How come discussions about real estate are so negative?
Remember when it wasn’t this way?
I started Toronto Realty Blog in 2007, and there were many differences between then and now. My blogs were about one-third as long, I wrote four times per week instead of the current three, I had a feature called “Listing of the Week,” which was blatant unauthorized advertising and had to be taken down, and oh yeah – most of my posts were positive!
After the last few posts, it occurred to me that the subject matter, the themes, the opinions, and the comments thereafter often take a somewhat negative tone. Why is this?
Is it because real estate is just so damn expensive in Toronto, and people are angry?
Is it because the market is extremely complex, fast-paced, and difficult to understand and thus navigate?
Or am I just a negative person?
The blog-comment I wrote about on Friday is still stuck in my head; the one where a reader told me that if I’m constantly describing interactions with agents who have no idea what they’re doing, and then seem surprised that I have these interactions, then something isn’t right with my expectations.
A lot of my blog topics over the past couple of years have been about organized real estate, and the industry in which we work. I cover a variety of topics on TRB, but every agent out there will talk about new buildings, show pretty pictures of lofts, and re-Tweet the same stats that every other brokerage has on hand, but I pride myself on tackling the tough subject matter, and openly discussing the industry.
Whether it’s commission, multiple representation, access to sold data, the role of TREB and OREA, or the lack of experience of many agents, I have no problem sharing my opinions, even as other agents, and often the boards, ask me not to.
I think that as the pool of licensed agents has grown, the market has become more dynamic, and new brokerage models have popped up, the overall level of service and level of knowledge, experience, skill, and capability of the average agent has dropped significantly.
I wanted to talk today about OREA’s announcement that they, apparently on behalf of Realtors, want the Ontario government to “ban” bully offers, but I’d be remiss if I didn’t describe a recent interaction with an agent that I think will put my above commentary in perspective, and shed some light on the real problem with bully offers.
This story is a short one, but I think it’s a good example of how different people may have drastically different perspectives on the same situation.
Last week, I brought out a condo listing in the downtown core for $599,900.
This was your classic “under list, hold back offer” strategy, and for those of you that believe this to be hypocritical, since I have lamented this strategy on occasion in the past, welcome to the Toronto real estate market! And by the way, it’s the seller’s decision in the end.
Based on comparable sales, this property was probably worth anywhere from $650,000 to $700,000, and while I know that’s an enormous range, you have to consider just how subjective comparable sales can be. Every buyer is looking for something different, and while the average price-per-square-foot in the building over the last six months might lead you to a $650,000 price, there was nothing average about this unit (nor the cleaning, painting, de-cluttering, staging, marketing), nor are 6-month-old comparable sales still valid, in my opinion. I personally believed this property was worth $675,000 to $700,000, and figured we had a good chance of breaking $700,000.
The amount of showings on the property defied expectations. It was just nuts.
We had eight booked on the first day, which is a lot. But we had fourteen booked the second day, and we were pushing forty as we moved into the weekend.
By the time offer night rolled around, we had over fifty showings from agents, and probably sixty to eighty people through the Saturday & Sunday open house.
We were reviewing offers at 7:00pm on Monday evening, and at 10:00am that morning, something odd happened.
I received an offer from an agent with a 1:00pm irrevocable.
I emailed him back and said, “Thanks Jim, but we are reviewing offers at 7:00pm tonight.”
He wrote me back and said, “This is a pre-emptive offer.”
It made no sense to me. And for those of you that don’t understand what pre-emptive of “bully offers” are, let me give my a quick two cents.
If a listing comes onto the market on Tuesday, with offers to be reviewed one week later, and you and your agent see the property on Tuesday night and love it, you might get really aggressive and submit a “bully offer” with incredible terms and conditions, that evening. You essentially put the seller to a test for all their poker chips, and force them to either forego the next week of showings and the open house, and accept the offer right then and there, or turn the offer down, and risk you not coming back to the table on “offer night.”
Bully offers can happen at any time, but they usually happen in the first couple days of the listing.
So boy was I ever surprised to receive a so-called “bully offer” a few hours before my sellers and I had scheduled our offer presentation.
I’ve been in the business for fifteen years, and this was a first. And any time you experience a first in this business, it’s either a stroke of genius, or absolute madness.
I reviewed the offer, and it was a poor one. The price wasn’t great, but more surprisingly, it was conditional. Not just one, but two conditions!
Again, for those of you that aren’t in the know, we are in a market right now where just about every offer accepted on a scheduled “offer night” for a downtown condo is unconditional. Buyers know this, buyer agents know this, and it’s merely a given.
But here I sat, at 10:00am, with a conditional offer, at a price that was far less than any comparable sale would justify, when all the while, I was set to review offers that evening.
It made no sense.
So I called the agent, thinking that perhaps a communication on the phone rather than by email would shed some light on the situation.
