Would you submit an offer on a property when there are multiple offers, and you know in your heart that you have no chance in hell of winning?

I wouldn’t, but a lot of buyers out there would….and do.

I think it’s a mistake to just throw your hat in the ring, and I’ll tell you why…

I’m going to tell you the following story, and I hope you don’t hate me.

Understand that I did what I did because it was the right thing to do, and not because I’m a jerk.

In early January, I was working with a girl named “Mabye” who was looking to buy an entry level condo.  Mabye wasn’t just looking for any condo, however, she wanted to live in the ever-so-popular “Liberty Village” area.

Mabye was pre-approved for a purchase of $275,000 through her mortgage broker, and thus we began looking at properties in and around her price range.  As I do with all my new buyers, I made sure to thoroughly explain current market conditions to her.  I showed her past sales for units in Liberty Village where sale prices exceeded list prices, and informed her that for every Mabye that is looking for a 1-bedroom starter condo in Liberty Village, there is a Madeline, a Melissa, a Meghan, and a couple of Matildas.

A condo came onto the market at $279,000, and Mabye decided that “this was the one.”  We even brought her parents in from Milton to have a look.

I showed Mabye the comparables and explained that this condo would probably fetch $300,000 when offers were reviewed, and she seemed to understand.

But on offer night, and with four offers already registered, she shook up the world worse than Muhammad Ali when she proclaimed, “I’d like to offer $275,000.”

I smiled at first, as I thought she must be kidding.  She was 27 years old and had a Masters in Psychology so I assumed she was anything but naive.

But she reiterated her desire to offer less than the asking price despite the presence of four competing offers.

I tried my best to convey to her that this condo would likely fetch $305,000 or more, but she was incorrigible.

She claimed, “I just wanna throw my hat in the ring; see what happens!”

I already knew what was going to happen.  Why go through the motions?

So I did something bold, that I would do again ten times out of ten: I refused to submit her offer.

She wanted to submit an offer of $275,000 on a property listed at $279,000 that had four offers and would likely sell for over $300,000.

I wasn’t going to do it.

I told her my reasons why, obviously, “You have exactly 0.00% chance of getting this property for $275,000, so there is no point in submitting this offer.”

And more to the point, all it would do is help to artificially drive up the price!

With four offers, perhaps the top dog would offer $300,000.  But if Mabye threw her hat in the ring with her BS offer to make it five, I think the top dog would end up paying $305,000.

A friend of mine said, “What’s the problem?  Submit the offer, keep your client happy, and keep your client, period!”

I just didn’t see it that way.  I thought that submitting what amounted to a dummy offer might not be unethical, per se, but it was certainly a crummy thing to do.

In the end, I told Mabye, “I’m sorry if you disagree with my approach, and while there are probably thousands of other Realtors out there that would love to submit this offer for you, I won’t do it.”

And she dumped me.

My friend told me, “You’re a moron.  You just lost a buyer because of your ‘integrity’ as you see it.”

I disagree.

Mabye was never a buyer.

If she wanted to run around town offering less-than-asking on properties with 4-5 offers, then she wasn’t actually going to buy something, and I would rather spend my time working with buyers that would actually buy.

I am, after all, trying to make sales, as a salesman…

But I also didn’t feel very good about needlessly driving up the price of real estate in an already competitive market.

Last week, something incredible happened in my building: the unit exactly ten floors up from me received twenty-one offers.

Call me vain, but on the first day of every month, I make a “NET WORTH” statement that lists all my assets and liabilities so that I can keep track of my finances.  I have pegged my condo value at $335,000 and it has remained unchanged for about six months.

The unit ten floors up from me is the exact same floor plan as mine, however, as has been noted on this blog about once per month for the last three years, I have an awe-inspiring 440 square foot private terrace.  THAT is the major difference between my unit and the one ten floors up from me.

Well, I also have substantial upgrades such as:
-Crown Moulding (2007)
-Hardwood Flooring (2008)
-Berber Carpet (2008)
-Slate Kitchen Tile (2009)
-New Washer/Dryer & Built-In shelves (2009)
-All Around Awesomeness (2007 – 2010 inclusive)

If the condo ten floors up from me sold for $333,000, I can’t even fathom what my place is worth with the 440 square foot terrace and the upgrades.  How about $375,000?  I digress…

My point about the twenty-one offers is this: How many of those offers had no purpose being submitted?

Listed at $279,000, and with a recent comparable selling for $320,000, how many of those offers were pointless?

How many buyers simple mailed it in?  How many just threw their hats in the ring?

If you were under $300,000, it was pointless.  I’d say maybe 5-6 of the twenty-one were under $300,000.

If you were under $310,000, you should have known better.  I’d say probably 10-12 of the twenty-one were under $310,000.

How many serious buyers were there for this condo?  Maybe 4-5.

And that is the problem with our market: too many buyers are just throwing their hats in the ring.  They’re mailing it in!  They’re driving the price up for the serious buyers.

Some of these buyers are so stubborn and so ego-driven that they can’t see past their own dreams.

Maybe that’s why they throw their hats in the ring – their heads inflate with illusions of grandeur and the damn hat no longer fits on their head…