Wow, the first four months of the 2021 real estate calendar have flown by!

And at the very same time, it seemed to last forever…

Case in point: I went to look up a blog post that I wrote about a seller’s bully offer dilemma, thinking it was back in February, only to find it was on March 10th.

Really?  That was only 1 1/2 months ago?  It feels like an eternity!

So much has transpired since then, and as a real estate agent, you often measure time by the transactions you’ve worked on.  Maybe we just had a really busy March and April, but man-oh-man, does that ever seem like a long time ago!

March 10th, 2021, I wrote: “Behind The Scenes: A Seller’s Bully Offer Dilemma”

This was after two similar blog posts in which I wrote behind-the-scenes accounts of both representing a seller in competition as well as a buyer in competition.

All three posts were well received, and as many of the readers pointed out, this is material and insight that you won’t find anywhere else.  If you’re a buyer, seller, or agent in this market, I’m happy to share these stories with you so you may use the information to educate yourself in this exceptionally-difficult market.

I found myself without a topic for Monday morning as I sat down at the computer on Sunday night, so I figured I’d tell you all tales this morning from Saturday night’s excitement!  I suppose in a different world, for a different person, “exciting tales from Saturday night” might describe a racy evening out on the town, but alas, we’re in a pandemic, and I’m also forty going on eighty…

I have a listing, er, had a listing on the east side for a gorgeous semi-detached, 3-bed, 2-bath with laneway parking and great backyard.  Located in a family-friendly community and a great school district, the only knock on this house is that it’s on a busy street.  Not quite Broadview Avenue, but busy.

Like most people in this market who care to admit it, I had absolutely no clue what this house was worth.  I mean, I could tell you what it’s worth on paper, but what I mean is that I had absolutely no clue what it was going to sell for, hence no clue what somebody would pay for it, and thus what it was, by definition, “worth.”

In January, I gave the seller’s a CMA that showed the average of twelve properties, with adjustments, providing a valuation of $1,275,000.  I believe I told the sellers that I felt it was worth more than what the numbers showed, perhaps around $1,350,000, and that ultimately I would love to see upwards of $1,400,000.  When I say, “I believe that,” it’s because January of 2021 may as well have been Octvember of 1988, because this market is moving at a pace that none of us can keep up with.

A lot transpired between our January meeting and our April listing date.  To say we were meeting and preparing early was an understatement.  Our staging walkthrough took place three months before we would actually list, and this was due to the fact that the property that the sellers had purchased had an epically long closing date.  From the time we met to the time we listed, schools were closed, then opened, then closed again.

When we first met, I had suggested a list price of $999,900 which is what I call “stupid low,” not only because to price a $1.35M house at $999,900 is stupid (and yet we all do it…) but also because it gets stupid people to view it, thinking it’s worth $999,900.  By the time we were ready to list, I told them I wanted to list at $1,099,900.

What was this house actually worth?  Honestly, I was hoping for $1,500,000.  I know it’s insane, but I was holding out hope.  The high-water mark for a semi on this street was just shy of $1,200,000, one year ago, so my goal was ridiculous.  But, we’re in a ridiculous market, are we not?

After some back-and-forth on the price, and coming up from $999,900 to $1,099,900, we decided to list for $1,159,000.  Although $350,000 over-list had been done before many times in this area, I didn’t know if we’d get to our $1,500,000 number.

The night before we went to market, I called the sellers and walked them through the process.

Last week, I wrote a blog called, “How To Manage Expectations For Your Listing,” and I only wish I’d written this a week earlier since it would have helped in my discussion with these clients!

I like setting expectations, and at the same time, setting realistic goals.  I told them that the first day, I would like to see 6-8 showings booked, and on the second day, I’d like to see 8-10.  I said that I wanted to see a minimum of 40 showings in total, but 50 would be ideal, and 60 would be fantastic.

I did not, however, ask them what their bully offer trigger price would be.  I used to do this all the time; I’d ask clients to tell me their “Holy Shit” number, but recently I’ve waited until we had an offer in hand to talk shop, as I feel that expectations change as the listing goes on.  Some sellers get nervous if there’s little action at the onset, and they decrease expectations.  Others increase expectations if we’re off to a hot start.  So in the end, I’d rather know how they feel in the moment than in advance, without any clue what the interest level would be like.

