“You’re a pit bull” – aka how to prepare your clients for a bidding war

2016 has started off no different than 2015 in Toronto’s real estate market. The Realtor (let’s just call her that for now) saw young couples’, retirees’ and other home buyers’ dreams fading away. She saw them Giving up hope on getting that security blanket, that pride, that shelter, the Catalyst for growing a family, making memories and having a safe place to return to every day.

See, plenty of times people don’t know what they don’t know. So perhaps they would run through an open house, search a plethora of websites, or even give uncle Johnny the task of landing their dream home without ever checking if uncle Johnny is qualified for such a monumental task (not to say Johnny isn’t the best realtor on the planet).

My hope is that once you read this story, you’ll know exactly who you should choose as your quarterback. It may not be all encompassing, but nevertheless genuinely enlightening.

So, the Realtor decided that if she was given a chance to help someone, she would go to battle for them. She studied the market. She studied people. She studied cases. She has invested in knowledge just so she can give the right guidance. She was ready.

One day,  busy as ever, she got an unexpected email with a mysterious link from Suzy and Joe. They needed her help. Time stopped for a moment as she looked at what may have been the most important thing that day. A dream of a young couple for a better life and the promise of a beautiful future.  Her heart beating faster than usual, she opened the link and she exclaimed: I can help! This is it! They need the best help they can possibly get and I know I can guide them to finally make their dreams come true. A beautiful place they will call their Home.

She sat quietly for a moment, then she asked them: How badly do you want this to be your home? The answer was clear: We want to watch our son to build a train track big enough to cover the entire living room! We want to celebrate Christmas here with our family. They already envisioned their lives there. Right at that moment The realtor knew She would not let them down. She would do everything in her power to make their dream a reality.

With that, the wheels were set in motion immediately. The realtor opened her toolbox of ideas and started lining up her strategies to prepare Suzy and Joe to be the strongest contenders in this arduous race. She knew that money talks, but money is not everything when it comes to winning a bidding war. She wanted them to be the frontrunner in every single (some even seemingly unimportant) category. She left no stone unturned.

Firstly she called the listing agent to find out if the seller would be interested in a pre-emptive offer. Seller’s sometimes love the strategy of holding off offers until a certain date, but if you give them an offer they can’t refuse, they might just consider accepting it well before the actual offer presentation date. Since no bully offers were allowed, she had time to get the buyers ready.

She then prepared them for perhaps the most important aspect of a multiple offer presentation to avoid disappointment. She told them that based on sound logic and a strong market analysis, the sale price should hover around the $400,000 – $420,000 mark. However, bidding wars are about as predictable as our Canadian winter these days. In essence  the price of the home could go well over or even  (although rarely) under that. So she asked them to think of a price they are comfortable paying for the home, based on their individual circumstances. A number above which they would have no reasonable regret to move on. She told them to keep this number in their minds at all times. This was their marker. She did not ask for the number, which will be a serendipitous yet amusing detail later in the story.

Secondly she asked them to prepare their finances. She asked them to enlist a seriously competent mortgage broker/advisor in order to make sure they have a rock solid idea that not only are they qualified to afford the home, they are also comfortable affording it. She advised them to bring the actual MLS listing to their bank/mortgage broker so the lender knew upfront the type of property in subject. She asked them to have a strong deposit prepared in form of a bank draft made out to the listing broker’s trust account for the night of the offer presentation. Think minimum 5-15% (or even more) depending on the price and type of property.

She told them the cleaner the offer, the better the chances. However, if you can give comfort to the sellers that not only are you giving them an offer with no conditions, you’ve actually done all your homework and basically fulfilled them in advance, your chances just increased vastly.

In Suzy and Joe’s case, the property in question was a condo townhouse. This means, that the affairs of the townhouse complex are managed by a corporation. Things like maintenance, major repairs, grass cutting, and the piggy bank savings account (aka the reserve fund) of the complex are all under this umbrella. There is a big (and somewhat boring) book called the “Status certificate” that will show you just how well the complex is taken care of. It even shows if there are any pending lawsuits against the complex!). So, as you can imagine, it’s important to know that you’re buying into a soundly managed place that has a great track record and of course a hefty reserved fund for those rainy days (literally if the rain gets so heavy that the roofs need to be repaired!!). Long story short, if you haven’t satisfied yourself with respect to the strength of the management, you may end up wanting to put a condition to review the status certificate. Which of course can take up to ten days to receive, and a day or two for your lawyer to get to it. Sometimes the seller is very proactive in ordering the status certificate from the corporation, so everyone can review it in advance, sometimes you just have to run after it, and other times you may not be able to get it on time. If you do see ample sales in the complex, that’s usually a good indication that there the status certificate is sound. Either way, the goal is to proactively fulfill the condition if at all possible.

