22 Mar 2013

Egos and Real Estate are like Oil and Water

Listen to your Realtor

We love helping our clients real estate dreams come true. Unfortunately, we come across Buyers and Sellers who let their ego and emotion get in the way of a successful transaction. Has this ever happened to you?

Over the years we’ve seen clients walk away from a purchase over a thousand dollars, we’ve seen Sellers put up the “come back to me when you have a serious offer” wall. Most of the time, common sense prevails and all parties end up with what they want. We’ve had a couple experiences in Q1 of 2013 that we wanted to share: One ended well, the other didn’t.

Scenario 1 – The Bad

We were representing the Seller and a week into the listing we had an offer within 2% of the asking price. Not bad right? The Seller decided to tell them to go take a walk and come back with a few more grand to bring it above the most recent comparable sale. The Buyer, understanding that the condo market isn’t all that hot right now decided to walk. A few weeks later, we were in a position where the property was still on the market with no offers on the table.

We have a simple policy at Spring Realty: We NEVER let a deal die in our hands. If we get a low offer, we always encourage our clients to counter the offer thus putting ball back in their court. In this case we were told to tell them to do better. Well, they didn’t, and now they’re likely going to offer less than they had originally. Moral of the story: if you’re in a down market (and we are for most Toronto condos right now), and you get a reasonable offer it’s in your best interest to work with what you have. If you feel you’re not getting the price you want then pull the property off the market and try again in a year. You don’t get to tell the market what your place is worth, the market dictates value.

The sweet spot for a listing is within the first two weeks. If you’re priced right, the offer will come. If you’re not, the decision to adjust the price needs to be made quickly to avoid stagnating the listing. This particular listing ended up coming off the market mainly because the Sellers price expectations weren’t going to be met in our current market and we’ll likely try again when things pick up.

Scenario 2 – The Good

We had the pleasure of being referred a fantastic first time buyer, who with the help of his parents was going to jump onto the property ladder. Now when parents get involved it can be good OR bad. Parents expectations can be drastically different than reality especially if they haven’t been involved in the Real Estate market for some time. In this case the parents were on the ball and understood what it would take to get their Son his first bachelor pad.

We sell a lot of houses at Spring Realty but we’ve been dealing with a lot of condos lately. When we represent condo Buyers these days we usually have a fairly easy time finding them something that works. There are many great properties on the market and competition is low…in most cases, but not in ours! We saw a condo within the first week it had been on the market. It was priced very well, perhaps a bit low but that’s too be expected with a Toronto Condo right now. We viewed it, then made an offer that same day, then BOOM another offer came in. Damn!!! Sent the message to the client and his parents and received a surprising email response:

Ara, we want you to get this place for our Son. We’ve reviewed the comparables and don’t want to lose this place over a mere $5K. Let’s go for it!

I can’t tell you how much I respected these people for their positive outlook on the situation. After pestering the Listing Agent letting them know that losing was not an option for us we sent in our best and final offer and a few hours later we had secured this amazing new space for our client. AMAZING. Moral of the story: The moment you feel your ego kick in, stop…take a breath…look at the facts and only THEN respond. These people weren’t made of money, they’re hard working Canadians who realize that if this place they loved didn’t work out they could be spending the next month or months searching for something similar and spending an extra $5K now would solve their problem. That $5K when mortgaged does not add up to very much monthly and adds a $1,000 to the down-payment. They understood that and pulled the trigger. Respect.