Realtors holding offers 2 increase price or double commissions

106 Replies

"It takes a very moral Realtor AND two parties that of equal experience in buying and selling for dual agency to be fair. "

----------------------

Dual agency is not and cannot be fair. It is a contradiction in terms. It is only a way for a shill to cover his butt and double dip, to the harm of the seller.


Originally posted by @Susan K. :
Originally posted by @Irina Belkofer:

@Susan K. the agent might be a wholesaler - he didn't have to list unless it's necessary for comps.

Most likely the buyer was a flipper he sold the contract to, that's why he listed his flip for sale.

It seems to me that you're up against an unethical agent - and it sounds like you have proof of it.

I would consider filing a formal complaint against that agent with your Board of Registration in Real Estate. 

That's exactly why the Bord is there in the first place.

Of course, it could be that the flippers offer was inferior in price but superior in terms - but the Board will sort that out.

@Frank Wolter why are you buying properties at retail (highest and best) prices? Get out, build better systems to find properties not yet on the market. My wife’s a top Realtor in her company and her city, but I don’t always buy though her. Sometimes deals are best without the use of a Realtor. The sad fact is there are TOO many Realtors now. Too many who think there is easy money to be made. My advice is to find deals without the need of a Realtor.
Originally posted by @Mindy Jensen :
Originally posted by @Christopher Phillips:

I think everyone has to realize that sellers look at offers whenever they feel like it.

THIS!!!  The seller can choose to ignore your offer completely and come back in a month if they'd like. If you want the property, you'll buy it. If you don't, you'll pass.

But in a seller's market, the seller makes the rules, the timelines, and the decisions.

(I am both an investor and an agent.)

As a listing agent, I am a fiduciary. I am OBLIGATED to follow the directions of the seller, so long as we are not violating any rules. (I can't follow their direction to only show the house to women, for example.)

..............

But it also sounds like you may need a new agent to represent you, one who is aware that deadlines should be inserted into contracts. 

 Let me tell you about that deadline to respond.

I was a selling agent (representing buyers) in residential transaction for $400-500K houses. I've made an offer without a deadline, we started to negotiate and my buyer had very good points about asking price (below asking).

So, instead of restating his points to the listing agent, I forwarded his email to her.

In that email he asked to consider answer the offer within 24 hours. That was in January this year and it's a sellers market over here for sure.

The seller get offended about 24 hour deadline and rejected the offer with no further negotiation. The LA told me on the phone, that the seller (a woman in her 60's) get very emotional about that particular thing. 

I have to add, that it was done in very polite manner, nothing offensive or demanding and I really didn't expect that reaction. Also, this is not a REO or anything distressed - price was $470K and slightly overpriced for the condition. However, seller was not motivated enough to overlook that tiny thing and move on with the sale.

As for REO's I didn't use very often 24-48 hours deadline because my buyers are pretty competitive and their offers are never dismissed.

As for multiple offers, you can do few offers but you'll have to include inspection contingency in the offer, which will weakened the offer. But if you've got 3 offers accepted with money only for one, you'll exercise your inspection contingency clause and get out of the two contracts (HUD has restriction on that).

I don't think in today's market it's going to happen that 3 low balls offer get accepted simultaneously but if it does - your low balls are not too low :)

Unfortunately, this happens more commonly than not.  The first call would be to that agent's broker.  I'd evaluate how the broker handles it.  If there isn't a decisive action made, the next call would be to the local regulatory agency.  In this state, it is the Department of Business Regulation.  That, accompanied with any supporting documentation will surely light a fire under the broker's *** to get the situation rectified immediately. 

Sorry to hear about the bad experience, Frank.

Sounds like a discussion the Realtor likely should have initially brought up with you. It's a fairly common practice (depending on the market I guess) to have an expiration on your offer. Hopefully you found a Realtor that can do the job you're needing.

Best of luck in your future investments!

@Irina Belkofer brought up a really good point...it's absolutely crucial to know as much as you can about the seller and their situation and then adjust the deadlines on your offer accordingly. Are the sellers older and need to discuss offers in person with their agent? Are they out of state? Are they emotionally attached to the home because they raised 5 kids there over the past 40 years? Is it an estate sale where multiple heirs in different states have to review the offer and agree on the terms? 

It's pretty common here for agents to actually put a note in the private MLS remarks regarding response times such as "offers received on Friday or weekends will be responded to on Monday by 5 pm". Or something like "out of state sellers...please allow extra time for response".

