Need advice on home sale

**NewYorkHomeOwner** · 07-14-2009, 12:09 PM

Okay, so I know that it is a tough market and I should be thankful for any offers to come my way. Having said that an unusual situation just occurred that I'm not sure how to handle and am looking for some advise. Within days after putting my house on the market, my agent told me that I needed to reduce the price because it was too high based on feedback from other brokers and I resisted by saying that she shouldn't have taken the listing if she thought it was overpriced. Regardless, I received no offers for the next three months and I really got the perception that the agent was not even attempting to sell the house and kept insisting that I needed to lower the price. I was ready to do this when all of a sudden a competing real estate agent came in with a bid (Family A) for the property for 20% under my asking price and my agent seemed to be stunned. I countered at 10% below my asking price hoping that the bidders would meet half way. Well, by mere coincidence a second bid (Family B) came in within a matter of hours for the amount that I countered the first family with. I told my agent that as a matter of integrtiy, I want to let Family A have an opporunity to meet the original offer we made to them. Family B then returned with an offer that exceeded Family A's offer and stated no contingencies/no inspection/all cash - obviously they wanted to avoid a potential bidding war. That was an offer I couldn't refuse and I accepted. The only requirement was that I sign the contract within 24 hours which I gladly agreed to. The celebration was very short lived.

The next day, I called to find out when the contract was going to be sent/faxed for signature and was informed that Family B was lowering their offer to below the original counter offer made to Family A. When I said we will then wait for Family A to respond, I was told by my agent that she got indication from the other realtor that Family A was not going to meet the counter offer and that I should accept the new offer from Family B because it is still without contingencies. I then found out (second-hand and actually validated by my agent when confronted) that Family B is not only being represented by the owner/boss of my listing agent but that they are actually childhood friends which seems to be a conflict of interest. I find it difficult to believe that the owner didn't go back to her friends and let them know that original bidders were backing out which enable them to lower their bid. Feeling trapped, I agreed to the reduced amounts but re-emphasized that there would be no contingencies and everyone agreed.

The next day, I received notification that the contracts are just about finished and will be forwarded on after the home inspection which is scheduled for the following day. When I questioned my agent about there being no contingencies, she responded that it is a law the all homes be inspected prior to signing the contract. Knowing that there is no such law on the books, she finally admitted that she may have misrepresented the truth but that no contract is ever signed before an inspection is done if the buyer is stating no contingency in the contract. For some reason that to me seems like a contingency.

I fully expect Family B will once again reduce the offer after the inspection and I will have a tough decision to make. Typically out of spite I would just reject it, but I am aware of the tough economic conditions we are in. The question I have is whether the actual events would be grounds to cancel my listing agreement with the agency if the deal falls through without liability. I know I should probably asked my lawyer, however I am being represented by a lawyer recommended by the realtor at this time and am currently in the process of looking for a new one.

Any thoughts or suggestions would be greatly appreciated.

**tucsonhomes** · 07-14-2009, 05:35 PM

There are some things that should not be much of a problem and some other things that are so far out of bound that - well we'll get there.

First, pricing is the seller's choice, not the broker's. Feedback from market activity should be used to learn how to get closer to the market - if the seller chooses - or not.

The first offer seems normal and the counter offer to the first offer seems normal, although you should have probably been advised that any counter offer can be withdrawn, at any time, until it is accepted by the other party.

The second offer seems reasonably normal and even the relationship in some states would have been acceptable (not blood relatives) except that in ANY state a dual agnecy must be disclosed and agreed to prior to the offer. Any other sort of dual agency is illegal in every state.

There is a federal law, if your property was built prior to 1978, that the buyer has to have a 10 day inspection to include lead based paint. The buyer has to sign documentation (the seller as well) acknowledging that they have had this 10 day right.

The main problem is that, evidently, the broker that you hired to protect your interest, provided details about an ongoing negotiation even though the pricing was below the asking price. This violates every responsibility of agency.

My guess is that if you would talk to the managing broker of this agency, they will not only let you out of the listing agreement, but they will offer t pay the commission on the next one.

**Greg** · 07-15-2009, 08:29 AM

The brokers relationship with the buyers should have been disclosed upfront but since it wasn't it sounds like it is time for you to get another real estate agent. The agent can't let you out of the listing agreement but the broker can. So talk to the broker.

If the broker refuses to let you out of the agreement then talk to the state real estate commission, not the board of realtors or mls people. Go to the real estate commission, they are the ones who control the licenses and they are the one who can get the broker in real trouble.

In the meantime, you might want to talk to the first agent and see if they really did pull out or where they told they lost the deal and then walked away.

**NewYorkHomeOwner** · 07-15-2009, 11:01 AM

Thanks for the feedback and advice. It is greatly appreciated.

