So you’re looking for a steal, eh?

Or just a deal?

Maybe not a deal, but just a “feel-good” purchase?

Perhaps you just want to buy a house or condo and not feel like you got beat up, right?

I understand the psychology of buying properties in Toronto and I’m fully aware of the emotional roller-coaster that buyers ride through the process.  I know that every buyer has a different budget, risk tolerance, and level of like-versus-love for a particular property, but I will say that there are always those buyers in the market that can’t quite get out of their own way.

That is the topic today, and while I’m aware that 20-50% of the readers will initially disagree with my sentiments, just humour me and understand that I’m speaking from experience.

I am not suggesting that all buyers should overpay or “pay whatever it takes” to get a property, but rather I want to tell the story of a recent transaction where I can tell the buyer just couldn’t get out of his own way, and ended up losing the property.

I had a listing for a condo, priced at $599,900, that was sitting on the market.  That’s rare out there today, but this is a newer building where the price per square foot is high and while units all sell, they take some time.  This isn’t a building where we see the “list low, hold back offer” strategy.

Two weeks into the listing, we sold conditionally for $580,000.  But that deal fell through on the fifth day of a five-day condition on financing, and we were back on the market.  We ended up with another offer for $575,000, also conditional, but my seller told me she would either sell for $580,000 conditional, or $575,000 unconditional.  The buyer was free to have his or her pick.

In the end, our deal failed to materialize.

No more than four days later, I received a call from a buyer agent who said that he had just showed the condo and asked if I could give him some “insight” as to pricing and expectations.

These phone calls often go nowhere, and they’re also ripe with misinformation.  They’re a great opportunity for both sides to feel one-another out, to plant pricing anchors, and to set the tone for a negotiation.

I told the agent, “I’m busy, I have a dozen listings, and I don’t have time to bullshit.  So let me tell you the truth here and you can feel free to do what you’d like with it.”

Take that with a grain of salt if you’d like.  I could be setting him up with that only to bury him later on, but in this case, I was telling the truth.

“We had this condo sold for $580,000 and the deal fell through.  A few days ago, we had an offer on paper for $575,000 but it fell apart.  If your buyer wants this, it’s all his for $575,000, firm.”

The agent told me he understood and appreciated the honesty.

I told him, “One last thing: please, please don’t listen to this and then turn around and send me a shit offer for like $550,000, okay?  I just don’t have time for this right now.”

Now, I am negotiating here, and while the cynic will say, “David, who cares how busy you are?” you have to realize that this is part of the trade.  If I can come off as an agent that doesn’t “need” the sale, which I don’t, then the buyer agent has far less leverage.

No more than twenty minutes after I got off the phone with this agent, he sent me an offer.

Was the offer for $550,000, like I told him not to send?

Nope.

It was for $530,000.

“David, this is a really good offer; it’s unconditional,” he told me in a text message.

When you go from conversations on the phone to conversations over text, you know the other side is playing scared.

Again, I understand that you, the reader, are fully on board with the buyer at this point!  You want a deal, you want to pay the least amount possible, you don’t want the seller to get an “easy sale,” and I get that.  I’m just giving you the lay of the land here.

I called the agent back immediately, but he didn’t answer.

So I sent him a text message and said, “Please call me.”

He did, about one minute later.

“I understand that you’re working for your client,” I told him, “And you and the buyer have every right to doubt the authenticity of what I’m telling you.  But now that your offer has been submitted, I’ll reiterate: we’re not selling this for less than $575,000, firm.  I’m not even going to discuss this with my client, there’s no point.  So it’s up to you!  For $575,000 tonight, firm, your client has bought a condo.”

And that was that.

Now, you know that I have an obligation to “present all offers” to the client, so if I tell the agent on the other end of the phone that I’m not presenting his offer, I don’t really mean that.  But at the same time, my client doesn’t want to see this offer anyways.

A half-hour later, the buyer agent emailed me an updated offer.

Was it for $575,000, firm?

No.

It was for $550,000.

I know, I know.  You’re on their side.  They’re just negotiating, that’s all!

He sent me a text message and said, “Revised offer submitted, let’s get this done!”