“Jim,” I told him. “I have your offer here, thanks for this. The thing is, we’re going to review offers at 7:00pm, as per the listing, as per my email to all the showing agents this morning, and as per my last email to you.”
“I get that,” he said, “But as I told you in my last email, this is a bully offer.”
I knew this wasn’t going anywhere. But I kept it amicable, as I always do, and tried to be honest with the agent on the other end of the line.
“Jim, listen, I appreciate your offer, but my clients are in Jamaica, we’ve got a ton of interest in the condo, and I’ve talked to five or six agents already tonight that have said they’re bringing offers. There’s just no reason for my sellers to work with the deadline you’ve set.”
Somewhat unsurprisingly, he said, “Has the offer been presented to your sellers, and can you provide confirmation?”
I didn’t understand. He was trying to strong-arm when he had absolutely zero leverage.
So I changed my tune a little, offering a little more honesty: “Jim, you’ve submitted a conditional offer; an offer with not one, but two conditions, for a price that won’t work, on the day of offers, with a deadline of six hours before multiple other agents are going to submit offers.”
He asked again, “So has the offer been presented to the sellers, and can you confirm so?”
“Oh, Jim,” I said, “I think the conversation with my sellers would go something like, ‘Hi Guys, we have, for some reason, received a conditional offer for $635,000, expiring at 1pm. Let’s reject this offer and move forward with the plans tonight.’ That’s how the conversation would go, Jim. So yes, I can get you receipt if you would like.”
Then he started to rant and blame. “This is bullshit,” he said. “This bully offer nonsense. It’s ridiculous. I’ve tried to get the boards to stop this, it’s bullshit….”
He went on an absolute tear, and I pleaded, “Jim, Jim, can I get a word? Jim?”
I asked, “Jim, can you give me fifteen seconds, please?” And he calmed down and allowed for it.
“Jim, I looked you up online,” I said. “You’ve got thirty years in the business.”
“That’s right,” he said, “I do. I’ve been in the business thirty years, and this is all bullshit, this crap going on now…”
I continued, “Jim, I respect that you’re a real professional, you’ve been in the business since I was in grade-school, just please hear me out. Jim, you submitted a conditional offer to us, with a gun to our head. Please, Jim, put yourself in the sellers shoes. They’re going to have five, six, or ten offers tonight. Why would they accept a conditional offer at a price, that, with all due respect, is so far off base, and forego working with the other offers this evening? This is the market we’re in, Jim. A bully offer doesn’t have conditions, it just doesn’t. It’s not how this works, and I’m trying to help you here, Jim. I’m giving you information that you can use, and take back to your client.”
That made perfect sense to me, and it was the information he needed, from the perspective that he was missing.
But he went on another rant, and then said “Goodbye.”
7pm came and went, and we had a high offer of $703,000, which was fantastic. There were three other offers at $681,000 and above, then two in the middle somewhere, and then Jim and another agent at the bottom. To his credit, Jim did remove the conditions, but the 4-month closing was somewhat odd, as was the low deposit.
We accepted the highest offer, which was unconditional, with a deposit cheque in hand, and my sellers celebrated in Jamaica.
I called some of the agents to let them know that we appreciated their offers, but we wouldn’t be working with their offers tonight. Others I emailed, one of which, was Jim.
Jim responded and said, “Well, I’m sure you sold the property with no conditions and you probably have a cheque,” with this undertone that somehow this was not a good thing, and then said, “Can I get the sale price?”
So I told him.
And then he wrote back, “Wow, the sellers won a lottery. I have been trying to get boards to eliminate offers dates as it inflates the prices and affects the economy. Hopefully they will wake up and realize what it is doing to our industry.”
And that was that.
I didn’t write back because I didn’t feel there was anything left to say.
So what do you make of this, folks?
I think we’re all going to have different opinions, but there are really only two perspectives on this.
Personally, I think that this agent, with 30+ years in the business, has lost his edge. He is utterly and completely out of touch with the market. He doesn’t know how to transact, doesn’t understand the market dynamics, is lost when it comes to the offer process, and has let emotion take over.
An experienced agent is supposed to take the emotion out of the process for the buyer, so that the buyer can keep a cool head, and focus. In this case, the agent was the emotional party.
The agent didn’t run his comparables, and seemed to suffer from the same affliction as many buyers, who feel as though their dream price has a chance in reality.
The agent was confrontational and aggressive when he was in the submissive position.
And in the end, he got in his buyer’s way. This was not a case of an agent protecting a buyer, or looking out for the buyer’s interest; this was an out-of-touch agent who put his own emotions and ego first and foremost.
And in the end, he blamed other agents, other buyers, real estate boards, and just about everybody in between, but never looked at himself in the process.
Or, maybe he’s right about everything.
Maybe the other perspective on this carries weight.
