If you’re an active buyer in Toronto’s real estate market, you’ll LOVE this story.
It’s always a happy ending when people get what’s coming to them…
The following story happened to a colleague of mine, so I’ll have to change all the pertinent deals so he, or she, can keep ‘their’ anonymity.
A friend once told me he suspected that every time I tell a story, I simply change the sex of the person from male to female, or female to male. So what now? Keep it the same? Reverse psychology? Or just use a name sounds so phony, it can’t be real…
“Justice” is a friend of mine who works with me at Bosley real estate, and it’s been said that she and I have very similar attitudes, and ways of doing business. We bounce ideas off each other from time to time, talk shop about offers and pricing, and ask for advice when something amiss is going on.
A couple weeks ago, Justice showed a property to her buyer clients that had just come out onto the market. I mean it just came out, like they were in the house about one hour after it hit MLS.
In a competitive market, and for a property with no set offer date, with no associated expectations of multiple offers, you MUST get your clients in for a look as soon as possible. If they’re working downtown, no problem – pick them up at lunch, drive out to the property, and be the first person through the door. Hold-backs on offers are rampant in this market, and when there is a new listing for a property with no offer date, you have to take advantage.
Justice is a sharp lady, and she had an offer prepared when she went to show the property, just in case.
As luck would have it, the clients loved the property, and wanted to make a full-priced offer on the spot.
This was on the Wednesday before Canada Day long weekend, so Justice made the offer irrevocable until 11:59pm that night, ensuring that her clients would have an answer that evening.
The listing agent was slow to the draw, either because she was busy, or because this was by design.
She kept saying that she wasn’t able to reach her clients, and that they were tied up.
Justice suspected that she was stalling because there were other showings going on, and Justice, and her clients, worried that a second offer would be forthcoming.
In the end, the listing agent said she wasn’t able to reach her clients to review the offer that Wednesday evening, so she asked Justice to re-submit the offer for Thursday morning. She added, “By the way – we might be looking at multiple offers here. If your clients really want this property, they should offer a ‘premium’ to my sellers, since they’re going to sell their house after one day, in this red hot market.”
Justice was right – the agent was stalling.
But she couldn’t disagree that the house was a good deal, another offer could come in at any minute, and that it was nice to not have to compete.
Justice’s clients really wanted the house, so they added $5,000 to their offer. The house was listed at $699,000, so they offered $704,000, which theoretically meant they were bidding against themselves, but it was the cost they were willing to pay to get the house.
The offer went in on Thursday morning, with an irrevocable date of that afternoon. Both Justice, and her buyers, didn’t want to wait around.
Now consider that the subject of this blog post is “GREED,” and now try and predict what happened.
Take a moment…
Stop reading this, for a second. And think.
What do you suspect happened? Come on, play along – hazard a guess…
…..ready?
Justice received a sign-back, even though her offer was for $5,000 over the asking price!
The sellers and the listing agent signed the offer back $20,000 HIGHER! They signed it back at $724,000.
Insanity?
Inexperience?
Illogical actions?
Maybe. Maybe not.
Perhaps the listing agent smelled blood in the water. Perhaps she thought she had a whale on the line, and she was going to lure it in.
The problem, of course, is that Justice is a take no BS kind of agent. Sure – she allowed her clients to go in above the asking price, but it was their decision, they wanted the property, and it was less than they thought it was worth. But now that Justice had received a sign-back of $20K higher, she was going to completely change her demeanor.
The sign-back was good until Thursday night at 11:59pm, and Justice told her clients to sit on the offer, not touch it, and let it expire.
Justice didn’t return the listing agent’s phone calls, and let the offer lapse.
On Friday morning – the Friday before the Canada Day long weekend, which in real estate is known as “the end of the line,” Justice re-submitted an offer on behalf of her clients.
What price, you ask?
$699,000.
That’s right, she told her clients to take back their $5,000 “premium” that was “a sign of good faith,” and give the sellers only their asking price.
The offer was made irrevocable until 6:00pm that day, and Justice went on the offensive.
She told the listing agent: “You f****d this up. You could have had $5K over asking, but now my clients are pissed. They’ll buy it – but at their price. They’re gone for the weekend, so I couldn’t catch them now if I wanted to. Oh, and by the way, you’ll notice I’m in my car. I’m heading up to my cottage, and I’m effectively off the clock. Let me know what happens.”
