TorontoRealtyBlog

Does the public want to read the following?

Hell yes.

Does organized real estate want this floating around out there?

Probably not.

While I’m fairly certain that I won’t wake up one morning with a horse’s head in my bed, I am always concerned that, someday, I’ll write something on TRB that will put my real estate license at risk.  I’ve been writing blogs now for almost fourteen years, and although I’ve only ever had two RECO complaints in that time, I’m aware that organized real estate is watching.

I don’t know about the other agents out there, but I fear organized real estate.  Even though “they” are essentially an extension of us, it sure doesn’t feel like it.   Let’s say you’ve got 60,000 members of an organization that form a board, and that board has duly-elected leadership.  Certainly, that leadership works for the membership, right?

Not in our world.

But by the same token, if you took a petition with 28,000,000 Canadians’ signatures to the Prime Minister’s office, and said you wanted change, do you really think that change would be granted?  If you do, you’re an idealist.  And naive.

In organized real estate, we have the Toronto Regional Real Estate Board, who are responsible for the “data” that has been the subject of much legal debate over the last decade, but who also provide access to listings for their members in Toronto.

Then, we have the Real Estate Council of Ontario, who are responsible for licensing and discipline.

The reason why I can’t show you a sale from MLS without blacking out the identifiable features (address, location, MLS#, etc) is because TRREB won’t allow us to publish sale data, but it’s also because RECO has rules against “unauthorized advertising,” and believe it or not, to show another brokerage’s listing without permission and credit is not allowed, even though it’s on every third-party website out there.  More to the point, if I said anything negative whatsoever, I would be guilty of “disparaging a competitor’s listing.”

But with every blog I write here on TRB, I know that the Real Estate Council of Ontario could drop the hammer on me by using one of their many vague sections in the Code of Ethics.

Case in point:

Fairness, honesty, etc.
3. A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity.  O. Reg. 580/05, s. 3.

Or how about this one:

Unprofessional conduct, etc.
39. A registrant shall not, in the course of trading in real estate, engage in any act or omission that, having regard to all of the circumstances, would reasonably be regarded as disgraceful, dishonourable, unprofessional or unbecoming a registrant.  O. Reg. 580/05, s. 39.

Over fourteen years, it should come as no surprise that I have written blog posts that people didn’t like.  But not liking them, and there being a reason why I shouldn’t be able to write them, are two different stories!  So when the time comes for a complaint to be lodged, those sections of the “Code of Ethics” above are what must be relied upon.

I mean, if I write a blog about the behind the scenes action on an offer night, does that mean I am not dealing with integrity?

And who defines what is “unbecoming a registrant?”

The hypocrisy is incredible.

With every blog post that I write, I empower the consumer with education and insight that they cannot find anywhere else, and yet I live in fear that organized real estate will crush me for it one day.

Oh well.  It’s not going to stop the following…

I’ve always wanted to take the TRB readers behind the scenes of an “offer night.”

One of my colleagues who is now, quite sadly, with another real estate brokerage, sat in my office one day when she first started to see how the whole show goes down.  In fact, I’ve done this with a couple of agents since then, and I always thought it would entertaining, informative, and a little fun to have the TRB readers sit in on an offer night as well.

Unfortunately, to video record me in my office for six hours would amount to “NSFW” as the acronym goes, and you can’t imagine the amount of coffee that’s consumed or new swear-words that are created.  So, here’s the next best thing: let me re-trace my steps from a recent offer night.

As noted above, I can’t divulge the address of the property because TRREB rules prohibit me from giving out the sale price of my own goddam listing.

The property in question was a 2-bed, 2-bath condo in a building that has been very hard to price over the years!

At 850 square feet, with a great layout, lots of windows, and loads of sunshine, I felt we would do well with this unit.

My clients completely vacated and moved into their new home, and I told them to take EVERYTHING with them!  Get out, take your stuff with you, and leave me the key.  We cleaned, painted, and repaired where needed, then fully staged the unit and took some incredible photos and virtual tour.

We listed for $699,900 and set an offer date for six days later.

The previous sale for a 2-bed, 2-bath in the building was 1,000 square feet for $825,000, or $825/sqft as the math suggests.  This would put our value right around $700,000, but I felt we would do a much better job marketing the unit, and that our unit had some nicer features, notably the southwest view and the corner with windows.

Here are the need-to-know stats:

72 showings

16 agents asked for a copy of the “status certificate”

1 unsuccessful bully offer attempt

I tell my clients that a rudimentary measure of potential interest on offer night is to divide the requests for the status certificate, or in the case of a house – the home inspection, in half, and that’s how many offers you might expect.