What if he’s the only one not jumping off the bridge? Just because everybody’s doing it, doesn’t make it right, and maybe the other seven buyers and buyer agents are in the wrong.
Perhaps he’s correct as to how our market has changed, and the industry along with it. “Offer nights” and bully offers? Where did this come from?
With thirty years in the business, having seen ups and downs, maybe his experience is just insurmountable.
Maybe he does know what’s best for the economy, and everybody in it.
Okay, that last one was what “did it” for me.
You all know how I feel, even though I’m trying to make an argument here.
The guy telling me what was best for the economy seemed like a really big reach, and the context was misplaced.
But I will admit that there are a lot of folks out there that will agree with what this guy is saying, and doing.
It’s not going to buy any of his clients a property, and that’s my problem.
It’s childish, to be quite honest.
It’s like when a kid wants McDonald’s for dinner, but his parents tell him that they cooked chicken and rice. So the kid says he’s not hungry, and tries to “show them” by not eating. The parents say, “fine,” and the kid goes to bed without dinner. How long until that kid realizes just how hungry he is?
Despite the dislike for “offer nights” in Toronto, they are a necessity, based on supply and demand. I refuse to accept otherwise, and I refuse to accept a contrarian opinion from anybody that does not own a home, since it goes without saying that all buyers would love to see the supply and demand dynamic change.
Despite the dislike for “bully offers,” they are a part of our market – for how long, who knows.
But an agent putting his head in the clouds and trying to stay there and work out a deal for his buyer is n-e-v-e-r going to work in this market.
That’s just my perspective…
Andrew
at 7:27 am
David I saw you were quoted in the Toronto Star’s article about OREA’s proposed changes:
https://www.thestar.com/business/real_estate/2019/04/08/shove-bully-bids-out-of-housing-market-says-real-estate-association.html
I see your perspective on this. The problem is inexperienced agents, and as a result, the buyers that hire them. I’ve heard you over the years tout personal responsibility as a favourable attribute and you’ve made it clear that you think people are less and less able to look after themselves.
I understand and I agree. But what happens when you get to a point where there are so many clueless agents out there that the market is chaotic as a result? TREB continues to license all these agents and they clearly aren’t ready to work in the field. Don’t you think just maybe if the agents can’t work in the current format, then the format needs to change?
I see that this is the easy way out, but if you really believe that agents won’t change, and the service level continues to decline, then what other options are there?
Kyle
at 9:12 am
Some good points here. IMO though, the answer isn’t to dumb down the buying/selling processes to accommodate incompetent Agents. I’d prefer to see the Industry doing more to purge incompetent Agents, rather than protecting them.
The way the industry is set up now, incompetent Agents are able to flourish without recourse. Agents just need to be competent at one thing only – getting a client to work with them, because after that the client is contractually stuck. A buyer who end up with an incompetent Agent gets locked in with a Buyer Representation Agreements and a seller who ends up with an incompetent Agent get locked in with Holdovers.
Not Harold
at 4:25 pm
You see brands on the developer side of condos helping market, promote, and sell, along with a bunch of inhouse at the Tridels of the world. But there’ just not much of an ability to really consolidate even in Toronto, never mind the broader GTA or the Province. Real Estate in Sudbury or Timmins is very, very different than condos in the core or houses in midtown.
That difference also means that change in laws or regulation is hard/impossible. An education/training requirement similar to that of top big law or investment banking (2-3 years post grad degree at a top school after excelling in undergrad) could be a reasonable investment if it was the only way to get access to single family home sales above $800k. But it wouldn’t make sense for the ability to sell $50-150k properties in rural Ontario.
Then there’s the technology thing – how much value do real estate agents really provide? It’s not that much different than being a travel agent. Should we really be entrenching a guild that has less and less of a need?
There’s lots of craiglist/ebay/kijiji/etc used car transactions, and many overlap with real estate prices (especially real estate outside the GTA & Muskoka). Then there’s how much AI is eating into work done by lawyers and accountants.
So there’s a big problem, it’s incredibly hard to solve, and it’s a very complex and changing environment. Great for bitching, hard to solve.
jeff316
at 9:29 am
Well put. In many parts of this province, being a part-time agent isn’t a knock – it’s just a fact of selling low-value properties on a low-volume basis. Make entry too hard, and people will go without representation.
Verbal Kint
at 7:58 am
If most of your business is representing buyers, why do you write so much about your rare listings? Most of your listing business this year has been rentals.
Katie
at 8:25 am
Okay THAT is a blog troll! Lol
ChT
at 8:30 am
Completely unnecessary, passive aggressive, asshat comment. What’s your point? Get a life loser.
jeff316
at 9:55 am
Ka-boom!