The listing agent was in tight.
She now had to go back to her sellers and tell them that the offer on the table was for $5,000 LESS than they turned down the day before.
If you’re like me, you’re wondering if:
1) The sellers were greedy, and it was their idea to sign back $20K higher on Thursday
2) The listing agent was cocky, and told her clients “they’ve given us an inch with that $5K premium, so let’s take a mile by adding another $20K!”
I told Justice I thought it was #2.
Justice told me, “It doesn’t matter; seller or agent. They ain’t getting that $5K back.”
After the listing agent called Justice about six times in the next three hours to beg for the extra $5,000, apologize for the $724,000 sign-back, and suggest that the deal would go south, I reaffirmed my position that it was the agent who advised her clients on that ill-fated sign-back.
Justice’s phone rang and rang, all afternoon. But in order for her to answer it, she’d have to risk getting tanning oil on her Blackberry! So instead, she just layed on the dock at her cottage, and let the phone go to voicemail.
Text messages and emails flew in every half hour, with the listing agent first saying, “An extra $2,500, and the property is yours! Let’s split that $5,000 premium!” And then saying, “This deal isn’t happening unless my clients get that $5,000, so let’s each throw in $2,500 of commission, and get it signed!”
Tick, tock. Tick, tock.
Justice waited until about 5:30pm to answer her phone, and told the listing agent for the last time, “I’m at my cottage, and my clients are at theirs. I suggest you don’t let this offer expire in a half hour. This is Friday before the long weekend – before the end of the real estate season. If your clients want to take their chances on the market in July, then God speed.”
At 5:59pm, Justice received an email with an executed copy of the Agreement of Purchase & Sale.
The listing agent cost her clients $5,000 by being greedy.
Telling her clients to sign back $20,000 HIGHER was absolutely insane, and it was an expensive mistake.
As I said at the onset, if you’re a buyer in this market, you’ll like seeing a seller get the short end of the stick.
It’s nice to see greedy pigs get slaughtered once in a while, and even though these sellers got their asking price, and sold their house in 3 days, at least they have to go to sleep at night knowing they threw away $5,000 by being greedy…
Vincent Cheung
at 7:57 am
I love this story. Cut throat and full of karma. Thanks!
Alex
at 8:35 am
love it-)
S. Whissell
at 9:52 am
If I didn’t have a girlfriend, I’d ask Justice to marry me…
Joe Q.
at 11:30 am
I fear that for every “Justice” there are ten other Realtors that would be too “hungry” to call the sellers’ bluff.
lui
at 1:09 pm
But again it could have backfired and the seller found a buyer at $704k and your client lost out of their dream home because of their stubborn realtor.
Geoff
at 1:37 pm
There’s always another house.
lui
at 3:18 pm
Not really…love at first sight…Im sure the clients check out other houses before this one.You know you found the perfect place.
Jeremy
at 4:27 pm
I agree with Geoff. Nobody said it was their dream house, a term that gets thrown around a lot.
ScottyP
at 12:31 am
C’mon, lui. Do you think Justice put a gun to her clients’ heads and forced them to withdraw their prior offer of a $5,000 premium?
Clearly they were just as pissed off as Justice, and just as willing to follow through with this strategy. And good on ’em.
Hollywoodhero
at 9:40 am
You know what’s worse than greed?
A pompous realtor who advises his client to sit on an offer an risk the loss of client’s dream home (fairly priced, no less) over $5,000, for the sake of their pride.
If i was the client, i would have told Justice to head up North a day early so he/she could get to his/her oil sessions. Lots of other Realtors who’d be interested in ‘wait for it’, my interests.
Great story and hollywood ending though. Can we expect a sequel? If so, let’s move away from the predictable scripts that feature a bash of Realtors other (other than me or my colleaugues). It’s so, um 80’s. If not, you risk me waiting for DVD or syndication.
Jeremy
at 1:01 pm
$5000 isn’t a trivial amount of money. Take a minute, and think about how long it takes you to make 5 grand after taxes. Also, nobody said it was their dream home.
