Hey gang. Here's the situation.
A few days ago my wife and I finally put in our first offer on a tiny 2 bed, one bath house. It wasn't without issue - some visible mold that we traced down to an overly damp basement and some foundation crumbling from a bad patch job. But at $35K we figured it was the perfect opportunity to finally make the jump. We have a family of five and quarters would be cramped, but we were excited and enthusiastic to BRRR the heck out of it and get our start in the real estate game.
So we booked another walk through for the following morning with our agent and friend with knowledge of troublesome foundations. At this point, it had only been on the market for a day. About 9:00PM our agent calls us in a panic. She informs us the listing agent called her and said he's got an offer he's willing to accept and, if we plan on submitting, we have ten minutes to get it in. Which seemed weird to us, given the time of night. So, we place an offer for the asking price and hope for the best.
Long story short, we're informed about an hour later that our offer wasn't accepted. Now, the part that we're finding bothersome is that "winning" bidder is a well known investor (who also has his real estate license). As an added bonus the listing agent (also a very well known, familiar face in the local RE market) has been fined in past for poor practices such as posting a house as "Pending" before it hit the market. Which leads us to the following questions and where YOU guys come in with your all knowing wisdom...
1) Isn't there a waiting period investors have to abide by before making an offer?
2) Are there fines for any agent or investor guilty of such behavior?
3) Is there a place to lodge a complaint for said behavior?
@Jack Boyd These are very good questions. From my understanding the agent presents to the seller the offers that are available. From a seller perspective, they will take the offer that makes more sense to them. They chose the investor who is known to close on properties and who is well known in the RE circuit, rather than a buyer than can walk out on the deal. I bet that investor bought the property cash and offered a quick close.
To my understanding there are no waiting periods. Depending on the deal and the market, you have to make a deal more aggressive since you may not be the only one bidding.
My last property I bought, the agent texted me a property before it even went on the MLS. I put an offer on it right away because I knew it was a great deal. By time it hit the MLS no one else could take it from me. I was aggressive and it paid off. Best of luck to you guys finding another property!
- Assuming this was a normal private sale, no.
- It's possible that an agent could have their license suspended or revoked.
- You can complain to the agent's broker and the state licensing board.
It will be hard to prove anything, but it sounds as if the selling agent did not even present this offer to the owner (I say this because, if two offers are on the table, I expect you'd be asked for a "best and final," not just rejected outright). In that case, there's a real, legitimate complaint.
The real question is how far you want to push this. Consider the following:
- There may be nothing underhanded happening here. Perhaps, the seller chose the other offer because it was all-cash with a quick close (something you didn't offer, I suspect).
- It will be hard to prove anything unethical was done.
- Will there be reputation cost to your pursuing this? If you get a reputation as someone who goes after agents and is difficult...that may not be to your advantage over the long term.
My guess is this investor is paying all cash and has already developed that relationship where they will take his offer over yours. Then again on the flip side of that if you were the seller and needed to close fast to move into your new home a cash offer would be pretty sweet.
Honestly I think it will be very tough to prove and is that really worth your time? You could be spending that energy into looking at other properties. Stuff happens. I saw some shady stuff too. Crazy high prices like 15 to 20k over asking price which I thought was weird for something needing 30k+ worth of work. And these houses were already priced above what they were worth.
Your best bet might be more of those off market deals from your agent or you might have to expand your market out a little bit.
I know it sucks. I was outbid on 4 houses before I finally got mine. People were going so far above list price it was ridiculous. I remember one house was listed at 215k and it went for 235k. The house was not even worth that. The inside was like a 1960s time capsule.
The house I did buy I made an offer on right away. Offer was accepted. The very next day at 12:01 3 other offers came in. 1 was from yup you guessed it a real estate investor. He's pretty known around here for fix and flips. I got a pretty fair price and have accumulated quite a bit in equity.
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