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July 7, 2008
owner backs out of offer
Recently, a seller accepted my offer to buy an apartment. Everything was great until roughly 20 minutes later. The broker for the sellers called back to say there were now other offers higher than mine and the sellers were reconsidering. Do I have any recourse? The new offers came in 2 hours after the "best and final" deadline passed. Was the acceptance of my offer a verbal contract? I doubt it, but have to ask if anyone has had a similar problem. Thanks.
Comments
Why are you even trying to buy an apartment if you don't know the answer to this question? And if you don't have an attorney?
Either party can back out of it - it isn't a contract 'til both parties sign the contract.
Posted by: guest at July 7, 2008 4:17 PM
If you REALLY want the place- and you can stomach the fact that it sounds like the broker is trying to shake you down for a few extra dollars, ask them outright what the magic number is. Ask them what you have to beat. Tell them that you're willing to have the consider again at your higher offer, but that they need to decide quickly (like today or this week). Then expect that you might not get the place, but at least you can clearly navigate the negotiation.
Ask your attorney for advice- and also ask that the sellers attorney and your attny start talking immediately to arrange the contract if you get the offer in.
What broker and firm is this? Despite what the poster above chimed in with, you're not an idiot for feeling like what happened isn't right. It's not illegal, but it's really poor practice, if not unethical for a broker to accept an offer, and then call back to say it's not accepted.
Posted by: Park Place at July 7, 2008 4:29 PM
we are having a problem just getting in touch with the sellers (well, the realtor is).
We put in an offer, they countered, we countered, then there were other offers (after 2 months of no offers) "The sellers liked us and wanted to work with us, but wanted our offer to be closer to the counter"- we eventually went to their counter. We still have not heard back and supposedly their realtor has left them messages.
The whole thing is making me and my husband sick. We were told that we would have an answer on thursday. At this point our offers are expiring. I am so mad. Do we have any recourse? probably not. Now I am really considering a buyers broker- so they can hound whoever.
Posted by: brooklynjennie at July 7, 2008 4:33 PM
Question- after my first buying experience, I felt that the broker did nothing for us. It it possible to do this whole thing with just a lawyer?
Posted by: guest at July 7, 2008 4:44 PM
brooklynjennie - is this the same apartment deal that ms0426 posted about? If not, stop being confusing and write your own post.
Posted by: guest at July 7, 2008 4:47 PM
Legal, yes. Ethical, no. Name the broker and the agency please.
Posted by: guest at July 7, 2008 4:48 PM
The broker isn't supposed to do anything for you. Repeat after me: the broker represents the seller. Even if the broker who brings you to the seller is a different broker from the one who represents the seller, that broker also represents the seller. There's no sale, and they don't get paid, unless you buy. They get paid by the seller. It isn't that difficult to understand.
Posted by: guest at July 7, 2008 4:49 PM
Park Place - do you think the OP would have thought they were legally bound to complete the purchase on their verbal offer? I thought not...
Posted by: guest at July 7, 2008 4:51 PM
Sorry guest at July 7, 2008 4:47 PM-
I was commiserating with the OP- not looking for advice. Sorry to confuse anyone!
And to guest at July 7, 2008 4:47 PM- you aren't being nice.
Posted by: brooklynjennie at July 7, 2008 4:57 PM
You weren't either - I wrote a post giving advice (nice advice) to the OP and you, and then just before posting realized you weren't the same person. (It read as if you were the OP commenting again.) You be nice, and I will.
Posted by: guest at July 7, 2008 5:06 PM
Dear 4:51- who are you arguing with (and why?) I wrote that it's NOT illegal.
Why don't you go shout at a wall, or count to 10 or something?
Posted by: Park Place at July 7, 2008 5:14 PM
OP,
Unless you either absolutely love the place or your offer was a bit lowball to begin with, you might consider standing on your current offer and taking the chance on losing the place. If the seller (and there had to be seller's consent or instructions to accept an offer) is willing to be less than true to his/her word, then who's to say the existence of the other offer is fully legit. You might just find that yours ends up being the best offer after all. Even if there is really another offer, it may have resulted from the same slimeball tactics, and buyer's remorse may set in.
