Listing Broker May Not be Submitting my Offer to the Seller

10 Replies | New York City, New York

About 2 weeks ago, I submitted an Offer to Purchase a Property for a Client/Buyer.

The Seller's Agent got back to me and said that there is currently an offer with "No Finance Contingency" and because my Client will be using a Mortgage, the Seller is refusing to send over the Contract to the Buyer's Attorney.

The Offer was for $1.6 Million and the Commission the total commission would be $80k. The Listing on the MLS (called RLS here in NYC) has the co-Broke at 2.5% or $40k.

It's been 2 weeks and so far, it is not in contract.

I am starting to think that the Agent is holding out on Offers that has a co-Broke.

Is there any legal way for me to find out if the Listing Agent actually submitted the Offer to his Seller?

I was thinking of trying to talk to the Seller directly, but I'm not sure that will break any rules.

I also personally know the Seller's Attorney and I can directly call him and inquire.

What do you think would be the best way to go about this? Is it even worth pursuing? My Client would definitely be interested on moving forward to the point of increasing his Offer.

HOWEVER, again, it was told to me that there would be no Offers entertained if it included a Finance Contingency.

For those who don't really know the NYC Market, I cannot say that "No Finance Contingency" is UNCOMMON because it happens often enough.

Any advice, especially from NYC Brokers/Agents would be appreciated.

Every one on this site is always so suspicious that their offer was not submitted.  They always seem to think every agent is doing something shady.  The amount of times stuff like that happens is incredibly rare.

Just ask to present your offer in person if you really think its an issue. The NAR code of conduct allows you to prevent offers in person.

what does a lawyer have to do with any of this. ???   although if the listing said cash only .. and thats all the seller wants .. you could have your answer if your contract has a finance contingency.

@Russell Brazil   as Russell stated I have gone direct before..  does not make you very popular though with the other agents.

There are so many things wrong with this. If I'm understanding you correctly you don't have an accepted offer (you never actually mention that). If that's the case that's why no contract was sent to the buyer. The offer was not accepted because the seller does not agree to a mortgage contingency and your buyer's offer has a mortgage contingency. This should really end here. If you're a member of the RLS, you should know the RLS rules which prohibits you from directly contacting the owner of an exclusive listing without the permission of the exclusive listing agent. Also, the RLS is not a part of NAR and so NAR code of conduct does not apply. The RLS does not allow you to present your offer in person. Lastly, the seller's attorney has a fiduciary duty to the seller and you want to contact them to try to get info that might help you negotiate against the attorney's client or to get some proof the seller's broker is breaking real estate license law?

Instead of focusing on things that are purely speculation (the listing broker doesn't want to co-broke with you so hasn't submitted your offer), focus on the things you know (the seller will not accept a finance contingency). Work with your buyer to try get their offer to be more attractive. Do they really need the mortgage contingency? Are they worried about the property itself and the lender funding the building? Is it that it might appraise too low? Has your buyer gone through complete underwriting with their lender (not just a pre-qual or pre-approval but a full doc underwriting)? Break it apart and see what, if anything, can be conceded. Maybe it can be framed in a way that is acceptable to the seller. Or let your buyer know the contingency is a deal breaker but perhaps it isn't at a higher price. If your client is ok increasing their offer, have them increase their offer!

Ultimately both you and the listing agent should be  trying to facilitate a meeting of the minds. I would suggest you try to view the listing agent as someone you can work with collaboratively to get your buyer to a deal. Good luck!

@Wayne Brooks

@Russell Brazil

@Jay Hinrichs

@Jason Lee

Thanks all for your comments. It's all appreciated.

Jason, as a fellow REBNY Member, we have access to their Legal department and I have met REBNY's Legal team on several occasions. I wouldn't dream of approaching the Listing Agent without discussing it with our Counsel.

There are actually a lot more facts which I left out AND I have spoke to a few NYC Brokers that I know PERSONALLY to get their opinion.

I am also a VERY experienced Buyer with over 2 Decades buying and owning Brooklyn Properties.

Regardless, I am putting into place a strategy to ensure that my Clients or I will NOT be turned down solely because a Listing Agent wants to collect the full commission.

Feel free to contact me if you are interested in discussing further.

Originally posted by @Jason Lee :

There are so many things wrong with this. If I'm understanding you correctly you don't have an accepted offer (you never actually mention that). If that's the case that's why no contract was sent to the buyer. The offer was not accepted because the seller does not agree to a mortgage contingency and your buyer's offer has a mortgage contingency. This should really end here. If you're a member of the RLS, you should know the RLS rules which prohibits you from directly contacting the owner of an exclusive listing without the permission of the exclusive listing agent. Also, the RLS is not a part of NAR and so NAR code of conduct does not apply. The RLS does not allow you to present your offer in person. Lastly, the seller's attorney has a fiduciary duty to the seller and you want to contact them to try to get info that might help you negotiate against the attorney's client or to get some proof the seller's broker is breaking real estate license law?

Instead of focusing on things that are purely speculation (the listing broker doesn't want to co-broke with you so hasn't submitted your offer), focus on the things you know (the seller will not accept a finance contingency). Work with your buyer to try get their offer to be more attractive. Do they really need the mortgage contingency? Are they worried about the property itself and the lender funding the building? Is it that it might appraise too low? Has your buyer gone through complete underwriting with their lender (not just a pre-qual or pre-approval but a full doc underwriting)? Break it apart and see what, if anything, can be conceded. Maybe it can be framed in a way that is acceptable to the seller. Or let your buyer know the contingency is a deal breaker but perhaps it isn't at a higher price. If your client is ok increasing their offer, have them increase their offer!

