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…
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.
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.
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!
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.
*edit= should read “And I’m not not naming them because I still want the apartment.”
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
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).
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.
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.)
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.