The other day I found a home my buyers loved and for which they wanted to write an immediate offer. I called the listing agent to inquire about the status of the listing and to ask questions about any particular needs the Seller might have. The agent said to me, and I quote exactly, “I’m sorry, we’ve already accepted an offer”.
Question: What is the next thing I should say as the Buyer agent?
1) “Darn! Oh well, congratulations on the quick sale, I guess we’ll keep looking. Bye”
or
2) “Has the offer been signed?”
I always ask #2 when told an offer “has already been accepted”. In this instance, I was told the Sellers were on their way back into town from a trip and would be signing the offer later that evening.
Now, this is where it gets tricky in trying to help Buyers get the house they want in a hot market. Technically, the house is not sold. No deal is done until everybody has signed. Period. The Seller has no obligation whatsoever to stick to an oral agreement. But Buyers, Sellers and Agents often choose to honor their oral agreements while the logistics of final changes and signatures are being accomplished, and I respect that. Personally, I wish we could all work that way, but that’s not how it works.
I can’t bully my offer onto the table by saying to the agent that verbal offers are not final and demanding that my offer must be presented. Instead, the best thing to do is to cordially sell the listing agent on the notion that it sure won’t hurt anything if the Seller were to have another offer to consider before signing the first one, and that we’ll certainly understand if the Seller decides to stick with the first offer, but there is no downside to having another offer to look at, is there?
So I simply had a nice conversation with the Agent. Finally, the other agent said, “well, why don’t I just call the Seller and see what they want to do”. This is exactly the proper thing for an agent to do in this circumstance. Let the Seller decide.
A few minutes later the agent called back and said that the Seller could not be reached, and told me to go ahead and send over the offer just in case he did want to consider it. Then I asked more questions, found out the Seller was buying a new house but needed to sell this one first and had not yet found the new house. This sort of thing is important to know before writing an offer. My Buyer can’t move until late June and so is in a position to offer a short lease-back to the Seller. This means the Seller can sell the house, then temporarily lease it back while waiting to close on the new house. This means the Seller only has to move once instead of twice. A powerful motivator.
So we wrote it up stating that the Buyer can be flexible on the closing date and/or offer a lease-back to the Seller. It was also full price and cash. We also wrote a 5 day Option Period, which meant that even if my Buyers flake out, the house will be back on the market Saturday and the Seller doesn’t lose a weekend of market time. The offer also included a copy of the Buyer’s bank statement showing all funds were available for the cash purchase. Additionally, the offer was written clean, with no goofy provisions or nonsense – a “ready to sign” offer.
The agent called back that evening. The Seller had signed off on our offer and had taken us up on the flexibility of the closing date (changing it to a week later) and the temporary lease-back of 1 week. The next morning, my Buyers initialed the closing date change and signed the temporary lease. Done deal.
Do I feel bad for the first people who thought they had a deal only to get knocked off? A little bit. I’m human. But I don’t represent that Buyer, I represent my Buyer. Did the first Buyer get screwed? No, they simply lost out to a better, more agressive offer. There are things their agent could have done to anticipate this possibility and prevent it (another blog topic later!).
Did the Seller do the right thing? Yes. The Seller has a right to consider all offers before signing, even if he has “verbally accepted” another one. Some Sellers in fact have an emotional hard time doing this, but that’s why a good agent needs to act as a buffer between Buyer and Seller, so the Seller doesn’t forget that this is a real estate business transaction, not a friend-making adventure.
I thought the listing agent had a fiduciary obligation to present ALL offers, as long as the original offer had not been signed. If the sellers discovered that your buyers had an offer – a nicer offer, in fact – and their agent didn’t tell them, would they have grounds for legal recourse?
>>There are things their agent could have done to anticipate this possibility and prevent it
I’d like to hear more about this.
I don’t know. I am not sure where the law stands but I think verbal agreement has at least some power to the contractual duties. Say if I am the buyer, and I got a call from the seller’s agent. I happened to be recording every call I received (it’s not that hard through VoIP as all calls are RTP packets that can be captured and converted to media streams like wave or mp3). Then I can use this call as my evidence of contractual agreement and sue the seller for breaching the contract.
Yes, the seller can say that he never signed anything. But the phone conversation is probably good enough to indicate that the seller has entered the contract willingly.
Ok, I guess the chance for him to win the lawsuit might not be that high. But that’s enough to cause a string of troubles for the seller and the buyer who got the signed contract.
Thus, my advice to the seller, honor the words of your mouth.
good for you…..nice to see that its a sellers market out here….goes to show that until
the ink is dry, you don’t have a deal….and never take no for an answer, at least from a listing agent.
