Can I get proof of a competing offer? The answer may surprise you

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Multiple Counter Frequently the questions (actually, usually it’s the answers) on Trulia Voices make me want to slam my head into a wall. Trulia Voices is a “online community” where real estate buyers, sellers and professionals can ask and answer questions of any topic relating to real estate.

Head-slamming content aside, there are also thought-provoking discussions that occur on occasion.

Recently, “George S” a home buyer in Anthem, AZ posed this question:

I had an offer of $205,000 that was being considered by the bank on a property listed for $225000. Suddenly, at the last moment, the listing agent told my agent that there was another offer of $220000 that the bank was considering. We matched that price and got the property. But now I am wondering what proof is there that this offer really existed and that the listing agent was just not jacking the price up.

That’s a great question.

Here was my first response:

George –

You won’t get proof. I understand why you’re asking, but the bank isn’t going to provide the proof.

This happens all the time on bank owned properties.

Consider this. The listing agent’s commission was probably in the range of 3% of sales price. So if the sale went through at $205K, the listing agent’s commission would be $6,150. If the listing agent jacked up the price to $220K, the commission would be $6,600 — a difference of $450.
Most bank owned property listing agents work bank owned homes exclusively, and usually have multiple listings from the same lenders.

If the agent "jacks up" the price to make an extra $450, they risk blowing the sale completely, upsetting the bank, who then pulls ALL their listings from the agent.

It would take an utter fool to make that huge risk for $450. (and the difference is probably even less than $450 as the commissions paid to bank-owned listers is quite often less than 3%.)

And I’m sticking by that. It would take an utter fool of a listing agent to claim there were other offers when none existed.

But then Voices uber-user Dunes correctly pointed out that, sadly, utter fools exist in the real estate space (and lets face it, every other space).

A couple of months ago we had a client that submitted an offer on a home that had been listed for 73 days. A couple of hours after the offer was sent in, the listing agent called and said something to the effect of, “Just wanted you to know that we got another offer in today, so the seller is requesting that you submit your ‘highest and best’ offer. I pointed out that it was a remarkable coincidence that two offers came in that morning on a listing that had been on the market for 73 days. After consulting with our client, we informed the listing agent that the offer submitted WAS the ‘highest and best’. In yet another remarkable coincidence, our clients offer was accepted the next day.

Maybe there really was another offer. More likely, the agent tried to employ a “tactic” of claiming there were other offers in an attempt to squeeze more money from our client – and for his seller. A noble gesture, but one that rarely works.

This brings up the question though of whether competing offers should be disclosed, and more precisely to the point of debate on the Trulia thread, should the existence of competing offers somehow be proved to other buyers interested in the property?

Let’s say for the sake of argument that if a listing agent says, “We have other offers,” that proof must be provided. How is that going to work? I can assure you that I’m not about to release ANY information on my buyer’s offer that could compromise their position. On the Trulia thread Alan May (who seems like a stand up guy) suggested the listing agent provide a copy of the offer to other buyer agents.

Well not if there is ANYTHING in that offer that could compromise my buyers position. That would include, but not be limited to, items such as:

  • The buyer’s name and their contact info
  • The offer price
  • The financing terms
  • The amount of earnest money
  • The closing date
  • Any contingencies
  • Any requested concessions
  • Any variation of the standard boilerplate contract language

Personally, I don’t see what good an “offer” that was missing this information would do anyone. Alan said with the other buyers agent’s name, that he could call that agent just to confirm they had submitted an offer.

My initial reaction to a buyer’s agent calling me to see if I have a buyer with an offer in on the property is, “it’s none of your business”.

Why should I compromise my buyers position so your buyer can feel better? (or submit a stronger offer than they were considering – potentially displacing my buyer’s offer).

“But Jay, how does simply confirming your client has submitted an offer – if no details are provided – compromise your buyers position?

Quite simply, having another buyer and their agent with ANY information regarding my buyer potentially compromises them. And if there is but a sliver of a chance of compromising my clients position then I’m not doing it, plain and simple.

Say I tell Agent Joe that yes, we’ve submitted an offer on 123 Main Street. Joe then tells his client, “Yep. Someone has an offer in”. Joe’s client may then think, “Well crap. I really want that house. I was ready to submit a low offer in the hopes the seller would bite. But now since someone else is already in the mix, I better beef this offer up and go all in.”