Originally posted by @Russell Brazil :

Had to laugh that you think it is unethical. When Im hired by someone to sell their house, they hire me to sell their house for the most money. Thats the job Ive been hired to do. When I hire someone to sell my properties in other states, thats what I expect them to do, get me the highest price. I cant even wrap my head around how someone would think it is unethical to do the job you were hired to do, sell real estate at the highest price and at the best terms.

Also for what its worth, when I or other top agents see expiration dates, we ignore them. A better offer is going to be available. I list properties on Wednesdays and have offers due the following Tuesday. Under contract by the following Wednesday 1 week after listing.

 If you were my agent and I found out you were holding offers without telling me I would fire you on the spot.

Originally posted by @Tom R. :
Originally posted by @Russell Brazil:

Had to laugh that you think it is unethical. When Im hired by someone to sell their house, they hire me to sell their house for the most money. Thats the job Ive been hired to do. When I hire someone to sell my properties in other states, thats what I expect them to do, get me the highest price. I cant even wrap my head around how someone would think it is unethical to do the job you were hired to do, sell real estate at the highest price and at the best terms.

Also for what its worth, when I or other top agents see expiration dates, we ignore them. A better offer is going to be available. I list properties on Wednesdays and have offers due the following Tuesday. Under contract by the following Wednesday 1 week after listing.

 If you were my agent and I found out you were holding offers without telling me I would fire you on the spot.

 When Im hired, a client agrees to work under my process. We list Wednesday and we have offers due Tuesday at noon. We review offers Tuesday night and are under contract on Wednesday. If a seller doesnt want to use my process, they can hire someone else.

I am Realtor. In the market I work, it is not uncommon to omit an expiration on an offer, especially in a sellers market. Regardless of the state of the market, if your offer is strong it will likely get answered quickly. Recall the old saying "A bird in hand". 

@Frank Wolter I had an agent pull this on me once, Called and said we are in a highest and best situation out of the blue. I re-submItted my offer for $10,000 less, Agent called raising hell asking why we would drop the offer. Turns out, the Agent lied and there were no other offers. Since the agent was representing a bank, they took the offer and she got less commission.

I always include a deadline in my offers but lately, as in 2005 most of those deadlines are not enforced. 

Usually, not always, the listing Agent will advise that they are holding all offers until a specified date such as after a long weekend or maybe an upcoming open house. Giving me the opportunity to either extend my deadline or pull out immediately if I just cannot wait; but they know I will probably wait since it's just business.

Holding out for multiple and maximum offers makes sense from a Sellers point of view and I don't fault them trying to make top dollar... I do when I sell. 

I admit that it can be frustrating sometimes but it's just part of the business we've chosen to be in.

This is a great thread, with differing view points and based on the comments made at the very beginning I believe it has satisfied the intent of educating new Investors.

I just discovered there is a form that you can have the Seller sign when you submit an offer of proof that the agent did indeed even present the offer.  I've run into this when submitting offers and had a feeling the agent did not even talk to the Seller about the offer.  Now I will use that form to at least get proof that the agent submitted the offer.  At least in Texas, agents are supposed to present every offer to the Seller.  I get it if the offer is lowball I don't agree that agents should withhold any offers simply b/c they know their commission will be lower if the Seller accepts a lower offer.

Originally posted by @Dan Heuschele :

Here is what I think is unethical.  A few years ago I make an over ask offer ($25K over ask which was a little less than 5% over ask) on a property that I wanted (A multiplex in an area with very few multiplexes and perhaps the best school district in the state).  I never got a response.  My realtor informed us that the selling realtor provided the buyer.  The sold price was virtually my offer price.  I was willing to go up higher on the price as well as remove most contingencies and am convinced that if given the opportunity I was willing to out pay the eventual purchaser (I would have considered going up another $50K even if it could not be financed at that amount - obviously I was willing to remove the finance contingency).  In this case, the seller got less than they would have and I did not get a property that I wanted enough that I was willing to pay significantly over asking price and possibly over appraisal price.  Who benefited?  The eventual buyer a little bit but the realtor benefitted the most and did not take the best care of the seller.   I have no way to know for sure that my offer was presented to the seller but even if it was, because the sold price was basically my offer price, the realtor could easily convince the seller that the other offer was in some way superior to my initial offer.  I was very surprised that we did not hear back from the seller's realtor and more surprised when I saw what the RE sold for (I could understand if it sold for $50K more than my offer that the buyer may have placed an very short time out).  I view a realtor increasing his pay at the expense of the seller to be unethical.

