Margaret and Pierre had been looking for a new home for a while when they finally found one they liked (names, prices and other details have been changed to protect everybody’s privacy). It wasn’t perfect, but it had some very nice features. It was nicer than most similar homes, but at $995,000, its price reflected this fact as most similar homes were selling in the $850,000 to $950,000 range. A few had sold for between $995,000 and about $1,050,000, but not many.

As the sellers did not have a pre-inspection report available, Margaret and Pierre had one done and also went to the bank to obtain a certified cheque for the deposit. They did these things to be prepared in the event that they found themselves in a bidding war. They signed their offer on Tuesday, even though offers were not being looked at until Wednesday. By this time, they were all organized and ready for whatever happened on Wednesday.

Wednesday rolled round and, lo and behold, Margaret and Pierre found themselves in the enviable position of having the only offer. As they had the only offer, they offered list price of $995,000, had no conditions, allowed the sellers to keep whatever chattels and fixtures they wanted to keep and agreed to close on the date the sellers chose. Margaret and Pierre were prepared to pay a higher price had there been more offers, but there were no other offers. You’d think that the sellers would be pleased to receive a full price offer containing all the terms they desired, wouldn’t you? Well, you’d be wrong. These sellers stated that they were not prepared to sell their home for their list price of $995,000 and would only sell it for $1,050,000 or $55,000 above their list price.

Even though Margaret and Pierre might have been willing to pay this inflated price, or more, had there been other offers, the fact was that there were no other offers. These sellers were obviously disappointed that they didn’t receive as many offers as they expected, but still wanted Margaret and Pierre to pay a multiple offer price. This wasn’t going to happen. At least not on my watch.

I admitted to the sellers that they were entitled to ask for as high a price as they wanted for their home, but explained to them that their house wasn’t worth $1,050,000 because the homes that had sold for that much had additional features and provided them with concrete examples of this fact. I went on to tell them that if their home WAS worth that much, they’d have received multiple offers. After this, I went to speak to Margaret and Pierre. I explained to them that they had 4 main options: 1. Accept the sellers counter offer of $1,050,000; 2. Stick to their guns and make a second offer of $995,000; 3. Walk away from the negotiations completely and perhaps make another offer at a later date if the house didn’t sell; and 4. Offer the sellers a little more than $995,000 to allow the sellers to feel like they won the negotiations. Margaret and Pierre really liked the house and didn’t want to risk losing it to another buyer on the next day. They opted for option 4 and offered the sellers a few thousand dollars more just to get the deal done, which the sellers accepted. Margaret and Pierre were happy because they got the house they liked at a price that was far less than they likely would have paid in a multiple offer situation and the sellers, while disappointed, were relieved that their house was sold and that they had received such a nice, clean offer containing all the terms they wanted apart from price.

Questions for discussion for your Real Estate Club:

Why do you think there was only one offer? Was it because the home was over priced to begin with? Was it because the sellers did not do a pre-inspection and buyers didn’t want to buy this home without one and didn’t want to risk paying for an inspection that might have been useless had they lost out in a bidding war? Was it because Margaret and Pierre registered their offer early and this scared some potential buyers away who didn’t want to get into too much of a bidding war? Was this house so unique that it didn’t appeal to anyone else? (I’ll answer this one for you: no.) Was there something wrong with this house? (Once again, my answer is no.)

Were the sellers wrong in not being willing to accept the list price which they themselves chose? Is it ethical to list a house for less than you’re willing to accept? Or are there no rules when it comes to a business transaction such that you may do whatever you choose to strike the best bargain possible? What would you do if you were in the sellers’ shoes? Would you have listed your house for a higher price to begin with? Would you have accepted what the market was telling you and accepted Margaret and Pierre’s first offer? Everyone is different. None of us knows exactly how we’d behave under a specific set of circumstances, but it’s fun to speculate.

There’s always something to be learned from every situation in the wonderful world of real estate. Hopefully, this situation and these questions will help you learn what to expect so you can give some thought to how you’d react if faced with similar circumstances.