BAM. My client’s position has potentially been compromised.

In fact, Agent Joe just compromised HIS clients position by calling me and informing me they are interested. With that info, albeit limited, I call my client and say, “Hey, just got word someone is thinking about jumping in on 123 Main St. Let’s get this thing wrapped up before they get a chance at it.” And BAM, now Joe’s client is left out.

Alan suggested that a third party could be sent the offer for confirmation. He even suggested broker for example.

But no broker with an agent involved in the transaction can be considered a neutral party. Regardless of how ethical and upstanding they may be, that broker has a responsibility to represent that client. In fact, they owe that client a fiduciary duty. There’s no way I’m sending my clients offer to another broker who has a client interested in the property. NO WAY.

It was suggested the agent’s association could vet the offer and confirm its existence. My association has 8 or 9 employees to service 8,000 agents. I can’t imagine dumping “offer confirmation” on an Association. They don’t have the time or resources to handle what could be hundreds of offers a day. And what if the competing agents are in different associations? The association as a “neutral party” won’t work.

I suppose some enterprising start-up could develop an “offer confirmation service”, but that is fraught with issues as well. How would confidentiality be maintained? What would it cost, and who would absorb those costs? How much time would it add to an already lengthy and convoluted process?

To be honest, I can’t think of a way to prove there are competing offers.

Don’t get me wrong, I understand completely the prospective buyers position here. My initial response talked about the $450 that would go to the agent for “jacking up the price”, but there is difference of 15 grand in this case to the buyer. That’s a serious chunk of change, even spread across a 30 year mortgage. I get why a buyer wants confirmation that other offers exist on a property of interest. Sadly, John Q. Public doesn’t have a lot of trust in real estate agents. The vast majority of that this industry has brought upon ourselves. Simply saying, “trust me, there have been other offers submitted” isn’t going to fly. That so many try this “send us your highest and best offer” ploy doesn’t help. I also understand a listing agents desire to get the most money for their seller. That’s what listing agents do, and rightfully so.

So I sit here struggling, writing a 1500 word tome that provides no real answers. Should anyone have happened to read this far, I’d love to hear your thoughts. Should proof of competing offers be provided to other potential buyers? If so, any suggestions for how to do that without compromising the position of any of the parties involved?

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About the Author
Jay Thompson

I'm a real estate broker in Phoenix, Arizona and the publisher of the Phoenix Real Estate Guy blog. I tend to drive too fast and scream at the University of Texas and Denver Broncos football teams. My two kids are smarter than most adults I know and my wife is simply amazing.

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  1. Tom Royce says:

    Jay

    As my wife and I are about to sell our home and buy another one this question crossed my mind. The math works for the logical mind. But there is a trust issue that the real estate industry faces in the consumers mind.

    You and I know the reality but when it is $15,000 of capital for the buyer, and we know how hard it is to accumulate capital, our red flags get raised quickly. The shady agent who pulls this crap ruins the reputation for other agents.

    I wonder how many good deals blow up with stupid tactics like this.
    .-= Tom Royce´s last blog ..Relief or Pandering – Obama Comes To Vegas To Help With Housing Crisis =-.

  2. Your first point hit it on the head. As a REO broker, it would be foolish for me to lie about having other offers on the table and risk losing the one true buyer making an offer. I understand that multiple offers are frustrating for buyers/buyer agents – especially in a market that keeps being touted as a buyer's market when in fact (at least in my area) it is a REO-seller's market. Buyers just don't understand that the demand for REO property is so great that they may end up paying a premium for that "deal" they're looking for. I feel that the agents complaining about the H&B calls and "threats" of multiple offers are, often times, jealous of the REO agent that MUST be rolling in dough since they have so much business and they "don't have to work for it."

    The fact is, now more than ever since the REO inventory is so low, there will be multiple offers and highest-and-best calls are the norm. If there aren't multiple offers there is no reason to call for a H&B, and yes, a property with no offers for 90 days may very well end up with multiple offers overnight – especially after a recent price reduction.

    Believe me, REO brokers want to move inventory just as much as buyer's agents want to get their offer accepted. There is no benefit for us to mess around and risk losing a sale.

