Greed! (conclusion)

Houses | May 16, 2008

Imagine a seller who puts his property on the market, gets multiple offers, over-asking price, and STILL wants more! 

What options does he have?

What realistic options does he have?

When is enough still not enough?

monopoly-man.jpg

My good buddy Sport, and I, had done our homework, and figured that this house in Leslieville was worth about $425,000.

But when there was only one other offer, we realized this was a very unique opportunity to get into a thriving neighborhood, at what amounted to the best house in the area, for under the market value!

There are many “should’s” in real estate, but they don’t always come to fruition.  This house should have attracted more than two offers, and it should have sold in the $425,000 – $430,000 range.  But it didn’t…

After presenting my offer, I sat in my car down the street from the house and waited for the other agent to come out of the house.  He did, after what seemed like only five minutes, and got in his Audi with his client, and drove away.  I took that sign to be either really good, or really bad, but nowhere in between.

The listing agent called me as soon as the agent drove away, and she told me that her sellers were sick, distraught, and dissapointed.  They wanted MORE.  They thought their house was worth MORE, nay, they knew it was.

I kept quiet, and let her say her piece.  “David, I’m convinced if we put this house back on the market for $429,000, we’d get our price.  For some reason, the market isn’t responding to my clients house the way it should.”

See……”should.”

“The house on Rushbrooke sold for $422,600, and the lot size here is bigger!  That crummy house on Caroline sold for $437,500, and it was this god-awful reno that looked like it had been done by a blind man and his dog!”

She seemed to be unreeling a bit.

She went on for about five full minutes before I finally said, “Well, what do you want to do moving forward?”  She replied, “Well…..is there any room?”  I asked what she meant by “room,” and she said “PRICE.”

Now here is where one agent gets into a game of wits with another agent.  We pretend like we are friends for the most part, but let’s face it: we’re both working for our clients, and we’re both trying to get the best deal possible.  Sure, some agents just want to make a sale at any cost, but that’s not my style.

“My client is tapped,” I replied.  “He was pre-approved in the $390’s, and to be honest with you, he can’t afford this house.  He’s borrowing a huge whack of cash from his sister in New York, and if I ask him to move up in price I already know what the answer would be.”

Now, according to the Real Estate Business Brokers Act, I’m not allowed to disclose any of those facts that I did above.  BUT, since it was all B.S. anyways, what’s the harm?  There are, however, agents that wouldn’t think twice about it.  They just don’t work for my company…

The listing agent went on to tell me that there was no way her clients were going to let their house go for $410,000, and they would be perfectly content to put it back on the market the next morning at a higher price.  They were in no rush.  I knew this wasn’t the case, since she had already divulged that they bought a house in High Park.  She was very bad at letting things slip…

I told her I would call my client, and I did.

Sport picked up the phone with some uneasiness in his voice, and I quickly said, “There isn’t a yes or no yet.  Just so you know.”  I wanted to get that out of the way.  I went on to explain the situation to him, and he was speechless.  We had prepared for two scenarios: 1) we got it, 2) we didn’t.  This was not expected at all.

“She’s trying to game us,” Sport said.  “This all sounds unbelievable to me.”

He was right.  Nobody puts their house back on the market at a higher price!  Well, people do, but we refer to it in real estate as “the kiss of death.”  It never works.  If you couldn’t sell your house at “X” how could you sell your house at “X+5”?

I played dumb when I spoke with the listing agent, but really I wanted to quote Eminem in “Superman” and blurt out, “Oooh yeah girl, run that game.”  She was full of it.  And we knew it…

I hung up with Sport and listened to FAN590 for about ten minutes, then I called her back.  I told her that I absolutely BEGGED my client to come up just a few thousand bucks, but he was stuck on his price.  I told her that he was an accountant and that he was “a numbers guy.”  There was no way he would budge.

Then, I concocted an even greater lie: I explained to her that during my fifteen minute drive from the house to my office, I convinced Sport to increase his offer by over $15,000, and that initially, our offer was below $400,000.  I asked her to please not divulge this information to her clients, knowing full well that she would, and I told her we were at a stalemate.

She told me that they would discuss it, and get back to me.  So I went home.

So what were the sellers’ options?
1) Accept our offer of $410,525, or the other offer (which I assumed was lower than ours)
2) Sign back one of the offers
3) Accept neither offer, and relist the house at a higher price

She called me back an hour later and told me that her clients just weren’t content to sell at this price, and that they were going to relist the house at $439,900 with a $10,000 cash bonus to the selling agent, in attempts to lure an agent into pushing his/her client to pay $439,900 (effectively $429,900) for the house.

I told her that she should really consider working with the two offers she had on the table, and that’s when she said, “No, the other offer is gone now.”

JACKPOT!

That was her biggest mistake of the day, and there were many!  She NEVER should have told me that, since now I knew I was the only option for her sellers, and since I was convinced that all this crap about re-listing was exactly that.

She then told me, “You know, if your buyer would pay the $422,600 that the house on Rushbrooke got, we’d forget about the re-list and sell tonight!”

An hour later, she called me back and said that “I think for $5000 more, we could get this deal done!”

There was blood in the water, and she was dealing from an obvious point of weakness.  I could have told Sport to “split the difference” and pay $2500 more and just put this thing to bed, but I wanted every last dollar for Sport, and I knew I had this agent right where I wanted her.

I told her that I had a date at 9:30PM, and “Even though real estate is a 24/7 business, I just don’t feel like this deal is going to happen, so please, please, PLEASE let me know by then so I won’t have to cancel on my girlfriend.”

Sport went home for the night, and low and behold, the listing agent called back and said, “We’ve got a deal.”

I called Sport and left him the following message: “Hey buddy, it’s me, it’s 8:30PM, ummm…..two things.  First, do you want to play hockey tonight?  We’ve got an open spot since Neil is away on business, so let me know if you can make it.  The game is at 9:30PM at Moss Park arena.  Second thing, they accepted your offer.  WHAAAAAAAT!!”

I wish I could have seen his reaction…

I have never in my career met anybody as greedy as the sellers for this Leslieville home.  I understand that people want top dollar for their largest asset, but they almost royally screwed up.  To turn down $410,525 when you listed your house at $389,000 would be real estate suicide.  It doesn’t matter what their house should sell for, it only matters what they can get for it when their time comes.

I explained what had happened to a few agents in my office, and one remarked, “That’s the listing agent’s fault.  What the hell are these people going to do when we get into a real market?”  It’s true.  Just because your neighbor got six offers and 109% of the list price doesn’t mean you should hold out for it.

How can you turn down such a huge amount of money?

What is the possible upside when compared to the huge risk?

Greed.  Pure greed.

Most people get burned by greed, but these sellers finally came to their senses.

Sport got his house, and I get to drink Cerveza all summer long on his tree-canopied, cedar-deck.

The only negative that came from all this?  Well, with Sport owning such an amazing house with an unbelievable back patio, who the hell is going to come visit ME???

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One thought on “Greed! (conclusion)

  1. Sanh

    at 4:38 pm

    Is it reasonable to assume that you would get what the other houses would get if time was on your side and you could afford to wait as a seller?

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