How much are you willing to say about a previously turned down offer on one of your listings? This was the topic of last week’s Mastermind meeting at our office and it created considerable debate. Here is the scenario…. You have a listing that has been around for nearly two months. In that time you have entertained two offers. The first one came on offer night but it was much lower than the Seller’s expectations. Just after the third week, you terminated the listing and relisted it at a higher price. (This tactic has limited success but, depending on the time of year and a bunch of other factors, can help sell the property). Within days you received your second offer which was lower that the first offer. Now you are cruising in on month two. You are still getting lots of showings and agents are asking questions…why hasn’t it sold? have you been getting interest? AND… have you received any offers so far?
We had a rather entertaining debate at the office and on the local real estate Facebook group. One thread suggested that the listing agent has a duty, according to REBBA 2002, to say absolutely nothing. I find the logic incorrect on this. While our duty is to inform agents about the number of competing offers we are bound to keep the contents of competing offers confidential, but once an offer is rejected and expired, is it still our responsibility to keep the contents private? If you agree with that logic than you would have to agree that an expired offer is still, technically, an offer. I don’t believe that is the case. Plus I find it hard to imagine an agent responding to my question about other offers by saying “I can’t tell you”. In my mind that is a loaded response that immediately puts any possibility of a new offer off the table.
Another thread suggested that it was okay to divulge certain information about expired offers, such as price and terms (like conditions or closing dates) provided the Seller has given his permission. Generally this is not a bad answer but I don’t think it ticks all the boxes either. Essentially it suggests that the Seller is directing the listing agent to say something like “the Seller is hoping to get $1M and the last offer was only for $850k”. Clearly the agent is acting on the direction of the Seller but is he advancing his listing in any way?
While I recognize that we work under a strict code of ethics and the law, I believe there are a number of responses that work without implicating your Seller in a position of greed or being unrealistic. “We had two offers. One came really quickly and wasn’t what we were looking for, and the other had some conditions that the Seller was uneasy with” or how about “we were back and forth but in the end the parties just couldn’t come to an agreement”. and end the conversation with “we are still getting plenty of showings and traffic is high at open houses”. No lies, no disparaging comments. Simple truths. What you don’t want to say are things like “The offers didn’t meet my clients expectations” or “both offers were below market value” or “my clients expectations are too high” or ” my client is looking for $X (even if directed by your client to say so)”.
I am reminded about the saying that a good agent will say more by not saying. That’s a valuable lesson to be learned. I believe it is alright to say that you had two offers, but, if pressed about the contents it is okay to be vague. Don’t fall into the trap of saying too much especially if you are asked about price. Simply direct the potential agent to do their own research on comparable solds in the area and let them determine value. 20 years ago our market was much different. Properties stayed on the market for months so naturally agents would ask about previous offers and yes, we would speak the truth. There was true kitchen table negotiating with candid discussions while not giving away too many details. My advise, strike a balance between saying something and not saying anything. That may sound strange but the reality is that human nature should be your guide. People want what others have or want. If you say that there has been interest and offers then potential buyers want in on that action.
Mark McLean is the Broker/Manager at the Bosley Real Estate Queen St W office, the Immediate Past President the Toronto Real Estate Board and a director at the Ontario Real estate Association . The opinions expressed here do not reflect the opinions of TREB, OREA or Bosley RE
Imagine this scenario. You are the listing agent holding court in a multiple offer situation. You have five offers on your house which you listed for $699,000. Your expectation was that with any luck you might reach $750,000. Agent Steve’s offer is for $710k, Agent Robert’s offer is for $740k, Agent Susan shows up with $745k, Agent Betty’s clients are $760 and Agent Matthew smokes everyone by bringing in $780k.
You have a couple of choices here assuming all offers are clean (no conditions) and have roughly the same closing date. Choice one, accept the highest offer and break out the bubbly, or roll the dice and send them all back in hopes that you can get even more. Sure you might lose one or two but given the current market conditions in Toronto there is a pretty safe bet that you can squeeze a few more dollars for the sellers.