You already know your are dealing with slime here, so why pay a premium for the pleasure? If they are willing to jerk you around here, they will jerk you again and again all the way through closing, especially if you show your willingness to go along with it at the outset. But if you go through with it, get yourself an aggressive lawyer.
Posted by: slopefarm at July 7, 2008 5:38 PM
I totally agree with slopefarm's last paragraph. I wouldn't deal with them anymore - no matter how much I liked the apartment - because I don't like dealing with people who deal like that. Once they do that, you can never trust them to act well again. I wouldn't want to spend money (on attorney, inspector, etc.) knowing they might pull the same thing - higher offer - before the contract was signed.
It is weird here - because verbal offers and acceptances can both be revoked at any time in the weeks it takes to get to contract, we are more dependent on people - both buyers and sellers - actually acting well throughout the process - even moreso, I think, than in places where bids are accompanied by documents and some exchange of money. So (when buying and selling my apartment) if the other party didn't do what is generally expected in the situation, I walked.
Posted by: guest at July 7, 2008 5:49 PM
thanks for the comments. I think I just generally feel burned and wish I could do something about it -or hoping I could do something about it. Most people I've told the story to including those who have bought property were surprised. they didn't need to give us the acceptance as quickly as they did if they were really wanting or hoping for more - we didn't lowball (offered asking). It's probably best to stay away. it's just too bad because we liked the property.
thanks again
Posted by: ms0426 at July 7, 2008 6:09 PM
If you think that's bad, for my house, I gave the seller a big down payment check, which he didn't cash for two weeks. They stonewalled me, then finally the broker said "He (the seller) is working on a better offer." I threw up my hands and just said take it or leave it. On principal, I wanted to walk away, but just stuck it out, and his other "offer" fell through. See--you can even sign a contract, but until the seller deposits your first check, not even that is binding.
In this market, there's always the chance the new buyer could flub his mortgage. You can't get emotional about these things. Easier said than done!
Posted by: guest at July 7, 2008 6:53 PM
I did a FSBO on my house in 1999. The house was a wreck but the price was so attractive I made a verbal offer on the spot and the seller accepted it. I didn't find out until minutes after the closing many months later that the seller had gotten an offer from another family on the block that was $60k over mine but he turned it down because he thought that verbal acceptance was legally binding on him. His lawyer didn't learn about it until then either. He stared at his client blankly then turned to me and asked what numbers I was playing in Lotto that night.
Posted by: Steve at July 7, 2008 7:06 PM
Well, some people, even if they know that the verbal acceptance isn't binding, just won't screw around with you. I wouldn't when I was selling - I had a hot place and could have done the act-like-its-an-endless-auction-and-keep-seeking-and-accepting-offers thing, but I didn't, because I wouldn't want buyers who screwed around with me, so I didn't screw around with buyers. (It isn't like that second verbal offer was binding on the buyer anyway.)
Posted by: guest at July 7, 2008 7:36 PM
Are there any circumstances when verbal agreements are binding?
Posted by: bxgrl at July 7, 2008 7:59 PM
Gosh, you people on this forum are a clueless lot. Accepted? Exactly how was the acceptance made? In writing?
Simple question to the OP:
Did the broker have you sign a Binder? Did you tender a deposit (which is not a down payment)?
If yes to both question, then take the Binder agreement to your lawyer. Which you should have done anyway. The Binder should contain the basic points of agreement for the sale, namely the price. A Binder is Binding.
If not to one or both, make a new offer if you can afford it.
Also, just a point of advice, as someone already suggested---find a lawyer BEFORE your find your a home to purchase. Finding a good and correct lawyer is just as important as finding the right house. Once you find a house, as you have fount out, it can be prudent to move QUICKLY! Having an attorney on the ready can facilitate this. Specifically, in regard to getting a contract to the Seller (normally a Seller initially draws up the contract, but the Buyer can do so.) Get a lawyer have him explain the process of a sale.
This NY not Kansas! The rules and pace are different.
Caveat emptor
Posted by: guest at July 7, 2008 8:17 PM
IIRC, most verbal agreements are binding so long as you can prove them. But agreements to sell real estate or tangible property worth more than $500 have to be in writing.
I'm not sure if it would have helped but even a scrawled letter of intent signed by the seller might have been all you needed to lock it in.
Posted by: Steve at July 7, 2008 8:24 PM
This (the original post)has the stink of Aguayo & Huebener written all over it.
