Tuesday, November 26, 2019


Is no offer better than a bad offer?  

In a recent post, I explained the reasoning behind sometimes taking a pass on certain offers even when there are no other offers on the table.  Selling a house is not unlike getting engaged... it's important that you get it right the first time, and if you chose the wrong person, it's going to come at a cost. 

Same with buyers.  

If you hitch your wagon to a flaky, under-committed buyer just because no other offers have materialized, you are taking on a ton of risk.  Because when a house goes under contract and then comes back on the market a week later, everyone automatically assumes something was wrong with the house, when in reality the buyer may not have even done an inspection.  

(There's no box to check for "cold feet" in the MLS, by the way)

So in the past few days I have once again swerved into an unusual set of circumstances around a new listing.  In our new tire-kicking, wait-and-see market of 2019, I've had really good activity for this property, with eight showings in the first week and several interested parties.  

In fact, that interest eventually manifested into four different offers... three that came in within 24 hours of each other and a fourth that came in after I had shown offers one, two and three the door.  

Here's a synopsis of what those offers looked like:

Offer #1:  Full price, but with a contingency to a home built in 1902 which has been on the market for 46 days and shows no indications of selling anytime soon.

Offer #2:  Full price, but in this case the buyer is in a lease through March and wanted us to wait almost four months to close (seriously).

Offer #3:  $10,000 below list price with a first-time buyer using down payment assistance programs and who is maxed out at this price point.

Given the three options, the only one that felt workable was #2.  I asked the agent what her buyer was paying in rent ($1,600 per month) and said if we could figure out how to bridge that divide, we might be able to patch something together.  

My seller's home is vacant and she has moved out of state, so she wants to sell quickly.  But like all sellers in this market, she really has just one shot to "get it right" when choosing a buyer... because as we go into the holidays, should we be off the market for several days (or weeks) and then end up coming back on the market (for whatever reason) in December, it's likely going to be a cold, lonely Christmas season.  

I asked the agent for Buyer #2 to talk with her client and try and figure out a plan, whether that meant breaking the lease early, subleasing, even offering up the rental on Air BnB for a few weeks (if approved by the landlord) to make the deal work.

Instead, I got this.

"My client is making a 20% down payment and so for each $5,000 we lower the price, he'll keep an extra $1,000 in his pocket," she said.  "Since he needs $4,800 to cover the rent through March, he needs to lower the price $20,000 for it to work."

And with that, she sent me an offer $20,000 below the offer she had submitted two days earlier.  

Hammer, meet forehead.

If that's the best problem-solving you can come up with (and apparently it was), there's 0% probability that I want this agent within 100 miles of my seller's home.  

Fortunately for us, as the aspirin was kicking in and my headache was finally subsiding, the showings kept coming... and within two days, we had another seriously interested party.

Full-price, no contingencies, four week escrow, 20% down.  

Yes, yes, yes, yes.  

And now we're under contract.  

But the lesson here is that in 2019, good agents have had to develop (or re-develop) the discipline to say no to things that don't make sense.  Even when there's nothing else on the table.  

The process sucks, and frankly, some desperate agents are upset with me because I won't accept their marginal offers.  Which I attribute to the fact that, in this market, there are a whole bunch of starving agents who need these deals worse than their clients do.  

But please, do some thinking and come up with solutions.

For the agent dependent on the contingent sale for the home struggling to sell built in 1902, put some teeth in your offer.  Let $1,000 of earnest money go hard every 7 days until we've maxed it out, or perhaps let some portion of it go hard after the inspection, or give yourself 15 days to get the contingent home under contract concurrent with an immediate price reduction.  

Do something, but don't just serve up a garbage offer.  

To agent #2.  The ball was at the one yard line.  We were talking about a $4,800 issue in terms of how to cover the buyer's rent for three months.  Maybe you throw some money in, we throw some money in, the buyer takes the home "as is" and we close in four weeks.  There was a path here, and you gave us absurdity.

And to the first-time buyer stretching to come in $10k low, you're just not going to get that deal five days into the process on a home drawing lots of interest.  Find a home that's been sitting for 46 days (I know of one built in 1902) and maybe that seller will be open to a $10,000 chop.  

The point is, the whole real estate ecosystem is in transition these days and there is plenty of wreckage to go around.  A much larger than normal percentage of transactions are falling apart because buyers are nervous and agents don't know how to solve problems.  

I guess this is why my phone keeps ringing and my services are in demand.

It takes discipline (and faith) to say no.  But increasingly in 2019, "no" is a much better response than saying yes to something that's ticking with a fuse sticking out of it.  

Monday, November 4, 2019


A changing market ushers in changing realities. 