Speaking of Perspective:
at 10:36 am
Hi David, long time reader, first time caller here. 🙂
Just a question about this trolling matter if you have a moment. I’m curious as to why you let this to persist. This person adds nothing to the conversation and really only intends to distract people from providing their thoughtful comments, which is something you’ve said so many times is something you value. You’ve mentioned that this is a rival real estate agent, so why not just out him? I think that’s fair game. Thanks for reading, hope you can find the time to answer.
David Fleming
at 4:27 pm
@ Perspective
Thanks for commenting! And right there, perhaps you’ve highlighted why I don’t mind the “trolling,” since it was this reader that you got you to post your very first comment!
I’ve never moderated comments, and never wanted to. I enjoy the highs and lows, agreements and disagreements, and ultimately I feel that the media already whitewash online comment boards (they all do it – CBC especially), so I pride myself on this comment board being 100% authentic.
As for the commenter/troll, I really don’t mind. I think people realize after 12 years of blogging, I have a thick enough skin and I don’t take anything personally. Trolling is seen for what it is. The online troll is like a second-grader who shits himself in class, just to get the attention of other people. “Any publicity is good publicity,” and as a 7-year-old desperately seeking attention, I guess any attention is good attention. But that kid still knows he shit himself, and still has to sit in it. I agree with the readers that this troll is an agent, and possibly one in my own brokerage. I can view the IP addresses and I know if somebody is posting under multiple accounts, etc. If I was really motived, I could probably find out who it is, but I honestly don’t care and wouldn’t spend the time on it. All hate comes from at least some form of love. Frankly, I’m flattered. Nobody would spend this amount of energy, and follow my career this closely (knowing how many of my clients have leased this year??) if there wasn’t a fanboy crush. So long as I don’t wake up with a horse-head in my bed, I’m fine with the following.
As for the “distraction,” I think you can see how quickly most people moved past it. There’s a community on here, and some people feel the need to chirp back (even those who might typically disagree with my opinions, but respect the Toronto Realty Blog community), but many just move on and discuss the blog topic.
Thanks again for commenting, please don’t be a stranger!
Appraiser
at 11:17 am
Keyser Söze was actually more clever and much more mysterious.
jeff316
at 9:54 am
When I first started reading this blog, people were up in arms about offer dates. They were unfair and people should be able to bid when they wanted to.
Now people are bidding when they want to – through bully offers – and we want to eliminate that to require offer dates?
If you really want a property, get your agent to make an offer immediately. Not rocket science. If you’re willing to wait until offer night, then maybe that house isn’t for you.
Kyle
at 10:09 am
This is a great comment. It is absolutely true.
I think the reality is buyers are frustrated and will be up in arms about anything that they can point a finger to, to explain why they haven’t been able to buy a home. No different than the out of touch Agent described by David blaming the Industry, the process, and everyone but himself.
To these frustrated buyers: the Industry needs to change, the Government needs to step in, Agents are evil, we need to build transparency and we’ll make the Sellers pay (a la Trump with his wall). In their minds this all makes so much sense, of course until the day they become a Seller.
Jennifer
at 1:01 pm
Most sellers are also buyers so you need to look at it from both perspectives. The happy seller is also the frustrated buyer.
While Jim thinks the sellers won the lottery, there’s a good chance they are buying or have bought in this market. The lottery winnings go poof on purchase, unless you are moving cities /renting etc or the property was an investment.
Kyle
at 1:46 pm
Anyone i know who has ever sold their property in Toronto, seems to have no qualms with any of these practices. My impression, is that the ones most vocally demanding transparency in the process, or saying certain practices should be banned are people who have never ever bought a property, let alone sold.
So i 100% agree anyone who says these practices should be banned, should start looking at it from both sides, because one day they may find themselves wanting to sell. Also think, similar to the Agent in David’s story, they should be asking themselves whether maybe the practices aren’t the problem, and maybe it is how out of touch with the market they are.
Clifford
at 4:03 pm
Have bought and sold multiple times and I hate the process personally. I absolutely hate the lack of transparency that comes with offer nights where you are bidding against yourself. I also hate the practice of grossly underpricing a home to incite a bidding war.
Condodweller
at 4:20 pm
This has been discussed in the past. Legislating underbidding would be difficult and no one can force a person to sell. Declining an “above” ask offer because it’s below the real asking price also rubs people the wrong way and just adds to the negative perception.
Kyle
at 5:09 pm
Fair enough, i’m not saying buyers should learn to love the processes. I’m saying if you insist these practices be banned then you can’t very well turn around and use it when it comes your turn to sell.
When it came time to sell, did you hate these practices so much, that you would refuse to entertain any such strategies (i.e. under-pricing, accepting a bullly offer) on your own sale? If you got multiple bids did you give transparency to all the buyers of what the others bid?