Posted by: nyflicka at July 7, 2008 10:23 PM
I think there are some decisions in New York that a buyer can recover damages for breaking a verbal agreement to sell, but the damages are basically limited to costs and possibly other opportunity issues -- I don't think you can enforce a real estate purchase agreement itself without a written contract. There might also be a tort claim against the real estate agent for interfering with your agreement if they were involved in continuing to solicit bids after the verbal agreement, but the problem is in proving what damages flowed as a consequence. Arguably, you might even have a claim against the other bidders if they should have known that the seller had already accepted your offer.
All this is a long way of saying that you might win a legal action, but just get nominal damages. I don't think you could ever recover pain/suffering/emotional distress, but consult a lawyer if you really want to talk about it.
OTOH, a signed contract should be binding, regardless of whether the downpayment was ever cashed unless the contract itself provides otherwise.
Posted by: guest at July 7, 2008 10:29 PM
ms0426, you say you want to do something about it, why won't you name the broker and the firm they work for?
Posted by: guest at July 7, 2008 10:30 PM
You say you want to do something about it - what? Give it up. Better you found out early rather than later in the process. You weren't bound by your verbal offer (and wouldn't want to be if you'd suddenly found a place you liked better, or decided not to move), and they weren't bound either. Yes, this process is not the best way to do it, but it is how it is done here, so accept that and move on. You will find a better place - that's how this always works out.
Posted by: guest at July 8, 2008 12:47 AM
I have to say, I usually think it's sleazy to accept an offer and keep negotiating with other parties while the contract is being worked on. However, in this case, the entire time of the verbal offer was 20 minutes, so I'm not as sympathetic. In NYC either party can back out until the contract is signed. Backing out late, after money has been spent for inspections, etc., is wrong, but 20 minutes -- that really doesn't seem so bad.
Posted by: guest at July 8, 2008 12:53 AM
You all are a clueless lot.
To the OP and the rest, particularly the person who keeps asking for the broker to be named. For what purpose? To show how clueless you are?
Sleazy? This is NY not Kansas. Do any of you know where you have moved to? It ain't heaven its hell. Get used to it.
Note certain things:
1) You must have heard this before: The broker works for the seller NOT the buyer.
So, the broker (the Seller's agent) does not offer you a Binder Agreement upon the acceptance of your offer; also, he does not ask you to IMMEDIATELY tender a 'deposit'; then, guess what? It's a serious hint that while the Seller, allegedly, has accepted your offer, either the broker and/or the seller wish to continue to market the property---while your offer sits.
Until you get a signed (by the Seller) Binder, then the only thing that's real is that your offer has not been rejected.
If you believe your offer has been accepted and the seller's agent (the broker) has NOT asked you to sign a binder---then get thee to your attorney asap and have him messenger (the best way) or FEDEX a binder and check to the seller's attorney----ahhhhh, you did get the name/address/number of the seller's attorney right?
@steve
Most verbal agreements are NOT binding, as most verbal agreements do not contain the elements which make them 'contracts'. The reason for this is that most people do not comprehend what makes a contract, consequently most verbal agreements are not such. Go to court you'll find this out, crap watch a few episodes of Judge Judy and you'll get it.
That said, even verbal agreements that do contain the proper elements and circumstances must be admitted by BOTH parties. Either party can deny anything at any point, in court. Then the opposite party must prove the agreement, which is most cases is not possible---even with witnesses.
Steve is, generally, correct that most verbal agreements are limited in varying degrees, by type, monetary value, and circumstance.
In the case of the OP, even with witnesses, it is HIGHLY unlikely that any NYC judge would find such a verbal agreement to be valid and binding. Highly unlikely. Generally, because the basics above, and more realistically because, if they were to allow such, courts would be tied up all day and night every day of the year with every tom, dick, and jane claiming some sort of verbal agreement (real and unreal). Most judges would simply throw the case out--not hearing it.
@12:53
Oh, and there's nothing wrong with backing out as it were even if money has been spent. The money spent s/h been covered in the contract as to who is responsible in the event. If not then it's your or your attorney's fault.
Buying a house may be personal, Selling a house is simply business. As a buyer you should look at it that way until you own it. Always be ready to walk away from ANY deal concerning money.