In the case of this particular condo, I felt that I would end up with more than eight offers, if we’re being honest here.

The feedback through the six days on the market was somewhat mixed, but that’s to be expected in this market.  I received some very odd phone calls from agents, some of which I touched on last week in my blog about bully offers.

One agent called me and said, “You’re a bit rich on the price, what do you think the level of flexibility is on the price?”

Was he wrong to ask this?  Based on the comparable sales, you could suggest that he wasn’t.  And if he’s “doing his job,” as so many buyers love to suggest, then maybe he was negotiating!

In any event, I had a few agents tell me that the price was too high, and I had a lot of agents tell me they were “having trouble pricing it,” which is often a nice way of asking what price we were expecting.  Some of these people, however, were just being honest.  Prices in this building can range from $750/sqft to $900/sqft.

Offer day arrived, and I told my clients the same thing I tell all clients on offer night:

Today is going to be a long day.  We will have multiple offers on this property and we will sell it by the end of the night, but we have ten hours between then and now.  Agents usually don’t register their offers until closer to 7pm, so if we have zero registered offers by 4pm, don’t panic.

That last part would prove to be foreshadowing, of course.  While I always register my buyer’s offer at 9:30am, not every agent works the same way.

Throughout the day, I received phone calls from twenty-one different agents.  Most of these agents asked the same question: “What are you expecting tonight?”

Many of these agents wanted to know the price I was expecting, which of course, I didn’t answer, but also wanted to know the amount of offers I was expecting, to which I said, “I would be shocked if we didn’t have six or eight.”

From 9am to 4pm, it was crickets.

How would you handle this, as an agent?

For me, it’s just par for the course.  The calm before the storm…

4:04pm: The first agent sends in Form 801 to register her offer and sends a copy of the bank draft as well.

4:07pm: An agent emails with a list of questions from the buyer’s lawyer, most of which, to be honest, were quite silly.  I responded and said that while I would love to help, the property management office was closed, and we were reviewing offers in three hours.  I couldn’t be more honest than that.

5: 30pm: An agent emails a fully-signed offer, which is quite odd, since offers were being presented at 7pm, and there was only one competing offer at this point.  That offer was for $740,000, with a $30,000 deposit, and had this note from the agent:

Here is my client’s offer. No conditions other than just a quick Status review by the Lawyer

I’m trying to think of a parallel here.

Telling your wife, “Honey, I didn’t sleep with a single stripper on Jim’s bachelor party!  Except for that one stripper…”

You either have a conditional offer, or you don’t.  The way this was phrased was amusing!

In any event, this represents our second offer.

6:20pm: A third agent is in the mix, and this agent doesn’t register, but rather sends a signed-offer as well.  This offer is for $725,000 with a $36,000 deposit, no conditions, and a bank draft attached.

6:22pm: Another agent registers an offer through our online system.  This represents our fourth offer.

6:24pm: Another agent sends an offer through.  I have never heard from, or spoken to this agent.  This offer is for $700,000 with a $35,000 deposit and no conditions.

Take a moment here to digest this: the property is listed at $699,900, there’s an offer date set, and already three offers have been registered.

This agent submitted an offer the list price, in competition.

Why?

In any event, this is our fifth offer.

6:26pm: Yet another agent emails an offer without, a) registering, b) waiting until 7pm so he knows how many offers he’s competing against!  More on this later, in greater detail…

This is our sixth offer.

The offer is for $730,000 with a $34,000 deposit and no conditions.

6:42pm: Another agent sends over a signed offer, without registering, and without speaking to me.  This is our seventh offer and is for $751,500 with a $50,000 deposit but is conditional for five business days on financing.

The agent included three conditions in the offer: inspection, financing, and status certificate.  But he crossed out two of them.  This is an old tactic to try and add by subtracting.  Often when the negotiation is really about money, you’ll see a buyer agent include four clauses and cross them all out as if to say, “See here?  We were going to have all these conditions, but we removed them,” hoping that the seller will feel lucky and then ease up on the price.

In any event, a conditional offer on an offer night, in competition, is never going to fly.

6:43pm: Another agent registers an offer.  It’s nice to see this agent do it properly!  This is our eighth offer.

6:46pm: A ninth offer is registered.

We’re cutting it a little close here, no?

Couldn’t these agents have registered an hour ago?

What do you tell the agent who registered at 4:04pm?  Or the agent who already sent in his offer a half-hour ago?

6:51pm: The agent who registered first emails me to say that based on the eight offers now registered, she’s having her client increase the price, and I’ll have the offer shortly.

6:51pm: A tenth agent registers her offer.

