Unlike the “twelve steps” in Alcoholics Anonymous, the steps involved in purchasing a house or condo can change from time to time.

It depends on the market: the city, the neighborhood, and the product.

In our current Toronto market, I tell my clients, “Step One: accept that you’re going to be in competition…”

www.dictionary.com defines “stubborn” as:

1) unreasonably obstinate; obstinately unmoving
2) fixed or set in purpose or opinion; resolute
3) obstinately maintained as a course of action

So what do I make of somebody that says, “I refuse to be involved in competition for any house or condo”?

It’s tough to use the word “stubborn” because I consider that to be judgemental.

To each, their own, I would say.

But when you deny the facts and begin to blame people or forces around you, then that is when the word “stubborn” can be used more than fairly.

We don’t make the market around us, we just battle to work within it.  Whether “we” are Realtors, buyers, sellers, or a host of other participants in the thriving real estate market, we can’t change what exists.

In the last few months, I’ve been telling my new clients something at the onset that I haven’t needed to say in quite some time.  It’s become my mantra, and those that listen have been successful, and those that haven’t have become frustrated.

Acknowledge and accept that there is a very good chance you will end up in competition.

“Competition” is really a synonym for “multiple offers,” or if you must use my most hated phrase, “bidding war.”

Is your cup half empty, or half full?

Because “multiple offer situation” and “bidding war” are two phrases to describe the same situation, the later of which clearly takes on a negative connotation.

I received an email this morning from a new client named James whom I had taken out exactly once to look at condos.  He said, rather bluntly, “Thanks for your help but the market is too hot right now and I’m going to commute for the next year until the market cools off.”

Several thoughts come to mind while reading this.

First of all, I say “bonne chance,” as I only want the best for my clients and if he doesn’t feel comfortable working in our current market then I wish him all the best.

Secondly, I wish I had his foresight because I have no clue where the market is headed but clearly he knows it’s going to “cool off” next year.

While I didn’t try to scare off this young man when we met last week, I was brutally honest in my assessment of the current market.

We went out to look at a condo on Dalhousie street priced at $199,000, and I told James, “Think more like $225,000,” since the property was holding back on offers and it was never a $199K condo to begin with.

I tried to prepare him for the realities of the market place, but I could tell from his reaction that he didn’t want to listen.

Every one of my comments was met with “that’s nuts” as if this really was a $199,000 1-bedroom condo at one of the most popular buildings east of Yonge Street.

Virtually any condo listed under $300,000 is going to be holding back on offers these days, and with the market hot again, sellers are underpricing their properties and multiple offers are resulting.

I don’t make the market, I just advise my clients how to work within in.

But some people refuse to accept the conditions altogether.

I was looking after a colleague’s business last week as she took a vacation down to Cancun, and I had an offer in play on a unit in the King West area.  My colleague told me that we probably didn’t have a shot since her client refused to go over the asking price, but I played dumb when I talked to him and tried to convince him otherwise.

On the morning of the offer presentation, with our $349,900 offer in hand for the property priced at $349,900, I called Mike to let him know that there were three offers in play and that “obviously” we’d have to adjust our offer accordingly.

He said, “Well I’m not going to go over the asking price.  That’s just not something I’m prepared to do.”

I asked him, somewhat facetiously, “Are you willing to buy a condo in the King West area?”  He replied in fact, that he was.

“Well then you are going to pay over the asking price, today, tomorrow, or whenever you buy in this red-hot area you seek,” I told him.

He gave me a long diatribe about how his parents think he is crazy for not “negotiating” with the sellers and how he had half a mind to ask for all their furniture, and suddenly I knew exactly what I was dealing with.

Mike wasn’t working within our current market.  His mind was elsewhere, whether it was in the 1972 Toronto market where his parents last purchased a property, or whether it was in the 2007 Florida market when condos were practically being given away for next to nothing.

Mike refused to acknowledge our market conditions, and his parents’ suggestion that he “negotiate” with the seller was nothing short of a pipe-dream.  There is just no room to negotiate by toying around with $330,000 offers on a $349,900 condo when there are two competing offers and the property eventually sells for $365,500.

Let me run off on a tangent here for a moment.  In December of last year, I was working with a couple in their 40’s who were buying a house in North Toronto for just under one-million-dollars.  At the time, we had all the power.  We went from house to house, taking our time, weighing our options, and we submitted two lowball offers on houses before we finally got serious on a third one.  We picked up a $989,000 house for an even $900,000, and laughed all the way to the bank.

That was then.  This is now.

And while Mike wants to go back in time, and James wants to move forward, neither is going to be successful in our current marketplace.

Ask any of my clients and I would bet they’ll tell you two things about me: I’m anything but a pushy salesman, and I’m brutally honest.

I’m not pushy, because there is no point.  And I’m brutally honest, because that is exactly the point!

For a long time, I told my clients “The first step in the purchasing process is to get pre-approved for a mortgage.”  But now I’ve taken a step backwards and I tell them that before they do anything, they have to accept the current market conditions and agree to work within them.

The market is a machine that runs with 100% efficiency, and at the moment, there are no “deals” to be had.  There are no opportunities to throw $15,000 worth of furniture and electronics into the deal for a $349,000 condo, or to negotiate when there are three other offers on the table.

Personally, I prefer to work in a more balanced market as half of my clients are buyers, and half of my clients are sellers.

But I simply play that hand that is dealt, and if we’re going to see competition for every condo under $300,000 and every house under $550,000, then I’ll work accordingly.

If my clients want to rent for now, wait a couple years to buy, or hold off selling their current property a little longer, then more power to them.

But if they are going to buy or sell in the foreseeable future, then they’re going to have to play the game, like it or not…