Oh, and know this, no matter a buyer or seller, the real goal is to get the opposite's signature on a binder----then the real negotiation can begin. "I agreed to what?" "I don't care here is my offer." "Hey, you can take it or we can argue." "We can even go to court, if you want." "But, understand if you don't take my offer you're going to have to have the pockets fund an attorney AND sit on your house for the duration." "It'll be cheaper to take my offer" "What, you're going to walk away?" "But, I have a Binder!" :))
It's not personal, it's business. NYC is the business capital of the world. Sharks swim in these waters. Guppies need to stay in Kansas with Toto and Dorothy. Sheesh, you all are a clueless lot.
Posted by: guest at July 8, 2008 1:48 AM
1:48am -
guess what -- the usual practice in NYC is that after you have an accepted offer, buyer pays for an inspection BEFORE contract is signed, so that money spent is not covered in the contract, no matter how good your attorney is. That's why it is ETHICALLY wrong to accept an offer and let a buyer pay for an inspection, then back out for a higher offer. It's not illegal, as I said in my post already, but that doesn't make it right. You sound pretty clueless when you write "the money spent s/h been covered in the contract as to who is responsible" since the contract hasn't been signed yet. You clearly don't realize that very few NYC house sellers will spend money to have a lawyer draw up a contract before an inspection is done these days. Maybe you can hold out for that when the bubble bursts, but good luck insisting on a signed contract before you spend any money for an inspection today. You sound more clueless than many responders here.
Posted by: guest at July 8, 2008 2:16 AM
8:17 and 1:48 Lawyer here. You are not really from NYC are you? If you were you would know that binders are not really in practice in NYC and ironically, Binders are not binding. They only show good faith and intent. Nothing more.
Posted by: guest at July 8, 2008 11:01 AM
Yeah, lawyer (another one here), I think that was so obvious - that the poster is nowhere near NYC and hasn't a clue - that no one deemed it worth explaining. Like would I give advice on buying property in California? No way...
Posted by: guest at July 8, 2008 12:18 PM
I think 8:17 and 1:48 are one and the same, and probably from Kansas.
To the OP - Verbal contracts don't mean squat. If you are really serious about buying property, you need an attorney to help with any purchase offer and subsequent contract. You would be smart to get one lined up right now, as time is of the essence when buying.
It's actually common to keep showing and marketing a property after a contract is out for consideration, as many would-be buyers can't get financing or decide to walk away. Any smart seller will continue to show a property until the contract is signed and the buyers financing is verified.
Posted by: guest at July 8, 2008 12:28 PM
What 12:28 says is true. And a seller may be tempted by a higher offer while your attorney is completing his or her due diligence, or the attorneys are going back and forth on contract points. A seller takes a risk in dumping the 'bird in the hand' for the higher offer, but some do take that risk and jump for the higher offer. Others recognize that they wouldn't want to be treated that way when buying, so, on the principle of treating others as they would like to be treated, they don't go back on their acceptance. It is really the seller who is responsible for making that decision, not the broker.
Posted by: guest at July 8, 2008 12:33 PM
It wasn't only that the offer was accepted and then another came in. It is also that the other offers came in and were accepted AFTER the time for the best and final.
Any broker that does that should be outed. If a broker brings a client an offer and it is accepted, they still are obligated to bring them a better offer that arrives after if there was no deadline. If they used the best and final practice, then that should be held to.
Posted by: guest at July 8, 2008 12:41 PM
12:28 here...
Duh, there was no signed purchase agreement! I don't think the OP (buyer) even has an attorney, or else they wouldn't be asking for help here on brownstoner.
Chalk it up to experience and next time, get the purchase offer to your lawyer for review ASAP and then messenger that signed document to the seller's attorney.
This is basic stuff, really.
Posted by: guest at July 8, 2008 12:52 PM
12:28, 12:52 -
There is NO signed purchase offer in NYC - nothing at allf or the buyer's attorney to review or to messenger to the seller's attorney. The offer is verbal only.
The seller's attorney then prepares the first draft of the contract and sends it to the buyers attorney to review. That's how it is done.
Buyer just makes verbal offer, gets verbal acceptance, then provides seller with buyer's attorney's name and address, and hopes seller's attorney sends buyer's attorney a contract ASAP so they can move forward.
