It Happened Again!

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TorontoRealtyBlog

So here’s something new…

My wife has all these “mom friends” that she didn’t have three years ago before we had a child, let alone ten months ago.

It’s amazing to see how many women out there have really crappy “long time” friends and end up making new “mom friends” as soon as they find themselves in need of camaraderie and support.  I mean, we all have those friends that are really only friends because we’ve known them for 20-30 years, but who’s company we really don’t enjoy, and with whom we have very little in common.

Once per month, I find myself attending these barbecues, pool parties, and kids play groups with my wife and daughter, and my wife’s mom friends and their families.

I picture a scene out of the 1960’s, where “Mary” gathers the neighbours or church-goes over to the backyard on Sunday, and “Joe” flips burgers while Mary encourages him to speak to John, Harry, and Bob as they too enjoy fishing.  And baseball.  And stuff and things.

Lucky for me, the “husbands” all follow sports, and business, and real estate, so we get along swimmingly.

Making friends when you’re pushing forty isn’t easy, but this group is full of like-minded individuals, and I would literally be friends with Vladimir Putin if my wife got along with his wife, and my child was friends with his child.

During the course of the mayhem and chaos, er, I mean, the brunch we had at our house two weeks ago, I watched my daughter interact with the other kids, and she seemed preoccupied by what toy each of them was playing with.  Eventually, she came running up to me, crying.

“I want it, I want it,” she wailed, as tears streamed down her face.

I wasn’t sure what she was talking about, but whatever it was, she must have really wanted it!

I asked her, “What do you want?  What is it?” and she pointed to something in another child’s hands.

Only this wasn’t her prized Teddy that she holds 24 hours per day (not figuratively, literally, as she is truly a one-handed individual because Teddy is always in the other hand), but rather it was a toy that I haven’t seen in about two years, and one she hasn’t played with since she was a baby.

Parents, you can relate, right?

Maya wanted that toy simply because somebody else wanted it, and not because it was something she truly needed.

In mid-August, I received a call on a Sunday afternoon from clients who had strolled into an open house, and fallen in love.

The house was unique to say the least!  But it was detached and had a private driveway, and was sitting for $798,800.

I know what you’re thinking: too good to be true, right?  But it’s not.  The house was a three-bedroom, and had two bathrooms.  There was a back deck and a back lawn.

But it was unique.  Quirky, you might say.

That, and the timing of the listing (ie. the slow-er month of August) seemed to be contributing to this property sitting on the market.

I rushed over to meet them on Sunday night; who doesn’t love an 8:45pm showing?

They brought their parents, and we went through the house for a solid 45 minutes, digesting what could be done to eliminate some of the quirks, and at the same time, we couldn’t help but highlight the positives!  The backyard, the private driveway, and the fact that this house was detached!

The property had now been on the market for 32 days at $798,800, so use your imagination here, folks – this house was screaming “price flexibility.”

But even more to the point, the listing agent at the open house was talking up a storm about how the sellers wanted to sell; needed to sell, and how they “might even do something crazy, like take $750,000, who knows.”

Now when somebody in a position of weakness says they would accept $750,000, that probably means they’d accept $740,000.

I spoke to the agent and he was begging for an offer.

He told me that they “needed” to sell, which isn’t wanting to sell, but rather their hand is being forced.

This is obviously not an enviable position for any seller to be in, but when your agent is telling people this, the situation must be absolutely dire.

My clients considered an offer in the low-$700’s, and slept on it.  But one day later, they determined that this quirky house was just a little bit too quirky for their liking, and they would rather see what the busy fall market brings.

I called the listing agent and told him that we were going to pass, and he said, “Damn, you were my last hope.  Okay, we’re going to have to do something aggressive.”

And that’s when he said what I just knew he was going to say, which I didn’t think would work, and absolutely loathe: “We’re going to under-list this and hold back offers.”

Yup, there it is.

There’s the story that you’ve heard from me a hundred times on this blog, and yet I continue to tell it like it’s a new idea.

Why do agents have this belief that if you can’t sell a property, you can just magically drop the price to something super-low, set an offer date, and then offers will fall from the sky?

The worst part is, when the property was re-listed the next day, it wasn’t $599,900 or $629,900, which might have been “low enough” to shock a bored market, in a slow period, to express interest in a quirky house, but rather it was $699,900.

