Happy Wednesday. Even the cold and drizzle didn’t keep the keeners away. For everyone else, you missed another exciting Mastermind here on Queen St. West. Today’s primary topic focused around conditional deals that fall apart. If you have sold a lot of homes you know that, from time to time, a condition does not get met. It is a fact of (real estate) life and it seems that it doesn’t matter what the condition is either; financing, home and/or termite inspection or even the sale of a purchaser’s property. We put conditional clauses in offers so that buyers can, in effect, do their own due diligence. For first time buyers, financing is incredibly important and while most are pre-qualified, the banks still needs to approve most purchases. Home inspections are also an integral part of the process but over the past few years this condition has stirred the most debate. I have tackled it in past posts ranging from agents getting sued for not being present during a home inspection to buyers getting out of deals even though there was nothing wrong with the home. At the crux of the situation is how the conditional clause is written.
Many years ago, the standard home inspection clause included a line which gave the seller the opportunity to remedy any deficiency. Today the result of home inspection is at the sole and absolute discretion of the buyer. So if, for instance, the buyer doesn’t like the fact that the roof is 5 years old and in perfect condition, he can walk from the deal. The seller has no recourse. It seems clear that the buyer isn’t actually trying to get out of the deal over something like the condition of the roof. There may be something bigger at play and in a previous post I wrote about a buyer who simply wanted to tie up one home while they were waiting to see if they were going to be successful bidding on another, better, home. Obviously, in this situation, the home inspection is being used for a more sinister reason. I only hope this is the exception rather than the rule. As we discussed in the morning Mastermind meeting, the home inspection actually has two significant roles. First, it acts as an introduction of the home to the buyer. It is the first time the buyer has an opportunity to really get to know the home. Secondly, the home inspection outlines the home’s assets and liabilities but more importantly, gives the buyer a snapshot of how expensive those liabilities will be to repair. For a first time buyer, knowing how much a repair may cost is critical to the decision-making process. As a selling agent, it is clear that the pre listing home inspection is an exceptional (although not foolproof) tool for recognizing and correcting any problems with the property before it goes to market. As a buyer’s agent it is their responsibility to explain that the intent of a condition is not meant to be a way out of a deal. Yes, sometimes deals fall apart because the home fails it’s home inspection miserably, and sometimes buyers and sellers agree to an abatement if there is a costly concern, but surely their has to be some accountability to those buyers who want out for other reasons.
So what is the expectation when buying a home? In my experience, homes are rarely perfect unless they are brand new (and even that could be argued). There is always something to do. It is also important to outline to a client all the pros and cons of home ownership. One of our agents mentioned that in their buyer’s package they specifically mention to buyers a need to set aside 2-5% (depending on age) of the home value per year for repairs. Seems like a good idea although I wonder who actually is regimented enough to but that money away for a rainy day.
Ok, its Friday, and the office is a bit quiet today so I thought I might write a quick post about a recent experience I had. This is a story of lost marketing opportunities and bad customer service. For those that know me, I am an avid runner. I like to run early in the morning, so I get to the office around 8 ish, lace up my runners and hit the road. The course is generally the same and on my approach back to the office I come up over the Strachan Bridge which hugs the corner of Liberty Village. If you know the bridge, or have ever driven west along the Gardiner, you will no doubt know the giant Inglis sign. For as long as I can remember it has flashed a quote of the day. I’m sure there are literally thousands of inspirational quotes out there, but if Inglis has ever ran the same quote twice, I have never seen it. Enough set up. Here is where the story actually begins.
One overcast and sticky morning near the end of July, I was on my usual run when I noticed the flashing message on the Inglis sign. It read; Destiny is not a matter of chance, it’s a matter of choice”. Hmm, I thought. I don’t know why that quote made such an impact on me. I guess I had a moment of self-reflection or something. Whatever it was, I found myself returning a few hours later to take pictures of the message and then posted them to my twitter and tumblr accounts. Ah the life of a busy social media guy.