Buyer doesn't actually need an attorney lined up to make an offer, but does need one ASAP after offer is accepted, so as to be able to provide attorney's name and address to seller ASAP after seller accepts offer, so seller's attorney can send out a contract.
Posted by: guest at July 8, 2008 1:06 PM
12:41 - Not that I like this process that involves ongoing multiple bids, but I'm not quite seeing the logic. Whether it is just an accepted offer, or an accepted offer after they use the words "best and final," what's the difference (as far as the buyer is concerned)?
Maybe it is because I never participated in a "best and final" thing, but the same concept would seem to apply in both situations - Seller has accepted an offer, and now can (legally) choose to either stick with it, or renege if another higher offer comes their way.
Maybe my distaste for this is why I never would participate in bidding wars when buying - whether "best and final" or not.
Posted by: guest at July 8, 2008 1:19 PM
Who is the broker?
Posted by: guest at July 8, 2008 1:32 PM
OP ain't sayin', because they still want the apartment.
But I think the guess above is likely correct, from what I've read in other posts here.
Posted by: guest at July 8, 2008 3:30 PM
I too am a lawyer and got the same laugh some of the previous attorney posters did about the binder debate.
The real problem here is that even brokers don't really understand the law. Brokers often throw around terms of art like offer and acceptance. Is the listing an offer? Is the purchaser's offer an offer? Is sending the contract an offer? When can any of those offers be accepted?
The standard residential contract gives the answer - there is no meeting of the minds until the seller signs the contract AND returns an executed copy to the buyer.
To the poster who got screwed when a seller held his contract deposit for two weeks - I would agree with you that you had a binding contract regardless of the deposit IF the seller signed the contract and delivered it to you.
It isn't unheard of for a seller to have multiple contracts out for signature, let alone continue to solicit offers.
I never recommend that a purchaser do an inspection prior to signing the contract. But in the grand scheme of things, the inspection only costs a few hundred dollars so it usually isn't a major issue. I have used a rider permitting a purchaser a unilateral right to terminate if they receive an unsatisfactory inspection report. There is at least 2nd Dept. caselaw supportive of such a rider without demanding even a reasonableness standard.
This is why sellers rarely have an entirely good real estate experience. I won't even go into the property disclosure form - which unless you are upstate no seller ever signs. just be prepared and you won't be disappointed.
Posted by: guest at July 8, 2008 5:17 PM
Attorney - do you do much work in NYC? Why would a seller sign a contract before the buyer did an inspection? The buyer does the inspection to find out what needs to be done to the building - and with 1890's brownstones, it is always something to a whole hell of a lot. The buyer will try to use what they find out to renegotiatate the price. The seller is in a better position if there isn't yet a contract. They can go for the buyer who isn't negotiating so much. And the seller has saved the expense of paying you, the attorney, to send out the contract. If the buyer walks because the buyer and seller can't agree on renegotiating the price, the seller has at least expended no closing expenses. And why should they before there's an agreement with a buyer who knows the condition of the house?
And I wouldn't advise a buyer to sign the contract before doing an inspection, either. The few hundred they spend on the inspector is less than they would pay their attorney for negotiating the contract. The buyer is out less money if they do an inspection and come to an agreement with the seller before getting their attorney involved.
And why would anyone sign a property disclosure form on a 100+ year old house when the option to just write a check for a few hundred instead exists? I'd advise *everyone* to write the check instead as a matter of course as a protection from further liability.
And sellers rarely have a good experience? Please, they walk away with the money, in recent years at great profit, and don't have buyer's remorse. I was ecstatic when I sold and walked out with the cash. (Paid off my law school loans finally.)
--- Also an attorney (but not one who practices in this area, so can see this from the buyer/seller perspective, not the real estate attorney's pockets perspective.)
Posted by: guest at July 8, 2008 7:20 PM
I'm an attorney but don't do RE. As someone who's been through the buying and selling process in Brooklyn several times, what 5:17 and 7:20 are saying seems to represent the law accurately and offer different, but viable, approaches. But I think the real concern is the effect if ethics and common practice go no further than the law. If, as a buyer, I come to believe that in Brooklyn there is no good faith behind a seller's representation that my offer is accepted, why would I ever pay for an inspection? I might be looking at inspections on 10-15 houses before I ever get to contract if every property is as fully in play after acceptance as before. I would not expect a seller to stop showing the place in case we can't come to terms or I do not diligently move things along, but I ought to be able to count on the seller not being ready to ditch my accepted offer at the mere drop of a hat. Yes, there is no contract based on an oral acceptance of an oral offer, but if the acceptance is meaningless and there is no good faith behind it in practice, the whole process breaks down. Honest brokers coach their clients in these norms and those brokers that break these norms are taking advantage of every one else's good faith and a system that they benefit from.