Real estate millennial
at 10:03 am
There’s this constant tone that new agents are terrible which is partially true, but no one in any industry starts as a pro. “Jim” is a 30 year vet but all that “experience” hasn’t done much for him in the new and dynamic market we’re in. I’ve done both the appraisal institute of Canada post grad and OREA courses and what I’ve found is that the education for OREA is just horrible. It’s produces terrible agents and in the end consumers are the ones who get hurt. I think TREB should double the member fees and OREA retroactively create a new education standard handing education over to the universities or a post grad through the colleges. Humber is a step a the right direction but there are still 50,000 agents that are incompetent.
As it pertains to bully offers if you’ve set the terms we’re going to review on a specific date I think you should honour that, I’m all for getting rid of bully offers. Multiple offer situations aren’t going anywhere so agents need to learn how to transact in that space so that their clients have the best experience possible.
London Agent
at 12:10 pm
Well you are correct regarding OREA’s education standards. It’s unfortunate that so many people have gained their license with those courses as their only guidance with which to begin their careers. However, raising fees will not help to eliminate only those agents that are unfit to service the consumer. Being that CREA, OREA and all real estate boards (including TREB) only function from the dues they collect from their members, it’s hard to foresee a situation wherein any of these groups try to force out a portion of their memberships. That is why they continue to try and educate the public through various means, such as RECO. They would like the responsibility to be on the consumer’s shoulders when they are deciding who they should work with. It’s not the worst way to look at the issue, but a lot of consumers are helpless and are easily taken advantage of.
In regards to your opinion on eliminating bully offers, I couldn’t disagree more. The seller enacts a strategy to sell their home for the highest amount and most favourable terms, and speaking from experience, often times that comes via bully offer when the buyer absolutely has to grab the sellers attention. It’s the seller’s property and so long as they follow the rules, they should be allowed to accept any offer any time, and sell their property the way they see fit. From a (well informed) buyer’s perspective, a bully offer is also often the best course of action if they truly desire to purchase said property.
While many buyer representatives don’t know how to properly submit a bully offer, and many listing agents don’t know what to do with a bully offer once they’ve got it, these strategies are excellent tools for an able agent to service their client. There should be no need to dumb down the industry to accommodate the poorly educated and misinformed. If anything, a “well informed” consumer should be able to weed out any lesser agent that is unable to assist them with these tools, and find one that is capable.
Max
at 1:17 pm
I think David should start his own realtor training institute. That’s what I honestly believe. 🙂
Not Harold
at 12:59 pm
A big issue is that there is little incentive to seek or offer training.
Once you’re licensed, you’re licensed. Law has articling year, but that’s not much and can no be skipped.
In law there is training at large firms and in government(ish) legal offices (prosecutors, duty counsel, etc). A large firm needs to constantly hire and wants to keep people for a longish time. Meanwhile their employees want to stay for 4 years to life to go in house, make partner, or start their own thing.
But lots of solo shops serving legal aid market and small commercial have no training and similar incentives to real estate.
You can get clients in real estate from day one yourself just by hustling. Most agencies are a logo and not much more – there’s no Osler or Goldman in real estate – hell there are very different experiences at different ReMax offices (aka franchisees that are totally separately financially) in the city, never mind in different parts of the province.
Nearly impossible to solve. .
Appraiser
at 11:05 am
“And by the way, it’s the seller’s decision in the end.”
Thank you, thank you, a thousands times thank you!
Too often this blog is filled with rabid anti-realtites (TM), angry renters, and pissed-off buyers.
Too bad!
As a seller it’s my inventory, it’s my house and whether it’s an investment property or my principle residence I will sell it however I please, for as much as I can, legally.
Appraiser
at 11:08 am
P.S. Thank-you is to our gracious host and it is his quote…
Verbal Kint
at 2:43 pm
It IS the seller’s decision. I don’t think offer dates or bully offers should be banned. However,
Most sellers don’t have as much market knowledge as you do. They rely on their agents to advise them. Will I get by more by listing low and holding an auction night? How much? Will it compensate me for the stampede of broke-ass, underqualified buyers going through my home over the next week? At what price should I accept a bully rather than waiting?
This is the expertise that agents purport to be selling, and that sellers expect that they are buying. Obviously there’s no consensus on this, because some agents underlist almost all their listings, and others hardly ever do.
Housing Bear
at 3:48 pm
And some agents spend all day anonymously trash talking their successful peers.
If you’re worried about your income, there is snow forecasted for tomorrow. Might be able to catch some surge pricing if you want to drive working folk around.
Mike
at 11:52 am
I do think the trend towards unconditional offers is insane. Are all buyers purchasing with 100% cash? How would anyone who needs a mortgage waive their financing condition?
Max
at 1:24 pm
I imagine they aren’t really putting all their chips on the table. A lender will give a pretty good idea what they are qualified for and the appraisal process goes by recent comparables as opposed to really assessing the value of brick and mortar. As long as they don’t go to that limit or over, it’s realistic.
