Questioning protocol for purchase offers
Failed sales lead to suspicions about agent foul play
By Benny Kass, Tuesday, May 11, 2010.DEAR BENNY: I came to the U.S. from Eastern Europe four years ago with my wife. We have been looking for a house for some time but haven't found one yet. Our offers were either not accepted, or if the offer was accepted, the seller took the house off the market one week later.
I feel that our real estate agent is not working for our best interest and this is the reason that I decided to e-mail you. I believe that our agent is working hand in hand with other agents and they are setting up everything on the market.
We've put in six offers till now (all between 93 percent and 98 percent of the asking price, plus 2 to 4 percent for closing costs) but they were not accepted. Our agent always asks us to sign a paper that says we take back our offer, even before the offer is accepted.
With our last offer, we first offered 97 percent of the asking price and asked for 4 percent of the closing costs. The seller's agent suggested asking for just 2 percent of the closing costs, which we accepted, but the seller still didn't accept our offer.
What are the legal steps after we made an offer and our offer isn't accepted? Should we receive a rejection letter from the seller (or his bank if it's a short sale)?
Is it OK to put more than one offer at the same time? Our agent doesn't want to do this for us.
Why does our agent tell us to offer more on a house than the asking price? This doesn't look fair for me because I know he gets a percentage of what we pay. --Marco
DEAR MARCO: First, I strongly suggest you get another real estate agent. I also suggest that you consider hiring a real estate attorney who can walk you through the process.
When you make an offer, the seller has three alternatives. He or she can (1) accept it, (2) reject it, or (3) make a counteroffer. If your offer is accepted, you have a valid real estate contract and the seller cannot change his or her mind and try to take the house off the market.
Of course, if you have contingencies in your contract, such as obtaining an acceptable home inspection report or getting the appropriate financing, you can cancel the contract if you cannot meet those contingencies.
If your offer is rejected, generally a seller (or the seller's agent) will tell this to you, but there is no legal requirement for a seller to formally reject an offer. The law is clear: Until a seller takes any of the three alternatives raised above, a potential buyer can withdraw the offer.
And if the seller counters your offer, you have the same three alternatives.
Why is the agent suggesting that you offer more than the listing price? That's not unusual where markets are hot and houses are selling quickly. But in today's economy, that's generally not the situation.
Finally, you asked about making several offers. I assume you are proposing making offers on more than one house at the same time. That's not a good idea; what happens if you make offers on two different houses and both sellers accept? You could be stuck legally with two sales contracts, and could lose your deposits -- or be sued for breach of contract.
Please get a lawyer to assist you.
DEAR BENNY: I recently inherited my mom's home, valued at $136,000. Unfortunately, she had a home equity line of credit (HELOC) on it for $66,000. Apparently, a relative talked her into getting this loan to start a small business. Of course she was stuck paying the loan, and the payments are current.
I would like to move into the home but have had no luck with Wachovia transferring the loan to my name. What are my options? I really do not want to refinance because her interest rate was 3.25 percent, which is fantastic. I am at a loss. I am maintaining all the expenses of this home but receive no benefits. --Sheila
DEAR SHEILA: First, have you probated your mother's estate? Depending on how she held title to the house, you may have to go to probate to make sure that the house is really in your name. If title was held in both your names as joint tenants with rights of survivorship, then you will automatically own the house.
(Note: Not all states use the same terminology, so you should consult a local attorney for clarification of who currently owns the house.) ...CONTINUED
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Submitted by Elizabeth Weintraub, #00697006, Lyon RE on May 11, 2010 - 4:51am.
I feel the buyer should look for another agent, but not for the reasons you have stated, Benny. It appears to me that the agent is working in the best interest of the buyer but the buyer does not trust the agent. If there is no trust, there is no fiduciary relationship.
I can tell you that the scenarios the buyer describes sound very much like the Sacramento real estate market. Around here, if a buyer makes an offer at 93% of value and asks for a closing cost concession, that offer is not likely to be accepted. Many homes are deliberately priced under market value, which attract multiple offers (some all-cash) over list price.
Even an offer of 97% and a 4% concession may not fly because that's a 7% reduction off list price. I realize that's a difficult concept for buyers to wrap their heads around, especially when they are bombarded by newspaper headlines about foreclosures, but when buyers write offer after offer that winds up rejected, I propose they might be using the wrong strategy.
Submitted by Jim Hodson on May 11, 2010 - 11:59am.
At Countdown To Buy an "offer range" is pre-determined in advance with the seller and a confidentially submitted offers (by the buyer, not their agent) are matched against a daily price that reduces 1% per day. This approach eliminates negotiation and possible manipulation. The agents are still involved and get commissions, but the offer management is left up to the platform so buyer, seller, and agent all know the fairest and most efficient deal was made.
Our mission is to bring trust and transparency into every aspect of a real estate...1% at a time.
Jim Hodson - CEO Countdown To Buy
www.countdowntobuy.com
Submitted by Paul Howard on May 11, 2010 - 3:16pm.
Marco,
It is interesting that the correct answer to your question may depend on what state (or area of a state) you are trying to purchase in. I often suggest to buyers (in Souther NJ) that they place offers on more than one home at a time. In Southern NJ the standard practice is to use a non-binding one page offer form as the offer - not a document that once signed would be a binding contract.
Even in areas where the contract can become binding the offer can be constructed so that it does not bind a buyer to two homes if both offers were accepted. (Talk to an attorney about that.)
I agree with Elizabeth that there are trust issues between you and the agent you are using. Switching agents might resolve that but not if it is because your expectations about the process differ from the practice in the area. Talk to a local real estate attorney that has a lot of experience in the area. They may be able to give you the information you need about what to expect - then you can measure your agents performance against that. One other thing you might want to ask of your agent is for a print out showing the ratio of list to sales price of the type home you are looking for - go back far enough to see at least 20 - 50 sales if there are that many. That will help in telling you if your offers are too low.
Good luck.
Paul Howard, Broker
www.NJHomeBuyer.com
Cherry Hill NJ 08002
Submitted by Judy Orr on May 16, 2010 - 11:47am.
I am in line with Elizabeth's comment above. I truly don't feel this agent is doing anything wrong. Not only does location make a difference, but so does price.
My area isn't bustling like some others, but at foreclosure prices there are usually multiple offers. For example, if these buyers are looking at homes in my area priced around $100,000 and they offered 97% of list price and asked for 4% in seller concessions for financing, they have very little chance of getting the property.
Our area isn't bustling by any means, but at the foreclosure level in pricing, many of these properties are going to cash buyers above list price. And forget about getting a formal rejection - it isn't going to happen.
We need more information before we should say dump your agent. How many agents will these buyers have to fire before they realize it's not the agent?
Judy Orr
Classic Realty Group
Oak Lawn Homes For Sale
Submitted by John F Sullivan on May 16, 2010 - 12:44pm.
RE: Marco
I find Mr. Kass' recommendation somewhat lacking. It is clear to me that Marco and many other home buyers are being uninformed or misinformed on the role of the real estate agent and whom they represent. Since none of the 50 States Agency Disclosure Statements acknowledge the existence of Exclusive Buyer Agents, the consumer is unaware that an agent who will truly represent their interests with full fiduciary responsibilities is available.
I strongly suggest Marco visit the web site of the National Association of Exclusive Buyer Agents, www.NAEBA.org and find an agent that will truly represent his best interests.
John F. Sullivan
Past President NAEBA
Associate Broker
Buyer's Edge Co., Inc