I put that quote in the memory books and went on my merry way. A few days later, while running again, I passed by the sign and lo and behold, it read the same message. Wow I thought. That is so unlike the Inglis sign to show the same message. Soon I found myself going out of my way nearly everyday to see if the message had changed. It didn’t. I have to say that there was more than a passing thought that I was living in a scene from Groundhog day. I wondered if it was the gods sending me a message. “Please Inglis don’t let it be the gods playing with me”, I thought. In August, I took some time off to travel with the kids. One of the very first things I did on my return was to go back to the Inglis sign and see if anything had changed. It hadn’t. So on I went, staring at that stupid message day in and day out. Finally I changed my running route just so I could avoid the sign. Then in late September, over 2 months after the first sighting, I found myself staring up at the sign once more. I can’t remember exactly why I was standing under the sign. Maybe I blacked out. I’m not really sure, but when my head cleared I knew what I had to do. Enough is enough. Even the gods must be getting tired of sending me the same message. I had to get to the bottom of this.
I returned to the office with a spring in my step. Maybe it was the invigorating sense of purpose. I looked on-line for the Inglis telephone number. Naturally, a 1-800 number. I called and, not surprisingly, was greeted by a kind sounding recording. Press 1 for this, press 2 for that, If you need this press 3, if you need that press 4. None of those choices would give me the answer I needed so I pressed 0. “That is an incorrect key” the kind recorded voice explains to me before repeating all the choices again. Ok, I thought, the sign is broken so I will press 3, that’s what you press when your appliances are broken. Seems logical….sort of. After a few moments I am transferred to a call centre in, I can only presume, the southern US. A nice gentleman answers and asks how he can help. I tell him the story of the Inglis sign and the many months of the same message. Although I couldn’t see his eyes raise, I instinctively know he was doing it. He asked if he could put me on hold…. then the line went dead. Strike one. Oh, but I am resolute in my determination. I called the 1-800 number again. I didn’t wait to hear the choices. I hit 3. Again. A different southern gentleman answered this time and once again I told my story only this time I tried my best to convince him that I wasn’t a lunatic. It must have worked. We struck up a conversation. He told me his name was Bob. (Shout out to Bob, as promised). We talked about the weather where he was and for an instance I detected a brotherly bond. Perhaps the gods had sent him a message once too. I knew he was on my team when he asked what the message was. I told him. He thought it was nice. Then he put me on hold. A few minutes later Bob got back to me. He said he asked around and had no solution to my troubles so he gave me the number for Whirlpool Canada, which apparently owns Inglis. Bob wished me luck and a pleasant day. Strike Two. Determined to fight the good fight, I called the 1-800 number for Whirlpool Canada. Again I was greeted by a voice recording. ‘”if you are calling for this press 1″..blah blah blah. I pressed 0. “that is an incorrect number. If you are calling for this press 1″. I pressed 3. I can’t tell you how disappointed (and a bit relieved) I was to hear Bob’s kind voice again. Strike Three.
Obviously I needed to tackle this from another angle. The next day I drove back to the sign to find out who owned it. Pattison Outdoor Signs. I returned to my office feeling a little defeated but not ready to give up yet. I thought I should email them since my determination just makes me sound a little crazy on the phone. Imagine my surprise when, the next morning, I received a note back (albeit rather surly) that the messages on the Inglis sign came from the Marketing Department at Whirlpool Canada. Ok, now we are getting somewhere. Unfortunately there is no direct phone number to the Whirlpool Canada Marketing Department. Trust me, I spent a few hours looking until it dawned on me; Whirlpool must have a business page on Facebook. Bingo. So on September 22nd, at 11am, I sent Whirlpool a message through Facebook and seven hours later I received a response. “ Thanks for your note, Mark! We’ve passed this on to the appropriate people and they are working on a solution for this”. Cool. I assured myself that my problems would be over soon. Not soon enough apparently. Six days later, I sent a kind reminder…”any news?” and the next day they responded in kind. “ Hi Mark – The marketing department was already contacted, and we will follow-up with them. Thanks again!” the exclamation point at the end offered me some hope. Later that day, I had to run an errand that took me on the Gardiner Expressway. Imagine my surprise when I drove by the Inglis sign and read a different message. Finally, the spell was broken. I could move on with my life. Just one nagging thing. I needed some closure. WHY was the sign stuck for such a long time? Did I actually have something to do with the message changing? Later in the day I sent another message to Whirlpool Canada’s Facebook page proclaiming my gratitude but still hoping for an answer. No reply. As far as I’m concerned….Strike Four.
