Friday, May 4, 2018


There's no shortage of things to complain about in the Denver real estate market these days, but one of the most frustrating aspects of working with buyers is all of the obstacles they face in simply trying to get an offer written and presented fairly in front of a seller.

From the "Coming Soon" scams to the open house games to the agents who fail to set deadlines to the agents to set deadlines but don't enforce them... it's easy for a buyer to lose faith in the process.

Here are four things that making buying a home - and representing a buyer - highly frustrating in the Denver market.

COMING SOON - This is probably my least favorite thing in the market today.  Because listings are assets and everybody who has been in the business more than five minutes is trying to form a team and funnel buyer leads to those newbie agents, "Coming Soon" riders have become as common as dandelions growing unchecked in the summer sun.

The basic premise of "Coming Soon" riders is that listing agents want to leverage the excitement of a new listing hitting the market to field buyer phone calls.  At a bare minimum, one objective is to find new buyer clients, usually so they can be handed off to the brand new, inexperienced agents working on behalf of the team leader.  It's awesome for the team leader, who often will take 50% of the commission from the new agent if that agent somehow eventually swerves into getting a home under contract.

But the other objective is often to try and "double end" the deal.  In real estate, it's customary for a commission to be paid to the agent representing the seller, with another commission being paid to the agent who brings the buyer.  But what if one agent manages to connect the buyer and seller together in the same transaction?


So here's the question... why, in the hottest real estate market in Denver history, would a seller settle for accepting an offer after just three or four buyers have seen the home?  Is it not obvious that you would almost always be leaving thousands of dollars on the table by not exposing the home to the 21,000 agents and tens of thousands of buyers accessible through the MLS?

Unless you're an 84-year old widow, and you don't understand the market or the process.  Or unless you're an out-of-state investor who has no way of monitoring what kind of exposure your longtime rental home is actually receiving from the sketchy agent you found on the Internet.  Or maybe your industrious agent told you they would lower the commission by one percent if they found the buyer.

One last thing... until a property is actually listed in the MLS, there are essentially no rules governing commission, disputes or brokerage relationships (and this includes all of the "Coming Soon" listings now posted on Zillow).  Putting the property in the MLS subjects that home to the rules of the MLS, rules which are designed to promote transparency, due process and fairness to all parties. 

The vast majority of the time, "Coming Soon" riders are designed to promote the listing agent and the interests of his or her team... not the seller.  And that's partly why so many people have a negative view of those in the real estate brokerage community today.

OPEN HOUSES - Let me be clear - open houses are a viable marketing strategy (for both the listing agent and the seller) and there is a place for them. 

If there is transparency and the seller's best interests are placed first.

But here's what they very often have become.  Marketing events designed to produce buyer leads for the listing agent's team (at best) and biased, unfair exposure events (at worst) which often result in listing agents and teams focused on double-ending the deal instead of securing the best price and terms for the seller.

As I have mentioned in previous posts, the number of agents in the Denver metro area has mushroomed from barely 10,000 after the Great Recession to more than 21,000 today (thank you HGTV).  Everywhere you look, bartenders, valets, shoe salesmen and line cooks are walking away from gainful employment to take out a real estate license in pursuit of all the "easy money" to be made in real estate.

(Fact check: nationally, 50% of all people who take out a real estate license will quit in the first year.  Three out of four will never renew their license at the end of their first licensing cycle.  This is the ultimate turnstile business, with endless scores of freshly minted agents bursting through the front door to trumpets and fanfare, only to slink out the backdoor months later, destitute and in debt.)

If the purpose of holding an open house is to gain additional exposure for the seller. leverage interest into better offers and terms that benefit the seller, while still adhering to the ethical and professional requirements of board membership and the MLS, then great, let's do them.

But if the goal on Saturday morning is to find a buyer (who may or may not be the best qualified), share the details of other offers with that buyer to improve their standing, and then persuade the seller to take that offer... you shouldn't have a license.  

Again, this is not the case with every open house, and open houses are far more legitimate than "Coming Soon" riders, in my opinion.  But there's still a significant segment of the agent population that functions and behaves as if their primary job is to maximize their own earnings, not promote the seller's interests. 

And when you see it weekend after weekend, instance after instance, it's easy to become pretty jaded about what's going on.

DEADLINES / NO DEADLINES - Lastly, there's incredible frustration for agents and buyers alike right now caused by lousy or non-existent communication.

Case in point... just this past weekend, I saw a new listing come up that was a near bullseye match for an investor client.  The property hit the MLS on Wednesday night with no notes about when showings would begin or when offers would be considered.  I immediately called to set a showing for Thursday and moved my schedule around to accommodate it.

The next morning, I got a call from the showing service.  "No showings on that one until Friday, sir." 

Okay, that's fine.  We'll make it work. 

Except that Friday was completely booked for me and my client travels for work on Fridays.  But alas, I see they are holding an open house on Saturday.  So we'll go before the open house and take a look then.

