Do two wrongs a right?
If so, then everything may be fair in the absolute chaos that exists in the real estate market in 2022, especially when it comes to preventative offers, also called “bully offers.”
For those currently living in one cave, perhaps one on the moon, a “bully offer” is an offer that is often made surprisingly prior to the scheduled “offer date” for a particular property.
123 Jones Avenue is up for sale Wednesday, Jan. 19, and the MLS listing indicates “Offers reviewed Tuesday, Jan. 25 at 7 p.m.”
When a buyer sees the property on Wednesday afternoon, prepares an unconditional offer at a unique price and sends it to the listing agent at. 21.15 Wednesday evening with an expiration date at. 23.59, it is a “bully offer”.
These have been a part of our real estate market now for probably fifteen years, though they are more prevalent now than ever.
Want to know what else is more prevalent than ever? Exciting!
A cynic may suggest that it is unreasonable to expect “justice” in a market designed for chaos, I might be inclined to agree.
Those of you who have been reading TRB for a while may remember my 2015 video series, “What if the whole world worked the same way as the real estate industry in Toronto?“Our second video was one that simplified the concept of ‘offer night’ and ‘bully offer’ by showing what it would be like if we sold other products like this …
Like I said a ..a cynic will suggest…
But experienced market participants will tell you that this is no longer rocket science. We able to work with “offer dates” and “bully offers” in harmony if we accept some very basic rules.
Well, there really is only one rule and it is one that is broken all the time.
Ready for it?
If you set an offer date and you change this offer date, you MUST notify all interested parties.
Pretty simple, right?
More point, why would not the listing agent for a house or condominium notify interested parties? Is not working in the best interests of his or her clients?
You are a real estate agent and you have a house on 123 Fake Street for sale on Wednesday 19th January with a scheduled offer date for Tuesday 25th January. On Thursday afternoon, when the property is only on the market for 22 hours, you will receive a “bully offer” on the house that is so good that you simply can not help it. Your salesperson clients agree.
What are you doing?
It’s that simple, folks. And not only do agents fail to do this, but they go out of their way to excuse themselves in advance! More on this in a moment.
What you do is this: You send an email to each buyer agent who has booked a showing, with the following:
Thank you for your interest in 123 Fake Street
A pre-sale offer has been received and the seller intends to work on the offer.
The offer is irrevocable until kl. 23:00 tonight.
If your buyers have any interest in the property, call me immediately at 416-275-0035.
Thank you for your understanding.
You can say whatever you want in this email.
Sometimes, in a really tough market where buying agents feel the pain, I want to throw something like, “This situation is not ideal, but neither is it unforeseen, so thank you for your understanding and good luck in this busy spring market!”
Why not? Kill them with kindness, right?
Or maybe it’s just me.
I had three quotes on a listing last week and I treated all three buying agents with the care and professionalism that I would want an agent on my team to receive. An agent struggled to get his buyer on paper for a number that would not come close to working, and I said to him, “Save your energy for another day. Tell your buyer that it’s going to be too expensive and that he must go. You will be his hero. ” I saved him three hours and several phone calls with a young 20-year-old buyer who would be blown away by a competing offer. The agent thanked me and now I have a friend.
So why not Other things do agents treat each other the same way? I have no idea.
When it comes to bullying offers, I often personally call agents who have shown my listing to tell them that we are “working on” a bullying offer, and they are always upset. They always complain. It would be much easier for me to just send emails, but the personal connection helps build trust in future appointments. There are no downsides here, folks. You is your reputation in this industry.
But when you call buying agents and tell them about the bully or just send them an email, it does the other thing that matters. The thing we get paid to do. Umm …… what is it?
Oh yes: sell the damn property!
Why we should make it a RULE that a listing agent should notify interested parties of a bullying offer is beyond me!
If a listing agent works hard for his client and they decide to work on a bullying offer, the listing agent who calls or emails twenty-five other buying agents is required to submit another offer, or a third or fourth, or twelfth.
But many listing agents do not do this!
Like I said, many of them will actually publish their intentions to be lazy, break the rules, and do a shitty job for their salespeople on the MLS listing.
