I’m on an honesty streak of late, so let me admit the following: after choosing the title of today’s blog, I came to realize that I don’t actually know what the idiom, “grasping at straws,” refers to.
Do you?
I think that many of us routinely use sayings, turns-of-phrases, and idioms for which we don’t know the origin.
I mean, do you know what is meant by a “harebrained scheme?”
We use this sarcastically to describe a genius idea that isn’t so genius, or a foolish endeavour, but the origin is rooted in the fact that a rabbit (or hare) has a brain so small that if you told somebody their idea was “harebrained,” you’d be telling them it was a poor one.
So where does “grasping at straws” come from?
This dates back to the year 1534. In Thomas More’s “Dialogue of Comfort Against Tribulation,” there’s a proverb that says:
“A drowning man will clutch at straws.”
The straw in this case is meant to refer to the thin reeds that will grow next to the mouth of a river.
This feels like one of those “Now You Know” moments from the 1980’s…
But are sellers grasping at straws in this market?
What effect is the mindset having on pricing?
Today, I want to share with you some recent examples of listings that underscore the, um, creative measures that some sellers are going to in this market.
Not all of these are good ideas. You’ll identify that pretty quickly.
Some are fair and some are completely offside.
It’s up to you to decide which is which…
Listing #1:
This property has now been listed three times, as follows:
Some of you already know what this is about, as you’ve read enough of my blogs to know the story before I tell it.
This property was listed for $998,900 on September 20th……with an offer date.
The offer date didn’t work.
In fact, very few offer dates worked this fall, and most houses were re-listed sometime after the failed offer “night.”
The property was re-listed for $1,198,700, as you can see above, on October 3rd.
The property didn’t sell.
So now what?
Do you see where this is going?
The property was re-listed for $989,900 on October 27th…..with an offer date.
Huh?
Didn’t they try that?
So I ask of you:
Is this a legitimate strategy, or are they grasping at straws?
If the seller is holding out for, or worse – expecting, anything close to $1,198,700, then this isn’t going to work. But if the seller is saying, “Let’s list low, see what interest we can generate, and take the highest offer,” then this could be a successful strategy in the end.
Listing #2:
Check out this property:
Freakin’ gorgeous!
Red-brick, Georgian, below-grade built-in garage!
Love it!
They listed for $5,658,000, and as you can see, they were on the market for 18 days.
But what happened next is one of the oddest strategies I have seen in quite some time.
They did this:
What?
Listed for $3,990,000?
Yes, there’s a caveat, which you can see here:
They have an offer date?
Really?
It’s one thing to take a listing for $1,200,000 and terminate, then re-list at $999,000 with an offer date. That strategy won’t work, but fine, have at it.
It’s another thing entirely to take a house for which the seller presumably wants $5.5 Million, list for $3,990,000, and hold back offers.
What’s the thinking here?
Does the listing side believe that they can get affluent, wealthy, intelligent individuals to lose their minds and act like pigs at a trough?
Tell me that you can take a $600,000 condo, list it for $499,000, and produce 13 offers – resulting in a $630,000 sale price. I’ve done it before many times, and it relies on the naive, inexperienced, hopeful, bashful buyers to submit dummy offers of $499,000, $510,000, $520,000, etc.
But do we really expect those who can afford a $5.5 Million house to be so clueless that they would fall for what is essentially a “trick?”
“Honey, we have to see this house! It’s listed for $3,990,000.”
Fourteen people think the same thing!
Fourteen offers materialize, and suddenly, five people are saying, “Sweetie, bid your brains out on that house! Go get it!”
Then there’s a money fight in the sky, and BOOM – the seller gets two offers for $5.6 Million.
There’s just no logic behind this.
And check out the listing history:
Everybody can see this.
The $3,990,000 price isn’t fooling anybody.
In fact, I think it cheapens the offering and it would turn buyers away who don’t want “that house” with “that listing strategy.”
Listing #3:
Here’s a really interesting one!
Great price here:
And it’s been listed for 22 days.
Do you know what that means?
It means, or at least it should, that there’s no offer date.
Most offer dates are six, seven, or eight days after the listing date. We list for sale on Tuesday, November 7th and we review offers the following Monday, November 13th.
That’s very common.