Dave
at 1:31 pm
You bid on 3-4 houses with a financing condition – you find out that your bid was higher than the one it was actually sold to – and you realize that sellers in Toronto will pass on an extra $5-10K to ensure that the sale is unconditional.
So – now you accept that one of the pre-req’s to purchase a house in Toronto is a clean offer
Condodweller
at 3:32 pm
I also think it’s insane but what’s a buyer to do? FOMO still rules apparently. Financing one has some control over I am more worried about house inspections. Especially with older houses and the shoddy work David has highlighted in the past about flippers.
I wonder what recourse a buyer has with an inspector if the report is provided by the seller. I knew someone who’s own inspector missed a couple of things had some major expenses after buying the property.
Dave
at 8:35 pm
Pretty much every inspection report has language to the effect of “the liability of the author is limited to the cost of the report.” And this would be applicable to the person who paid for the report, so a buyer would be SOL
M
at 1:49 pm
Jeez. Any wonder why everyone hates agents?
1. “This was your classic “under list, hold back offer” strategy, and for those of you that believe this to be hypocritical, since I have lamented this strategy on occasion in the past, welcome to the Toronto real estate market!”
ie. I’m super different and ethical, but don’t hate the player, hate the game, I just do what I’m told. You can’t be different and do the same thing. When is your next new construction sales event (I hate it, but it’s their decision!)?
2. “Based on comparable sales, this property was probably worth anywhere from $650,000 to $700,000, and while I know that’s an enormous range, you have to consider just how subjective comparable sales can be.”
ie. I make so many excel sheets and am so much smarter than everyone, but I really have no idea. Let’s see what the market does. What value is there to even bothering to set expectations when the market decides but the agent takes credit anyhow (120% over ask!!).
3. ““Jim,” I told him. “I have your offer here, thanks for this. The thing is, we’re going to review offers at 7:00pm, as per the listing, as per my email to all the showing agents this morning, and as per my last email to you.”
ie. You want to have it both ways. Many stories of putting in bully offers, but don’t want to accept one that doesn’t play by your rules? How is it the other agents problem that your client is away? I seem to remember multiple stories about how amazing it was you got an offer in during a snow storm, or close to a deadline or didn’t care about the rules when making an offer and saying that is how it is done.
4. “He asked again, “So has the offer been presented to the sellers, and can you confirm so?””
ie. Rules don’t apply to you? You can’t say there are terrible agents out there who should be fined for bad practices and then not want to follow the rules presenting all offers to your client.
Education of agents is not the issue. Regulation is not the issue. The process is the issue and the process is one that agents actually do very little to help.
In this day and age, there seriously is no reason a real estate agent needs to exist. Data is out there. Marketing tools are out there. All buyers are accessible through the internet. The cost to benefit calculation is all wrong (amount of work vs. commission)….The process is one that everyone hates both buyers and sellers. It’s can’t be long before there’s an app that does all the matching (Tinder for Real Estate!), and saves everyone a headache.
I’ve bought 3 times and sold twice. Always with “top” local agents. From Brad Lamb. From Bosley. Terrible experience every single time.
Kyle
at 2:04 pm
Begs the question, if there is no need for an Agent and you’ve have had terrible experiences with them, why on earth did you use them 5 times?
M
at 5:47 pm
Different situations. More I do work with agents the less leash I give them. Almost 20 years spread. Buying hard loft from the developer in 2001 for 200k was a very different transaction to buying a house for 1.9M last year. You live and learn but I’ve mostly learned they are all the same. Will say anything to make a buck.
…. including multiple agents I’ve interviewed through the process.
Derek
at 3:32 pm
I’m not really clear on what people expect David to have done differently with this listing. If the choices were to list for $725 or $600, it is not in dispute that the sellers make the call. I don’t think David has claimed to believe that the underlist strategy is unethical or that he refused to use it on principled grounds. With a desirable listing in mid-April, in this market, just who could peg the best offer (i.e. correct price) in advance better than a reasonable range? What rules or malfeasance did he commit with the crappy “bully” offer. I doubt David planned to not disclose an offer to his clients, for one. Perhaps a simple, my clients have been made aware of the offer and they are not going to respond–feel free to submit a new offer this evening; good day sir! The fix for the “process” is transparency for all through regulation.
Jennifer
at 12:31 pm
That’s true. David, were you not required to present the offer to your clients? Would a quick email have hurt, even though you knew they would say no? Technically, that’s what you have to do, correct? Then you could’ve replied with, “yes I have presented it and they have rejected.” Jim rightly got fussed over the non-presentation.
How do we know that Jim wasn’t simply doing his job, based on instructions from his client (even though he may have told them you cant bully low and with conditions.;..who knows). Why are we hating on Jim? Even though it wasn’t a “good” bully offer and he waited to the day of presentation, which is a bit silly, he did do things right. Maybe his client’s don’t know the process well and insisted on the presentation.