FRBYWA
at 11:39 pm
It’s called being being principled, got it? Again, the word is PRINCIPLED. In case you are still confused, here is the definition of PRINCIPLED:
1.(of a person or their behavior) Acting in accordance with morality and showing recognition of right and wrong.
2.(of a system or method) Based on a given set of rules.
Roughly 0.01% of people in this world are principled. David is one of them. Justice is another. I’m guessing you are not….it’s just a guess.
ScottyP
at 12:27 am
You presume a lot, Hollywood:
1. That the realtor is pompous.
2. That this was in fact the clients’ dream home (hat tip to Jeremy).
3. That the clients weren’t perfectly capable of instructing Justice to go ahead with the $5,000 premium if they were so inclined.
4. That Justice wasn’t interested in her clients’ interests.
5. Pursuant to #s 3 & 4, that the clients weren’t completely, totally on board with Justice’s strategy of withdrawing the $5,000 premium and sticking to her guns.
6. That the last paragraph of your comment, about sequels and DVDs and what not, was the least bit witty or amusing.
Other than that, great post.
jeff316
at 9:01 am
That’s not relevant. Hollywood’s point is that the seller’s realtor wasn’t acting on principle, he/she was acting on pride. Had his/her bluff been called, David could have very easily written a completely different blog castigating the actions of big-headed realtors that forget that they are there to serve their clients, not their egos.
I’m glad it worked out for them but let’s not go overboard. It’s easy to get principle and hubris mixed up.
ScottyP
at 12:29 am
Actually, points 2, 3, 4, 5 above are completely relevant, Jeff. (Point #1 being admittedly debatable, with point #6 being admittedly irrelevant.) As in, I’d be shocked if the Justice’s clients weren’t completely on board with this strategy.
Realtors advise clients. They do not force clients to do what they do not feel comfortable doing. Sometimes, that advice can be bad advice… sometimes, it can be downright misleading, uninformed, or irresponsible. But in this case, the options were pretty cut-and-dry.
Here’s how the conversation likely went:
Justice: “Do you guys want to tell this a-hole realtor that we are withdrawing our very generous $5,000 premium?”
Clients: “Hell, yeah!”
So, let’s stop making this about the realtor’s ego and interests alone, shall we?
Ann
at 1:29 pm
We once had a seller counter with an offer higher than asking on a property that had been on the market for a couple of months. We walked away from that one. On the other hand, we also had a seller who got a few offers, ours being to live in the house, the others being from builders. Instead of making us all compete for the house/lot, he told his agent that he’d met us and liked us and that he’d be happy to sell the house to us for asking, rather than going into a bidding war. What do you know – a seller who listed his house at a fair price that he was happy to accept and not try for more… rare indeed I’m sure (and of course we could have turned around and torn the house down, but he trusted that it wasn’t our intention). It should never have been a teardown (it’s a lovely fully renovated house), except for being on what’s considered a large lot for the area. This is another topic, but I do wish the city was a little more discerning as to what can and cannot be torn down – some neighbourhoods are unrecognizable compared to a few years ago! There are many newer builds on our street but I’ll tell you that our 100 year old house has a timeless look and has aged way better than a lot of the infill houses, particularly those from the 80s and 90s which look incredibly dated already!
Frosty Johansen
at 2:05 pm
Well-written tale, David!
But jeez, man, all this gladiatorial BS about 5K in THIS market, when prices are arbitrarily high? Why not add or ask another 50K or 100K when money is still essentially free.
Good on Justice though! It’s good training for when the real value-added Realtor work will begin (maybe sooner than later?).
Congratulations on your wedding, David. All the best. FJ
used autoparts online
at 2:07 pm
Really a great story. Thanks for sharing. Would love to see more interesting stories from you. 🙂
Casey Bannon
at 4:35 am
No one has to be greedy when it comes to real estate. However, there are those who tried and become opportunistic. I suggest that in order to have the best deals with commercial real estate Dallas, greed among agents should be eliminated.
Kat
at 2:57 pm
Hilarious!! My friend and her SO had something similar happen to them…
The sellers lost an easy $25,000 because they were being greedy and unreasonable! They ended up selling the condo for $25,000 less than what my friend and her SO offered… Their greed turned my friend off, and the sellers ended up selling to someone else.
Karma!