So in this scenario you send them all back. The conversation goes a bit like this….thanks for all the offers. Frankly they are all pretty close so the Sellers have requested that we give you an opportunity to improve your offers. In this example all the buyers improve their offers. Agent Steve improves to $725k, Robert gets to $750k, Susan’s clients are tapped out and only improve to $752k, Betty brings back $760k and Matthew’s clients have lost too many homes to go home empty-handed so they lay it all on the table with $802,500. So pretty simple decision really…..or is it?
As the listing agent you are in possession of all the offers. There is plenty of time (lets assume irrevocable time is 11:59pm on all offers) so you decide to try something. You call in Agent Steve and have a conversation that goes like this….”Hi Steve great job on the offer but it’s not the highest. However my seller really likes your buyer and wants to make you an offer. We are going to sign it back to you for $820k. I know your clients are waiting outside so I will give you 10 minutes to decide”. If the clients balk you move on to Robert. If Robert’s clients balk you move on to Susan, then finally Betty. If Betty’s client agrees, then they have bought a house. If not, then you still have Matthew’s very good offer.
In this example I have kept it pretty simple and haven’t complicated it with deposit amounts or short irrevocable times which might skew the results but the question remains, is this way of handling offer night appropriately? Do you find any moral dilemma in handling things this way? Ultimately you are getting the most for your client so you are doing a great job, but are you just playing with the other agents to the transaction? It seems that this is a delicate chess game where a lot could go wrong so ask yourself if the risk out does the reward?
We had a big discussion at our company today and couldn’t really pinpoint anything wrong although we did wonder if the listing agent had an ethical duty to let all the other agents know they were in a sign back. sleazy seemed to be bantered around but not illegal. After all is it any different when you have only one offer but kindly ask the Buyer Agent to improve their offer?
I’m sure there will be a lot of discussion to follow on this topic and will certainly add additional comments as they come.
mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.
Buy first or sell first? That is the question of the day and our topic for this morning’s Mastermind meeting. It’s a pretty loaded question with implications for each scenario, and given today’s frustrating market, one that is most likely causing some sleepless nights for buyers and sellers everywhere. if you missed Mastermind, you missed a great discussion plus an opportunity to listen to the opinions of not one, but four Bosley Managers who just happened to be in the neighbourhood.
The topic started when an agent mentioned that he was working with a client who was interested in buying a bigger home but wanted to make any offer conditional on selling his current home. If you’ve been in the business for less than ten years you may have heard of such a thing in Toronto but may never have actually seen it happen. Trust me, it was the norm back in the early nineties. (yes, I’ve been around that long). In many ways buying on condition of selling isn’t such a bad idea because, right now, finding a home is probably the hardest part of the purchase. Of course if you are one of ten offers on a particular house it is unlikely a seller will even look at your offer. I won’t say it is impossible because any condition can be bought at the right price. Here’s what I mean; suppose your client insists on buying with a condition on the sale of his property. He might be able to pay more for the privilege of having time to dispose of his current home. Depending on the circumstances of a seller, perhaps one who is in no rush to move, they might accept this offer provided there is an escape clause. Essentially, an escape give the buyer two or three weeks to sell their home. At the end of the time period, the seller is free to look at other offers and if one was acceptable, he would have to give the first buyer an opportunity to either firm up or walk away. Ok, fair enough. Still it is a tough haul, especially if there are multiple offers or the seller needs to move quickly.
What can you do if the client won’t listen to reason? Perhaps it is time to isolate the client’s fear . Maybe the client is worried about being homeless. That is a huge, and understandable fear especially for a client with a big family. Maybe the idea is to reverse the solution. Instead of buying with a condition of selling the current home, the client should consider selling the existing home with a condition on finding a new home. Does that make sense? Once again the privilege may cost the client a little money as potential home buyers may want to pay a discounted price for having an open closing. Do you think the idea is far-fetched? Believe it or not one of the agents in our session recently came across just this scenario. There is one obvious benefit to this strategy; you know exactly how much money you have for your new purchase.
As usual, I value any input you would like to share on this topic. Have a great and successful week.