Here’s a quick recap of all the important Olympic news you might have missed overnight, and a look at what’s still to come later today.
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Groups representing B.C.’s developers and realtors are critical of the new housing taxes announced in the budget this week. It’s left many in the real estate industry skeptical that the province’s 30-point plan will realistically improve affordability.
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I used this term in Tuesday’s blog as I discussed a buyer who simply didn’t “get it,” or wasn’t “with it,” in the context of the 2018 real estate market.
Many buyers out there don’t get it, and many of them try to create their own narrative, by hoping, waiting, wishing, dreaming, and eventually convincing themselves that the market fantasy they’ve created for themselves, is, in fact, the reality.
Today, I’ll give you a few recent examples of interactions I’ve had with people who create their own narrative, and you can tell me if their thoughts have merit, or if they too just don’t “get it,” as the saying goes…
Over the weekend, something happened that perfectly illustrates what happens when a disappointed, frustrated, and uninformed Toronto buyer meets reality.
I got fired.
I use that term somewhat loosely, and at times, facetiously.
I always take the high road, and unlike many agents, I don’t feel the need to be “right.” I don’t need to have the last word, and I don’t burn bridges.
A few weeks back, a young couple contacted me about potentially buying a home, and even from our initial email correspondence, I knew they were out of touch with market reality.
We met at a property that would surely have significant action, and they liked it. They said they “wanted to move forward.”
The property was under-priced, and had a hold-back on offers.
But the more I explained this to them, the less they seemed to care.
One of the buyers was scheduled to go away on a business trip, and so they determined that submitting a “bully offer” that day would be the best course of action.
I told them what they needed to know – about the deposit cheque in hand with the offer, asked them about potential closing dates, went over terms, and then almost as an afterthought, said, “….and obviously, no conditions.”
One of the buyers replied, “What do you mean, ‘no conditions?’ We want a condition on financing, and a condition on home inspection.”
I was confused, but perhaps this was my fault.
I often take it for granted that not every buyer knows everything about the Toronto real estate market.
I explained, “Well if you’re submitting a bully offer, and you expect the seller to forego the offer night, your offer would have to be unconditional. They would never sell their home conditionally, and give up the potential multiple offers five days from now, as scheduled.”
I’ll save you the rest of the dialogue, but I went on to explain the idea of a bully offer, in the context of today’s market, as well as how the seller would see it from their perspective.
My buyer responded, “We don’t care how the seller would see it. We only care about how we see it.”
That, right there, is a willful ignorance. It’s a growing trend, and it stems partially from dissatisfaction, and partially from a lack of common sense.
I said, “Even if you blew them away with a price so far over the asking-price that it exceeded their wildest expectations, they would still have to take on the risk that you don’t waive your condition(s) – plural, and I don’t see them taking that risk. I don’t recall ever seeing a seller take on that risk.”
Amazingly, she responded, “Who said we’d be going ‘wild’ over asking? We were actually thinking about coming in at the list price, or below.”
I didn’t waste any time here; “You want to make a bully offer, with not one, but two conditions, at or below the list price, for a property that will probably sell for 15% over asking on offer night? I’m sorry guys, but there’s absolutely zero chance here.”
She calmly responded, “We disagree.”
And then she stood there, with a matter-of-fact look on her face, and a slight smile. It was like she was proud, or had something to prove.
“We think we have a chance. And a chance is all we need.”
And suddenly I was reminded of…
There’s a reason that movie has the title it does.
I left the young buyer couple that day, and gave them a choice; I told them that I was happy to represent them and work with them on their purchase, but they had to revise their expectations to adhere to something even remotely resembling market reality.
They told me that this is how they were going to be successful in the market, and I wished them the best of luck.
Fast-forward a couple of weeks, and they reached out to me again. I was surprised to hear from them; there are 50,000 real estate agents in the city, and they could have found any number of willing agents who would serve as the “yes-men” (or yes-person) they were looking for.
