of the former.
Paully
at 3:27 pm
I am starting up a business to help move the multiple offer process along. For very modest $1000 flat fee in advance, I will attend the offer night with a signed offer to purchase in hand. I will make my offer so ridiculously low-ball that there is no chance that it will be accepted, but any person(s) making other offers do not need to know that. Now every listing can have multiple offers again, even if it is a total dog!
ed
at 4:55 pm
Hey David,
when are you going to get your IT geek to fix the comments so the oldest ones are at the top?
Lemonaid
at 9:48 pm
Hear, hear!
Mike
at 10:14 am
This….
CB
at 7:31 pm
I think that David has hit on a very important point, and it doesn’t just apply to the Toronto market: human nature. People get very emotional about buying, and especially selling, property. We’ve watched ourselves get angry about very small amounts of money. We learned to guard against those feelings, either as a buyer or a seller. In the end, “meeting in the middle” can be a much better outcome for both. Another point to consider is that my husband is a shrink. Some people you will deal with, either buyers, sellers, or colleagues are going to be a little (or a lot) nuts.
lui
at 7:34 pm
David is looking after his client,why should he care if the other agent client feels “hurt ” that she/he may lose on their dream home because David is holding back offers.He told them straight out there is another buyer that probably would offer more than their offer price and ask them to put their best offer on the table which they did not.It is still a sellers market no matter if sales are down from 2016 highs and the total lack of decent inventory is going to still push prices up in 2018.
jeff316
at 9:52 am
With the short irrevocable and the signalling of the buyer’s love of the property, the first buyer’s agent upped the ante for David. This is a high-reward, low-risk strategy because if it works the agent has forced David’s hand, if it doesn’t the agent is insulated because it pins the result on David’s actions.
In not kow-towing to the first buyer’s agent, he called his/her bluff and won. In a relationships-based business, this is potentially risky but it is his job to represent the bid with actions he believes will result in a sale that suits his client’s interests.
Well-played by both agents.
jeff316
at 10:27 am
Random anecdotal Australian real estate agent in the Star a few years ago:
Q: What’s the advantage of an open auction system versus our sealed-offer practices – apart from being able to see what the competition is offering? Some agents here say that the winning offers in bidding wars are frequently so far above competing bids that the lack of transparency has helped drive up prices. What do you think the effect on housing prices would be under an Australian-type system?
A: I think the auction system would have the potential to move the market up even higher. I believe that every day properties are being undersold here because they’re not letting the market take its course. If bidding is good enough to set the price of oil and most other commodities, why can’t we use that for property? If one buyer is prepared to go an extra $10,000, $50,000 or $100,000 over the starting or list price, I reckon there would be a good chance others would be willing to go with there too.
jeff316
at 10:28 am
That was meant in reply to Chris not as a standalone post. The idea that the type of sales system doesn’t impact the market’s dynamics is a stretch.
Chris
at 10:53 am
If an open-auction system moves the market up higher, than so be it. I’m not arguing for or against it for the purposes of cooling or heating the market.
I’m in favour of it simply for the transparency it would bring to the process.
Sarah
at 5:27 pm
reading these comments has me feeling as though most of Davids top readership has never witnessed or been privy to a real-estate negotiation. Assuming David handled things the way he said he handled them (which I think he did), he was very graceful, fair, and did his job exactly how he should have.
Bunch of butt-hurt people here.
Chris
at 6:09 pm
Just like we said to Katherine, where are you getting the idea that people are attacking David or are “butt-hurt”? One person called him a liar and two others refuted this. Many of the other comments have focused on the process itself, or the buyer’s agent.