In this market, more than half of all the agents who show the property will call you and say, “Would you guys consider a pre-emptive offer?” even though they never bring one.  I don’t know why agents do that, to be honest.  I don’t do it.

We had a great response to the listing with about 25 showings booked in the first two days, and it looked like we would be sailing toward 60 showings.

As is always the case, agents would call me and try to poke and prod for my thoughts on pricing, but I’m both honest and unhelpful when I tell them truthfully, “I have no idea what this property is going to sell for.”  They always seem disappointed, but I learned this from another wily vet in the midtown area who told me the same thing earlier this year when he said, “I can tell you what I think it’s worth, but somebody could pay like $200-$300K more than that, who fucking knows!”

Agents were asking about $1,300,000, or $1,400,000, but nothing really excited me.

Then one night, I was watching Yellowstone with my wife (we’re still on season three but just learned the big secret about Jamie…) when an agent called and said that his clients loved the place and that he could get them on paper for $1,400,000.  I told him this probably wasn’t our bully-offer number, but encouraged him to bring that on offer night.  Then he said, “Well, they’re approved for $1,500,000, and I’m wondering if I could get them there.”

To channel my inner Leonardo DiCaprio: “Oh, you had my attention, but now you have my interest…”

I told him I’d run that figure by the sellers and get back to him, but I knew we had legs here.

The next day, I told the sellers, and they admitted that if this were two weeks ago, they would have felt like they’d won the lottery to sell for $1,500,000, and even now, they’d be happy as hell to sell for that number.

I sensed a little bit of standoffishness, and that was warranted.  We’d had an incredible response to the listing and although $1,500,000 was absurd, we wouldn’t exactly be wrong to hope for more.

I told them I would chat with some colleagues and report back later.  A good agent will have enough humility to ask the opinion of other agents, whether about a specific property or a hypothetical “what if” scenario.

I called a top-one-percenter who had shown the listing to get her two cents.  She told me, straight up, “My clients aren’t into this place,” so that enabled us to speak more freely.  I asked her about $1,500,000 and she said, “That’s pretty friggin’ good, I’d take it if I were you.”  We hashed it out a bit more and she said, “I guess it’s like – you wanna just get that little bit more to know you squeezed out every penny, right?  Like $1.55M is a no-brainer.  Absolute, sign it up.  Donezo.”

I kind of felt the same way, to be honest.  How can we turn down $1,500,000 for this house?  It would be nuts!  But then again, it just feels like a price we’d probably see again, so shouldn’t $1.55M be our number?

Another colleague then told me $1.5M was stupid money and I’d be equally stupid to advise the clients to turn it down, which might have resonated with me a little, except that we didn’t actually have this offer on paper.  I had an agent who had, as of that morning, told me that he could probably get that offer together if I told him it was a go.

My clients and I discussed one more time, and we came up with the following: worst-case, our floor had to be $1,450,000 on an offer night, and who knows what the upside was here.  It’s not unreasonable to assume that we could get $1,550,000 on an offer night, but even if we got two bidders around $1,500,000, and we pushed them up, say, $26,000 over that number, it was still worth trying for.

I knew that $1,500,000 was a ton of money for this house, but it just didn’t feel right to me.  My gut was telling me there’s more out there.  The sellers basically said, “This is your call.  You’re the expert, so tell us what to do.”

Lotta pressure, especially considering it’s not my money, but ultimately I advised the sellers not to chase this guy’s $1.5M bully offer and simply proceed as planned.

And that’s what we set out to do.

I say “set out to do,” and not “did,” because Saturday proved to be the day that would force our hand.

I was driving north on Kipling Avenue after showings some of the new Minto townhouses at Lakeshore & Long Branch, when an agent called me about the listing.  She said her clients were incredibly interested and asked if we would consider a bully offer.  I told her what I already wrote above – that almost every agent who showed the property calls and asks that question, and that every time, I would answer: “I would present an offer if an offer materialized.”

She said, “But has anybody taken you up on that?” to which I replied, “No.”

She said, “Do you think they would look at an offer of $1,500,000?”