That said, while OP has every right to be pissed off and to be very wary of the ethics of either the broker or the seller here (see my post above), OP really isn't hurt in any meaningful way by the broker or seller's conduct here. But if that conduct becomes the ethical norm, we will have a dysfunctional market, as opposed to the mere rough and tumble jungle we have now.
Posted by: slopefarm at July 9, 2008 9:44 AM
Makes sense, but it isn't necessarily the broker who is at fault in your scenario, slopefarm.
If the seller keeps showing the house to get backup offers if the first one falls through, and someone makes an offer, I believe the broker is legally required to communicate that offer to the seller.
Now, the broker can coach the seller that it is the better practice to keep working with the first accepted offer and only accept another if the first one isn't proceeding to contract. But the seller makes the decision, really, not the broker.
The market is somewhat dysfunctional, as the seller CAN ditch the buyer at the drop of a hat. But I think it works, more or less, thought imperfectly because (1) the buyer can also ditch the seller, and both know that - it isn't like the power is all on one side, (2) the seller knows they may be ditching an offer from a buyer who will complete the purchase, while the second accpted offer may, or may, not follow through to purchase - so the seller often thinks twice before ditching the first accepted offer, as they may not be better off for doing so, but might be putting themself if a worse position.
---Not a broker (but the broker works for the seller, at the seller's direction - and you can't always blame the broker for the seller's decision in these situations).
Posted by: guest at July 9, 2008 11:16 AM
We were prepared to have an attorney step in as soon as the offer was accepted, which is what I'm used to. Maybe we need to get one before making an offer. It seems like there are varying opinions here on when to retain an attorney. Maybe it depends on if the poster is an attorney.
It's been helpful to read what others' experiences have been. I'm a first-time nyc buyer (not from Kansas though - ha ha) so this sales tactic is new to me. I generally prefer not to be screwed around with. I mean who does, but I figured if we had an accepted offer we were moving on to the next step not still in competition. I understand having backup offers given the challenges in obtaining financing in this market.
I think I basically agree with Slopefarm's comments.
I also believe it would be poor form to name the broker, but I'd caution you against making assumptions. And I'm not naming them because I still want the apartment. I'm not sure I'd still take it. Taking it would end a long search but I don't really trust the sellers anymore and I don't like doing business with people I don't trust.
-thanks everyone
Posted by: ms0426 at July 9, 2008 12:48 PM
*edit= should read "And I'm not not naming them because I still want the apartment."
Posted by: ms0426 at July 9, 2008 12:53 PM
OP,
You should get the attorney BEFORE you make an offer; it won't cost you anything until the closing.
Why? Because the seller will take you a lot more seriously if you have everything lined up and ready to go. If I were the seller and you didn't have an attorney I'd question how serious you really are about buying my property.
Posted by: guest at July 9, 2008 1:22 PM
Especially for a first time buyer, I wouldn't question it - they aren't likely to have one yet. (I didn't, but my broker told me I had to get one ASAP, so I did, ASAP.)
I'd just give them a short time frame (2-3 days max) to contact an attorney and get me their attorney's contact info - otherwise it'd be Next!
Posted by: guest at July 11, 2008 1:26 PM
And some people will reject a higher offer if it comes as they're midway through hashing out a contract with you, just because they think it is dishonest to turn away from someone they're actively working with. They'll do this, they'll tell you, the buyer, about how incensed they were that their real estate agent argued with them about it and tried to get their lawyer to send out another contract. You will think to yourself, "nice to be working with honest people" and sigh.
Then, a month later, when you are trying to schedule a closing with these nice honest people they'll freak out and decide that they don't want to sell. They'll dig their heels in, make up lies about mechanics liens, threaten to file for bankruptcy.
Posted by: serpentor at July 29, 2008 5:19 PM
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