Ethical or not? Offer was not presented to the seller

Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes

Ok, I called the seller's agent to let him know that I want to make an offer. The house was sitting for 600k, lots of work had to be done on it and for whatever reason the seller needed to close by the 5th of October. Ive suggested no contingency and 500k. The agent said he needs to do some paperwork, and then he disappeared. Just received a letter from a wholesaler for 630k. No chance that someone will buy it for this price and close fast. The house itself is listed as under contract. I think it is not ethical from the agent's side. Should I do anything about it? Contact his broker? The seller got a really bad luck with this it seems.

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

@Kate J. If you are licensed, then you are even more aware how to make an offer. You dont need another agent to process any paper work. Put the offer down on paper and send it over.

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Christopher Phillips
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
8y
@Kate J.
Offers technically have to be in writing. Verbal offers don't mean anything. However, the listing agent is contractually obligation is to the seller. Not the buyer. Their job is to market the property.
If you want to submit an offer, you should use an agent to submit it for you or submit one yourself.
You don't save any money going through the listing agent. Dual agency in Illinois is legal, but it has to be agreed upon by both the sellers and the buyers. Many offices just don't allow it due to the conflict of interest.
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Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
Sounds like your $500k offer came in the same time a wholesalers much higher offer did. They didn't go back to you because they had the better offer. The wholesaler is now trying to sell it for $630k. Sounds like it won't sell, but I'm sure the wholesaler has his standard "outs" and has not put down anything for EMD. offer the wholesaler $500k no contingency and see what he says?
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Brian Pulaski they did not present my offer to the seller as we have not processed it. Thats my main claim.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y
A phone call is not an offer. Calling someone else unethical because you are not familiar with how to make an offer wont get you far in this business.
[email protected]301-893-4635 Podcast Guest on Show #192
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Kate J.
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Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Christopher Phillips it's not in illinois, out of state. The agent said I can submit it and be selfrepresented. Do you really think that the agent was acting in a favour of the seller? Especially pushing it a wholeseller? What are the benefits of having another middlemen? The investers do check mls, they dont need a wholeseller to point a finger at a great deal.
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Russell Brazil I am not calling this unethical (as of yet), but checking what other people said. I did not present an offer, as I called at pm and then was trying to process the paper work at am. The agent was aware of this. I am licensed in illinois but the fastest way to get rhat particular property was to submit an offer as selfrepresented buyer to the selling agent. I would never do what the agent did, as this would hurt the seller.
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Aquina Searight
Member since 2018 · 18 posts · 0 votes
8y
just wait for it...it might come back ..as far as the seller you were dealing with i know there are avenues you can go thru to ensure you are dealing with the rightful owner or if the contractor is being truthful
it seems like alot of ppl in real ESTATE see numbers then get naive
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y
@Kate J. If you are licensed, then you are even more aware how to make an offer. You dont need another agent to process any paper work. Put the offer down on paper and send it over.
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
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Christopher Phillips
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
8y
@Kate J.
Yes. Like I said earlier. You can submit an offer on your own, but it has to be submitted in writing. Verbal offers don't mean anything unless you have a solid relationship with the agent, and even then, it eventually needs to be put in writing.
That being said, written offers are present to the seller. Seller makes the call on what to accept. Agents don't. What agents do is try to go through the offers to validate how serious they are - preapproval letters, bank statements and other proof of funds, and/or what other agents say about their clients. Essentially, what offers have the best change of getting to the closing table, which isn't always the highest offer.
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Brian Pulaski I know I should treat this as a business, but under these conditions I will not be submitting anything. Also 500k is already too high for it. The agent does not have selling history, maybe somebody new to this. His first price was 899k which was way far from the market price of repaired properties.
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Russell Brazil it's out of state... Usially I submit in a matter of half hour if numbers work.
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Christopher Phillips and hiw valid is the offer from a wholesaler? Not valid by all means.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
@Kate J. The agent may be clueless and not realize he tied it up with a wholesaler.....let the agent know this, show him the wholesaler’s offer price and submit a “back up” offer....not one that sits in the agent’s inbox, but an agreement signed by the seller putting you in contract should the first one not close.
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Christopher Phillips
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
8y
@Kate J.
I work with wholesalers in my area. Offer is an offer.
Takes 10-20 minutes to make an offer and send if over electronically.
You didn't submit an offer.
1 Reply
Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Christopher Phillips not quite, the seller's agent said I can represent myself and he will send me paperwork to do. Next morning I received a message from a wholesaler about this particular property. The seller needs to close by october, this can be done only with cash. The wholesaler will not be able to execute this at this price point, as ARV is about his listing price. It's obvious that the agent plays into his own favor and does not really represent the seller.
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Christopher Phillips well, you can say ive got angry on this transaction, but many of the properties I am checking do not end up in my hands anyway. It's normal and I am not stressed about not having this particular property. I will make money elsewhere. What is not normal is the behaviour of the selling agent.
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Christopher Phillips
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
8y
@Kate J.
You're making a lot of assumptions. But, assuming you're correct about the price is too high, then all you can do is shoot over your offer and it will go into backup. If the seller decides to budge then they'll entertain the offer.
Sellers don't always make decisions that make sense.
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Doug P.
Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
8y
@Kate J. While it's common for agents not to present offers. It looks more like you were simply outbid on this one.
1 Reply
Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Kate J. It sounds like an official offer was accepted before you were able to submit an official offer. If I had a property for sale, and you called to say you were going to submit an offer of $500k, and someone else sent an official offer for $600k, why would I bother with you? You got outbid, time to move on and find another deal
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Jason DiClemente because the offer is cash and the wholeseller would make a much lower offer than 600k to make money on it. As I said the seller needed to close by October which will not happen now. My understanding is that the general claim of the audience in BP is that the agent may ir may not present all offers to the seller. Ok, that's fine with me, it's a common practice in case of low offers. But the agent did not notify me that they are currently considering other offers. In this situation if I would be him I would call for highest and best by a deadline and not put the property under a contract with wholesaler. My point is that this is unethical, but possibly and likely legal. In Illinois I would bring this to the attention of the broker, as every contract requires a signature if rejected. In any case, all deals I had before and I had many were way more transparent. I feel it's very shady this time. The agent intensionally did not want to process the offer. Once again, my feeling.
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Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Kate J. Why would the agent process your offer? You were $100k less than the accepted offer. Maybe your offer was relayed and the buyer was insulted, and that is why you were not notified that there were other offers? I think you are making more of this than there is.... put yourself in the sellers position. What would you do?
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Jason DiClemente once again, the seller went with an offer from wholeseler who came back to me advertising the property. There is no real contract. The arv for this house is about 650-700, and needs a lot of repairs. The purpose of the seller's agent is to advertize it to a wide set of people. If I would be a seller I would not sign a contract with wholeseler for sure. We all know how this works.
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Kate J.
OP
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Jason DiClemente I would personally start negotiations with real.contracts and not wholesalers. At very least the seller was not explained what kind of contract they are getting into. The agent should act as fiduciary of the seller.
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Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Kate J. I understand what happened. It doesnt matter if you know "how this works". The wholesaler submitted an offer and that deal was accepted. You're a real estate agent, you should understand the series of events that took place. What the listing agent did is perfectly legal and ethical, time to move on to the next deal.
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Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Kate J. You dont know what the agent told the seller.... maybe the seller is willing to risk an assigned contract over taking an offer $100k short?
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