    Now, to answer your question :) … There is no way that I will provide any "proof" of multiple offers other than my word that there are multiple offers. I send a written notice out to all buyers who have submitted offers to let them know that there is a multi-offer situation, but if you haven't submitted an offer yet, you're just going to have to take my word for it. The notices do not disclose any details either, so it's still just my word … only in writing.

    I will not disclose any terms of the offers submitted as it is my job as the listing agent to obtain the best offer for my client. And I agree with you, Jay, that it really isn't in the buyer's best interest to have their position tipped to their competitors either. I always tell the buyer/agent to submit the best possible offer they can if they truly want the property … I get a lot of calls after a buyer/agent loses out on a multiple-offer saying that the buyer was willing to go up a little more after the fact … Sorry, too late. If your buyer was willing to go up more then they should have done it when they were asked for their "highest and best." Maybe they'll learn and won't make that same mistake the next time.

    Sorry to ramble on here, but this is one of the most frustrating things that we REO brokers have to deal with … Thanks for the bringing up the topic.

    • Jay Thompson says:

      The Phoenix market is a "REO sellers" market too James (for the most part). There is no question here that the vast majority of REOs get into multiple offer situations.

      Ramble on any time, thanks for bringing the REO listers perspective…

    • Angrybuyer says:

      Yes you would be foolish but at the same time you ask for proof of funds so you know how much is in the savngs account and if you see the potential you will do it. We are having the experience right now in AZ with the same broker. Our agent put CASH bid on a property that was listed for 115k we put a bid in for 85 knowing they would com back with a counter they did 115k. so we countered with 98.The house had dropped 6k for the past 4 months and has sat on the market for over a year. Now we are told there is another offer on the house so we gave up. That was 2 months ago the house is still listed at 115k. We put a bid in on another house and were told to submit a H&B. I am hard pressed since she knows exactly how much money we have in our savings. It is the new buyer beware scam brought to you by the same people who F***ED you over before!

  3. Jay-I'm with you on the impracticality of confirming competing offers. As a buyer's agent I share with my clients that the claim of other offers may or may not be true and I share my opinion on the liklihood of truth based on my experience with the listing agent.

    As a listing agent in a multiple offer situation, I share the name of the agent(s) with offers on the table. Although I've never known anyone to call and verify, at least they would know whom to call. Also, once the property sells, all agents see who the selling agent was so my credibility in my market is confirmed and strengthened.

    • Jay Thompson says:

      Hey Kathleen! I think a good, experienced buyers agent have a finely tuned BS meter and can usually pick up if a listing agent is feeding them a line about competing offers.

      In my market, with its 30,000 licensed agents, I rarely get the opportunity to work with a listing agent more than once, or with someone I know.

      And yes, the agents can see when a property sells that you weren't fooling around, but a consumer can't…

  4. Jeremy Isaac says:

    Great post. I agree that there isn't a viable way to provide proof of competing offers from the perspective of the buyer's agent. All you can do take the listing agent's representation of the situation and match that up to their reputation as established in past business dealings. Unfortunately, I could provide names and numbers of several "utter fools" based on your definition, and it is, at best, an educated guess on the part of the buyer's agent as to the presence of additional offers.

    On the practical side, when dealing with particular REO agents who I don't trust, I've employed various reconnaissance to our advantage… having the buyer make a "sign call" – asking another agent in the office to inquire – personally talking to different team members at the listing office… and at the same time, try not to make enemies (even with the sleazeballs) because your best chance at getting accurate information is having a decent relationship with them.

    (Jay, Technical note here: when I tab through the comment form your site is kicking me up to the contact form in the upper right sidebar. I'm using Firefox 6 if that helps)
    .-= Jeremy Isaac´s last blog ..Think the Manitou Incline is hard? So does Apolo Ohno. =-.

    • Jay Thompson says:

      There are indeed too many "utter fools" out there Jeremy, hence the virtual complete lack of trust between John Q. Public and real estate agents in general.

      The "recon" is good stuff….

      Thanks for the tip on tabbing through the contact form. I wish I had a clue on how to fix that…

  5. Alan May says:

    a nicely put-together blog post… and while I agree that they're not a good viable option for proving the veracity of a "phantom offer"… that doesn't cure my desire for a decent method to defeat the ability to employ this "tactic".