I couldn’t say “No,” and risk her clients walking away and not coming in on Monday’s offer night, so I said, “We’ve had that number before, and while it’s a great number, I don’t think that buys out the offer night.  To forego Monday night, we’d have to see something really special.”

She explained that her clients really wanted the house, and I told her that even if they came up with a magical number, they would need a deposit cheque, and it was 3:00pm on Saturday with banks closing at 4pm.  She said, “They could run out now, that’s no problem,” and suddenly I felt like we had a live one here.

We chatted again, and all the while, I had merely told my clients over text message, “I think we hooked a big fish.”  I didn’t want to give them any figures, since nothing was in writing yet, and it would be crushing if the offer didn’t materialize.

My only reference of fish stems from being a child and fishing off the dock up at a cottage we used to rent every summer.  Sunfish, rock bass, and the odd small-mouth bass were all we ever caught so I wasn’t sure what “Hooking a big fish meant.”

“Sturgeon,” I texted to my sellers, who I believe know as little about fishing as I do.  Further research shows that, at least as Ontario goes, I may not have been that far off…

Sure enough, it was around 4:25pm that my iPhone buzzed and an offer was sitting in my inbox.

The offer was unconditional, with a bank draft from ScotiaBank in hand, and for a whopping $1,600,000.

Is there a meme for this?  Send me your best meme to describe this moment, please.  And it doesn’t have to involve sturgeon.

I called my seller and played my favourite trick: “I said, we have the offer, but I couldn’t get you $1,550,000,” then waited for him to sigh, before saying, “So I got you $1,600,000 instead.”

Childish, I know.  But it builds the momentum and they’ll always remember this night.  Plus, it’s what Johnny Depp says in Blow, and we all worship false idols once or twice in our lives, right?

My client was as awestruck, as was I.  This was a ton of money for this house, or so we thought (more on this later…).

I told him that I had a 4:30pm appointment that I had to run to, so he should chat with his wife and I’d call him so we could regroup at 5:00pm.  I finished my appointment at 5:04pm and there were already two missed calls.  Totally fair, given the circumstances!

We talked, and obviously, it was a green light.  I explained the basic process from here: that I would email and call all of the other agents to let them know about the offer, and that with an 11:00pm irrevocable date, we’d probably accept this offer by 10:30pm.

The agent gave me an offer at 4:00pm with an irrevocable date of 11:00pm because I specifically told her, “I would only work with a pre-emptive if there was a reasonable time period to do so.”  She realized that respect is important in any transaction, and that you catch more flies with honey, so she obliged by giving me seven hours.

The same cannot for many, many agents out there, both in terms of the buyer agents being aggressive as well as the listing agents who have no clue how to stand up for themselves!

Check out this email I received on Sunday morning:

Yeah.

10:51am, you email all the agents who have shown your listing to say that you have a bully offer in hand with an irrevocable of 11:30am.

Why in the world would you let another agent hijack your listing?

If somebody sent me an offer at 10:45am with an 11:30am irrevocable, I would tell them I’m not working with it.  They may pull that, “You have a fiduciary duty to your client” bullshit, but where does that get us?  Why be adversarial and confrontational?  The best agents in this city are the ones who respect each other and work together, not against each other.

That agent above – I wonder if it was his own offer.  Bully his own listing?  Sure, wouldn’t put it past him…

At 5:05pm on Saturday night, I sent out the following email to 55 agents who had shown my listing:

Dear Colleagues,

Please be advised that a pre-emptive offer has been submitted on (address) irrevocable at 11:00 pm tonight.

The seller intends to work with the offer.

Please contact me immediately if your clients have interest in the property.

David.

Note: “the seller intends to work with the offer” means that this will be accepted and the Monday offer date is being moved up.  Many agents aren’t as clear when they send out emails about bully offers, and it often leads to some buyer agents not acting accordingly.

After sending this email I sat down outside on a beautiful evening with my family for our weekly “Saturday night pizza party,” and I told my wife, who is always caught up on my real estate endeavours, that I had “put the wheels in motion.”  She’s a real estate spouse, she knew what that meant.

So what happened next?

Well, we’re getting a little long in the tooth right now.  Let’s pick this up on Wednesday…

(TO BE CONTINUED…)