I texted him back, rather than calling him, just to show him how uninterested I was, and said, “This completely ignores our phone call from thirty minutes ago.  Good luck with the buyer.”

Alright, so is the buyer in his or her own way?

I think so, to some extent.  We’ve had this condo sold at $580,000 and we just turned down an offer for $575,000, so why would they bother offering $530,000 or $550,000?

But in reality, the buyer doesn’t have to care about this.  They don’t have to take us at our word.  And what they’re doing is negotiating, so I fully expect all the readers to side with them.

What happened next, however, I believe firmly puts them in the category of “getting in their own way.”

They came back two days later with a revised offer of $570,000, which again, was rejected.

One day later, the agent texted me and said, “Okay she wants to buy.  We’ll do $575,00.”

Wonderful!

Except that this time, the $575,000 offer was not firm, but rather contained THREE conditions!

Who needs three conditions?  One condition alone takes the offer from conditional to unconditional, and a buyer who has already reviewed the status certificate, already has financing in order, and has already visited/inspected the condo, surely doesn’t now suddenly need conditions for seven business days on each of financing, status, and inspection.

This is a classic example of a buyer wanting to feel like he or she has won something.  Anything.

This buyer wants the condo but can’t bring herself to cave, give-in, submit, or “lose” the battle by offering $575,000, so she made that offer on price, but added three conditions.

I called the agent and asked, “What the hell are you doing?”

He laughed.  “My buyer, my buyer!  It’s my buyer!  I can’t do anything!”

I explained to him that he can do something, such as educating his buyer, or helping her get out of her own way.  But he accepted no responsibility, and then tried to convince me that this was “a really good offer.”

I told him, “We turned down $575,000 with one condition last week, which is what I explained to you two days ago, so why would we now tie up this property for seven business days, on three different conditions?”

“The buyer will close,” he told me.  “She will waive her conditions.  She just needs………….this process.”

Yes, exactly.  She needs that small victory.  She needs to feel like she put one over on the seller.  And by doing so, she was merely getting in her own way.

Once again, we let the offer lapse.

The next day, the agent re-submitted with one condition, but slashed the deposit from $40,000 to $10,000.

Once again, this was the buyer trying desperately to feel like she’d won something.  Instead of simply buying the condo she wanted and calling it “home,” she was looking for ways to feel like she’d won, like tying up the property for a week when she didn’t need to, or decreasing the deposit amount.

I don’t feel like a $10,000 deposit on a $575,000 purchase is sufficient, and I told the buyer agent that.  I also told him that if he wanted a condition, we would do that deal for $580,000, as I had told him days prior.

This time, however, we signed the offer back.

I will concede that you can only allow the other side to submit offer, after offer, after offer, before they walk away.  Even if it’s their fault that they keep making subsequent offers, at some point you have to give the other agent something to work with.  You have to give him an opportunity to do his job, and so that’s what we did.

We sent him a sign-back: $575,000, no conditions, $40,000 deposit.

And thankfully, he accepted.

He sent me a text message and said, “David, she’s going to accept!  Thank you!”

He sent me the offer back, and indeed, it was accepted.

However, he or the buyer had changed the closing date from August 15th, which was what my client wanted, to July 15th, which would have made my client homeless!

Can you “accept” a sign-back, while changing a term or condition of the offer?

Absolutely not.  This was laughable at best, and illegal and deceitful at worst.

I don’t want to delve into contract law here, but when you change anything on an offer, the original offer is null and void.  You can only accept the offer that is presented to you.

I called the agent and again, he didn’t answer, but texted me back.

I finally got him on the phone and he said, “My buyer is happy to accept!  She just decided right now that she wants a faster closing!”

I explained the basics of contract law, and after initially disagreeing, and then calling it “a small detail,” he relented.

So I talked to him on another level, just agent to agent.

“What’s really going on here?” I asked him.  “Can I make a bold suggestion?  I really don’t want to tell you how to run your business, but I have a feeling you’re letting this client tell you what to do.”

My critics will say, “David, you work for the buyer!  Of course they tell you what to do!”

