Are Vancouver Home Buyers and Sellers Stubborn?

Market Anatomy

Does high inventory and low sales of Vancouver real estate mean buyers and sellers are stubborn?

Value Difference of Opinion

Continuing to state the obvious we know that the current level of homes for sale in Vancouver suggests that many sellers want to sell – or do they? In all likely hood there are many buyers who want to buy or – do they? With market prices lower but not exhibiting an overt decline are we to presume that they will only sell and only buy if they ‘get their price’. It seems fair conjecture.

Coffee Story

A recent coffee shop story from a Vancouver Realtor® pal claimed that a sale on a east side $950,000 home never concluded when the buyer and seller would not agree on a $2500.00 difference of value opinion.

Worthy of calculation, the $2500.00 equates to a 0.26% difference of dollar opinion which in this case was big enough to kill the deal. If you are scratching your head wondering why then there is perhaps a reason within that tells us there is more to this market than we might suspect – a reason I believe that won’t be accountable in market fundamentals.

Mule Talk

A sentence in an email from a buyer helped clarify this 0.26% conundrum. Stated was:
“We ARE serious to buy, but on our own terms.”

Hearing such words voiced adds dynamic to this current Vancouver market. It may be one which at glance appears to have both sellers and buyers feet set in quickly drying concrete of differing opinion. The email confirmed buying philosophy of ‘on our terms’, may be more in control that we might have suspected. If sellers are maintaining an equivalent outlook we might well expect this market malaise to continue for some time. Assuming all things remain stable, then maybe it will take an event such as a mortgage rate increase to break the intransigence.

Negotiation

We Realtor® types sometimes think we know it all when it comes to negotiating the purchase and sale of Vancouver property. In reality it appears that confidence is at odds with a 0.26% chance that we are wrong.

What confidence remains is one that is certain. While it may be a fine game to play hard ball, the game itself is a waste of effort if in advance your philosophically precludes you from ever winning. With only a 0.26% margin between winning and losing, I suspect that in this case stubborn mule talk convincingly turned both the seller and the buyer into losers.

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

Thom Says:
July 18th, 2012 at 4:46 pm

Vancouver RE is over priced by 40%.

BubbleBoy Says:
July 18th, 2012 at 5:34 pm

That was a big mistake by the seller.

July 18th, 2012 at 6:51 pm

@Thom
WoW another revelation! Haven’t heard that before.

Beard of Bees Says:
July 18th, 2012 at 7:06 pm

$2500 is 0.26% not 0.02%.

FSBO? An agent could cut his commission by $2500, unless he is also as stubborn as the seller and buyer.

July 18th, 2012 at 7:18 pm

@BofB

good editing I’ll fix that and thanks.
BTW not a FSBO. I was told commission was already on the table and buyer/seller still wouldn’t come to terms. Can’t say the two Realtors didn’t didn’t do their part.

vangrl Says:
July 18th, 2012 at 7:55 pm

“I was told commission was already on the table and buyer/seller still wouldn’t come to terms.”

you mean to say that the listing agent offered to pay the seller the difference ($2500), and the seller still wouldn’t accept?

that’s just stupid

July 18th, 2012 at 8:19 pm

@vangrl
no – the commish was already in as incentive bringing buyer/seller to within $2500 of a deal and they wouldn’t go for it.

Tell Me Says:
July 18th, 2012 at 9:43 pm

Tells me the seller didnt want to strike a cheque to the bank for $2500, he needed that to come out in the clear, sooo many home owners have been maxing out helocs to fund life and toys. Once the helocs are fully maxed =SHTF the next 12 months are gonna be scary!

Not gonna end well

July 18th, 2012 at 9:46 pm

@tell me

anything is possible I suppose but my source certainly didn’t give any indication that was the case.

July 19th, 2012 at 6:46 am

I wouldn’t call them Stubborn, I’d call them DELUSIONAL, at least the sellers. They have been made to drink the kool-aid of delusion for so long by the MSM that have actually come to believe that their plywood homes with some granite thrown is are really worth a Mil. or more So reality will have to hit them on the head with a 2×4 before they realize that it’s game over. Those who are waiting for the rainy days to end will soon realize that the rain has become a downpour, soon to become a deluge that will sweep most pre-2004 buyers like the tsunami in Japan!