This time, they were looking at an $800,000 listing, which of course, made zero sense, given their maximum pre-approval of $750,000. And given my target for this house was over $900,000 when all was said and done, it made even less sense.
I emailed back and told her that this would probably fetch over $900,000, and asked if they’d obtained a new mortgage pre-approval since we had last spoke.
She simply said, “Everything is the same as it was.”
I didn’t understand.
I mean, I knew that the first time around, they wanted to make a conditional bully offer, at or below the list price. But surely having seen that house sell for $100,000+ over asking, firm, via bully offer, and my encouraging them to adjust their expectations and approach, some of that would have sank in.
It didn’t, as it turns out.
The young buyer said they wanted to see the house regardless.
She said, “We don’t think that every house is going to sell over asking. In fact, we think many houses will sell below asking. We’re hoping this one sells significantly below asking, and we’d like to see it and plan ahead.”
This is one of the best examples I’ve seen in a while of wishful thinking.
And having gone through this exercise once already, I thought they would have learned.
As luck would have it, we never did tour the house in person. An odd series of scheduling conflicts led to the idea that time wasn’t on our side (even though we had four days before offer night…), and the offer day came and went.
The day after offers, seeing the house sell for $927,580, I emailed the young buyers to tell them.
It wasn’t an “I told you so” moment. As I said, I wasn’t chasing these guys, and I had already turned them away once. I was trying to educate them, and bring them closer to reality.
Having told them in an email that they needed some “tough love” from me, and saying, “With a $750,000 budget, we can’t be looking at $800,000 listings, that are going to sell for $925,000,” they wrote back, and told me where to go.
Something to the effect of, “We have a perfect understanding of the market, but we also have faith. Thanks for your help, but we’re going to look elsewhere. Take care.”
And with that, I was technically “fired.”
Most agents wouldn’t be able to control their egos, and write back something like, “Happy Renting!” But I simply wrote back and wished them luck, and told them to have a great weekend.
I feel bad for them, to be honest.
They’re creating their own narrative, and as a result, they’ve accepted their fantasy version of the Toronto market, as a reality.
As I alluded to in Tuesday’s blog, I met a lot of dreamers a couple of weeks ago when I had a North Toronto home up for sale.
It’s no coincidence that the cold-callers, who are proud to announce, “We don’t have an agent,” are always the most out of touch with the market.
On Saturday night, around 9:30pm, I got a page from our answering service to call “Bob Johnson,” and the message said, “You showed his son a house today.”
I knew exactly where this was going, of course. Jimmy was interested in a house, and Dad had to call the agent and suss things out.
Bob was very cordial, courteous, and kind, for what it’s worth. He was gracious, and thankful – let’s not get that wrong.
But was not in touch with the market, and I believe that part of that was his own doing.
He too was guilty of creating his own narrative, as everything that he said was a wish, hope, or dream.
“The market is terrible out there!” he said, to which I replied, that although house prices are down from the peak in April of 2017, they’re on the rise thus far in 2018.
“There’s way too much inventory!” he said, to which I replied that this was the only house for sale in the neighbourhood, and the only one in this price point in six months.
Everything out his mouth was a preemptive strike against a seller’s market for the home!
“A house like this isn’t going to sell quickly,” he said, which solicited an immediate response of, “Offers will be reviewed on Tuesday, and I would expect at least 3-4 at this point.”
“The house needs too much work, nobody will buy it.”
No word of a lie, folks – he just kept going, and going!
“Read the newspapers! It’s a buyer’s market!”
“Nobody is going to make an offer without conditions! The house needs to be inspected! Buyers need approvals from their banks!”
I explained to him that in this market, a good listing agent will provide a pre-home inspection, and that any buyer at this price point has already obtained a mortgage pre-approval. Furthermore, buyers know that sellers won’t accept conditional offers, in competition, so they don’t bother with conditions.”
“That’s just not true,” he told me.
“People aren’t buying before selling anymore! They’re all buying with conditions!”
