This was a busy week.

One of my listings sold on offer night, having attracted 15 offers.

One of my listings sold over the list price, after seven days on the market (no offer date).

And one of my listings sold via bully offer.

Three listings, three very different results.

TREB stats are out, and while I’ll wait until Friday to provide some colour commentary, I’m sure the regular market bulls will champion the September average home price in the comments section below.

But today, as promised, here are two recent letters from TRB readers, on very poignant subjects, and my thoughts…

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Hi David,

I have a question that made me think of a recent blog post about a first time home buyer who asked you to represent her where you were already on for the seller.

My friend is a first time home buyer in the Toronto market. She is working with an agent.

Last week, my friend saw a property listed at $1,099,000 which she liked and he was interested in making a bully offer of $1,315,000. Her agent spoke to the selling agent who told them not to bother with the offer since it was well below expectations. Two days later (before offer night) the house sold under a different bully offer for $1,300,000. This was $15,000 less than my friend was going to offer. The selling agent never contacted my friend’s agent to tell them about the lower bully offer and never gave them a chance to compete.

It turns out the buyer was a colleague of the selling agent at the same brokerage and waived his commission to get it for less.

This whole thing sounds shady to me but I am not sure if it crossed any ethical lines. If the agent shaved his commission I am not sure that the seller was harmed, but the seller did lose the opportunity to find out if my friend would have upped her bid. I question whether the selling agent even told the seller about my friend’s intended offer. I wonder if she was discouraged from making the offer so that the offer from the selling agent’s colleague would appear more competitive.

Does this story raise any red flags to you? Is there anything my friend could have done to avoid this type of scenario?

Thanks,
(Name)

There’s a lot going on here, but I think that every person involved should share some blame.

First and foremost, the buyer agent is to blame.

I know that “victim blaming” is in poor taste these days, but you should all know that I also believe in personal responsibility, and above all, accountability.

As I type this, I have a pre-emptive/bully offer in play on behalf of a buyer.

I drafted the offer, had my clients obtain a certified deposit cheque, and sent the signed offer to the listing agent along with a copy of the cheque.

I waited ten minutes, then called the listing agent and said, “Hi, it’s David Fleming from Bosley Real Estate, I’ve sent you a pre-emptive offer on XXX Number Street, did you receive it?”

That is how you submit a bully offer.

You do not do what the agent in the story above did, or you’ll get a result like his too.

There are some exceptions to the rule, don’t get me wrong.

A well-known east-end agent had a listing two weeks ago in which my clients expressed interest.  I know this agent has a slew of listings on the go, and I also knew that the house would likely sell for more than my clients would be able to pay on “offer night.”  So I sent him a very simple text:

“Hey Name, hope your fall is off to a good start!  Do you want a bully on XXX Number Street?  My guys are really keen, I can send one tonight.  Thx!”

In this case, blindsiding an agent I know, with a bully offer that is less than what I know it’ll sell for on offer night, is not going to gain me any favours, either on this deal, or the next.  He wrote me back and said that the sellers were in two different places, and committed to offer night.  But had there been interest, either from the sellers, or from this busy agent who might want to get a listing off his plate, he’d have given me the opening.

Unless you have a personal relationship with the agent, you don’t ask them if you can send a bully offer; you just send one!

In the letter above from a TRB reader, his friend’s agent simply wasn’t experienced and/or skilled enough to know how to navigate the market and utilize the bully offer as a tool.  By simply calling the listing agent and asking him, and divulging a price on the phone, he gave up any piece of leverage he had, and lost the element of surprise.

This is, to be blunt, a rookie move.

It’s a weak move too.  Really, really weak.

I received a bully offer today on one of my listings, which we’ll be accepting shortly.  The agent, who I know, hinted last night that she ‘might’ have a bully, to which I said, “Cool, I’m always happy to work with you.”  That gave her what she needed, and today we’ll do a deal.  But before we do that deal, I have to do my part of the job, which the agent in the story above did not do.

When a listing is entered into the MLS system, and there is an “offer date,” and that date must be specified in the listing.  But here’s something that most people don’t know: there’s a form that the seller must sign too.

Form 244: Seller’s Direction Re: Property/Offers

Here’s the section of the form pertinent to our discussion:

The seller must check one of these boxes if there is a set “offer date.”

With my listings, I always have them check the last box, and I write:

Offers Reviewed Monday, October 7th @ 7:00pm.  Seller Will Consider Pre-Emptive Offers

Now in the case above, the listing agent made one catastrophic mistake (aside from potential ethical breaches…) and that is the fact that he did not adhere to the one rule you simply have to adhere to when dealing with pre-emptive offers: he did not call/inform the other agents.

If a pre-emptive offer is registered on a listing, and the seller intends to “work with” the offer, ie. accept it, or any higher offers, then the listing agent has to inform “any party who has expressed interest in the property.”

The agent in the story above failed to do so, and that’s a breach of an ethical responsibility.

It’s also foolish, since he has no idea what other offers may have materialized.  A reader on Wednesday asked about “fiduciary duties” the seller client, and here’s a case where the listing agent’s laziness, incompetence, or indifference may have cost the seller.

If you’re the listing agent on a property, for which you’ve set an offer date, and you receive a pre-emptive offer, you can’t just tell the seller to sign the offer, accept it, and call it a day.

You absolutely, positively, must do everything you can to inform any party who has expressed an interest in the property, the very first of which are the agents who have shown it.

