I find the timing of this post somewhat ironic, considering I’m about to debate the pros and cons of offer instructions, while I just completely ignored a different set of instructions altogether.
The ones that came with the IKEA Pax Wardrobe.
After sixteen years working out of the Bosley Real Estate office at 290 Merton Street, we have now moved into Leaside at a new location on Vanderhoof Avenue. The buildings at 276 and 290 Merton Street were sold to a developer who will build condos one day (shocking!), and thus we had to find a new home.
Having commandeered the entire lower-level board room for an office, back in 2018, I was pretty darn comfortable at 290 Merton Street! I’m also a creature of habit, and really, really bad with change.
But credit is due to Christan Bosley, the broker of record at Bosley Real Estate, for turning an old industrial building into a really cool loft-style office that’s something you might expect to see Ari Gold working out of in an episode of Entourage. The space is modern, open-concept, exceptionally functional, and friendly.
Oh – and the old walk to Tim Horton’s was 170 meters, but the new one is only 180 meters, so I think I came out of this relatively unscathed.
Having cut my office down from a board room in the old building to a normal-human-sized space on Vanderhoof, storage has become an issue! Thankfully, the good folks at IKEA made relatively cheap, flimsy, wobbly storage units that only have a 12% chance of falling and crushing a member of my team, so I think we’re coming out on top of this one too!
I’ve been down to Harvard University a few times in the past two years to take courses, and during one, there was an exercise on “teamwork.” Build a tower, as tall as you can, out of sticks of spaghetti, a limited amount of tape, and it has to be held together at the top with a single marshmallow. Spoiler alert: the teams that always come dead last are the ones where one individual takes over from the start.
So how do you think the Toronto Realty Group “wardrobe-building-exercise” went this morning?
The wardrobe is up, but I have a few scorned team members here who felt like somebody (ie. me) might have stepped on their toes. Others wonder why I was so quick to cast aside the precious instructions.
“Because I’m a man,” I said. “And men are stupid.”
Truer words have never been spoken.
Men like to ignore instructions, skip ahead, do things out of order, and then deflect responsibility when something doesn’t go right, ie. it’s IKEA’s fault for having drawn up poor diagrams, rather than mine for working on steps 8 and 9 when my colleagues outside were trying to ensure steps 5 and 6 were done properly.
Instructions, after all, are supposed to be helpful!
No matter what you’re doing, if you follow instructions, you have a better chance of succeeding than if you do not.
Is the same then true for “offer nights” in our Toronto real estate market?
What are “offer instructions,” you ask?
As I said in the introduction, they’re often the most annoying, presumptuous, asinine emails you’ll ever receive as a real estate agent. But more often than not, they’re important, helpful, and necessary for you to succeed as a buyer agent on behalf of your client.
When there is an “offer night” for a property, we know that the general premise of the process is outlined in the “Brokerage Remarks” section of the MLS listing as follows:
Offers are on Tuesday, October 27th. The time isn’t detailed, but it’s almost always 7:00pm. And if you’re an agent, and you don’t know the what/when/where/how, then pick up the phone and ask!
Every agent runs his or her “offer night” differently. There’s no handbook on this. There are no rules, per se, other than the fact that the number of registered offers must be tracked, kept accurate, and disclosed.
In terms of how multiple offers are reviewed, worked with, sent-back to improve, and eventually accepted, that is what I want to talk about today.
But first, here’s an example of an “Offer Instructions” email:
Thank you for showing (Property Address). If your clients intend to bring an offer tonight, please read the following offer night information carefully.
- Offer presentation will begin at 6pm – please register your offer by sending Form 801 by 5pm to (Agent Email)
- We ask that you bring your best
- Please advise your clients to include a minimum 5% bank draft with the offer. Please attach a photocopy with the offer
- There will be an offer from the listing brokerage
- The seller’s ideal closing date is November 24th, 2020
- Please include Schedule B (attached)
- Please note the exclusions are:
- Dining room light fixture
- Master bedroom drapes & rods
- The hot water tank is a rental ($43.03/month)
- We do not have a survey
- Attached is the home inspection & floor plans
Thank you and good luck!
This is helpful, right?
The listing agent is doing his or her job by keeping buyer agents informed and up to date.