So let me get this straight: your over-priced house at $798,800, which has been on the market for a month, which you are telling people you would let go for $750,000, is now priced “low” at $699,900?

Low, but not low enough.

Maybe I’m too binary.  Maybe I’m too black/white, ones/zeroes, vanilla/chocolate, even though I actually don’t like ice cream.  But there’s high, then there’s low, then there’s what these guys did – they didn’t have the guts to go low enough, and instead, priced where nobody would notice.

Except, if you read today’s blog title, you already know where this is going, right?

I told my clients, “This will never work, and is a monumental waste of time,” which, of course, are famous last words.

“Offer night” came, and I expected to see the property re-listed the day after for a different price.

But guess what?

The property sold.

And for how much?

How about $786,800.

What?!?

Does that make any sense to you?

Six days earlier, they couldn’t give it away!  They were advertising at the open house, “We’re desperate!  Come and take advantage of us!”  And yet, nobody did.

So then all of a sudden, the property was priced low, and the market created a frenzy for it?

This makes no sense, unless, of course, you have the same opinion of people that I do.

It’s midnight on Tuesday, and I just got home from an offer night on a freehold listing of mine.  I experienced things tonight that would make your head spin.

The property was listed at $1,299,900 and sold for close to $1.55M.

There were nine offers.

And one of the offers was for $1,250,000

Why?

Why would anybody submit that offer?

There were nine offers!

In times like this, I try to dumb things down to the lowest possible level, and role play a conversation with the parties involved.

Buyer Agent: “There are nine offers, and the property is listed at $1,299,900.”

Buyer: “I want to offer $1,250,000 on this house.”

Buyer Agent: “For our offer to be successful, there would have to be eight buyers with offers of more than $50,000 below asking.”

Buyer: “I fully assume and expect that is how the buyer pool will respond to this offering.”

That conversation never happened.

But if it did, then it would have stopped the buyer and the buyer agent from wasting their time with this offer.  And the sad part is – the agent was texting me to ensure I received the offer, asking for updates, and seemed a bit surprised when I told him we were going with another offer.

I told my clients tonight, “I feel bad for the people who hired this guy.”  These people are choosing this person to represent them in the biggest purchase of their lives, and he has no idea how the market works, or how to advise clients.

My opponents might argue that under-pricing is the reason, but I would disagree.  You know I’m all about taking responsibility for one’s actions, so ultimately I expect that if a buyer and/or a buyer agent are going to transact in this market, they must possess the very most basic level of knowledge about how our market works.  Unless you got off the bus from Toledo this morning, you know what an “offer date” is, and you know that when properties have nine offers, they don’t sell for under the list price.

So in the case of this under-listed, re-listed house at $699,900 that sold for $786,800, that could have been bought for $740,000 six days earlier, what happened?

Well, people happened.

Buyers and agents happened.

And personally, I don’t know who is more to blame.

Is the agent to blame for not knowing that this property was just listed six days ago for $798,00, on the market for one month?  Is the agent to blame for not having shown this property one week earlier?

Is the buyer to blame for hiring the agent in the first place?

It’s a real “chicken and egg”  conundrum we’ve got here.

You would think that a buyer agent, working with a client who has an $800,000 budget, and who would advise a buyer to bid $786,800 on a $699,900 listing, would have already made his or her client aware of that listing six days earlier when it was listed for $798,800.

You would think that a buyer agent would recognize a stench of re-listed garbage when he or she smells it.

And yet there were multiple buyers who lined up to bid on this place, and multiple buyer agents who led them down the garden path.

I called this blog post “It happened again” because I just can’t believe that this happened once, let alone over, and over, and over.

I told you about my colleague who had a listing last year for $1,299,900, that was sitting on the market.  He re-listed at $999,900 and sold it for $1,310,000.  That property could have been bought for $1,250,000 the previous week.

So what gives?

Well, perhaps people don’t want something that nobody else wants.

And then when you make that ‘thing’ more attractive, by getting other people to want it, your tastes and preferences change.

This is one of many, many stories from the latter half of August that I literally turned into a mental blog post as I watched it happen, and I feel like I could go on until we’re well into October.

But only one week into the fall market, I’ve got a whole other roster of stories that need telling.  Stay tuned!

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