Brokers revealing competing offer amounts?
Does anyone know if it’s legal for a real estate broker to reveal the amounts of competing offers in a bidding process? I know it’s ok to say things like “there are two offers higher than yours” but can they actually state the dollar figures other bidders have offered? It seems fairly unethical considering that…
Does anyone know if it’s legal for a real estate broker to reveal the amounts of competing offers in a bidding process? I know it’s ok to say things like “there are two offers higher than yours” but can they actually state the dollar figures other bidders have offered? It seems fairly unethical considering that there’s no way to verify if those offers are real, and there’s a direct financial incentive to get the sales price as high as possible. I know it’s common practice but is it legal? Thanks!
Second the first part of what invisible said about offers, being verbal, aren’t necessarily real offers – you will never know if the other offerer is able to make the deal happen or not.
But confused by what invisible says about legal, binding offers. Putting an offer in writing doesn’t make it binding – many are in writing – via broker offer sheets and email. While binding written offers exist elsewhere (with the penalty for not following through being loss of earnest money), I don’t think they are used here. Offers are essentially verbal and not binding; they are written and binding only when the contract (after attorney review) is signed by both parties. By then, the acceptance is binding also on the seller, who is then unlikely to reject the contract, because the seller would get sued by the buyer.
The only way to have a contract that can be legally binding on the buyer but not yet the seller is to encourage multiple buyers to spend for inspections and an attorney to review the contract, and likely mortgage application expenses, and then sign the contract and submit their substantial deposit to the seller’s attorney. If a seller did this with multiple buyers, and just signed and returned the contract of the highest bidder, that would work, for the seller. But this is frowned upon because it is obviously stringing along buyers, causing them unnecessary and fruitless expense, and most real estate agents won’t do this because it also makes them look very bad. It does happen this way sometimes, when a seller accepts a higher offer from another buyer while the first already has their attorney reviewing the contract, and that s**ks for the now rejected first buyer. And it happens when the first buyer, or their attorney, doesn’t move, for whatever reason, to sign the contract is the usual expected time frame, and the seller moves on to the next buyer, which may be disappointing to the first buyer, but is their (or their attorney’s) fault. But suggesting that all offers be binding would substantially change the way real estate is sold here. The way it works now, it is much better to agree on the price with a buyer before getting the attorney and other expenses involved.
In this system, it is better to offer what you are willing to pay, and accept that you must bid not knowing whether other offers are real (in the sense that they can, or will, close). This is true even when the verbal offer is a real one and the agent isn’t lying. Because the offers are verbal and not binding, you are operating in a world of imperfect information, whether or not the agent tells you what the other offers are, and whether or not the agent is exaggerating about the number and seriousness of the offers (think there is likely more of that than outright fabricating of offers by agents, but I could be naive.)
It is best if you accept that the system is what it is, and figure out how you are comfortable operating in it. When I bought, I refused to play bidding war games – I just wasn’t comfortable with it. I’d respond to counteroffers to get to a price agreeable to me and the seller, but I ignored and went away if brokers were talking up multiple offers and suggesting bidding wars. If I offered the asking price, I refused to budge higher. Others figure what they are comfortable paying, and are able to deal with the bidding process. If you aren’t comfortable with it, buy from a seller who doesn’t engage in it. (I also didn’t engage in bidding wars when I sold – though I could have – I just don’t like the whole process – without binding offers, it seemed stupid to engage in the process, as a seller as well as a buyer.)
This sounds like someone familiar *cough Warren Lewis cough*. This is NYC, bullshit it bullshit, it may be real, it may not. Buyers throw numbers around kicking tires, brokers lie, and sometimes they tell the truth.
Prospective buyers make verbal offers and never get their shit together, get cold feet, a million reasons about why they can’t get to a signed offer. Dog ate my down-payment, etc. In which case you might very well be bidding against nothing. Even if it wasn’t a lie, it was still a quasi phantom offer. Verbal means nothing in this game, that’s the problem. In Real Estate anything can be said and no one can be held to a verbal contract per the law. Only in writing.