In theory, yes.  But an agent without a backbone is useless.  A tour guide, order-taker has zero value in this market.

“David, I have to do what my buyer tells me,” he explained.  “It’s up to her.”

At this point, we had nothing to work with.  We had an “agreement” which was illegal, and there wasn’t really any sign-back in play.  We would have to start over, and after taking to my seller, who was livid, I told him I would be in touch the next morning.

I bet you can’t guess what happened next, can you?

Call it a prayer answered, or a stroke of luck, or the perfect ending to this story, but low and behold, another agent called me the next morning at 10am and said that her buyer was interested in the unit.

“We were in sign-back on an offer for like five days,” I told this agent.  “I thought we had an accepted offer last night but the buyer changed the closing date, then accepted the counter-offer.”

The agent laughed.  I knew her.  I had worked with her one year prior when she brought the winning bid in a nine-offer melee on a Liberty Village condo.

“David, what do you need on this?” she asked.

“I need $580,000, unconditional,” I told her.

She asked me to send her the status certificate, which I did.  She said she would have her buyer’s lawyer review it asap and get back to me in the afternoon.

Meanwhile, the agent with the genius buyer, she of adding conditions, reducing deposits, changing closing dates, and accepting her own sign back, texted me early that afternoon.

“My buyer is upset with last night.  She will submit $573,800, no conditions, $35,000 deposit, original closing date,” he said.

I texted back, “Put it on paper.”

And he did.

With this offer in hand, I then texted the other agent and said, “They resubmitted.  Get me what we discussed and we’re good.”

And she did.

So I had an unconditional offer for $580,000 from an agent that I have worked with before and trusted.  And I had an unconditional offer for $573,800, from a buyer who has changed her mind and her terms/conditions five or six times in the previous five days.

Who do you think my seller and I elected to work with?

When I tell stories like this, I try to see it from both sides.  Perhaps you think the second buyer “over-paid,” but this condo was sold for $580,000 previously, and we’d had an offer for $575,000 thereafter, before this other buyer came in at $575,000 with their bullshit conditions and changes.  So for this new buyer to submit $580,000 and buy the property that night?  You call it “over-paying,” I call it “getting what you want.”

That other buyer?

She simply couldn’t get out of her own way.

In the end, she lost the condo over $1,200.  But she lost it over way more than that.  She lost it because she was never going to allow herself to be “beaten,” according to her own definition of the word.  She needed to feel that small victory, no matter how hollow, or how minuscule.  She couldn’t just go out and pay $575,000 for the condo because, in her mind, she likely felt like the seller had “won.”

She added conditions to her original offer, then took a couple out but reduced the deposit, then signed back her own offer with a change in closing date and accepted it, and while you might suggest that it was her inexperience or her agent’s poor guidance, I simply know the type.

Some buyers just can’t get out of their own way.

With every property I have ever bought as a primary residence, at some point, I looked back and said, “If I had to do it all over again, I’d have paid more.”  After living in my first condo for five incredible years, would it have mattered if I’d paid another $5,000?  Or $10,000?  No way!  That’s not to say I wasn’t pleased with what I’d paid, or how I had handled the offer process and negotiation, but rather it speaks to why we buy real estate as a primary residence.

I actually feel bad for this buyer who lost out.  She doesn’t see the end goal: living.  That’s why you buy your first downtown condo – to live in it.

She was so focused on the “game” of buying real estate, that she simply couldn’t get out of her own way.

And do you know the craziest part about all of this?

On the weekend, I sold a condo and had an eerily similar experience!  This buyer had also come back and made a second offer and had also included conditions in her offer, whereas she hadn’t the first time.  It wasn’t nearly as ridiculous – with the changing of deposit, signing back her own offer, etc.  But there were two or three very similar actions that gave me complete and utter deja-vu, and showed me that a buyer getting in his or her own way isn’t all that unique.

I’ve been doing this long enough to know when a buyer is simply negotiating the best deal, and when a buyer is playing games and making moves for the sake of making moves, while standing in his or her own way.

To each their own, I suppose.  But in the above story, one buyer is booking a moving van, and the other is in search of yet another game to play…