Condodweller
at 3:20 pm
David, you are doing a great service actually providing transparency through this blog. Please don’t stop! Your problem is that by providing transparency you are shining the light on questionable practices in the industry which naturally will be received negatively by some. You shouldn’t take that personally. You are not the problem, however, you are part of the problem. There is a subtle but important difference.
I have been reading your blog for a number of years and sometimes I feel you are banging your head against the wall unnecessarily. You said there is a form that a seller can complete instructing their agent to ignore preemptive bully offers. Can you not avoid all these headaches by getting your client to complete the form with the understanding that you won’t “bug” them with irrelevant offers but if a “punch in the face” offer comes along that they would be crazy to ignore will be presented to them?
You can send the form as a response to any “bad” offers and not engage with the agent.
I was involved in an offer for a similarly highly desirable property where our agent told us that the seller was not looking at bully offers and did not want to submit an offer. I asked him if there was anything stopping him from submitting a bully offer? He looked at me for a while then reluctantly said “Well…..no”. We submitted a pretty strong, unconditional offer which was declined but we tried. If you don’t ask, the answer is always going to be no. But if they accept, after all, it’s a win. There was no animosity.
The interesting part of this situation is that # of years in the business is not proportional to knowledge and experience. This is why I take issue with comments which automatically assume a new agent is incompetent. With the knowledge I have accumulated over the years I could become an agent and be more competent than a large percentage of existing agents including some with 30 years experience apparently.
I understand that agents are operating within the rules but the issue with negative public perception stems from the difficulty of the process and the lack of transparency. This is understandable when someone makes an offer on a property 20%+ and ends up losing.
I have bought and sold multiple properties and I am in favour of transparency. I believe banning bully offers actually benefits agents more than buyers, therefore, it would be misguided. It would be the tail wagging the dog.
The negative effect of bully offers in a hot market has been mentioned here many times, that each new sale price sets the floor for new offers. One solution to this might be to declare the fact that the property was sold through a bully offer on the listing. This would allow reasonable agents to lessen the weight of that price when looking at comparables.
Another big change I would make, which I have also mentioned before is to disallow asking the person with the highest offer to improve their offer. There are white lies that may be ok like faux closing dates but this is way more egregious bordering on fraud.
The biggest issue with buyers I think is the frustrating process where it’s difficult to win coupled with the extreme costs involved with buying/selling. It will be interesting to see what the industry/government comes up with
Not Harold
at 10:16 am
Lots of bad practices are ALREADY against OREA rules &/or criminal code with respect to fraud. But they’re VERY hard to prove, nearly impossible to detect/prevent, and rely on the counterparty being naive/accepting.
Best answer is to rely on buyers looking out for their own interests. As we’ve seen a substantial turn in many of the GTA submarkets lots of the practices people complain about are going away.
It’s like a bull stock market. When everything is going up, people complain about small investors not having fair access to IPOs or private companies. Then when the market goes down, the same people bitch about evil bankers “forcing” inappropriate investment on retail investors.
Libertarian
at 3:37 pm
Why are stories about real estate negative? Simple, because there is no transparency in the process.
And you said it yourself, “I think that as the pool of licensed agents has grown, the market has become more dynamic, and new brokerage models have popped up, the overall level of service and level of knowledge, experience, skill, and capability of the average agent has dropped significantly.”
The commenters on this blog do not represent the typical Torontonian because the commenters are primarily real estate investors, so they have a lot of experience. But to the average person, under listing, offer dates, blind auctions, bully offers, double ending, etc. etc., is seen as shady. People just want to buy their home and move up or down the property ladder as circumstances dictate, not be pawns in an agent’s game.
I believe in individual responsibility, but since the vast majority of people only do 2 or 3 real estate transactions in their lifetime, should they be expected to be real estate experts? CREA, TREB, OREA, and all the other bodies should do something to improve the industry so that people can feel rest assured that they’re not being taken advantage of. This bull market has been going on long enough to make changes. And now that real estate is so expensive, it’s more important for buyers and sellers to feel that they can trust the process.
M
at 5:55 pm
Good point. Same reason everyone hates cabbies. Try to charge you extra on credit cards. Surcharges or minimums. It’s the ‘system’….
Boom. Uber. You know what you get. No games. No nonsense. Realtors are like used cars dealers and cabbies and the system pretends there is no alternative.
I call bs. Tech isn’t my game but if it was a buyer/seller app would be where I would spend money money. You think millennials want to deal with shady agents and faxing offers back and forth in a pretend shell game of bids? Even eBay is losing these days at that game.