I just had the identical problem with a RE agent in New Hampshire (NH). The Sellers agent was smug and was misinformed about the property unfortunately I made the mistake of correcting him during the open house in front of other buyers, I didn’t mean anything malicious with my comment but apparently the seller’s agent took it that way. I put in an offer $25k over list price because the RE agent mentioned in the open house that he had a “Reasonable cash offer already on the table” I was ready to negotiate and go $55k higher but he never even got back to my agent. When I asked my agent to call him, he did and the seller’s agent told mine that he didn’t want to do business with my kind, I almost took it as a racist comment but I kept my cool and let it slide. Long story short the buyer’s property sold for list price, the buyer didn’t even see my offer because of his smug agent and too boot the sellers agent just happened to have a buyer of his own (Double commission for the sellers agent)

TL:DR the sellers lost an offer with a guy with deep pockets willing to go almost $80k over ask because of his smug, and maybe a little racist, agent (mind you this property would still cashflow at my inflated offer price.)

@Belinda Lopez

I can't get people to sign state mandate disclosure forms stating simply that "I represent you for this house at this moment and there is no contract, you are free to do what you want after you walk out of here. I don't represent the seller". 

How many times are you signing a form stating I showed you an offer for 30% of your asking price because because people are peppering out 100 offers a day? It's like that Seinfeld episode where he was signing checks for $.17 a piece for some royalty deal (never a fan of the show but remember that one). As a seller you are not required to sign, respond or even acknowledge anything. The prospective buyer can include all of the forms, time frames, dates, conditions they want. You are the seller and you are not required to do anything with an offer. 

You see people on here say "I present my offer and if they don't accept it I walk, I don't have time to play games". There are sellers who say "My house is listed for this and if they are not going to pay it I am ignoring them, I don't have times for games". It's why us agents have jobs. If people could bridge their own gaps and remove emotion, 90% of the houses would not sell by agent. 

I really hate games.  Some real estate people seem to love them.  If I get a notice that we are in a "multiple offer situation."  I tend to say "Let me help solve that.  I have included the notice that my offer has been cancelled.  Thanks."

If you do that enough times the local agents will stop sending the "multiple offer notice" when you have already submitted the highest offer.

If the property is really needed for an assemblage, then I say...  "I want the property, but I only participate in open bid auctions."

That way I do not raise my offer because another agent in the same office as the seller's agent has made a lowball offer. 

@Frank Wolter - I noticed you said you recently sold three properties. I'm curious how you handle things when you're the  seller - do you list with an agent? And do you always accept/negotiate the first offer that comes in, or take some time to receive/review multiple offers? How do offer expiration dates affect your response as the seller? I'm genuinely interested in your response, as you seem to have a massive portfolio and lots of experience. 

One other thought - you might reconsider trying to label people as either realtors/agents or investors. The two are certainly not mutually exclusive. Many investors eventually figure out that having a real estate license is a huge competitive advantage, and many real estate agents eventually figure out that it makes a lot of sense to invest in real estate!

Many of us here on BP wear multiple hats, such broker/realtor/property manager/buy-and-hold investor/flipper. That breadth of experience here in the BP forums is what adds perspective and value to these discussions, and the newbie investors reading this thread would be wise to consider them all.

@Mike Cumbie   Are you saying that every listing immediately gets multiple offers?  Because I only see that on really good deals, and even then, do I rarely see more than a few offers submitted, especially in writing.  Then it makes sense to tell your client to set a deadline for the highest and best offer and move forward.

What I see so many times is a property that comes on the market, often over priced, and just sits until the listing expires.  Or worse is when we see them go into foreclosure b/c the agent doesn't know how to do anything but a traditional sale and the auction deadline is way before that.  Often times I'll ask the agent if the owner will consider financing, even for a short-term, and the immediate answer is "No," when it's clear they haven't even presented that option to the seller!  Not saying all agents are like that but far too many have no understanding of creative ways to structure deals that make sense for their client.

@Frank Wolter You suppose to put a limited time with your offer, except it's a backup offer. 1. As listing Agent, helps seller net the top dollar in their pocket is the best agent if you are seller you will agree. 2. Time restrictions is always nessesarry to put in offer.
Originally posted by @Michael Biggs:

I really hate games.  Some real estate people seem to love them.  If I get a notice that we are in a "multiple offer situation."  I tend to say "Let me help solve that.  I have included the notice that my offer has been cancelled.  Thanks."

