Some sellers simply expect to get multiple offers on their properties.
So what happens when they plan for the best, and don’t get it?
Well, that depends on the listing agent and his or her ability to temper the sellers’ great expectations…
Honestly, how transparent am I?
I think it’s clear that this entire blog post was just an excuse to put up a half-naked photo of Gwyneth Paltrow!
Doesn’t that creepy guy kind of look like Michael C. Hall from Dexter?
The growing sense of entitlement amongst property sellers in Toronto is rearing its ugly head once again.
I had a situation on Tuesday night that had all the makings of a “great deal,” but the listing agent and the seller refused to face facts.
A house in the west end was listed at $429,900, and all indications were that it “should” have fetched over $450,000.
I told my clients that they should be prepared to see it sell for as much as $475,000, and then try to decide if they wanted to come anywhere close to that number.
Looking at comparable sales, feeling out the market, and discussing the property with my experienced colleagues at Bosley Real Estate led me to believe that we would be well over $450,000 and this would be a “decent” price for the house. Paying $475,000 would have been admitting that you really wanted the property.
Offers were being reviewed on Tuesday, and I registered our offer at 9:30AM like I always do. I like to be the first person to register just to scare off those buyers who say, “We’re interested….but we just don’t want to be in multiples.”
I checked back with the listing brokerage every two hours, and the story was always the same: “Mr. Fleming, you’re still the only offer.”
My clients had signed a blank offer with their initials next to the price so that we could fill in the price at five minutes before 7:00PM when offers would be reviewed.
The “what if” scenario was in the back of our heads, but we didn’t want to address it; what if we were the only offer? Wouldn’t that be amazing?
Well, sure enough, we were the only registered offer at 7PM, and we faxed over an unconditional offer for the full asking price of $429,900.
At 7:20PM, the listing agent called me, and to my shock and dismay, she said, “David….you know this offer isn’t going to fly.”
An unconditional offer with a closing date in less than a month for the full price wasn’t going to fly?
“You and I both know that this property is worth more than $450,000,” the listing agent said.
I simply replied, “Well, it seems that the market disagrees.”
Sure, I might be willing to advise my clients to offer $461,000 on this property…….if there were six offers!
But there weren’t six offers. There was only us.
The listing agent immediately told me that unless we “sweetened the pot,” her client was going to re-list the property the next day for $459,900.
Would he actually do that? Would a seller actually re-list the property for $30,000 more than the listing price because he truly believed that he SHOULD have received multiple offers?
In our business, we call re-listing for higher than the original asking price, “The Kiss of Death.” Those properties never sell.
I told the listing agent, “Your client would be well-advised to re-think that strategy. Have there been any documented cases of this ‘strategy’ actually working?” I asked.
She reiterated that the property was “worth” more than our offer, and she was vehemently against the idea of presenting our “terrible,” full-priced offer to her client.
We hung up, amicably, and she called me a couple of hours later.
She told me that the two of us had to “work together” to get the deal done.
I had a feeling she wanted me to screw my clients.
She asked if they were “the type” to pay a little more for the house, and I just shook my head. She wanted me to somehow convince my clients to pay more than the asking price, even though they were the only offer. Whether this house was worth $430,000, $440,000, or $450,000, there was no way I would ever advise my clients to pay that price because I knew that the listing agent and her seller had no leg to stand on, and no leverage in negotiating.
The only thing she could do was to threaten us with the idea of re-listing the property for $459,000 the next day. So was this an empty threat?
A few years ago, my friend Dave bought a house in Leslieville for $410,000.
The house was listed at $389,000, but the combination of recent comparable sales and the conversations with agents in my office led us to believe the house was worth around $440,000. Dave and I contemplated perhaps not even making an offer, but we decided to go ahead.
Much to our surprise, there was only one competing offer, and thus we figured we’d take home the prize.
But the listing agent and her client said they were “expecting” at least $430,000, and they’d be re-listing at $439,000 the next day unless we came up to their price.
Dave and I held our ground, and after four hours of grovelling, the pathetic agent and seller came back to us and asked for $1,000 extra as a sign of “good faith.”
Dave got the house for his asking price, and what I deemed to be about $30,000 under “fair” market value. The house is likely worth close to $500,000 today.
I used this experience to guide my clients through the mess this past Tuesday, and I urged them to stand pat. Well, in actual fact, I didn’t really converse with them more than once, since I handled my 7-8 conversations with the listing agent all by myself.
Her futile attempts to squeeze out what was a “fair” price ended with her asking for a small, insignificant amount of “good faith” money just like in my Leslieville experience.
At 11:53PM, just six minutes before our offer was set to expire, and right in the middle of Jack McCoy’s jury address on a re-run of a Law & Order episode that I have probably seen four times, the listing agent called me and said that her client was going to accept our offer.
Wasn’t that the likely outcome?
Were we ever really to believe that the seller would re-list his house $30,000 higher the day after only getting one offer on the property and not selling it?
Believe it or not, this happens all the time.
Personally, I believe it is the Realtor’s job to curb the clients’ great expectations, and prepare them for all likely scenarios.
It’s up to the sellers to decide how to proceed; to their detriment, or not…
at 11:06 am
David, what would YOU do if you were the listing agent in this case? I remember a few posts back, you told us about a listing, for which you were anxiously waiting for offers for the whole day, and by the end you were lucky to get a high offer. What if it didn’t happen that way? What if you and your seller weren’t that lucky? Your seller were just too disappointed about the situation, and he/she blamed you and your strategy, what would YOU do then?
at 1:22 pm
Listing offers is dying. I’ve seen a number of properties recently get nothing on offer night….and nothing for some days afterwards….only to finally sell for under or at asking. The market is turning. It reached it’s peak and is now settling, if not actually declining. As for sellers, your property is only “worth” what someone is willing to pay at that time. List at what you will accept.
I predict with rising mortgage rates and overall increase in cost of living due to the HST, we will be seeing a buyer’s market within two years.
at 9:40 pm
@LC – real estate markets are like pendulums – they spend very little time in the middle, and they hang on at the ends. I think you’re right, I just think we’ll be balanced through the summer and then buyers market in the fall.
Even though I hate using those terms… buyers and sellers markets. Nobody knows what they mean, and there’s no universally accepted criteria for it. My definition is a buyer’s market is when less than 25% of the listing inventory sells per month.
@David – nice work – you played it perfectly.
at 12:38 pm
Finally, these stupid games are coming to an end. I wonder what would have happened if these dimwits had just knocked it off with the games and listed it for fair market value – i.e. $450K. Maybe more buyers tired of the bidding wars would have offered knowing that it wasn’t being deliberately underpriced.
Well played, David.
at 2:03 pm
This is unfortunately the double edged sword that is the Toronto real estate market. Everyone assumes any half decent downtown property will end up with multiple offers, so listing at what you think is actually fair market value may burn you in the end.
You may price your property at a fair market value, and scare off any potential buyers because everyone just figures that any downtown listing is priced low to entice a bidding war.
I still agree that the stubbornness of the selling agent makes me glad these wonderful buyers got a great deal. Maybe they’re a young couple just starting out their adult life, so it’s nice to see them get thrown a bone by the real estate gods.
at 6:57 pm
I’m wondering how much of her commission this agent had to give up to appease her clients….
at 10:54 pm
@LC – I don’t think it works that way? Or does it? Curious thought.