But when we see 22 DOM, we expect not to see an offer date.
That’s what we see here, in fact:
Offers any time!
Amazing!
So that means, by all accounts, that this property should be available for $999,999, or maybe a buyer could negotiate the price down?
No.
Not even close.
Look at the listing history:
They clearly want a price for this that is nowhere near the list price, based on the previous two prices.
Now, some of you might say, “David, you guys do this all the time! You just said that you would price a $600,000 condo at $499,900 as a strategy.”
True.
But I firmly believe that when you have an “offer date” specified in the listing, you’re signaling that the list price is merely the auction’s starting bid.
When you have been on the market for 22 days and have “Offers Any Time” in the listing, it’s a completely different story.
More to the point, this listing actually says “MOTIVATED SELLER” in the remarks.
At one time, I argued that this constituted blatant false advertising, but some well-known Toronto brokerage owners fought me on that.
And so, here we are.
Is this a legitimate strategy or are they grasping at straws?
Listing #4:
Here’s a beautiful house!
I love this property and I’m waiting on it, for reasons that will become clear, for an investor client.
Here’s the listing history:
You’re going to say, “Didn’t we just see this? Isn’t this Listing #1?”
No. It’s similar though.
Both were listed for $900K with an offer date, terminated and re-listed for $1.2M, and then listed for $900K with an offer date, again.
But this one has a note in the listing as follows:
It’s simple and yet so effective.
Communication in this market is more important than ever and here’s an experienced agent that knows how to sell.
“Do you have an interested buyer? Please call us to chat!”
Simple.
I believe that in this market, both the buyer agent and the listing agent have to change everything they do compared to a seller’s or “hot” market. More truth, more transparency, more understanding, and more common goals. But above all, communication.
The listing agent in this case is basically saying, “We tried $900K with an offer date, it didn’t work, and then we re-listed higher, but it hasn’t sold. So call us. Let’s chat. Do you have a buyer? Let’s start the conversation about how we can put the buyer and seller within striking distance of each other, and go from there.”
This isn’t grasping at straws, but rather an effective strategy.
Listing #5:
Here’s a listing for $999,000:
It’s been listed for 27 days.
So is this like Listing #3?
Is this truly “offers any time” or is it a bait-and-switch on the price?
Well, I guess it’s somewhere in between.
Here are the listing remarks:
(David checks calendar…)
Oh, hey, look at that, it’s actually NOVEMBER!
What the heck?
This property was listed with an offer date for October 16th; under-listed, obviously, or so the listing side thought.
But on October 17th, after the property failed to sell, the listing side didn’t terminate and re-list.
In fact, they did nothing.
They didn’t even update the listing.
Their “strategy,” it would seem, is to leave the listing untouched and hope that buyers might show their hand with respect to price.
Is this a strategy or is this grasping at straws? Perhaps this one is a bit more obvious…
Listing #6:
Here’s a nice spot:
Wow, 51 days on the market, eh?
Alright, so it’s not selling.
And in fairness, this was listed for $3,295,000 and then reduced to $3,145,000.
So let’s assume that somebody was interested in this listing before it was terminated. What would they offer?
$3,145,000 on the market for 51 days? Geez, you’d expect to get it for $3,000,000 even, at worst. You’d probably hope to get it for $2,900,000, or even perhaps $2,800,000.
In this market, you might see people offer $2.6M or $2.7M as a starting point.
Well, all that is moot, because it was just re-listed:
When I first saw this, I assumed it was effectively a price reduction.
They were at $3,295,000 and reduced to $3,145,000. Then they terminated and re-listed for $2,998,000, which matches the previous price change.
Only, all that “logic” goes out the window when we read the brokerage remarks:
Oh, geez.
An offer date?
What?
An offer date signifies an expectation of “bids.” It projects a position of strength.
When listed for $3,145,000 and on the market for 51 days, the listing side would be lucky to receive an on-paper offer for $2.8M.
So how is $2,998,000 with an offer date within the realm of reason?
Legitimate strategy or grasping at straws?
There are pricing games galore out there, and as much as I detest some of them, I understand where the players are coming from.
Many agents have no clue how to transact in this market.
Many sellers won’t accept current market conditions.
Put those together and it’s a recipe for craziness.
If you’ve seen anything else like this, email me!