Remind the broker that whatever a prospective buyer says means nothing, and you aren’t going to bid against someone’s verbal whim, but you might counter an actual real legal written offer.
If offers in writing don’t exist, and you can’t see them (now or after the process is done) you have to assume they’re bogus. You must also be willing to lose the property if they are not bogus.
I’ve been in a bidding war only to back out near the end – – and the property miraculously came back to my bid after the high bidder backed out (some bullshit excuse, i forget what). I said to myself ‘fuck this i absolutely love the house but this is fucking bullshit’. How far down was an actual offer? Guess what – the house sold for $100k less after I gave them the proverbial finger. I think it took 3 or 4 months after the bidding war to go into contract. Not exactly as hot as they were pumping it.
Who was I bidding against, if anyone? I’ll never know. There were supposedly four at one point. We vowed never to deal with that firm again, and to never fall in love with a house to abandon all common sense. The “trust me” verbal thing is as bullshit as anything gets. Shame on us for being blinded by illusions of grandeur.
“If it’s open bidding, show me the offer in writing, (or proof of their existence before i go into contract).
If not – here’s my offer in writing and i’ll just have to assume whatever you say after that is bullshit on your part or a buyers part until i see a competing offer in writing.
Had a discussion with a broker re: a property on the market for years, with a few price cuts.
Me – based on the numbers & prices similar properties have that sold recently, I think it’s worth X.
Broker – well the price is Y and I can tell you seller has turned down offers considerably higher than X
Me – what’s the best offer received & turned down in the last year?
Broker – Sorry, I can’t disclose
I was wondering if there was any legal or ethical basis for the response. Maybe it’s just that broker wants to maintain the fantasy of bubble era pricing and doesn’t want to divulge that there haven’t been any offers anywhere close to ask.
Agree with Howard — might annoy buyer #1, but don’t see anything illegal or unethical about revealing the terms of the bid to other potential buyers. Lying about non-existant offers, however, wouldn’t just be unethical, but likely would also constitute fraud….
<— AGENT
Disclosing the offer amount to another buyer, with the intention of getting the 2nd buyer to come higher can be looked at in a few different ways…
1- From the SELLERS point-of-view: YES, the agent is working for ME, and if disclosing one offer to another buyer results in getting a higher offer from the second buyer, so be it.. THAT IS WHY I AM USING AN AGENT, to get more money. The agent isn’t only showing the house, he/she is “working the crowd” to get buyers to raise their offers, up until the seller goes to contract.
2- From the prospective of buyer #1 – THAT SUCKS.. why is he/she telling buyer #2, 3 or 4 what I am offering…?
3- From the prospective of buyer #2 – YES, I would rather know what buyer #1 is offering *if* I was truly interested in buying that specific home, rather than finding out the I was outbid by $1,000, because I *was* willing to go higher, but I was playing the negotiating game.
4- Buyers Agent – Hey, you represent the buyer, and *I* represent the seller… lets make a deal!
BOTTOM LINE, unless the agent signed a non-dislosure agreement with buyer #1, or if dislosing ANY offer works against MY client’s position, (usually the seller) it is perfectly LEGAL. If the agent works for the seller, I’m sure that the seller WANTS competitive bidding on their property.
It is real easy to sit on the web, and say that the broker is unethical, but that is not usually the case. It is when the broker ***LIES*** about non-existant offers that he/she is unethical, etc.
Comments??
Howard
I wouldn’t let other offers drive you. Pick the price you want to pay, offer that, and be willing to walk (as stated above).
It’s never worth getting too stuck on one place. I’ve had the experience in losing out on places I wanted and, in retrospect, am glad I didn’t buy the place or got something much more to my liking.
Also, in this market, it’s less likely that places get involved in bidding wars anyway. So that may be a red flag right there.
Legal, shmigal. There’s no way of verifying that anything a broker tells you is true or not. Don’t let them run you up above what you were originally willing to pay. Play the “walk away” card.