For one, selling a home in a weekend with multiple offers is far from the reality for most sellers these days.  More often than not, it's taking longer, sometimes a lot longer, to achieve a desired outcome.  Depending on price, condition and location, your timeframe for getting a home under contract can range from a few days until... never.

I recently listed and sold a home for past clients whome the market had treated well.  Just five years ago, they purchased a starter home for $270,000 in a solid neighborhood close to a regional park with excellent Jeffco schools.  It was less than 1,600 square feet of finished space, though, and with two small kids now part of the family equation, moving up to something larger made perfect sense.

We listed the home at $429,000, a number supported by neighborhood comps and a full 59% higher than the price they paid just five years ago.  The equity from their gain would provide a hefty down payment on their larger replacement home and I had no concerns about their situation.  In current Denver housing parlance, they are what is known as "winners".  

Of course, the process of selling a home today is often very different than what we have known for the past seven years.  No more multiple offer shootouts, no more over-the-top escalator clauses and no lines of people forming in the driveway an hour before the open house.

Even so, with two young kids and a smaller floorplan to begin with, I recommended that they clear out for our first weekend on the market.  Sticking around is not worth the hassle of being chased out of your home repeatedly and having to live you're in the display case at Neiman Marcus.

So over that first weekend, we ended up with a handful of showings and good feedback, but no offers.  With my clients returning to town Monday afternoon, we had planned to meet that evening to review anything that might show up, or if nothing materialized, to strategize going forward.

I circled back with agents Monday morning who had shown over the weekend to gauge prospective interest, and as it turns out, we did have two buyers with some legitimate interest.  Both had homes to sell, and that's where it got interesting.

"My clients don't want to end up homeless and so they don't want to put their home on the market until they have a replacement property under contract," said the first agent.  

"Okay," I said, "but give me something to work with here.  Where do they live now?  What price point are you looking to list it at, and what's your professional opinion about how quickly it might sell?"

Our conversation continued and eventually the agent did provide the address, as well as a proposed list price.  As I am prone to do, I pulled this agent's sales history from the MLS and found a transactional desert... five lifetime transactions, one listing in 18 months as a licensee.  

The second agent I spoke with also had a client with a home to sell.  This time, however, the home had been on the market for several weeks without a contract.

"What's wrong with it?", I asked.

"It's a great home, my clients just haven't been that serious about getting it ready because they haven't found a home they love.  And they really like your home."

"So you listed it, it wasn't market ready, no one bit, and now your sellers are suddenly going to get serious if we accept your offer?"


Shortly thereafter, as I was walking out the door to present our first wobbly offer, the second wobbly offer came through.  Five thousand dollars over list with a contingency asking for 45 days to put their heretofore unsalable home under contract.  

45 days?

I drove to my sellers' home and we sat down at the kitchen table.  

"In the old days," I began, "we spread offers out on the table, we would talk through the pros and cons of each, remove the bad ones, keep the good ones, and eventually settle on a winner.  Tonight, I don't think I want to take either of these offers out of my briefcase."

I explained that despite the fact we had two offers, both at or over list price, they were a long way from sure things.

"Both of these properties have issues, and both of these agents do not inspire confidence.  It would be easy to say yes to one and try to make it work, but honestly, if we go under contract and come back on the market three weeks from now you're not going to be happy, and most people are going to assume there is something wrong with your home."

So we did something I can't recall doing in my 13 years in Colorado.  We dropped our only two offers in the shredder.

It's better to wait for the right buyer than to cross your fingers and hope that clueless people get it together.  As I explained to both agents the next day, there were and are all kinds of ways to put this deal together.  All you have to do is let 50% of the earnest money go hard after inspections and guarantee us you'll have a contract in 15 days.  Just step up, somebody.  .  


So that's all we needed to know.  People who are committed, or who have agents who are committed, figure out how to get things done.  The indecisive, uncertain or non-committal end up in a ditch. 

With 23,000 agents in the Denver metro area, we are drowning in freshly-minted licensees but thirsting for good old-fashioned competence.  

My clients stayed on the market and another weekend passed.  Then, on Monday, we received the call we had been waiting for all along.

"My buyers love the home and their kids go to the school just down the street.  They're willing to do whatever it takes to make this work."

Full price, non-contingent, quick closing and nice people.  Check, check, check, check.

Three weeks later we closed, and we even secured a short-term rentback that gave my clients time to close on their replacement home and move in an orderly manner.  Everybody got along famously and all parties were treated fairly and with respect.  

Not every transaction turns out so well, but the lesson here is that it is wiser to do your diligence up front and get the right people on board from day one rather than hitching your wagon to the first pack mule that comes along and hoping things work out.  

In life and in real estate, more often than not, competence, patience and faith will yield the right results.