Disclosing rental items is incredibly helpful, and while it seems obvious, most agents don’t do it. Can you imagine how many times buyers have purchased properties without knowing, or being informed, that there’s a rental furnace that costs $80 per month? Who ends up paying for that in the end?
Noting exclusions is important too. These are typically detailed in the listing, but it’s helpful to ensure the buyer agents know.
If the listing is a condo, I’ll include a copy of the Status Certificate as an attachment.
If the listing is a freehold, I’ll link the Carson Dunlop home inspection as well.
I’ll usually attach floor plans for both.
Note the fourth point: “There will be an offer from the listing brokerage.”
This doesn’t necessarily mean that John Smith of XYZ Brokerage, who is the listing agent, is also representing a buyer, but rather only that an agent from XYZ Brokerage is submitting an offer. “Multiple Representation” exists on the brokerage level, not the agent level.
In any event, it’s important to note point #4 because many agents don’t disclose this. Some, you have to ask. I think this should be disclosed, and I would always disclose it at my earliest opportunity when I’m listing.
Furthermore, I do believe that an agent should disclose whether he or she has his or her own offer, and that extends to that agent’s team. For example, if I’m the buyer agent, I’ll ask, “Does anybody from your brokerage have an offer?” but then I’ll take that to the next level, and ask flat-out, “Do you, or anybody on your team have an offer?” Keep in mind, just because an agent has his or her own offer doesn’t mean it’s going to be the winning bid. As easy as it may be to assume that the agent will just cheat, and have that buyer make the highest bid once all the other bids are known (which, of course, is illegal…), often the listing agent will pick up some random, unrepresented buyer from the open house who wants to submit a crappy offer. You never know.
Now, note the second point: “We ask that you bring your best.”
What does this mean?
Well, at the most basic level, it’s asking buyer agents to try hard and advise their buyers to submit their best offer.
But the underlying message here could be read many different ways, by many different buyer agents. One agent might read that the listing agent is saying he or she will likely accept the “best” offer, without going back to the other offers to improve. In reality, I highly doubt that would happen. But the fact that this statement is aloof and incomplete, makes the “instruction” unhelpful.
Let’s look at another set of instructions:
Many thanks for showing interest in the property at (Property Address).
Please note that all offers will be reviewed electronically tomorrow Wednesday, October 21st at 6:00 pm.
Please register with our office by phone at (Brokerage Phone Number) by 5:00 pm and email your offer to (Agent Email) by 5:30 pm. Our Brokerage preference for deposit will be a bank draft and it would be helpful for you to email us a copy of it with your offer. However, if your buyers’ preference is a wire transfer, we will send instructions once an offer is accepted. Please send signed schedule B, Pipeda, and form 801 with your offer; Home Inspection and Termite inspection are attached for the buyers’ review.
The ideal closing would be the first week of January, with flexibility to move back into December if at all possible.
Please note that if anyone from our team has a registered offer there will be no reductions in commissions.
If there are multiple offers, we will review all terms of each offer and our clients will decide whether there is one that is acceptable at that point, or whether there are offers that are too close to make a clear decision. If the latter is the case, a second-round may be considered, but it is not guaranteed. We would encourage you to bring your best offer first so that we can deal with everything quickly and efficiently.
Thank you and we look forward to hearing from you.
Note the second last line – about “if there are multiple offers.”
First, consider that when you price a $1,000,000 house at $799,900, you’re likely going to have “multiple offers,” so the “if” statement is almost condescending.
But after this, we see that the listing agent is laying our his or her preferred method of dealing with offers: that the client will decide if there is one acceptable offer, or whether there are a few offers that necessitate being “sent back” to improve.
“A second round may be considered, but is not guaranteed.”
This may or may not be true, of course. The listing agent doesn’t know, half the time.
But do you know how many times I’ve won with a bid in multiple offers, and then the listing agent has told me, “Oh man, I have this other agent breathing down my neck. He’s pissed that he didn’t get a chance to improve.”
I went out for a beer one night with the listing agent after doing a deal, and he showed me the angry texts from another buyer agent who was lambasting him for not “allowing a second round of bidding.” But this listing agent had said in his offer instructions what the agent detailed above: that a second round may be considered but is not guaranteed.
