By Ross Wilson
“Competition brings out the best in products and the worst in people.” – David Sarnoff
In this third and final segment on the hot subject of bidding wars, I draw some conclusions that lead to more questions. But consider that before we have the answers, we must ask the questions.
During my career, I orchestrated many multiple offer scenarios for my sellers. In earlier days, board rules permitted us to delay the showing commencement date as well as offers. I’d organize showings to begin – and offers to be presented – on the same day, usually a Saturday. On that first day, the property was usually a buzzing beehive of activity, with appointments scheduled every half hour, sometimes overlapping. Aside from the first and last showings of the day, the lockbox usually remained untouched, with business cards being exchanged between agents arriving and departing.
I also occasionally threw a public open house into the mix. Typically, during the presentation that same evening, the street was clogged with cars, anxious agents and lingering buyers, all caught up in the competitive frenzy. Even back then, though, some agent would seek to sneak in early with an offer conditional on satisfactory buyer inspection. Thankfully, my vendors normally adhered to the plan and rebuffed them. And did those overtly aggressive agents show up at offer time? Always. I don’t recall ever losing one.
Ignoring your carefully formulated plans, with the deliberate intent to avoid a competition, an aggressive buyer agent may contact you to register on your new listing what has become known as a “bully offer”. They demand an appointment prior to the officially announced presentation date. Since you’re convinced of the merits of your marketing strategy, you encourage your seller to make this insistent agent wait.
A seller certainly has the right to refuse to see this “short-circuit” offer, but curiosity sometimes gets the best of them. It’s mystifying why they’d sacrifice an opportunity for multiple showings and offers by surrendering to a bully’s attempt to evade a fair competition. Obviously, you must comply with your principle’s instruction. However, before committing to an earlier date and all that entails, ask the buyer agent about the offer. If the major terms are unacceptable, advise your seller to stick to the original plan. But if it’s full asking price or more, with no conditions, they may not gamble losing it.
In accordance with industry rules – and prior to viewing the bully offer – the MLS listing must immediately be amended with the new presentation date and time. Plus all agents who have already shown the property, have confirmed but outstanding appointments or have expressed interest, must be promptly informed of the new arrangements. If they haven’t already done so, all buyer candidates must quickly scramble to view the property and register their offers. Unfortunately, some may be unable to act swiftly enough. So, your seller might lose them. By caving to a bully’s demand, they’ll never know if that lost buyer might have been The One.
Given such short notice, the buyers who weren’t able to act in time are grievously disappointed and sometimes very angry with our industry and its members. It could be argued that your seller was formally tendering for competitive bids, but at the last moment, chose to dishonour their commitment to await all comers. What can a disappointed buyer do about it? Well, it’s been opined that an aggrieved buyer could sue the seller and their agent for damages. I’m unaware of any precedent-setting court case to date, but it could happen anytime. All it will take is a sufficiently disturbed buyer with deep pockets. Listing agents beware.
Does greed get the best of people? Yes, I suppose it sometimes does. Some argue that buyers who dodge the rules of fair play for their own advantage are indeed avaricious and iniquitous. Is a bully buyer innocent? Do they have the right to be aggressive? Obviously, the technical answer is yes, for they certainly have the right to buy at the lowest possible price. The same argument could be made for an aggressive seller who wants the highest price possible. But if a bully buyer deliberately ignores a seller’s clearly stated procedural request regarding the marketing of their own property and attempts to circumvent the system, are they behaving morally? I suggest that they’re demonstrating a complete lack of respect for not only the seller’s wishes, but potentially our rules of service. In my view, this is not representative of innocence. Bully buyers are no different from movie patrons who butt into line ahead of other people patiently waiting their turn.
It’s also been said that sellers could refuse to comply with a bully’s demand, that those who agree to this marketing strategy are also selfish and greedy and knowingly contribute to the inflation of market values, not to mention a highly stressful and potentially devastating experience for many buyers.
Some have suggested that sellers can be bullies too. However, they’re certainly entitled to attempt to maximize the sale price of their own property by any available legal means. And by agreeing to a viewing period and delayed offer presentation day, are they not being fair by providing all interested buyers an opportunity to make a bid?
Further, is it not a major responsibility for a listing representative to do everything legally and ethically possible to get the best terms for their seller client? The strategy is designed to stimulate fair competition, which should result in a fair sale price based on supply and demand in a free democratic society.
Is the bully offer system undermining consumer confidence? Absolutely, especially with buyers willing to respectfully comply with the posted protocol but who are caught with their pants down by a bully jumping the queue. Nevertheless, until the rules change yet again, fair buyers must be prepared to respond to bully offer scenarios by viewing the property at the earliest opportunity.
As their representative, you should have your buyer’s offer documents prepared in advance and ready for presentation on short notice. To contribute to consumer confidence in our industry, listing agents who practice this legitimate hot-market strategy, which is more prevalent for city or suburban than rural, should carefully prepare their new seller for the distinct possibility of a bully offer. Ask your seller to adhere to the plan or risk trouble for both you and them. The reputation of our industry is at stake.
“When a resolute young fellow steps up to the great bully, the world, and takes him boldly by the beard, he is often surprised to find it comes off in his hand, and that it was only tied on to scare away the timid adventurers.” – Ralph Waldo Emerson