If you do that enough times the local agents will stop sending the "multiple offer notice" when you have already submitted the highest offer.

If the property is really needed for an assemblage, then I say...  "I want the property, but I only participate in open bid auctions."

That way I do not raise my offer because another agent in the same office as the seller's agent has made a lowball offer. 

this is were I have used escalation clauses successfully..   

Originally posted by @Jeff Copeland :

@Frank Wolter - I noticed you said you recently sold three properties. I'm curious how you handle things when you're the  seller - do you list with an agent? And do you always accept/negotiate the first offer that comes in, or take some time to receive/review multiple offers? How do offer expiration dates affect your response as the seller? I'm genuinely interested in your response, as you seem to have a massive portfolio and lots of experience. 

One other thought - you might reconsider trying to label people as either realtors/agents or investors. The two are certainly not mutually exclusive. Many investors eventually figure out that having a real estate license is a huge competitive advantage, and many real estate agents eventually figure out that it makes a lot of sense to invest in real estate!

Many of us here on BP wear multiple hats, such broker/realtor/property manager/buy-and-hold investor/flipper. That breadth of experience here in the BP forums is what adds perspective and value to these discussions, and the newbie investors reading this thread would be wise to consider them all.

Very Nice post !!! I would say a lot of the BP audience is farther ahead in the knowledge of how the industry works than many beginners or they soon learn if they hang around here much and read some of the material... but there is no doubt many have no clue how the industry works.. that's for sure.. You know the buyer that runs you around for a month.. then buys a FSBO and sends you an email all giddy about it wanting you to be happy for them LOL they don't get that agents are paid to close deals.. So as agents get to a mature business level they are all independent contractors they work for themselves.. they are not mandated to do anything but follow contract law and ethics .. and they don't have to work with those they choose not to..

@Account Closed When I'm representing a seller, I am their fiduciary.  I have a legal obligation to get them the best possible offer.  It's not a game by any stretch of the imagination.

If I have more than one offer, I always send out a multiple offer notification with a request for "highest and best" offer by a specified deadline.  

I guarantee that's what you would want me to do if I were your Realtor and selling your property.

From the buyer's perspective, you're under no obligation to raise your offer.  I fact, I've represented many buyers who have not. 

I promise you that no matter how many multiple offer situations you drop out of, I would continue to send you that notification every time I had more than one offer on the table.  Again, it's my legal obligation as the seller's fiduciary.  

I'm not saying that it's never happened, but I've never even heard an accusation of another agent in the same office submitting a lowball offer for the purpose of triggering a multiple offer situation.  That's such a serious ethical violation that I'd bet it would lead to a fast revocation of their license.  Goodbye career, hello fines!

Even if that really happened, you would be the high bidder! 

By withdrawing your offer in that situation, you're walking away from the deal you wanted,  All you had to do is to stand your ground with the original offer and it would have been yours.

@Belinda Lopez

Not at all. I am saying that you can;t make anyone sign anything just because you gave them an offer. If I knocked on your door trying to sell you streak knives for $750.00 and you said "No, get off my lawn" Could I then somehow require you to sign a form stating I presented you with the opportunity to purchase them? When a buyer makes an offer they can put whatever they want (Sign this form stating that I showed ti to you give me your first born child, join a new church) but the seller is not held to anything a buyer gives them. 

Every deal and every seller is different. I have had sellers balk at a 99.5% cash offer. I have even had clients accept offers on day one at 75% of asking happily. You don't say "It's always in the buyers best interest to....." or "I never submit a highest and best because...." or "Someone else did this because.....". There are pieces of every transaction that the other side does not know and there are plenty of pieces the general public is not aware of. The hardest thing to understand is the motive someone has for doing something when they don't want to share it.

It seems a whole lot of people know "why" someone didn't take an offer or did take an offer or didn't respond to their offer. I had a buyer get into a house because the lady selling it was the widow of my clients old bus driver. They even had a plaque hanging in the kitchen she gave him when she was in kindergarten, saying "Worlds Best bus driver". They got it for less than 70% of asking because that's all they were approved for. I'm sure today there is some buyer crying about how their offer wasn't presented because it was higher than what was accepted. Humans do things for all sorts of reasons.