Seeing as I have no shortage of these emails saved, let me dig through and find a few other examples of how agents detail the “process” for reviewing offers in their Offer Instructions emails:
We encourage you to bring your very best offer. If the offers are exceptionally close, we’ll encourage our Seller to give the buyers an additional opportunity to improve their offer. Ideally, your buyers will be accessible via Docusign (or another similar software) to help make any required changes to your offer as quickly and as convenient as possible.
Define “exceptionally close,” of course.
And consider that there’s no proof either.
A house is listed at $599,900 and you bid $760,000 amid 13 offers. The listing agent tells you that he’s “sending back four,” and you’re one of them. You go to $771,413, and you get the house. Months later, you run into an agent who tells you she was “sent back” as one of the four, and then mentions that she was in at $760,000. Are those offers “close,” by definition? That was an experience I had back in 2009, and for some reason, it stuck out to me.
Process and instructions: Unless there are two or more offers quite similar in overall value, the seller’s inclination will be to accept the best, only if two or more offers are quite similar will the seller entertain providing the opportunity to improve so please encourage your clients to bring their best to avoid disappointment
Here, I might do without the “…avoid disappointment” line, but so be it.
The listing agent here is saying that he or she will likely accept the best offer, but leaves the door open to the “two or more offers quite similar in value.”
Again, what does this mean?
When you offer $1,500,000 on a house and are told that there are “two offers really close,” and sent back to improve, are you assuming that the other offers are $1,490,000 and $1,510,000?
Please advise your clients to put their best foot forward with their offer as we advise our clients to accept the best offer right away. Chances for improvements are only given to offers that are considerably close.
Same version of the same thing, right?
Please email your clients highest and best offer, however, if two or more offers are similar and at the seller’s discretion, we may give the opportunity to ALL offers to re-submit.
This one, I don’t like.
They may give the opportunity to ALL offers to re-submit?
What about the people offering the list price with two conditions, that are $250,000 lower than the highest offers? Are you going to send them back?
Years ago, I submitted an offer on one of those bus-shelter ad agents, and I was not surprised when of the 18 offers on the listing, he sent them all back. All of them. And he didn’t pretend that this was about fairness, but rather said, “It’s not my job to decide what’s close and what’s not.” My buyers walked away on that one.
Although we are doing the presentation in person, we are trying to get this done in a swift and efficient manner. Please bring your highest and best offer. We cannot guarantee a chance to improve.
The use of bold, underline, and italics in this one speaks volumes, right?
Shall I keep going?
I have no shortage of these. Simply searching “Offer Presentation” or “Offer Instructions” and I’ve got emails galore…
Please bring your best offer and ideally have your Buyers available to facilitate any changes that may be necessary. We encourage you to come in with only your best offer. If the offers are very close, we will encourage the seller to give the buyers an additional opportunity to improve their offer.
Seen enough yet?
We are trying to have this done in ‘one-shot’ – please bring your highest and best offer. If there is a firm offer on the table after the initial presentations, that is acceptable to my client, I will recommend that she accept it. It will be her decision of course, but please let your client know there is a very good possibility that there will not be a second round.
Ah, yes, the “one shot” routine.
Not bad, not bad. Tell agents, “Hey, this is a one shot deal, bring your best.”
But then what percentage of the time does there magically seem to be two offers that are just so damn close that you had to send them back?
My sellers’ intention is to choose the strongest offer from those presented so you are encouraged to bring your very best offer from the outset. However, if there are competing offers that are very similar, there is the possibility that those buyers will be given an opportunity to improve.
Right. Seen enough
By now, many of you are choosing to focus on how much you dislike real estate agents and the “games they play,” but I would encourage you to try and see past that, and realize that this is the way the process works, and it’s better to understand it so you can be successful, rather than sit and stew.
I only mention this because as I was writing this post, I started to think about the comments, the retorts, and the rebuttals.
I also figured it wouldn’t be long before somebody comments, “We need a new system – like the one they have in Australia,” even though about 99.2% of the people who make such comments have no idea how Australian real estate auctions work. I wrote a lengthy post about it back in 2018, ” Is The Grass Greener Down Under?” have a read if you want to see why the grass isn’t any greener down under…
Love it or hate it, the unofficial auction system of selling real estate is what we’ve got. So learn it, understand it, and ensure your buyer agent has mastered it.
There is gamesmanship to this process in the end, no matter what the “offer instructions” say…