Larry, you may survive this downturn but I’d bet legions of your colleagues, who were just as delusional as the majority will not. Happy Days are not coming back anytime soon, if ever! Vancouver 2020 will be Japan 2010 and sinking just like Japan!

Anon Says:
July 19th, 2012 at 6:44 pm

Prices are sticky. It takes time for sellers to realize that they need to flex substantially on price. Especially when you have the REBGV saying that home prices are stable even though averages are 15% lower. I must say though, I’m following the stats in Van and it seems price changes are common and larger ones are starting to happen (100k+ drops at a time).

In terms of buyers being stubborn, idk. Why wouldn’t you be in this market? Prices are sure to continue to fall and rates are staying constant. You’d have to be a real fool to buy now unless you can actually find something that is a true deal. That said, I agree that being 2500 apart from a deal is stubborn on both aides but the buyer must have not wanted it that bad…. that seller is going to be kicking him/herself.

vanpro Says:
July 20th, 2012 at 12:00 pm

That still means (even after the initial contribution by the 2 realtors) that the 4 parties (including the 2 realtors) refused to cut their respective stakes by a combined $2,500 to make the deal happen which means the 2 realtors ALSO didn’t value the deal enough to contribute a further $2,500….sometimes that’s the way it goes – everyone contributes as much as they are willing to until they say “enough” – in this case the 2 realtors contributed a cut of their commissions UP TO a certain point after which they both cried “uncle” and refused any further cuts to their commissions. Conclusion: all 4 parties (including the 2 realtors) had a “stake” in the deal collapsing….

Jim Says:
July 20th, 2012 at 7:33 pm

Larry,

I had to comment because you are spot on. We recently let our listing lapse(rec property) because we could not get what what the property was worth to us. We will try again in 5 or 6 years.
We sincerely want to sell, but on our own terms. I wonder how many listings are driven by expectations of windfalls and not need.

July 20th, 2012 at 7:52 pm

@signs
“They have been made to drink the kool-aid of delusion for so long”

and here I believed we had freedom of thought.

July 20th, 2012 at 7:54 pm

@vanpro

yes it really is too bad that Realtors are not a net zero philanthropic group – damn them all 🙂

Adam Says:
July 20th, 2012 at 9:00 pm

Seller will be full of regret a few months down the road, while the buyer will feel fortunate (assuming they don’t buy anything else). When my dad bought our first family home in 1976, the same thing happened, it came down to a $500 difference and no one budged. My mother begged him to give in but he refused. Eventually the realtor did give up his commission and the sale was done. Back then $500 would be like $4000 now in housing dollars (house was $80k then, and 700k now). So same scenario. I may do the same thing when I buy a house… e.g., come to a fixed price and then ask for another $3k from the seller, and another 3k, and another 3k, until we are 3k apart from each other. Then make the realtor throw in their commission. Nothing personal Larry, I just find commission to be too high in BC. Realtors like to say the standard is 7% on the first $100k and 2.5% on the balance. For smaller condos, the cost is front loade. For bigger homes, the cost is too much. Is selling a $2m home in Vancouver really 4 times more challenging than selling a $500k condo? Some of these homes have buyers lining up around the block with multiple bids. The realtor doesn’t even need to do anything, and the commission on a $2m home would be $54,500. I am surprised more sellers don’t just take the real estate course at UBC, become their own realtors, and sell their own house/list it on MLS? It would be cheaper and they would be able to also earn buyer’s commission on their next house purchase.

July 20th, 2012 at 10:22 pm

@ADAM

“Is selling a $2m home in Vancouver really 4 times more challenging”

It depends and the answer is almost always yes. Let us not forget there are many service offerings out there to suit your pleasure and needs. Hire who you like or do it yourself that choice has always been available.

“the standard is 7% on the first $100k and 2.5% on the balance”

To be clear – there is no standard fee: the fee for RE service offerings abound. 1%, 2%, fixed fee, no percent flat fee or service menu packages. You can choose any or none.