Five days after my message to Whirlpool, I sent another message. I begged again for closure. Don’t I deserve some credit at least? Hello? Is anyone there?….Strike Five. So here we are, nearly two months later. Nothing. So, what is the status of the Inglis sign today? Is everything back to normal? Is everything right with the Universe? Yes and no. For a few, very brief days the message changed daily on the mighty Inglis sign and then, as quick as they resumed, the messages stopped coming all together. I don’t know how long it was dark for. I assumed they thought it was better to just turn it off than wait for me to call again, but this morning I drove by again and a message way flashing again. Hallelujah.
Toronto has two longstanding yearlong traditions. The first in the weather beacon on the Canada Life building which has been flashing since 1951. The other is The Inglis sign in Liberty Village. I can’t help feeling like the lights went out because no one cared, but Inglis Sign, if your listening, I care. Turn the daily inspirational messages back on.
Well, another awesome Mastermind session yesterday. It was great to have some agents from other offices sit in as well. Mastermind is a pretty casual event with no agenda in place. Agents are encouraged to bring in their own topics for discussion. Yesterday however I got the ball rolling with a question that was posed to me by an agent from another company who reads my blog. The question was; How do you manage stale listings?
First of all, I think it is important to define ‘stale’. Our Mastermind group felt that there where two things that helped us determine if a property was stale. One was the time on the market, which of course varies across country and the other was Activity. For instance, a house that has been on the market for 60 days but is getting 2 showings a day may not be stale because it is generating lots of attention, but a house on the market for two weeks with no showings is a different matter.
Lets remember the cardinal rule of real estate. Everything sells if it is priced right. Getting to the right price is the tough part. Theoretically, when agents prices a home they use a competitive market analysis ( I like competitive rather than comparative because it’s tough to compare houses since there are rarely two the same). That is, looking at what has sold, is for sale or unsold. Usually there is some price adjustments to factor in things like the number of bathrooms or parking. Those adjustments are based on our experiences being in the market. In some ways you could say it is a gut feel.
It’s easy to blame a stale listing on another problem, and in this week’s Mastermind, agents brought up things like view, house style, age of the home, choice of ugrades, or being in a bad neighbourhood. But the reality is, that for every problem, there is a pricing solution. At the core, the agent needs to factor in those issues, build a case for the price, and relay that value to the potential buyer. What we are up against is the Realtor.ca addiction. It is a common ailment. Real estate has been the topic de jour for 10 years or more, and as a result, sellers are convinced they know as much, or even more, than local realtors. So what tools can we launch to get that house sold? Here are some thoughts.
1. If the homeowner has a price in their head that doesn’t jive with your research, ask him to show you his research. Let’s get right to the bottom of the price differential.
2. Set expectations better. Have an understanding for the average days on the market in your area. That is your baseline for pricing.
3. Explain the sales cycle to the seller. People are more keen to buy a house early on, and it is in the early going where the seller has the power. As the listing ages, the power transfers to the buyer. That’s when all the bargain hunters come out to play.
4. Report back to the seller regularly. How you manage your client is critical. That may mean daily phone or email updates and should contain feedback from other agents. (note to agents; feedback works when everyone participates so make the effort to respond to one another).
The pricing pyramid simply shows that being 20%under fair market value creates the most interest in a home while 20% above creates virtually zero interest. Obviously, the strategy here is to price a home in the zone that will generate traffic. As you can see, you get nearly twice as much interest in a home when you price it 5% below fair market value as opposed to 5% above, and you get three times as much traffic when it is priced 10% below versus 10% above.
6. If the client is determined to list at his price, agree on a time where the price gets adjusted according to your CMA. Most reasonable sellers will agree with your research in the end.
7. Outline your efforts to sell the house. Sellers will always use the excuse that you didn’t do enough to get them their price.
8. Jetison the deadwood quickly. Lets face it, there are some listings that will drag you down with their negativity. Don’t be afraid to say adios to stubborn sellers. Remember, it’s your reputation.
Naturally, the moment I hit the publish button a thought occured to me. Some houses just take longer to sell than other houses. In Toronto, for instance, a very well renovated semi-detached house, in a good area, priced in the low $600k’s will sell much faster than the $3M house in North Toronto. That is just a fact of life. The pool of people gets smaller as the price goes up. Just another thing to communicate to your seller.
Remember, You will always win the pricing battle if you demonstrate a solid understanding for both market conditions and area experience.
Have a safe and happy week.