Ultimately both you and the listing agent should be  trying to facilitate a meeting of the minds. I would suggest you try to view the listing agent as someone you can work with collaboratively to get your buyer to a deal. Good luck!

wow you guys don't have to be a member of NAR ??? not that way out here on the west coast.. access to MLS = NAR

@Jay Hinrichs

@Jason Lee

NYC is FAR different than any other City when it comes to Real Estate.

There is no City Wide MLS but rather several MLS that a Brokerage can become members and NAR is not one of those.

The MAJOR MLS's are:

REBNY - Real Estate Board of NY

This one is for MOST of the expensive areas of Manhattan and Brooklyn

Brooklyn MLS - This one is for the other areas than the expensive areas of Brooklyn

Long Island MLS - This one is used primarily for Queens, NYC

Staten Island MLS

Then there is StreetEasy, Craigslist, etc.

Because there are SO many MLS.... it is easy for a Broker to list their Property on one MLS and then not follow the rules of the other MLS that they belong to.

I don't think Jason really understands the level of corruption and Games that Brokers play.

Because I started a Brokerage as I became a Broker and I have been an Investor for 21 years in the Brooklyn Market, I have seen a LOT of it.

I thought I really understood it until I opened up the Brokerage Office.

Now I think I got a full understanding and I know what to do to ensure I am fully insulated from the Games that are being played.

Brooklyn, if not all of NYC, IS the Wild, Wild, West of Real Estate.

I resolved a very difficult situation just recently involving a $400k Earnest Money Deposit. Even with Attorneys, I had to walk a careful tightrope or we would have eaten up 10s of thousands in Litigation fees to recover the ERM.

ANYWAY...... I don't think non-NYC Brokers realize the level of sophistication that certain elements work over here but I think you all hear about it.

Even Kushner Companies have been accused of corruption in his dealings with Rent Regulated Apts. When you see what Developers, Brokers, Agents and others actually do, all the rules and regulations on both MLS's, City, Federal, etc. are bent or broken.

It is both difficult and exciting! :)

It's exciting because I know I'm swimming with the Big Sharks. While it is dangerous, it also shows me how much I have moved up in the world.

You’ve said you didn’t provide us with many facts. The one fact you did give us is that the listing broker told you the seller would not accept an offer with a financing contingency. I tried to answer the questions you asked. Not sure what we’re supposed to do about material facts you omitted.

Btw, you don’t need to consult your counsel to speak to the listing agent. That’s the one person you are allowed to speak to.

Also you've made assumptions about what I do and don't know. I've been doing this for 10 years. I'm a member of REBNY and Brooklyn, and also NAR where I'm a member of 4 other MLSs. You sound like you're new at this. (Being an experienced buyer or investor doesnt mean you're experienced at brokerage).

There’s an easy way to figure out if the listing agent is lying. Ask him what offer the seller will accept and the make that offer. Anyways, I’m sure you’ll figure it out.

@Rachel H.

@Jason Lee

Rachel:

Going to the Agent's Broker was one way I was thinking of doing it.

Actually, I read that on an Offer Rejection, I can require the Listing Agent to have the Seller sign the rejection or at least request for the Seller to sign the Rejection.

The Listing Agent will need may refuse to do it, but that will not look good should I bring up a case against him.

Another great thing about our particular MLS, REBNY, is that it provides arbitration among it's members. Brokers should have very good documentation. But I won't go that route until I see if the Sale goes through and the Buyer paid LESS than my Offer AND they used Financing.

At that point, I will bring up a complaint so I can see what actually went on.

Jason:

Sorry if I mis-communicated. I was thinking I may ask REBNY Legal Dept to advise how to go about getting confirmation of a rejected Offer and whether or not I can get a signed Offer rejection. Both of our Brokerages are REBNY. So REBNY Legal will have a significant role in the request should they say this can be done.

ALL:

I am assuming you all know about the corruption in Real Estate in general since some of you had a huge difficulty during the most recent financial crisis.

In addition to that, one of my brothers was caught up in a Dept of Buildings scandal in Jersey City where the Inspectors were arrested for taking Bribes. The problem was that my Brother and his Contractor didn't play that game and unfortunately, the Inspectors caused delays in inspections and nitpicked on things to the tune of more than a 2 year delay of construction, causing 100s of thousand of dollars in extra costs.

Even today, all you need to do is Google "Building Inspector Arrests" and you will see the large amount of articles and confirmation of what really goes on.

Every time I have to scratch my head on why I need to do something that doesn't make sense it shows me how the system was designed to promote a certain corruption that keeps getting worse.

Most recently, there was an Article in the NYTimes that showed how large Corporations have started gaming the NYC Housing Courts to harass tenants just by filing a $45 court case against them, whether or not there was a legitimacy. What happens here is that the Courts are now completely overwhelmed and real cases have difficulty coming up on any reasonably timed basis.

You may call me Paranoid, but I personally know enough people who had lost real money due to suspicious and confirmed corrupt circumstances.