Which we did.  And as we were finishing up our showing, the rookie agent recently hired as a member of the listing agent's team showed up to host the obligatory open house.

"Have you set a deadline for offers on this?", I asked. 

She didn't know. 

"Do you know if the sellers need a rentback?"

She didn't know. 

"Do you have any offers?  Anything else we should be aware of?"


So I called the listing agent, who was obviously busy with other clients (or perhaps playing golf).  I went into her voicemail.

Two hours later, I received a call back.  

"We've got multiple offers and we're going to present them tonight," she said. 

Okay... so at this point we cancel dinner plans (as happens almost every weekend in our household), call our client, and tell him we have two hours to pull an offer together. 

He has dinner plans as well, and now the question is... does he throw his family in the trash along with me to try and pull an offer together, or does he choose to kiss this one off in order to ensure domestic tranquility? 

Long story short... domestic tranquility wins. 

"Why can't they give us a deadline in advance or some kind of guidance so this isn't a flipping rodeo?" he asks.

From me... silence. 

I don't know why people can't communicate.  For the past four years, virtually every home I have listed has been marketed the same way:

"Showings begin at noon Thursday and will continue until noon on Monday.  Offers due by 6 p.m. Monday with a response deadline of 12 noon Tuesday.  Seller to review offers Monday night.  Disclosures uploaded in MLS.  Please call with any questions."

Fair, concise, understandable and respectful of people's time. 

I called the agent and explained I had a cash buyer, very motivated, and that he had been waiting for a home in this particular neighborhood for over a year.  He could accommodate a seller rentback, he wouldn't need an appraisal and he could close in 15 days.

"Can you get us an offer by 6 p.m.?", she asked.

I told her my client had Saturday night plans that were going to be hard to change.  He was debating whether to cancel to try and get his hat into the ring on this home.  It added stress on top of stress in an already stressful situation.

Thirty minutes later, my client called me. 

"All of this is just too rushed and out of control," he said.  "Forget it, we'll wait for the next one."

I texted the seller's agent to let her know we were dropping out.  She didn't reply.  

You would think that is where the story ends.  But no, in the Denver real estate market, there's always more to the story.

Several hours later, I received another text from the listing agent. 

"We're going to keep taking offers until 2 p.m. tomorrow, " she wrote.  "My sellers want a cash buyer or a larger appraisal guarantee, so let your buyer know he still has a chance." 

It was 9:18 p.m. on a Saturday night.

I texted my client at 9:20.  "Sellers are extending their deadline until 2 p.m. tomorrow.  Still interested?"

No response from my client.  The next morning, I texted again.  "Any interest in getting in one more time and having another look?  We still have a window of opportunity to get this done."

He called.  I'll save the extended details, but in his mind, he was being played.  He didn't think the seller actually had offers (he does), he felt they were trying to rush us into an over the moon offer Saturday night (they weren't, necessarily) and he now felt like they had overplayed their hand and were trying to pull us back into the bear trap.

The issue was... my client was mistaking lousy, disorganized communication and general incompetence for blatant manipulation. 

"I really don't like the way this feels," he said, echoing a thought I've had every weekend for the past six years.  "I don't know what to believe."

And with that, we officially dropped our pursuit.  

If there was one piece of information I wish buyers could easily access, it would be an "honesty and integrity" rating for the listing agent. 

There are plenty of good agents out there, and when I show their listings, I do so with the extra confidence of knowing that the playing field is level, my time is being respected and my client will have a fair shot. 

I just closed a deal for a buyer who won out in a five-offer situation.  The home was marketed with a firm beginning and end time for showings, a clear deadline for offers to be submitted and a clear time frame for seller acceptance.  All disclosures were uploaded to the MLS, the agent took and returned phone calls promptly, and everyone was kept informed throughout the process.

We had enough time to pull comps, discuss strategy, clear our plans with the lender and write our best offer.  We wrote an above-list price offer, doubled earnest money, let a portion of it go hard upon acceptance, included an appraisal guarantee and wrote a thorough cover letter.  We submitted it one hour before the deadline and called the agent to confirm receipt.  

Because my buyer was confident, qualified, educated and given time to process information, we could confidently put our best foot forward. 

In large part because of our own communication and how clean our offer was (despite the fact it was financed), the sellers chose to go with us.  

We sailed through inspections and the property appraised at value.  We closed on time and everyone got what they wanted.  It was - dare I say it - an enjoyable process.  It was how real estate is supposed to work.

Ultimately, the listing agent sets the tone for the transaction.  And that tone can be one of professionalism, structure and a focus on treating everyone fairly... or it can be a greedy grabfest of trying to leverage everything for personal gain.  

In a market increasingly driven by greed and despair, many agents have ethically lost their way.  And when this extended market run is finally over, they will be the first ones to discover that longevity and integrity go hand in hand.