How would you feel, as an active buyer, if somebody said this to you?

Or one better: how would you feel if it was said by your agent?

I’m a pretty honest guy, and a pretty honest Realtor.

In fact, I might say that I’m brutally honest, for lack of a better word.

When I started Toronto Realty Blog in 2007, the central idea was that there is too little opinion in an industry where clients hire you for exactly that purpose, and that I never wanted to take the middle ground, sit on the fence, or avoid taking a stance.

I aim to demonstrate this on my blog every day, and all my readers have come to expect nothing less.

But what about during my actual interactions with clients?

Would it be reasonable to assume that I’m just as brutally honest with Jane and John, in person, looking them in the eye, as I would be while posting a blog aimed at nobody in particular?

Yes, it would be.

I’d like to tell a story, and at the end, have my readers tell me if they would:

a) respect my honesty, opinion, guidance, and straightforward manner
b) think I’m a total jerk

So here goes…

At what point, in a multiple offer process, does your offer become pointless?

At what point is there no point in submitting your offer, because you have absolutely, positively, no chance in hell of being successful?

I believe there are people out there that would say, “There’s always a point; you never know, and you have nothing to lose!”

Then, there are many people who would completely disagree.

Here’s a scenario…

There’s a house listed at $329,900, that any half-wit knows is under-priced.  It might be “worth” around $390,000, or more, but all signs point to this house selling for well in excess of $400,000.

Nothing in this neighbourhood has sold for under $360,000 in the past two years, and this is a good house!  The market is red-hot, and buyers are out in full force.

And guess what?

There are sixteen offers.

So I’ll ask you again: at what point does your offer become pointless?

There are SIXTEEN offers!  There’s you, that guy over there, and then fourteen more buyers!

The house is going to sell for $400,000, and in actual fact, sold for $422,500.

So is there any point to your offer of…….wait for it…..$335,000?

No, there isn’t.

That’s my opinion at least.

Some of you may say:

a) you never know!  may as well try!
b) what have you got to lose?
c) that’s not fair – you’re looking back now, in hindsight!

But again, in my honest opinion, I disagree.

I think that an offer of $335,000, on a house listed at $329,900, that is worth $400,000, and is going to sell for more, is absolutely, positively, pointless.

And so, as an honest Realtor, I would feel the need to tell this to my clients.

This story is based on true accounts, and a colleague of mine at another brokerage found himself in this situation.

He elected not to tell his clients that their $335,000 offer was pointless, and he submitted the offer on their behalf.  The house sold for $422,500, and they were embarrassed when they heard.

Every agent runs his or her business differently, so I can’t say there’s a right or a wrong.

But what would I have said?

“Guys, listen, we’ve been working together for a while now, and I hope that you respect not only my opinions and my advice, but also my honest nature.  So I’m going to tell you this as honestly as I can: your offer has zero chance of being accepted, and it’s a waste of time.  Please don’t fault me for saying that, but I feel if I were to submit this offer for you, it would get your hopes up, it would set a poor precedent for next time, it would lead us in the wrong direction, and in actual fact, it would raise the eventual selling price of this house so that you end up paying more next time there’s a listing across the street.  If you see $335,000 in value in this house, then we’re not on the right track, and we need to take a step back, regroup, and continue the search after first letting go of this property.”

That’s what I would say, and it’s not untrue.

Again, you’re free to say, “David, so what?  Let them make the offer!  Are you lazy?  Do you want to go home early?  What’s the problem?”

The problem is that you may as well offer $1.00, if you’re going to offer $6K over asking, when there are SIXTEEN offers, because that offer has equally as much chance of being accepted as your offer, which is to say that chance is zero.

The problem is that it’s allowing false hope.

The problem is that it starts a pattern of bad behaviour, that is out of touch with the market.

The problem is that, I think, I wouldn’t be doing my job in an effective manner.

Personally, I think I’d be doing a better service to my clients if I told them “there is no point to your offer,” than if I smiled and said, “let’s cross our fingers; I’ll let you know!”

What good would that be?  Wouldn’t that be considered……lying?

Or even worse, what if I actually thought they had a chance with their $335K offer?  When the property sold for $422,500, wouldn’t I be exposed as a terrible agent who had no clue what he was doing?  Wouldn’t an agent be completely out of touch if he or she figured a $335K offer had a chance against fifteen others?

So working backwards from those two points, isn’t the client better off if I tell them there’s no merit in the offer?

I have a feeling that the feedback might be 50/50 on this one, but that’s because deep down inside, we all wish the market wasn’t the way it was.

Every so often, I have a client say something like, “My Dad told me to submit an offer around the asking price, so if the accepted offer, you know, like, falls through on financing or something, then the sellers come back to me, accept my offer, and I get the property for a steal.”

I tell my client, “Your Dad bought his house in 1972 for $18,000, and has never transacted in a market like this.”

What else can I say?

I wish I could buy my dream home for 20% less than fair market value, but it’s not so.

I wish my clients had two weeks to think about that hot new listing, before making an offer well below the asking price and then negotiating to a satisfactory price, but it’s not so.

I can only work in current market conditions; not the past, and not a wishful paradise where a house never had more than ONE offer.

And under current market conditions, when a house has sixteen offers, I’m sorry – but an offer of $6K over the asking price has no chance, no merit, and no point.

I do my job, and I tell my clients the truth.  Maybe they don’t want to hear it, but it’s better than a lie, and it’s better than false hope.

So let me ask again: if my client was in competition with fifteen other buyers and wanted to offer $6K over the asking price, and I said, “there is no point to your offer,”would you:

a) respect my honesty, opinion, guidance, and straightforward manner
b) think I’m a total jerk

It’s okay – you can be honest.

Lord knows, I am…