I work with both buyers and sellers, so I can always “put the shoe on the other foot,” and I’m great at playing Devil’s Advocate.
But as I continue to submit offers on behalf of my buyer clients, I see an increasing amount of stubborn sellers that don’t want to work within the current market.
Instead, they come up with these “plans” to do better than everybody else, and better than the market currently affords. I sure hope they know what they’re doing…
Remember those books?
“Little Miss” and “Mister” books by Roger Hargreaves?
These were a staple amongst my reading diet as a child! No matter what your situation, emotion, or feeling – there was a book about a Little Miss or Mister that you could empathize with.
I can’t empathize with some of the stubborn sellers out there in today’s Toronto real estate market, however.
Do I sympathize with them? I just don’t know.
I work with both buyers and sellers, almost equally, but my job is to get deals done – not to hold the hands of people who want to drag out the process unnecessarily. Don’t get me wrong, I’ll work with a client for as long as it takes. But if they’re being unreasonable, I’ll tell them so.
I was working with a buyer just before I went away on vacation who was interested in a property on King Street West.
Actually, he was interested in two properties in the same building.
He was buying the condo for his son, so he was emotionally detached. He didn’t really care which property he ended up with, as one unit had a parking space and one didn’t, and they were very similar.
So we made an offer on the first property, listed at $335,000, which had been on the market for four weeks.
We offered $315,000, assuming we might settle in the middle around $325,000. For this area and this building, I thought the price would have been quite fair for my buyer-client.
But the listing agent and the seller were incredibly stubborn.
They basically told us, “We’re not going to sign this offer back…..unless….”
What did they have up their sleeve?
They told us that they weren’t interested in even taking a second look at our $315,000 offer on their $335,000 condo, and the only way they would sign it back was if we agreed to look at a sign-back of $341,500.
That made zero sense.
The property was listed at $335,000 and had been on the market for four weeks. And they wanted to sign it back for $341,500?
Did they want to sign it back at $341,500 to try and get us up to their asking price of $335,000, or God forbid, did they actually think they were going to get $341,500?
My client laughed, which was a good thing. He was a very experienced investor and the president of a small company so he’s butted heads with a few people over the years.
But clearly we weren’t interested in dealing with a seller who was this clueless and this stubborn.
The listing agent gave us a little background, which was useless at best. He said that when he first met the sellers, they were “looking for” around $355,000 for their condo. He had to work them down to a reasonable price, and they thus they listed at $335,000. But even at that, the unit sat on the market, unsold, for a month. So based on what they wanted, explained the listing agent, they would sign back for $6,500 over the asking price.
Yeah, I’m not buying it.
That was an awful explanation, and it didn’t solve anything.
I want a ba-jillion-dollars for my condo, just because I want it. Wait until I take off my tin-foil hat and step into my imaginary escape pod before I come back to reality…
Who cares what a seller “wants” or “needs?”
What matters is what your property is worth. All this talk of “needing” ten percent more than market value is just a waste of time and a daydream.
We were very diplomatic about the whole situation, however, and asked the listing agent what the seller’s “plan” was.
He said that they were going to hold onto the unit until October when the market picks up, and then stage it and sell it for more money.
Crystal Ball, oh Crystal Ball…..tell me who I’m going to marry and when. Tell me what age I’ll be when I die…..tell me who will win the 2014 Stanley Cup…..tell me what the Lotto-649 numbers are for August 5th…
Once again, the sellers were being stubborn, and wouldn’t ya know – they knew best.
They knew the market was going to “pick up” and they wouldn’t make a deal now unless it’s for MORE than they’re actually asking for their condo.
But the incredible part is: if they sat down and thought about it, and then put some numbers down on paper, they’d realize that their “plan” is flawed.
We were offering an obscenely quick closing – ten days. Most buyers are looking for sixty days.
Let’s assume that we would have closed our deal on August 1st, and if the sellers were to market the condo in October and have a 60-day closing, they’d be out on December 1st.
That’s four extra months of carrying costs.
The maintenance fees for this condo are $350/month, plus about $40 in utilities. That’s $1,560 over four months.
The property taxes are $2,200 per year. That’s $733 over four months.
Assuming the sellers made a 20% downpayment on their condo, which they purchased for $280,000 a few years back, they’re probably paying about $850 per month in mortgage interest. That’s $3,400 over four months.
To carry this property for another four months, it’s going to cost them just shy of $6,000.
If they spend maybe $1,500 painting the condo and $2,500 renting furniture, they’re going to be in for $10,000.
Had they agreed to the $325,000 price that we were looking for, they’d be exactly $10,000 shy of their asking price.
Maybe. You can make numbers say anything you want.
Or maybe it’s a zero-sum-game.
Maybe being stubborn doesn’t pay off in the end, and maybe you just spend four months running around fixing up your condo and paying the carrying costs just to end up back where you stared.
Ordinarily, I wouldn’t blame a seller for trying.
But I found this seller to be irrational and stubborn, and I don’t think he put any thought into his actions.
He just wanted what he wanted, and the unit continues to sit on the market.
The next day, we purchased the other unit for sale in the building. It was very similar in terms of size and layout, but it had a parking spot. The price, as my buyer-client admitted, wasn’t a “steal” but it’s hard to steal a property in that area.
We weren’t trying to steal the first unit – the one listed at $335,000. But we weren’t going to pay more than fair market value just because the seller was stubborn and uninformed.
I don’t know what September will bring about.
There have been some great deals in June and July, and I expect August to be a very slow month.
But if you’re a seller, and you literally have your possessions boxed up (as the sellers in the preceding story did) ready to move out, and then you recieve an offer for fair market value, maybe it’s time to stop dreaming about carrying bags of cash out the front door of your building…Back To Top Back To Comments