Yeah, I know, that’s a weird title for a blog, but it will all be clear by the end. I promise. Years ago I heard about a buyer who had a very unusual way of purchasing a property. Now, this was back in the days when multiple offers were few and far between but her methods are worth mentioning. She would put conditional offers on over 5 properties then start negotiating with each seller until there was only one left. Strange approach but there was some method to her madness. First she could judge the motivations of the sellers and take advantage of the weakest one. It was a strategy that worked even if it burned out a few agents along the way.
In a round about way, I’m telling this story to illustrate a problem that we will face in our careers. No, I’m not just talking about high maintenance buyers, I’m talking about buyers who will use conditions to get out of deals. As agents we need to remind buyers that when they put the pen to paper they should be prepared to purchase. This is not just an opportunity to waste time.
Case in point, a buyer buys a condo through his agent, conditional on the status certificate. The lawyer reviews the documents. As time is of the essence, the listing agent calls the buyers lawyer to get an update and is told that everything is a-ok. At the same time, the buyers brother is trying to convince him to get out of the condo deal because a sweet income property just came on the market. The buyer calls his agent and tells him to use the status certificate to get out of the deal. Sorry, no can do. The seller’s agent knows everything is good and threatens legal action. As you can imagine, the deal firms up.
So what does any of this have to do with cats? It’s not just a catchy title. there was a story in our office about a deal that fell apart because of a status certificate. Apparently the buyer had 3 cats and the building only allowed two. The Sellers didn’t ask for verification but could you imagine a different time when that could happen? “Yes, sure. I will just need some verification that you do indeed have three cats”.
Someone once said that if you put a little effort into it, you can get out of any real estate deal. There are enough places to make mistakes in a typical agreement if you look close enough. Examples of discrepancies include wrong frontages and depths or mutual driveways and other easements, wrong maintenance fees, taxes and, of course, time limits. It is in our best interests to make sure our offers are bullet proof. Changing your mind is not an excuse and your clients can’t hide behind a condition. Like wise, please don’t tell your clients they can use a condition to get out of a deal. A recent RECO complaint resulted in an $8,000 fine to an agent for leading a buyer to think he could use a home inspection to get out of a deal.
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.
Let me ask you a question. Have you ever lost a deal because of something somebody else did or say? If you’ve been in the business you probably have. We’ve all lost deals because the house failed it’s home inspection or because the client didn’t get financing or because the status certificate revealed deficiencies in the reserve fund. Sometimes it’s just unavoidable. That’s just the nature of the game. What I’m talking about is when somebody says something during the course of the negotiation that cost you the deal. Case in point, last week an agent in my office was negotiating on a house and suggested to the client that they have a termite inspection because the house was in a termite area. The inspector who came said the front porch had termites and said that his company could rectify the problem for about $6000 and then suggested that the buyers renegotiate the sale price via an abatement to cover the cost of the repairs. My agent felt a little weird about the inspector’s comments so she decided to pay for another inspector out of her own pocket. The second inspector spent a great deal of time looking at the house to determine that, in fact, there were no termites nor was there ever any signs of termites. The deal went firm but that first inspector will never darken the doorway again. A similar situation came out of a recent mold inspection.
Here’s another one. After weeks on the market, an agent managed to get her own offer. The contract stipulated that there was no discounting commission if she got her own offer. Upon review of the offer the seller’s lawyer instructed the seller to renegotiate her commission. I have also heard of situations where the mortgage broker has done the same. Why?
Now, I have a couple of theories on why this is happening. I wonder if people involved in the transaction think we are charging too much for the job we do. To that I would argue that good agents are worth every penny they earn. Maybe they are simply taking advantage of buyers anxious to get into the hot housing market. More likely, inspectors are being overly zealous because they don’t want to be sued at a later date. Conversely, one might argue that we are products of the HGTV generation, that being that we all think we know more than the person doing the job. If it looks easy on TV, then it probably is?
So, what can you do? Part of having a good defence is having a good offence. Build your reserve of trusted team members. If you don’t have any….ask those around you. Get recommendations and do your own due diligence. I strongly believe that just like in any other business or service, the good players outnumber the bad. The good ones get rewarded with future business and the bad ones end up in court or out of business.
If you have any stories please forward them to me as I would love to hear them.