6:52pm: An agent emails me a signed offer and this is our eleventh offer.  This offer looks exceptional: $791,000 with a $50,000 deposit cheque herewith.

This offer is going to be the big winner tonight, no question about it.

Ironically, this is from the agent who emailed all those questions earlier tonight.

Oh, wait a minute……….this offer is conditional.  Uh-oh…

7:00pm: The clock strikes.

Is this it?

Where are all the offers?

7:01pm: The agent with the tenth offer sends hers in: it’s for $720,000 with a $40,000 deposit, no bank draft.

7:02pm: The agent with the eighth offer emails his offer.

He starts his email with the following:

“Before you discount our offer right off…”

Not the best way to begin, is it?

Well, he explained that they signed this offer when there were only four registered, but this plays into what I’ll explain later, about how a buyer agent should proceed on an offer night.  Again, more on this in a bit…

I know this agent, he’s been around for a while.  Nice guy, hard-working, and although he didn’t have the winning hand, he didn’t stop playing the game.

The offer was for $721,500, with a $40,000 deposit including a bank draft, and was conditional on financing.  That’s a death sentence right there, in competition, but it didn’t stop him from trying!  He wrote two paragraphs about his clients, explained their financing situation, and then even followed up twenty minutes later with a copy of their pre-approval from the bank!

7:03pm: The agent with the fourth registered offer emails her offer in.  Actually, her assistant emails it.

The offer is for $720,000 with a $36,000 deposit, and a letter to the sellers.

The offer is conditional on financing and insurance.

Insurance?

Insurance.

Bizarre.

Let’s not even bother trying to make sense of this one…

7:06pm: The agent with the first registered offer sends her offer in for $755,000 with a $35,000 deposit, no conditions, and a bank draft attached.

This represents our highest unconditional offer to this point.

7:08pm: The agent with the ninth registered offer sends his offer in for $765,000 with a $50,000 deposit, also no conditions, also with a bank draft attached.

It seems to me: the agents who waited until they know exactly how many offers there were have the best offers.

7:30pm: Amazingly, an agent I have not heard from emails an offer thirty minutes after offers were due, meaning we could have already accepted one twenty-nine minutes before he sent his in.  This is our twelfth offer and it is for $750,000 with a $50,000 deposit and no conditions.

So let’s review.  Here are the offers we have in hand:

$700,000
$720,000
$720,000, conditional on financing and insurance
$721,500, conditional on financing
$725,000
$730,000
$740,000, “only one small condition on status…”
$750,000
$751,500, conditional on financing
$755,000
$765,000
$791,000, conditional on status

Alright.

Now what?

For those of you who thought that my comment about the real estate industry not liking this post was about providing the terms and conditions of my twelve offers, that’s not all I was talking about.

In terms of what I can do next, as the listing agent, now that I have twelve offers – what can I do?

Whatever I want.

There are no “rules” per se.  Other than the one stipulation that a listing agent cannot divulge the terms and conditions of a competing offer to another agent, there is no set, identifiable set of rules, or pattern, or accepted principles on how to deal with twelve offers once they’re in hand.

That’s what the public may not want to hear, but it’s the truth.

And while some agents will argue that I’m wrong, they know I’m not.

A colleague of mine served on the RECO Complaints & Enforcement board and I asked her very simply, “What’s to stop me from picking the third-highest out of nine offers and telling them to improve to a certain amount of money?”

She said, “You can’t.”

I said, “Why?”

She answered, “You go back to one, you go back to them all.”

I said, “Where is that explained?  Where is it written?  What Act, or Code?”

She paused, looked at me a little fishy and said, “It’s just what you should do.”

Ah-ha!

“It’s just what you should do.”

You can’t trust real estate agents with that monumental task!

I had an offer not too long ago on a listing that belonged to one of those radio ad/billboard guys.  He had forty offers on the house and he called me and said, “We’re sending ’em all back.”

All forty.

He didn’t work with the top two, or five.  He didn’t tell the losers who offered the list price, and were 30% lower than some other offers, to go home to their families.  He just sent ’em all back.

Personally, I think that backfires.  If I’m sent back with EVERYBODY else, I’m less inclined to increase my offer than if I’m told I’m in the top-three.  But I digress…

So, on the topic of ethics, fairness, working for your seller, and hypocrisy.

Yes, hypocrisy.

Because now is the time when just about everybody says, “You should take the highest offer!  None of this ‘sending people back’ nonsense.”

Only, when it’s your turn as the seller, you wouldn’t have the same attitude.

Trust me on this.  I don’t care how good a person you want to seem on this message board – no seller has ever said to me, “We have enough money, fair is fair, let’s just accept the best offer and not talk to anybody else.”