“I am surprised more sellers don’t just take the real estate course at UBC, become their own realtors, and sell their own house/list it on MLS”

Probably the same reason they don’t want to take the garbage man course and put up with the smell all day or as in this case if they are around long enough to run a blog, contend with the endless discourse about how bad Realtors are.
And when you take that UBC course and become a Realtor you will need to be associated with a broker to have access to MLS. Then you’ll find out that Broker E&O insurance precludes you from selling your own home. But what the hell forget reality – just think of the savings right!

“Then make the realtor throw in their commission”

Really! Gee – Thanks for the warning!
Seems you are conveniently choosing to forget that you signed a listing or buyers agreement. This prompts me to ask if you always deal in bad faith? I can only presume that you expect your Realtor to maintain one level of professional integrity while your intent is contrary. Interesting declaration on your part. Litigators will love you.

“Nothing personal Larry”

Don’t hide behind that statement. You are taking a swipe while in my sandbox at my expense.

I’m not special but I am fair and when I’m hired to do a job on a ‘success fee’ basis I expect and demand the contractual terms of the listing or buyers agreement be fulfilled by the client as much as they expect me to fulfill my pledge to them. Renegotiating the terms after the fact to suit convenience of the moment is simply not on. If you are the buyer or seller you would expect nothing less in your agreement with each other. If that is not the case then when is a deal a deal?

All my terms for service are declared upfront, fully disclosed and in plain English. The result is if I help the seller or buyer get what they want – I get what I want. If I can’t make that happen the conditions of the mutual agreement between me and the buyer or seller have not been achieved and I suck it up. Take that incentive away and the objective of the exercise which at its most commonly perceived level is the negotiation of a price acceptable to both parties, vanishes quicker than the ink on the purchase agreement dries. I’m guessing but I do think you are choosing to forget that there is more to this business than a sign on the lawn or a free chauffeured ride to look at open houses.

And that’s all the snark I have about that!

ZRH2YVR Says:
July 21st, 2012 at 12:12 am

As much as I believe that the real estate commissions are too high in some circumstances, in most cases, the Realtor is worth all of the cost. In a very very hot market, you may go in and start with a different commission (which everyone may agree to and that’s your option). However, in slow times, agents front-load many costs at their own risk and then may have to wait a long time to get paid. When Larry sells the prime Marine drive property one day, he will have probably worked close to 1/4 year (possibly) just to move it.

I also have to agree with Larry. When you sign a listing agreement, it is pretty much a contract and changing the terms at the end (at your request) is really not a good idea. The realtor may feel that they will help the deal get done – but if I had worked 200 hours for the deal – I would probably not do it. If this was a weekend project – I can see there is some flexibility.

Anyhow – back to the market – prices are sticky on the way down but current owners should not expect to see the price that we have today again before the year 2025 (don’t be shocked by that – it is not that unreasonable).

Tell Me Says:
July 21st, 2012 at 6:38 pm

Anyone?? Just curious….of the 20 posted sales on Friday in E/W Van, how many of them were post July 9th??

Looks like the market is stalling??

On the other hand pre-sales seem to be doing fine, any truth to this?

vanpro Says:
July 23rd, 2012 at 8:41 am

Larry: I was just pointing out that there are more than just buyer and seller w/ a stake in a real estate deal….

timber2012 Says:
July 24th, 2012 at 8:05 am

Larry – in your response to Adam. I think Adam is completely correct. His allegiance is to himself and his family. So if he has a pretext to get a deal to a point and force the realtors hand (by having him eat commission), that is good business – he has saved his family some money.

What you have to understand is the realtor must deal in good faith as they are the one with a reputation. The seller is anonymous so they can deal in bad faith and their recourse is minimal.

I think you are being naive in your response to Adam. A contract can always be changed after the fact if both parties agree.

Otherwise, thanks for the blog. Refreshing to read some insight on a realtors blog rather than “I just listed this house” or “I just sold this house”.

July 24th, 2012 at 6:50 pm

@timber

“I think you are being naive in your response”

this is the privilege of opinion

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