Greg, I was thinking about contacting the agent for the first family for the same exact reason you stated but didn't know if that was appropriate. However, I was just informed that Family B withdrew their "offer" prior to any inspection being done. We were told that they have purchased another house in the neighborhood. If I had to guess, my house was their second choice and when they found out that there was a bid on the table they quickly made an offer to hold me at bay until they heard back from their first choice - of course that is speculation on my part. As such, I really don't have anything to lose by going back to the first agent to find out how this was communicated to them.

I do have to clarify a statement I made above - I "technically" agreed to the dual-agency since they advised me that the buyer was being represented by them, my surprise was learning (after the fact) that the client was a childhood friend of the owner. I would have been much more skeptical of the deal if I had known that up front. To be honest, although unethical, I'm not sure that I wouldn't have given a friend the "heads-up" on a big deal.

Regardless, I am going to speak to the actual broker and start looking for a new listing agent. However, I do have a few questions that hopefully someone can provide insight to.

1) Is it really an offer if a buyer hasn't submitted it in writing? When the agent called us to let us know of Family B's second offer for all cash and no contingencies (which we verbally accepted), she also stated that the offer would be forwarded to us the next day and that the buyers wanted it signed that morning. When no offer arrived, we called the agent who informed us that the offer was being reviewed by their attorney. Is this the norm?

2) What exactly does "no contingencies" mean? As stated in the original post, one of the reasons I agreed to Family B's offer at the risk of losing the other bid was because they stated "no contingencies". I was a little shocked to hear that the contracts were being held up for an inspection. I thought "no contingencies" meant exactly that. Clearly they were more concerned with their friends (oops, I mean buyers) than with us (the sellers). In hindsight, that was probably just another stalling tactic while the buyers were waiting to hear back from another offer.

3) How long does the process usually take from when a bid/offer is verbally made and accepted until it is presented to the owner for acceptance/rejection in writing? I remember when I bought the house, I had the offer submitted with an "in earnest" check within 24 hours. Granted, my offer did contain contingencies for legal review, financing and home inspection so I was protected if anything went wrong. Although I was pushing the agent to obtain the proper signatures and payments, she stated that things were moving quickly and that these things take time and that I should be patient. For reference, it was three days from when the buyers supposedly made an offer and we verbally accepted until they finally backed out of it without ever having submitted anything in writing. I'm still somewhat confused by this part of the process even though the agent stated that this was normal.

I'm only asking these questions to determine whether I need to reset my expectations going further.

Thanks in advance for your responses. I wish I had found this site before I began the process as there is a lot of useful information here.

Cheers-

**tucsonhomes** · 07-20-2009, 04:24 PM

1) Is it really an offer if a buyer hasn't submitted it in writing? When the agent called us to let us know of Family B's second offer for all cash and no contingencies (which we verbally accepted), she also stated that the offer would be forwarded to us the next day and that the buyers wanted it signed that morning. When no offer arrived, we called the agent who informed us that the offer was being reviewed by their attorney. Is this the norm?

Because processes are so different is different areas and states, what you are asking is not anserable in this kind of a format. My experience is that in areas where attorneys must write the contract, there is usually some form of written offer or letter of intent to clarify what is being offered in terms of price, terms, closing, inspections, etc.

2) What exactly does "no contingencies" mean? As stated in the original post, one of the reasons I agreed to Family B's offer at the risk of losing the other bid was because they stated "no contingencies". I was a little shocked to hear that the contracts were being held up for an inspection. I thought "no contingencies" meant exactly that. Clearly they were more concerned with their friends (oops, I mean buyers) than with us (the sellers). In hindsight, that was probably just another stalling tactic while the buyers were waiting to hear back from another offer.

"No contingency" should mean that the buyer is putting their earnest money at risk if they fail to close - for any reason. You are correct that this is used in negotiations to have one offer appear "better" than another offer.

3) How long does the process usually take from when a bid/offer is verbally made and accepted until it is presented to the owner for acceptance/rejection in writing? I remember when I bought the house, I had the offer submitted with an "in earnest" check within 24 hours. Granted, my offer did contain contingencies for legal review, financing and home inspection so I was protected if anything went wrong. Although I was pushing the agent to obtain the proper signatures and payments, she stated that things were moving quickly and that these things take time and that I should be patient. For reference, it was three days from when the buyers supposedly made an offer and we verbally accepted until they finally backed out of it without ever having submitted anything in writing. I'm still somewhat confused by this part of the process even though the agent stated that this was normal.

Again, processes in different areas can be very different and even different markets can change how things process.

It seems to me that the level of trust in you real estate salesperson has declined to the point that you are looking for quality information elsewhere, when the best source should be the person you hired to work for you.

Talk to the managing broker, get released, interview a few good salespeople, make a choice, and go with them.

All the best!