“Home Bidders Get Personal”

Business

5 minute read

November 2, 2009

Here’s a great article in Saturday’s Toronto Star that explains a new trend among buyers who find themselves in multiple offer situations.

Try and differentiate yourself from the pack.  Maybe the sellers will respond favorably?

happyfamily.jpg

Home bidders get personal: ‘Our baby loves your house’

October 31, 2009 Tony Wong
BUSINESS REPORTER 

When Amanda Cohen and Noah Segal received multiple offers on their semi-detached downtown Toronto home Sunday, one stood out. Along with a written bid, the potential buyers included a video presentation with a unique message.

“They showed their baby ‘signing’ the offer and told us how much they loved our place,” says Cohen. “I thought it was brilliant. We were really moved.”

Chocolates. Maple Leafs tickets. Handwritten notes and personalized videos. Bidding wars for Toronto real estate are once again percolating, with desperate buyers trying to make an impression however they can. The phenomenon, say real estate insiders, speaks volumes about the city’s housing market.

“People are now making audition tapes begging you to let them buy your house, and by the way, they’d also like to give you more money than you asked for. How outrageous is that?” says Bernard Lang, a Toronto investor in rental properties.

Low interest rates have pushed home sales up 34 per cent from the same time last year. A drought of listings – down 42 per cent – has resulted in multiple offers, with choice properties going for tens of thousands over asking.

That has potential purchasers going to extremes to get attention. Vendors, meanwhile, have the power to decide who gets to move into the neighbourhood. “We were hoping that if it came down to a close bid, it would put us over the top,” says Danielle, who made the video with her husband, Roy. (They didn’t want their last names used.)

In the video, the couple tell Cohen and Segal that they “really love the home” and would take good care of it. They then hold up their 10-month-old baby and pretend to sign an offer. The bid was unsuccessful, but memorable. “It blew me away,” Cohen says.

Danielle and Roy have been looking for a year and knew they had to try to make their offer stand out. “We wanted to differentiate ourselves from the other 500 young couples with kids wanting the same house,” says Danielle.

The concept of putting a face to a bid isn’t so crazy, says professor Alan Middleton, a marketing professor at the Schulich School of Business at York University.

“This is the classic strategy in all selling. Try to develop an emotional connection with the person you’re pitching to. It allows for space in the negotiation, so it becomes something more than price.”

Toronto agents surveyed by the Star say the practice has become more common, driven by the lack of inventory on the market. “We just thought it would be fun and cute to do,” says Corey Brozovsky, the agent who shot the video on his BlackBerry. “The buyers can speak much more eloquently than I can on why they deserve the home.”

The big question when making a personal pitch, says Middleton, is: “How much value does this emotional connection have? Is it enough to move the vendor?”

It made a difference when Tracey and Steve Finch sold their Davisville Village home in the spring of 2006. The house received multiple offers and the couple picked a bid that was lower than the top price.

“Their personal stories helped us make a decision,” says Tracey Finch, who now lives in Boston. “We thought a family would go well on our street because all our children were born there and we had such great experiences and neighbours.”

The Finches had lived on their quiet North Toronto cul-de-sac for 10 years. They purchased their house for $265,000 and were selling it for more than $600,000.

“It really was a fantastic neighbourhood. People would be on their porches, the kids would be out playing …”

So when a single person submitted the highest bid, the Finches decided instead to go with a young couple recently arrived from Ireland with children. The difference in price wasn’t huge, “a few thousand,” says Finch.

“Frankly, we just felt guilty that we were getting more money than we expected for the home. I think it must be awful to be in the buyer’s position, where you’re constantly competing with other people.”

As for Cohen’s property, the video by Danielle and Roy was a nice touch but their bid was just too low.

“If they were equal or even a few thousand dollars off, it likely would have made the difference,” says Cohen. “We still feel guilty we didn’t pick the cute baby.”

There is some hope on the horizon for harried Toronto buyers. Analysts expect more listings next year, which should take some steam out of bidding wars. But in the current market, the connection that vendors have with their neighbourhoods – and with potential buyers – can be key.

Danielle says she won’t hesitate to make a video the next time her family bids for a home. But she is protective of their star. “It depends if the baby is up to it,” she says.

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It’s a great story, but is this fantasy or reality?

How far can “the personal touch” really take you?  And by that I mean how much MONEY is it worth?

If ‘Couple-A’ offered $625,000 on the house and ‘Couple-B’ offered $600,000 but included a really cute video of their baby signing the offer, would the sellers really consider taking the lower offer?

Having said this, and always the devil’s advocate, I will say that adding a personal touch can help get your foot in the door.

I brought along a cute photo of my brother and his fiancee when we were in multiples for their St. Lawrence Market condo a few years back, and while it didn’t win the sellers over completely, it allowed us to get back in “round two.”

We were $4,000 lower than the highest offer, but the sellers thought that it was very cute for us to have brought the photo and they actually seemed genuinly interested in the offer price which included “621” in the dollar figure – since that represented June 21st when they would be married.

The sellers allowed us an opportunity to “improve our offer,” and we added exactly $5,000 and took the property.

We would never have been given that chance had we not gone the extra mile and included “the personal touch.”

I’ve used this tactic a few times since then, but never with any luck.  In our current market, sellers don’t seem to care much – especially if they are pretentious 30-year-old yuppies who laugh you out of their condo for having the audacity to only offer $30,000 more than the asking price, but I digress…

We’re in a very hot market now, no doubt.  And rather than dwell on the condtions and what “woulda/coulda/shoulda” been, buyers would be better suited to come up with innovative ways to differentiate themselves from the other one, two, or fourteen buyers.

If it means including a clause so that the seller can move up/back the closing date 90 days to allow them time to search for their next house, then so be it.  And if it means singing and dancing on a video with your three-year-old, then that works too.

After all – what’s the alternative?

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

Find Out More About David Read More Posts

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2 Comments

  1. Frank

    at 3:18 pm

    Here’s a novel suggestion. How about an open and transparent auction process.

  2. WEB

    at 9:59 pm

    “Smells” like a market top to me…..oh, but wait….I also said that in 2008, 2007, 2006, 2005, 2004, 2003, 2002, 2001, 2000….. one day I’ll get it right!

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