In the case above, the listing agent did not reach out to the buyer agent, and that’s wrong.  That’s a punishable RECO offense.

The TRB reader suggested that perhaps this had to do with “shaving commission,” and that smells odd to me.

It’s far too convenient that a listing agent says the seller accepted a $1,300,000 offer, having turned down an offer of $1,315,000, because “the difference was made up in the discounting of commission.”

It’s possible, but not probably.

That would be a buyer agent giving up more than half the commission, and that’s rare.

The idea that the other buyer agent was a “colleague” of the listing agent, from the same brokerage, obviously plays into this.

If I were to give the benefit of the doubt to that listing agent, I would add that even in a small company like mine, with less than 300 agents, there are still many I don’t know, and I would never conspire with another agent just because we are licensed by the same firm.  We are independent contractors, and there’s absolutely nothing gained by having a “colleague” from the same firm provide a buyer or seller to one of our transactions.

But if this is true in the case above, then it stinks.

The listing agent, in not information the first buyer agent about the presence of a pre-emptive offer, has already shown he’s a cheat and/or lazy and incompetent.  But if he’s going to bend or break the rules for a colleague, then throw the book at him.

While I blame the listing agent for being unethical in this case, I also think the first buyer agent has to wear some blame because he doesn’t know how to transact in this market.

–

Here’s another letter, er, email, that I received this week.

Remember letters?  Remember opening them at camp, and being so excited?

What do kids do now?  Just text their parents?  Or Facetime?

They’ll never know the excitement of hearing your name during “mail call” and getting that letter from Mom.

But I digress…

Dear David,

We live well outside the city limits and find ourselves in a real estate market that isn’t anywhere near as warm as what you describe in Toronto. My husband and I will be selling our home in early 2020 and we are having a tough time understanding the new real estate frontier.  We have not bought or sold a home since 1982 and much has changed since then.  Our agent at the time was one of only about five who worked in this area and all worked for the same firm. We would meet at his office and look at Polaroid photos of houses, flipping through them like playing cards. Then we would go out on a tour each weekend, sometimes seeing as many as ten homes in a day. We bought our house for $34,000 but with a 16% interest rate. We thought we were lucky as rates had come down some.

We’re having trouble wrapping our heads around the idea of moving our wares out of the home and into storage while other furniture is brought in. I know you tout this on your blog as essential but is it really? In our area there are houses that look awful and still sell. There are houses that look beautiful and sit on the market. I don’t like the notion of my things being stuffed in a warehouse some place that I don’t know. We are not as concerned with an extra few thousand dollars as we are with the process running smoothly and not interfering with our lives. My husband has sat in the same shoddy chair to read the newspaper every morning for years. I don’t imagine he would enjoy sitting on a fashionable stool that looks good in photos. We recognize that a buyer doesn’t want to see our family photos on the wall leading up the staircase but we also don’t think this should act as a reason for them to pass on the home. I personally think our house shows as a place of warmth, and a true family home. I don’t believe that stripping our home of character and personality is a step in the right direction.

Can you tell me if you think that virtual staging is a reasonable compromise? My son says that we can take photos and doctor them to look more modern and have different furniture. If we could stay how we are and where we are but show our home in a more favourable light then that would be idea.

Thank you for your time.

Alright, well, this gal has made a convincing argument, and as I explained to her in my email response, I think there’s a marriage between “getting the most money for your home” and “having the least inconvenience caused” that only she and her husband can define.

I will also note that her email started with a blast from the past (Polaroids and 16% interest rates) and took a quick jump into the future (virtual reality!).

But I will respectfully disagree with the idea that a house filled with “warmth,” in the form of ratty chairs that Dad has sat on for decades, will trump clean, open, modern looks and feels.

There are buyers looking for that “family home” vibe, and the word “warmth” is not to be taken lightly.  But “warm” is a feeling that some buyers get, and it’s not tied to family photos of somebody else’s kids.

What I was not expecting was the note about virtual staging!  That came out of nowhere.

The word “doctoring” stood out to me, and that’s a bad word in most respects.  I think of a pitcher “doctoring the baseball,” and it’s not a good thing.

I think “doctoring” photos to make them look good runs the risk of misrepresenting the property, but when it comes to virtual staging, I’m a hard pass.

I was going to save these photos for an “MLS Musings” post, but they fit well here.

Does this look like a real condo to you?  Or does the entire room look fake?

Those photos all look like comics.

And if you saw those on MLS, I think you’d giggle, then email them to a friend.

You wouldn’t take this place seriously, and I actually feel that the virtual staging undermines the listing.  It hinders, rather than helps.

And if you didn’t laugh at those, you’d laugh at this one:

A virtually-staged guitar?

That looks so out of place.

Not to mention this “den” is probably seven feet wide, and that King-sized bed is like a dollhouse miniature in there.

That is misrepresenting the space!

So to the reader who provided the letter above, she’s got two issues: 1) De-personalizing and staging, 2) Virtual staging.

I’m a hard “no” to virtual staging, no matter what.  Some will argue that an empty property shows better with virtual staging, but if it makes the place look like a comic, as the photos above do, then forget it.

I’m also a hard “no” to leaving up all the family photos, and Dad’s ratty reading chair, among other things.  However, and this is a big “however,” I think that if a seller is less price-sensitive than most, and the added stress of packing up personal effects doesn’t trump the potential for a faster sale, and/or more money, then forget staging.

Thanks again for the letters!

Have a great weekend, everybody!