Now let’s take a quick step back for a moment.  Remember I said I would “explain later?”

If you’re a buyer, you want to register your offer first thing in the morning.  The “Offer Summary Document” merely contains your signature, and nothing else.  No price, no deposit, no terms, no conditions.  Nothing but your intention of submitting an offer that night.

Once your offer is registered, you would (presuming the listing brokerage is in tune with 2021…) recieve an update any time an offer is registered.

Ergo, as offers come in, you’re kept informed.  And as the day goes on, you understand the level of competition you would expect.

So what happens to those agents who email offers in at 6:45pm, wihtout having registered previously?

They don’t know the lay of the land.

They are flying blind.

They are submitting an offer on the property with partial information, at best.  And they are way, way too early.

A good agent will register first thing in the morning, and sign the offer (usually just filling in the price) at 6:59pm.

Of my twelve offers, only five of those agents registered their offers.

If you’re a buyer, or a new buyer-agent, take note.

So, returning to our story about sitting with twelve offers, ranging from a bizarre offer of the list price, all the way to $91,000 over list.  Since many agents submit offers without knowing how many buyers they’re competing against, when I receive their offer, I usually inform them as to how many offers there are, and then ask, “Do you want me to present this to my client?”  I’m doing this so that they can’t complain later on that they didn’t know there were eleven offers, instead of four, even though it’s their fault.  Sometimes, agents will proactively improve.  In this case, none did.

I called my clients and told them what we had.

They were over-the-moon about the $791,000, but understood that there was no way they’d accept a conditional offer.

Why?

Too risky.

What if that condition doesn’t firm up?  Then what?  Then you’re back on the market, stigmatized, and your whole plan goes up in smoke.  Ask for further clarification if you want, but trust me on this – very few, if any, agents will disagree.

The first thing I did was go to the agent with the $791,000 offer and ask, “Can you remove the condition?”

This buyer’s lawyer was costing the buyer a property, noting that the parking spot’s legal description was not the same as the actual description, among other objections (this is the case in about half of all parking spots, FYI), and I gave this agent the chance to firm up the offer.

No dice.

So I went back to the agent with the $765,000 offer and said, “The door is open here if you want to walk through it.  Your buyer would have to make a huge jump.”

Now here’s the question you want to ask: what am I allowed to tell that agent?

The answer: anything outside of the terms/conditions of a competing offer.

Can I tell that agent, “If you bring me $793,000, the property is yours”?

Yes.

Can I tell that agent, “If you bring me $1,000,000, the property is yours?”

Yes.  Although I’m just proving a point here.

The agent asked, “How much?”  but I merely told him, “A lot.”

He came back once and asked, “Would $780,000 do it?” and I told him that it would not.

He eventually was able to read the tea leaves, and called me with good news: his clients were going to re-submit at $800,000.

Great!

Except that he said now they would need to insert a condition on financing.

No dice.

He bandied about for a while, made a few calls, and then told me he wasn’t having any luck.  So I was honest with him: I said that if he wasn’t going to come in unconditional, I would open the door for another agent.

Fair, right?

Is that unfair in any way?

Would the agent at $720,000 walk through that $800,000 door?

No.

But the truth is, I would open the door for other agents, and try a few windows as well.  If he wasn’t able to re-submit with an acceptable offer, then I would look for other options.

To his credit, he came around.  The unconditional offer for $800,000 was re-submitted, and it was signed by my seller-clients.

Then I made that agent drive to my office at 10pm to drop off the deposit cheque, because I don’t sell listings without cheques.  Ever.

For the record, I did speak to the agents who had offers of around $750,000, just to say I did.  But when they’re saying things like, “I probably getcha ‘nother five grand,” it’s not worth pursuing.  When you’ve already backed the lead horse, you don’t need to keep an eye on those at the back of the pack.  These aren’t “slow starters;” they’re horses that are only in the race to fill out the field.

I let the other agents know that we had accepted another offer, and that was that.

My seller-clients were happy, and I was pleased as well.

So, comments?  Questions?  Discussion points?

Ah, yes.  I’m sure there will be many.

Just remember what I said: none of you would keep the same attitude out there as a buyer that you would as a seller.  It’s simply impossible.

I’m ready for your suggestions about how this all “should” work, or how the system should be automated and run by the government, as well as your thoughts on how “the Australian system is better,” even though you don’t know anything about it, but merely read a headline six months ago on the sidebar of a TMZ article you were reading.

Go ahead, I’ve heard it all.

Now I have to get ready for “offer night” again at 7pm on Monday…

The post Behind The Scenes Of An “Offer Night” In Toronto appeared first on Toronto Realty Blog.