I am not a perfect broker and I am perfectly content with that. Being imperfect creates space to grow and personal growth is what is most stimulating about life. It is the forward moving action in our own narratives.
A recent incomplete transaction has me a little miffed as there are certainly lessons to take away though I am not 100% sure what I am meant to learn. I suspect that writing this newsletter will help.
The scene: a client who bought a 2 bedroom 2 bath vintage condo in southeast Evanston calls me out of the blue. He had purchased the home for his three daughters to live in while they were finishing up school and starting their professional lives. The unit is livable though the bathrooms are mostly original and need updating. The kitchen is 20 years old. The building has a garage, which is incredibly rare for that area. The windows are also original. The building is well run and has a new roof. The courtyard is beautiful in the warm weather with ornamental flowering fruit trees and a small fountain. It is walking distance to the lake, to the Main Street retail corridor, and to the CTA and Metra stops. There are 6 common washer/dryers for 19 units. They bought it for $285k five years ago.
Mr. H we shall call him, called me off of an email that he received from a service I employ called Homebot that provides an algorithmic estimate of his properties home value. The value sent to him was $319k. I alerted Mr. H that the value generated by Homebot was an algorithmic estimate. I shared that the unit below his, which was recently updated closed for $285k less than a year ago. We listed at $315k and came to terms on a cash offer for $305k within the first two weeks.
I would say that 90% of the time the first offer is the best. This buyer asked for the windows to be replaced, which is roughly a $50k expense, so obviously a non-starter and yet without pursuing a conversation, Mr. H instructed the contract to be canceled. Later on he would tell me that the association was looking to help lower the costs of window replacements by working with a contractor to replace all the windows at once. While still a cost to the owner, a reduced cost. A discussion should have been had with these prospective buyers to try and determine what it exactly was they wanted and I implored Mr. H to do so. He refused stating that they were not real buyers.
We had 3 other offers right around $285k. During negotiations on one of them, he stated he would be willing to accept $290k. The buyers were stuck at $285k. Fine. Sometimes sellers have a line they are unwilling to go beyond. It is very frustrating as a broker, but when you take a mindset of abundance you operate according to your client’s wishes and their best interest.
The listing expired and Mr. H decided he was going to relist in the spring, likely without my assistance. One week later an offer came in from a broker whose buyer had seen the property previously. They were willing to pay $290k. I was excited and hopeful. Unfortunately, this time around Mr. H was only willing to go as low as $292,500. I was incredulous. We talked about carrying costs and the risk of carrying a vacant property. I could not understand why he was unwilling to sell at a price he was previously willing to accept. His response was that he felt these buyers could afford that price and he had come down from $319k. He stated it was their responsibility to meet his price if they wanted the property. Throughout the effort he kept harping on nothing being on the market in southeast Evanston and that bringing up comps from the past did not mean that the current should take them into account. I tried to calmly explain that as a buyer’s rep, of course those comps matter and I also explained that an appraiser would use those comps in their valuation. He refused. The next morning he asked me to try to get everyone including the two brokers to kick in $625 each. I was unwilling to devalue my services when I had brought him four good offers. He thanked me for my time and wished me good luck in my future endeavors.
Here are my takeaways:
While there was an initial email that went out explaining the valuation derived by Homebot was correct within some standard deviation, my clients needed to be reminded of that fact more often.
This client of mine has had a successful career as an attorney where he most likely never compromised off of his conviction and even though he told me he would be reasonable if an offer came in (let alone four), his early behavior should have been an indication to me that he would not be reasonable when push came to shove.
The sellers of the property below him deeply underpriced their unit and I should have reached out to that listing broker to better understand that story.
There are some people out there who will always act in a way that runs contrary to data presented to them and ultimately “test the market”, which can turn into a waste of one of your resources, time.
As service providers, we will encounter scenarios where we can feel frustration at others for not heeding our advice, where we have conviction that we presented all of the facts and data at our disposal, and still need to simply let the transaction go and wish our clients well.
This last takeaway is particularly challenging though it may be the most important one to master.