Take a look:
This is illegal.
A seller can not accept a pre-sale offer “without notice”.
Because it’s one Rule that in the event that a scheduled offer date / time changes, the listing agent must “notify all interested parties.”
There is a form called Form 244: Seller direction regarding: Property / offer ”
In that form we find this:
A few things to note here:
1) The first paragraph, in large letters and bold: “SELLER ACKNOWLEDGES THAT THIS INSTRUCTIONS CANNOT BE CHANGED OR CHANGED OTHER THAN A NEW WRITTEN INSTRUCTION.” That’s a little important, right? Kind of serious stuff? It tells us that when a salesperson and a listing agent set an offer date / time, it matters. It is carved in stone, unless you reformulate and re-sign this form.
2) “NO TRANSFER OF ANY WRITTEN SIGNED OFFER” means that the seller will not consider preventive offers, but it also means that the listing agent does not have to present or communicate to anyone!
3) Second paragraph in bold: “Seller acknowledges that the Listing Broker has professional obligations to other brokerage firms, and the Listing Broker will comply with rules and regulations regarding the presentation of properties and the provision of written offers” means that the Listing Broker must follow the rules.
And yet, despite all these three points, all of which are signed by the seller and the listing agent, we continue to see some nonsense like this:
So how ought to things are done?
First of all, this is how I would prepare Form 244 and get my clients to sign:
This says that there is a day / time for offers, however, the seller will consider preventive offers, and reserves the right to do so.
How should this be documented on MLS?
This example shows:
1) There is an offer date
2) When the offer date is
3) Seller has reserved the right to consider pre-bid offers, which means that they reserve the right to move their bid date – provided they give “interested parties” notice
Who does not notify interested parties?
And they used one exclamation mark!
This is a slap in the face to RECO’s Code of Ethics, but also to Toronto’s Regional Property Council and the MLS system.
TRREB should terminate these listings, and yet for some reason they do not.
Here is another:
There are so many of these that I barely needed to search.
I would add that none of these are reputable agents or brokers, mind you.
These are the usual suspects, and we leave it at that.
Here is one that explains Why they will look at preventive offers:
“Per seller instructions.”
This one is even more careful:
“Per seller direction. “
If they are even more careful, they upload the “Seller Direction” form as an attachment on MLS.
Here things are left a little confusing:
Does the seller reserve the right to see preventive offers or not?
You need to specify, otherwise, that ambiguity and uncertainty will cause problems. Plus, you need to specify what you know – because it is in the form 244!
I got a laugh out of this:
I can not tell you how many times I receive a pre-offer on a listing that is not very good, and I call the agent to say, “Thank you, but my customers will wait until the offer night.” to get the agent to respond, “You know, you said you would accept a pre-order offer! “We just had to accept anyone offer? Is to what we wrote in our list?
I do not think the agent who wrote the caption above comes from the same place, but the conclusion is certainly the same!
So what’s the moral of the story here?
Well, it depends on whether your glass is half empty or half full.
We can sit and lament the state of the real estate industry, but in the time it takes us to do so, another seven hundred people will enroll in the real estate education at Humber College, but I deviate …
I think if I’m a buyer or a buying agent, I’m looking to take advantage of the chaos out there. It is not the job of a buyer to monitor the unjust or take the moral high point. In this market, a buyer needs all the possible benefits.
If I’m a salesperson, I’re asking list agents how they work with bullying deals and trying to figure out if they fall into the category of lazy, unprofessional, corner cutters, as many of the examples above have shown agents to be.
In the meantime, I would encourage TRREB to look at this again.
Anyone, agent or member of the public, can send an email to email@example.com with a problem, illegality or problem in an MLS list.
Of course, TRREB then sends one fax to that brokerage business, I suppose, because fax machines are such a groundbreaking technology and all that …
On another note, was I the only one shoveling for 75 minutes Monday morning and driving to the office? I passed three TTC buses are stuck in the snow and about a dozen cars, but no part of me said, “This is a bad idea.” I came to Bosley’s office and found out that the car park had not been plowed, and was therefore forced to return. Men are sometimes so stupid …
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