Every sentence out of his mouth was just yet another argument in favour of a poor market; one in which his son could purchase the house, for well under-asking, all according to his own timeline.
One of my colleagues ended up taking the father to the property, on the day offers were being reviewed, and the son showed up shortly thereafter.
They spent two hours at the home, going back into rooms they’d already seen, over and over.
They walked the lot, they inspected the yard, they scoped out the inside of the garage.
And by the time they had finished, it was 5:30pm, and there were already six offers registered on the home.
“We’re interested,” the father said. “But we’re going to want to negotiate.”
My colleague is a lot like me, and getting right to the point, he rhetorically asked, “There are already six registered offers on the property, how the do you expect to negotiate?”
The father and son were on the same page; they didn’t even need to look at one-another.
“We don’t care how many offers there are,” the son explained. “We’re going to do what’s best for us.”
Sure, I get that. Do what’s best for you, absolutely.
But that doesn’t change the reality of the market, and if you mean “We won’t pay $2.7 Million, because it’s not what’s best for us,” then don’t offer $2.7 Million. Just walk away, if you don’t see the value. But that’s not what they were thinking.
“We would be buyers at two million flat,” the dad said.
My colleague shook his head, and said, “You guys aren’t listening. There are going to be 6-10 offers, and the house is going to sell over the asking price. Coming in $300,000 under the asking price is pointless.”
“We could go to $2.1 Million,” the dad said.
“Now you’re negotiating with me?” my colleague asked.
The dance went on for a few minutes, and eventually it ended.
The father and son scoffed at the idea of providing a certified cheque for the deposit, as they didn’t deem it “necessary,” and then said, “We’ll take our chances. Let us know if it’s still available tomorrow.”
I don’t understand the father’s position, nor do I understand his motivation.
I can’t figure out if he was truly out of touch with the market, or if he felt that if you put something out into the universe, it might find its way back to you. Perhaps by making all these absurd claims about the real estate market, and the process of buying and selling, he thought he could convince the market participants, or the aforementioned universe, to see things his way.
Last story here, folks, but this one might be the oddest.
Another couple who saw the house, loved it, and were highly interested.
But on the day of offers, they took a different approach, and emailed the following:
The house is lovely, it’s a great fit for our family, and we could see ourselves enjoying the warmth and cozy confines of the home for years to come. But at present, we’re in no position to act. We have yet to list our house for sale in Boston, and we’d ideally like to have it sold before we make an offer in Toronto. We aren’t going to list the home until the end of the school year, as we don’t want the kids to have to deal with the emotional toil of the sale. If the sellers would like to see the home go to a family that will cherish it dearly, please let them know that we will be back house-hunting again in June, and if they’re willing to wait a little while for us, we would love them to consider selling to us at that time.
I’m not being insensitive here, but I just can’t understand how somebody could put that in writing.
And this has nothing to do with them being from Boston, and not understanding the Toronto market. They saw many houses during their stay, and they know each one has an “offer night.” They’re not stupid.
But how in the world could somebody suggest that a seller, with nine offers on their home on the scheduled offer day, would put that aside, on the off-chance that one buyer makes an offer, four months down the road?
This isn’t another example of “creating your own narrative.” It’s just really misguided.
Dare I say that with a very small portion of Toronto buyers, there’s almost this willful ignorance. And as you saw in the first story above, the willful ignorance often comes with a hint of pride, and that, I just don’t understand.
Look, I get it, folks. The Toronto market is expensive. Prices continue to rise, and people want what they can’t afford. Buyers are disappointed, and frustrated, to say the least.
I’ve never denied any of that, but pretending that reality doesn’t exist, is not the answer.
Creating a fantasy in your mind, and then trying to play it out in the real world, is not the answer.
Acting cavalier, and refusing to accept what’s given, is not the answer.
I’m sorry to be the bearer of bad news, and I don’t enjoy giving tough love. But creating your own narrative, and then getting caught up in what you hear yourself say, is simply never going to help you in this market, no matter how badly you want to believe it…
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