Here is another big one: home inspection. Most often  people are just not comfortable pulling the trigger without a professional opinion on the state of the homes structure, mechanical, electrical, hvac, plumbing, and other systems. The realtor’s suggestion: get a home inspection done during the week of viewings. It may cost a few hundred dollars, but again, it may be the difference between landing the deal or losing it. So if you’re really really serious about buying the property, just do it.

Another biggie is the closing date: whoever can get closest to the sellers preferred date of move will win in this category. Suzy and Joe knew and so they continued to be strong team players with the Realtor. Albeit not ideal, they worked it out so they could match the seller’s preference. Another category check marked.

Another fine, yet crucial detail was that Suzy and Joe made themselves fully available and present for the evening of the battle. It may seem trivial, but a warm introduction to the seller, or even a short and sincere story of the buyers can sway a seller’s mind. The Realtor knew this well as she’s seen it time to time. Suzy and Joe arrived right on time to the presentation with high hopes and nervous, yet positive energy. As the realtor knew her mission, calm and cautious optimism filled the room they were seated in.

The seller’s sales representative marched into the room, ready to hear Suzy and Joe’s story. That’s just what the Realtor gave him. A story so compelling and ernest, that even without any offer details, the Realtor got what she needed to have an edge. The listing agent’s empathy and support. Again, this may or may not have mattered in a different scenario, but the Realtor observed the listing agent well enough to know that this may be the key to the seller’s hearts, and of course, to Suzy and Joe’s new home.

When the bidding finally commenced, there were four offers on the table. 3 competitors in the Realtor’s mind. Are they as well prepared as them? Did they bring the deposit cheque? Would they scratch all conditions if need be? She knew one thing for sure. She wasn’t  about to lose this monumental race. Not for Suzy and Joe, and their beautiful family. She knew they were prepared. She also knew that the only way to walk away was if the price got over the breaking point of Suzy and Joe’s comfort zone. I’m which case, they were content with walking away.

After rounds of bidding (blindly of course), the race came down to two buyers. One who was half an hour late to the presentation, and of course Suzy and Joe, who showed the utmost respect not only to all parties but also to the process. They embraced The Realtor’s advice, even if it seemed outlandish at times.

As the negotiations were down to the wire, Suzy and Joe decided to push one last time, in a big way. No conditions, strong deposit, great story, and a last significant price increase. The Realtor sat down with the listing agent for one final plea. But before revealing the Buyer’s last effort, she thought, “Let me just probe this person before we submit our final offer”. And that she did. It’s okay to ask questions, they will only help making better decisions. She didn’t want to leave any money on the table.

Moments went by that seemed like excruciating  hours of wait. The Realtor reassured Suzy and Joe that they have done everything as a team in their power to get this house. And what a team they were.

After what seemed like an eternity, the door finally opened as the listing agent triumphantly marched in:  CONGRATULATIONS! You have won. Thank you for your patience and kind cooperation. Fair or not he was genuinely happy about their victory. After all, we are only human. We love to do business with people we like.

Suzy and Joe jumped up in disbelief. They were speechless for a moment then finally let go of all nerves and anxiety. Pure joy filled the room. Smiles, handshakes, hugs and kisses were flying like sparks.

That night, the Realtor was finally content. She settled down with a warm blanket by her fireplace. She was yet again reminded why she became a Realtor. She got to be Suzy and Joe’s crusader. She lead them to victory and now she could rest.

The next morning she received an email. A short yet powerful note from Joe: Thank you again. You were a pitbull out there. We couldn’t have made a better choice.

So if you’re lost in the murky waters of bidding wars, and seemingly eloping dreams of buying your dream home, don’t give up. Find your crusader, become the best team player you can be, and prepare like never before. The goal is closer than you may think.

P.s.: The sale price? $413,950. Suzy’s secret threshold: $415,000. Joe’s number: $412,000. Lesson learned: well I’ll leave that up to you 😀

 

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