A signature of the parites is required for a legal real estate contract in Texas. Verbal agreements, even if recorded, are not enforcable by the court. The requirements of a valid contract are competence of the parties, consideration, mutual agreement, lawful objective, contain a legal description of the property, and be IN WRITING and SIGNED by the parties. A contract which does not have ALL six of these things is a VOID contract. Furthermore, the agent must present all offers, or at least make the seller aware of all offers. If the seller doesn’t want to see it, they have that choice.
>> Furthermore, the agent must present all offers, or at least make the seller aware of all offers. If the seller doesn’t want to see it, they have that choice.
This was what I thought – the seller can refuse to look at the offer, but the agent is legally bound to make them aware that the offer exists. So, when an agent says, ‘Sorry, we’ve accepted an offer,’ they’re technically breaking (though perhaps unintentionally) their fiduciary responsibility. I don’t mean to sound like I’m ragging on the listing agent in Steve’s story, I just wanted a clarification on the legalities of that scenario.
1) anyone can be sued… even if it just oral… even if you have an air tight case… sued-you-lose
AVOID THE POSSIBILITY…
2) never…. give the verbal “its a done deal”……. you dont need to…. use “sounds good!!… i’ll see them tomorrow eve…….” SAFE
3) in this fast market place…. use a sellers needs page to collect data before presenting offer… “my clients would like me to prepare an offer so good your seller will choose them… so they have a few questions………. (SELLERS NEEDS… ETC…)
4) try to present offer in person with buyers/sellers…. present… ask for questions… then leave.
people love to connect a face & personality to an offer…. very positive outcomes…
Good tips Lenny. We don’t use a “Seller Needs” page per se, but I always ask questions and try to find out what the Seller’s situation is.
Steve
Regardless if an oral contract is enforceable or not I believe that it is ethically responsible to honor it and not try to take advantage of the situation.
If we as businesses, that represent our community, do not live by a code of ethics and only by the legalities of any certain situation, how can we be trusted by our own word?
It is easy to criticize other broker’s schemes but sometimes we should take a look at our own. I think a lot of people would honestly say they feel very uneasy about the idea of imposing on someone else’s contract, be in verbal or written.
Just a thought!
> I believe that it is ethically responsible to honor it and not try to take advantage of the situation…live by a code of ethics …
This is a tough situation when these multiple offers happen. On the Buyer side, if I’m representing you and if you tell me you want me to write an offer that will get the house, I have an obligation as your agent to use my best abilities to make that happen. I have to make that call to the other agent, gather the info, and write an agressive offer. What happens with that offer is entirely up to the Seller, not me and my Buyer.
When I’m on the Seller side of this scenario we never say the Seller has “accepted” anything. Because we know these circumstances may occur that we never let the Seller sign anything until the Buyer is completely done. So, we may go back to a Buyer’s agent and say “your offer is NOT accepted, but if you send a new offer with the following changes, and a better offer does not come in before then, the Seller has indicated that he will give very favorable consideration to the new offer.”
This makes other agents angry sometimes, because they want a written counter-offer so the Buyer can control the deal. If they insist on a response in writing, we use the form called “Seller’s Invitation to Buyer To Submit New Offer”, which accomplishes what I said above, but does it in writing.
http://www.crosslandteam.com/component/option,com_docman/task,doc_download/gid,38/Itemid,66/
Steve
>> If we as businesses, that represent our community, do not live by a code of ethics and only by the legalities of any certain situation, how can we be trusted by our own word?
People can be trusted at their word. But things like this happen, and there has to be a some sort of legal guideline that everyone can follow. In this case, the listing agent (who was honoring her word), could be construed as interefering with her seller’s right to see other offers. Was she doing what she thought was the right thing? Probably. But the seller might not see it that way. If it came to litigation, that agent would probably be punished for it. Keeping everything in writing keeps it simple for everyone.
I’m trying to figure out why you are posting what I would consider confidential information
per your buyer and the seller on the web for the world to see. More than that, why would
you take a chance that someone(the former buyer) may use this information you just
posted in a court of law. I don’t think any agent out there is posting personal info about
deals still pending. I strongly feel you should keep client info private, no matter how thrilled
you might be that you got the deal through. Real estate agents should not divulge personal
matters, including contract details, and substantive info about how you got the deal done,
for any reason, same as an attorney, accountant, or any other occupation which represents
clients.
Hi Scott,
Thanks for your comments. One of the intentions of the blog is to share “from the trenches” anecdotal stories and things Sylvia and I encounter as a Realtors working in Austin TX. This includes opinions, statistics, observations, rants, raves, tips, advice, war stories, and whatever else may come to me.
Nothing I share could be connected by a reader to a particular Buyer, Seller or property, so I don’t agree that any of the content is “confidential information”. But I appreciate and have taken note of your concern and will continue to be thoughtful and careful about what goes into the content of these types of posts.
Steve