When is a Seller accepting one offer over another an Real Estate Ethics Violation?
Honestly, there are plenty of times when discrimination of protected classes and choosing one Buyer over another would be grounds for punishment of the Listing Agent. Don’t mess with familial status, sexual orientation, ethnic origin, the ADA etc. However, accepting an offer of a buyer who has not seen a property is not cause for a complaint against the Listing Agent! Discriminating against less motivated or less creative buyers or slower buyers is not a crime. And angry people are not a protected class in Boulder County.
True Story: Real Estate Ethics Question
It was a warm sunny day in winter. So very Colorado! The seller had asked me to list his condo as he was kind of sick of being a landlord. I complied.
We talked with the tenants ahead of time and made sure they were comfortable with the plan. As foreign nationals and new to the State they had serious concerns about allowing strangers into their home for showings while they were not there. Alas, their lease said I could with 48 hours notice and so after giving them some pointers about hiding checkbooks, financial documents, medications and other valuables, I listed their condo for sale on a Wednesday morning. The tenants were OK with it too at this point.
Showings were to start at 9 am on Friday.
On Wednesday afternoon I received an offer. Cash. Full price. Closing next week. The deadline to answering the offer was the next day. I presented that offer to my seller the same evening and we talked about options. Do we hold off on accepting the offer (which was acceptable to him) and wait for competitive bids or a higher offer, but risk not being able to close next week, with buyer and seller both having travel plans starting the following Thursday. Or do we hold out for a better offer?
My seller is not a greedy man. He confirmed that he’d like to accept the offer and close the following Wednesday before his hut trip. We went under contract on Thursday… Just before comparable offer #2 flew into my inbox. It was also sight unseen.
With those travel plans looming, it was a rush to get the deal to the title company and all the due diligence taken care of by Friday. Meanwhile, showings started Friday and I had advised all showing agents via email that we had accepted an offer, but welcomed them to keep their appointments if they liked.
The phone rang… and rang… and rang. A dozen confused, angry, frustrated agents calling to chew me out, on behalf of their buyers.
Was it an arms length transaction? IE Did we give preferential treatment to someone I knew or the seller knew?
Was it my buyer? IE Did I give preferential treatment to one of my own clients so I could scoop a double-ended commission?
Why did you let someone else see the condo before us? The assumption of course that I stopped some buyers from viewing the place, while letting others in ahead of time.
Why didn’t you put in the MLS listing that the Seller reserved the right to accept offers anytime they like?
And my personal favorite is this email from a “professional” agent in my community. (I withhold his name to protect him from himself. Someone must and clearly he is incapable!)
We wanted to look at this property early too. Did someone buy this property without seeing it? I’m upset that you would hold us back and then let someone else bring in an offer without letting us even see it. This is not how to sell houses on an even playing field. My buyers want to contact the Real Estate Commission and lodge a complaint against you and your business practices.
Every single agent got the same explanation.
This was an arms length transaction, not my buyer. I don’t know the buyer or the Buyer’s agent and they are not local. Neither this buyer/Agent or anyone else (including my own buyers) saw this condo before the offer was received. It was sight-unseen. The seller ALWAYS has the right to accept any offer, anytime. I’m very sorry for your frustration and I completely understand it, since I work with buyers in this market too.
For my friend with the aggressive, threatening email, I replied with something extra special for his effort at ruining my morning:
XXXX, I understand that you are upset. I have been in the same situation repeatedly this year with my own buyers.
The condo was not ready for showings – per tenant agreement.
NOBODY saw it. Not even my buyer! The first showings were booked for 10am today. That means the playing field was level.
I didn’t “hold you back”. I didn’t receive an offer from you. It was always an option you had.
As for me “letting someone else bring an offer” … Maybe you misunderstand. I am not in control of another agent or their buyers. I am obliged to present offers at the first available opportunity and I did my job.
I followed the directions given to me by the seller, my client. He is entitled to sign a contract with any buyer he likes, whenever he likes. We received 2 offers, sight unseen.
I have never claimed to be holding the door open to offers until a certain time or presenting offers at a certain time. All agents have received the same notification at the same exact time.
If you are unable to explain to your buyers my duties and obligations to my seller then yes, by all means make a complaint and explain to the Real Estate Commission your understanding of agency and why your clients are so confused.
However, the most appropriate place for an ethics complaint is BARA – that is the association I am a member of and if BARA finds that your clients lost money at my hand, they will kick it to the RE Commission.
I find it’s easier to educate my clients and avoid hostility, since I might be submitting a competing offer to work with that agent again in the future, but that’s just my opinion and my business practice.
Just this week I had a buyer tell me to tell the listing agent to “go f* themselves” after the agent held offers in hand until she had 10, then presented them. It was 5 days from submission before we got an answer. I had to tell him that it wouldn’t serve him long term but I’d be sure to express our unhappiness. She was taking her direction from the seller too.
Basically I’m saying I understand the frustration and your buyers reaction – We are all experiencing the market in similar ways.
Needless to say, I never heard from him again but I’ll never forget his name!
He is right though. It is not a level playing field. Some people have cash, some have 5% down payment. Some agents play well with others and some have a reputation for being a hot-head and bully to try and get their own way. If you are a Buyer who thinks your bullying agent is going to pound down the seller and get you a good deal, you need to rethink that. Agents get reputations and if yours has a reputation for being difficult and unpleasant, you will be disadvantaged in a competitive offer situation.
Someone once sent me this and I think its appropriate to illustrate a point:
|The WIND and the Sun were disputing which was the stronger. Suddenly they saw a traveler coming down the road, and the Sun said: “I see a way to decide our dispute. Whichever of us can cause that traveler to take off his cloak shall be regarded as the stronger You begin.” So the Sun retired behind a cloud, and the Wind began to blow as hard as it could upon the traveler. But the harder he blew the more closely did the traveler wrap his cloak round him, till at last the Wind had to give up in despair. Then the Sun came out and shone in all his glory upon the traveler, who soon found it too hot to walk with his cloak on.
Aesop Fable (6th Century)