I’ve done a lot of preaching on this subject over the years, but I’m usually left disappointed.
Last week, I had the pleasure of dealing with an agent who was fair and honest in his dealings, and it made it easier for everybody involved…
Hey, the market is red-hot again!
For all that predicting and posturing we did back in the summer, it seems like we were way off base.
Maybe it was wishful thinking, or maybe it was a genuine belief that the market was going to finally cool. Whatever it was, we were dead wrong, at least if the first three weeks of September are any indication.
I know you’ve all been waiting for the “eventual cooling,” but it’s just not happening right now.
It’s the same old story: supply and demand.
There’s not enough supply to satisfy the plethora of active buyers out there, and until the day when we see twenty houses for sale in Riverdale instead of one, I don’t see it changing.
Case in point: I’m sitting here at my desk on Tuesday afternoon about to enter the frenzy for a house in Riverdale this evening.
There are five offers registered at the time of this writing, and I’m sure there will be more. I told my clients from the beginning, “Expect 6-8 offers, and it could go 10-12. But either way, the price will end up around the same spot.”
I’m anxious about presenting the offer tonight, not only because I think this house is perfect for my clients and I want them to get it, but also because the sellers have requested/demanded all offers by fax, and I’m insisting on presenting.
The tone that has been set by the listing side isn’t what I’d call adversarial, but it’s certainly from a point of leverage. In this market, you can ask for whatever you want. If you want offers by fax, at a certain time, and according to a certain set of regulations, you can have them – you need merely ask.
But how the offers are presented is only one half of the story. The other half is how they are reviewed.
As I’ve said before on countless occasions: there is no one identifiable method or procedure for reviewing multiple offers, and ultimately for determining who to sell to, ie. which offer is the “winner.” The ultimate winner could be the person who had the 4th highest offer, that is, until you grind them down for an hour and send them back to improve their offer six times.
This may be an exaggeration, but these situations happen, and they’re not fun.
You never know how the listing agent is going to proceed. Sometimes, they truly will take the highest offer, and call it a day. Then sometimes, if there are eleven offers, they’ll send ALL eleven buyers back to improve their offers.
You just never know.
The hope is always the same from the perspective of the buyer’s agent: you hope that you have the best offer and it’s accepted.
But you also hope that you don’t get jerked around, and this happens probably more often than not.
Last week, I represented a buyer who was looking to purchase a house in the west end.
The house was listed at $998,000, and we offered $1,100,000.
The house might have been under-priced, who knows. It’s debatable, depending on who you ask, but there are people out there that might suggest $998,000 was too much to begin with!
In any event, my buyers put their best foot forward, and left nothing on the table. I always tell my buyers, “Don’t assume there is going to be some sort of ’round two’ or that there’s automatically going to be a send-back. Put your best foot forward.”
We did, and we were not successful.
But it was how the listing agent handled the process that helped restore my faith in the multiple offer game.
For starters, he was polite, professional, and very friendly.
And after I presented my offer, he came outside to chat.
“David, thanks for your offer,” he said, which of course is not a formality, is not cliché, and should always be said to somebody who takes the time and effort to bring an offer to the table – especially in multiples!
“Here’s the situation,” he started. “We’ve got eight offers, as you know, and there’s, well, there’s like ‘three tiers.'”
This was something I hadn’t really heard before.
“There’s three offers in the bottom tier, three offers – including yours, in the middle, and then there are two offers that are just – like, wow, up there!”
He motioned with his hand when he said, “up there,” and as if his words weren’t enough, I got a very good picture of just how high those offers were! The listing agent was a large man – about 6’4″ I’d bet, and I’m only 5’11” so the point was very dramatic.
I said, “So they’re really up there then, eh?”
“Yeah, David, they are,” he said.
And with that, the listing agent saved my clients and I a lot of time and aggravation, but he did it in a way that enabled us to feel as if we made the decision.
He left the door open for us to come back and improve our offer, which, of course, it made no sense to do.
He wasn’t saying, “You suck, goodbye,” either.
But he was basically telling us what was going on, without telling us.
He was essentially saying, “You’d have to come up $100,000 to be in the ballpark,” and since we weren’t going to do that (he knew as well as I did), he was allowing us to exit the process by our own accord, and not waste any more time than we needed to.
Many agents will send ALL the buyers back – and you all know how I feel about this!
Other agents will send back the top offers, including those in the “middle,” which they fail to distinguish from the rest.
There’s no transparency, but at the same time, I see how many agents don’t want to play their hands. However, sending back a buyer who has no hope in hell of coming up to the eventual selling price is just plain cruel, and agents do it every single day.
In this case, the listing agent told us a lot by not telling us much – he said we were in the “middle tier,” and that the top tier was in a whole other league.
That was all the information we needed to:
a) make an informed decision
b) walk away at the right time
c) feel good knowing that the selling price was something we would have never entertained.
And you know what? Despite that old adage, “A property is worth what somebody is willing to pay for it,” we felt in this case that the selling price was way beyond anything that we would ever consider. Good for the person that bought it for $1,225,000, and I hope they’re going to build a family home that they’ll be in for twenty years! But it just wasn’t for my clients, and thus we passed.
Imagine if the situation had been different, ie. ‘normal.’ Imagine if a different listing agent simply said, “We’re going to give you the opportunity to improve your offer, yadda, yadda,” and we moved from $1,100,000 to $1,120,000, spent two more hours on it, and then found out we lost by $105,000.
I understand that some listing agents don’t like to divulge the “secrets” behind the offer process, but have some consideration! Let people exit “the game,” as one listing agent so aptly put it today, when it’s obvious that they’re no longer playing.
Wow, Up There!
That’s a fair way of handling multiple offers.
Nobody who is told that their offer is in the “middle tier” is going to waste any more time once they hear about the competition.
It allows the buyer to decide for him or herself to pass, and save some dignity.
I only wish more listing agents had as much courtesy.