Jennifer
at 12:50 pm
I also think what adds to negative perception is the amount of fees. 5% for what could be a few weeks worth of work for a listing agent, which goes something like this: Give advice on preparing for sale, assisting with staging, hiring a photographer, putting together some marketing brochures, etc., listing on MLS, holding an open house, dealing with some emails, and gathering offers on offer night and picking the best one. That is a TON of money for that. Maybe if fees were less, people would be less caught up. I get people have to earn a living wage, but it’s also not people’s problems there are too many agents and minimal sales per agent per year, which is why I suspect the formal 5% fee is not budging even though house prices have skyrocketed. And touching base with some other comments on here and prior posts, when you are dealing with agents who have to close or they cant buy groceries next week (i.e., they do 4-5 deals or under per year), this could be why agent shenanigans are rampant.
I’ve read the arguments about adding value and all the marketing materials about why you should hire a realtor, and it’s true for some people, but to people who are able and knowledgeable to deal with the process themselves, which I suspect is most who read this blog, and who can pay a lawyer a flat fee to prepare an APS, my feeling is that the fee structure also what adds to the negative perceptions. Maybe a tinder for real estate is coming soon – the industry is ripe for disruption for all these reasons listed in the comments. Let’s see where Purple Brick and that other new one end up.
Batalha
at 2:26 pm
What I really don’t understand is how all these new agents (I’m talking GTA exclusively here) added to the “pool” each year/month/week get any business. Ditto for the marginal “knock-on-your-door-and-convince-you-he’s-wonderful” types.
My wife and I have bought/sold on only two occasions (despite my rather advanced age of 65). The first time we used my wife’s best friend’s mother (who did actually work full-time as an agent) and fortunately it worked out fine.
However the second time we went with one of Toronto’s top agents, on the recommendation of our lawyer, who, as it happens, specialized in real estate. And we absolutely could not be happier with the service we received.
Particularly considering the relatively minor cost difference between good/great agents and the rest, why do so many people (apparently) opt for sub-par representation? To put it another way, why are there thousands of agents who handle one or perhaps two transactions per year? Who uses these folks? And why?
Kyle
at 3:01 pm
In my experience i want a top Agent to sell my house, but not necessarily when i buy. They still have to be good mind you (i.e. knowledgeable, experienced and a good negotiator), but the top Agents simply aren’t going to be that available for showings, to handle your inspections or chase down answer to your questions, and more than likely will pawn you off on one of their lesser experienced team members anyways.
Batalha
at 6:14 pm
Interesting.
The one time we both sold and bought (in 1998) we were moving from a $150K semi in Malvern (northeast Scarborough) to a $300K detached at Broadview and Danforth, so we were much more concerned with finding an agent familiar with our destination neighbourhood than with the area we were leaving, which had barely appreciated in seven years. We didn’t really care what we got for the semi, what we wanted was an agent who could get us the house we wanted in the area we had our hearts set on.
But of course that was a very different market, to state the obvious. Frankly, I don’t know how people survive the home-buying battleground these days.
Not Harold
at 10:31 am
It’s cheap and easy to get into real estate and the fees off of just one sale are VERY high. There’s a reason why it’s a stereotype for middle aged women to try getting into real estate.
More stock brokers make more money, but there’s a LONG time to get to a productive client base, big educational barriers to entry, and tons of personal cash that has to be invested into getting clients. Someone in David’s percentile in asset management is making tens of millions to billions of dollars a year but it’s MUCH harder to break into.
For consumers, you want someone to help you and there’s a substantial relationship needed. But you’re just not that interesting to high quality brokers if you’re looking to buy a $600k or less condo. If you’re not working at King & Bay and didn’t grow up in midtown/Oakville/Aurora you likely don’t relate to many of the top brokers and want someone who you are comfortable with. Lots of people also prefer someone who can speak a language in addition to English.
There’s a reason why stock brokers, lawyers, and real estate agents who are member of Donalda have clients who are members of Donalda, And why Korean, Persian, Polish, Ukrainian, Jewish, Mandarin speaking, and Cantonese speaking members of those professions have lots of clients with the same background.
So you can get the first 3-5 deals easily enough but the next 10 are MUCH harder, then the next 100, the next 500. Which is why so many people enter and exit the business. But it’s pretty cheap to keep a license which gives you so many inactive active licensees.
canadian pharmacy
at 7:40 am
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tanvir mian
at 9:58 pm
in my opinion offer night is total fraud and total menoply of listing agent no one knows except listing agent NOT EVEN owner of the property knows whats go on in in listing agent,s wicked and criminal head he or she will not let any one know the offers and try to keep jacking up the offers and at the end the frist poor fellow who gave the best offer at the first day with no condtion gets bumped up by agents disonesty by telling the listing agents own customer to to beat his offer by 5000 or 10000 thousand s and give his or her clint inside info.#1-to get the full commision on artifishly inflated price ?all offer should be in sealed box and really open infront of all agents at offer night with out listing agent knowing who and what all others offers were ? just like any other draw roll the drum and see who really beats the offer not listing agent,s bullshit and frauds?
Jacqueline
at 7:09 am
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