We talk a lot about what could be considered “false advertising” when it comes to under-listing properties, but this latest example is as close as we’ll ever come to really, truly, labelling something as false advertising in real estate.

THAT is false advertising!

No doubt about it – the photos speak for themselves!

But what do you do about it?  Who do you complain to?  And what’s going to happen?

A lot of false advertising in today’s society goes unchecked.  And when a fuss is made, there are rarely any significant repercussions.

When it comes to real estate, much of the general public has taken issue with the time-tested technique of “under-listing” properties and setting an offer date to try and incite a bidding war.

We’ve talked this subject to death, so today I’m not going to delve into the pros and cons, the lessons learned, and the fairness or unfairness.

Listing a house at $699,000 and setting an “offer date” could be considered false advertising, but it’s not, in the eyes of the real estate regulatory boards, the Competition Bureau, and the court of public opinion.

It’s not the ideal way to buy a house, but nobody is forcing the buyer to submit an offer, and a hot market will forever necessitate the “hold back on offers.”

You could list something for $1.00, with a set offer date, and nobody would be expecting you to accept $1.00.  So what’s the difference?

Well, the BS that comes into play with the price-gouging, phantom offers, and “requests for offer improvements” are what really drive people crazy; not so much the offer-date itself.

The crazy sellers who list at $1,599,000 with an offer date, receive no offers, and re-list at $1,799,000 are clearly demonstrating that they are NOT guilty of false advertising.  Leaving the property for sale at $1,599,000 when you have no intention of accepting that price, would be false advertising.

As I write this, in July of 2012, I’m happy to say that a shift in the market has caused fewer and fewer sellers and their agents to under-price properties and set an “offer date.”

I’m happy, because I never liked the process to begin with.  I understand that in a busy market, you have no choice but to set an offer date, and you’d be foolish not to, but it’s the pricing games and artificial BS associated with the listings that I don’t like.  It’s the cookie-cutter $399,000 condos that have “Offers graciously reviewed….” in the MLS notes that drive me insane.

There are three major reasons why we’re seeing fewer “offer dates”:

1) The market is cooling.  Not significantly, but it’s cooling a little bit, and we’re seeing a few houses sit on the market for (gasp!) two weeks, which we might have expected to sell in a matter of days earlier this year.

2) It’s summer.  The condo market is typically busy year-round, but families take vacations in the summer, and thus the market for family-homes does too.

3) Buyers are fed up.  I don’t blame them!  It’s naive to think you won’t be in competition for sought-after homes in sought-after areas, but it’s the pricing games and BS that are causing buyers to say “I’m not getting involved in this.”

And that brings me to today’s rant.

Just as the market is changing and becoming a little more honest, there’s a huge exception to the rule!

If you want pricing games, and you want an open declaration of false advertising, take a gander at this a**hole below and what he’s doing:

Wow.

What a piece of work.

Here’s what’s going on…

This agent has set an offer date of July 13th at 7pm.

But he is advertising that he is “open” to bully offers.

Now read between the lines: a bully offer is always over-asking!  So he’s saying that offers will NOT be reviewed until July 13th, but they will be – so long as they’re over asking.

How is this NOT false advertising?

We often take exception with that house listed at $899,900 that is more than likely worth $1,000,000, but what you see above is something totally different.

“Advance Offers” is written in the section that the public can see, but “Bully Offers” is written in the brokers remarks.  That alone tells me that the author if this text knows he’s on thin ince.

Now we have to consider that, until the last few months, where sellers started terminating listings and bringing them out at higher prices when they didn’t get what they wanted on offer night, you usually knew that a property would sell on offer night, possibly with multiple offers, and possibly for over asking.

You knew that.  We got used to it.  It often frustrated us, but we worked with it.

But the situation shown above is an invitation to be jerked around!

The question we all want to ask is: WHAT IS THE TRUE PRICE?

In most multiple offer situations, the “true price” is what the highest bidder pays.  We know that the $899,900 house is worth $1,000,000, and it could sell for more, but we decide that we’re willing to pay $1,000,000, and we submit our offer and hope for the best.

But in the situation above, what the hell does the seller want?

They want to sell to the highest bidder, but they might sell on offer night, they might sell earlier, they might take the property off the market, they might sign your offer back, they might ask you to improve, they might hold your offer for 48 hours, etc., etc.

And in my opinion, it’s false advertising.

You can set an offer date when your property is listed at $899,900 and say, “Well I didn’t know the price would end up higher!  How was I supposed to know somebody would pay $1,000,000?”

That’s fair game.

But when you set an offer date, AND say “Bully offers welcome,” you’re saying, “We expect, and will only accept, more than the asking price.”

THAT is false advertising!

Is it not?

There’s no writing on the wall when you set an offer date that says “We’ll only accept more than asking.”  You can assume that, and it might be true, but nobody is spelling it out for you, and you can’t accuse them of listing the property at a price that they won’t accept.

But when they DO spell it out, and when the writing IS on the wall in the form of “Bully Offers Welcome,” then let the accusations fly!

I have a novel idea; maybe it’ll work, maybe it won’t.

Why not…..(wait for it…drumroll….)……..list the property for the price you’re looking to achieve?

Huzzzah!

Sure, sure – you don’t get bidding wars by listing at fair market value, I get it.  And if this were March, and I had a 3-bedroom house in Leaside, I’d hold back and let the offers fly.

But in the situation above, where the house isn’t even that sought after, if it’s listed at $375,000 with “Offers Reviewed On July 13th” and “Bully Offers Welcome,” then why not just list at $425,000 if that’s the price that’s needed?

I just listed a house in the Beaches for $799,900.

We were going to list at $699,900 and set an offer date, but you know what?  We just didn’t have the stomach for it.

I think a lot of buyers would look at the house and say, “Ugh….another offer date…..I can’t handle this.”

The house isn’t in A+ condition (far from it), and there’s no guarantee that listing at $699,900 would produce $800,000 on “offer night.”  The risk-reward equation wasn’t in our favour.

So we listed at $799,900, which is what we think it’s worth, and what the sellers would be happy with.

This is where the market is headed, folks.  And I hope that others will follow my lead.

And a**holes that list properties with offer dates and advertise that they’re open to bully offers at the same time will only further alienate the buyer pool, and buyers for those properties will move on.

I hope that agent falls flat on his face.

I saw this start happening in 2008 when the market dipped a little.

Agents couldn’t decide on a strategy.  They didn’t have the guts to list houses at fair market value, nor did they have the guts to under-list and hope for a bidding war, so they set offer dates AND advertised that they would look at bully offers.

Where is the skill in that?

Who wants to dance with you when you smell awful, look terrible, and just might abuse your dance partner?

Agents need to adapt, or die.

And as much as I wish (terrible, terrible) death to many of my colleagues, it often takes a while for people to notice the changes that are going on around them.  Don’t forget – many full-time Realtors work “part of the time,” and many of them aren’t very good at their jobs.  So if you’re a buyer, and you see crap like that listing above, just walk away.  That agent and those sellers are dangerous, and you don’t want to get caught up in a game that has no basis being played.

Those agents will adapt to the change long, long after it’s underway, but in the interim, we have to sift through the sand to find the gold.

Another day, another rant.

And I think I was pretty calm in this one, given the ridiculousness of the situation…

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Have a great weekend, everybody!

I’ll be golfing on Saturday – trying desperately to follow up on last weekend’s first-ever hole-in-one! 🙂