    I'll even go you one step further, in "giving away the client's position"… sometimes, I think you'll agree, knowing WHO the other agent is who is representing the buyer, can be a tip-off as to how they work. If it's an agent I know, and know well… I'll know how they might advise their client… (go over list, be at list, be just under list)… So I understand your objection.

    I'd love a solution, though. btw… thanks for the "stand up guy". Right back atcha!

    • Jay Thompson says:

      It was a pleasure discussing this with you on Voices Alan! We've never met, but it's clear you are a "stand up guy" or you wouldn't take the time to help consumers like you do on Voices. Good on you!

      Agreed completely that sometimes knowing who the other buyers agent is can be a tip-off. But as I mentioned in my reply to Kathleen's comment above, in a market the size of mine, I rarely run across someone I know.

  6. Jay, really good post regarding the slippery slope of multiple offer confirmation.

    One technique that I have used in the past with agents that I don't know is to have the Branch Manager or Broker of Record confirm the existence of multiple offers. This would be in the case where my Client's felt something fishy was up.

    As a listing agent it would be my job to notify any potential buyer's of another offer. Having two or more buyers working against each other usually results in a better price for the Seller, but it can also backfire where you end up with no buyer.

    • Jay Thompson says:

      Jeffrey – I'd like to think a branch manager / BOR would provide an unbiased (and ethical) confirmation. And the vast majority would. But that wouldn't always be the case…. no way around that I suppose.

      • Jay, you are correct, but I think in most circumstances when dealing with a slippery listing agent this confirmation will pull everything out into the light. No Broker of Record or Branch Manager should have any motivation to lie on behalf of an agent. But there is always exceptions to every rule.

        I am surprised by how much interest your post has received. Seems that it reflects back to how little the public trusts real estate agents.

        Most times I advise Clients not to get into a bidding war unless they cannot stand loosing the home. It quickly becomes pretty clear if they are being worked against a legitimate offer or not.
        .-= Jeffrey Douglass´s last blog ..Downtown San Diego 2009 Real Estate Report – Part Two =-.

  7. J, when we have multi offers, I will tell each agent the name and office of the other agents who have offers in, so they know I'm not fabricating additional offers. If they want confirmation, they can call the other broker and ask.

    It's a good case for the buyers to shoot their best shot outta the gate when making an offer.

    I've seen the 'salience' phenomenon many, many times over the years. All of a sudden, the house no one wanted is in multi offers.

    • Jay Thompson says:

      Candice!

      We encourage our buyers to submit their "highest and best" from the get-go. Or at least know exactly what that point is. Many a time we've been told to submit "H&B" and we've responded, "You've got our H&B". Sometimes the buyer doesn't "win", but many times they do…

  8. Are you kidding? says:

    It appears that all of the agents are saying that a buyer has no legal or ethical right to expect to actually know the truth about what is really going on in their transaction.

    Why do almost all real estate professionals assume that the offer presented was not the best offer that would be given? Once I made on offer on a house that was all I could do. My own agent tried to get me above my limit. WHY???

    I would insist on proof of a competing offer. If it does not appear I would be greatly tempted to drop my offer price to compensate for this hassle. If you want a competing bid system to work as an auction turn it into an auction. If I can see what I am up against I will either bid or walk.

    This whole issue just makes everyone very suspicious of those who refuse to be honest and show what is really going on.

    As Ronald Reagan said, trust but verify. If you will not verify I will not trust.

    • Jay Thompson says:

      "Are you kidding" –

      Hmmm… I'm not seeing anyone say that a buyer has no legal or ethical right to expect to know the truth.

      In Arizona, there is no legal requirement to provide a buyer proof of a competing offer. That was kind of the point of this post (granted, that point may have been lost or not well made).

      If you're in Arizona, and you insist on proof of a competing offer, you're not likely to get it. As I said, I'm not going to jeopardize my buyer's position so you, another buyer, might submit the offer a seller accepts. Nothing against you, but I represent my client, not you.

      It's not just about being honest. I suspect the majority of sellers agents ARE being honest when they say "We have multiple offers". I also know that sometimes they are full of crap when they say that. But **proving** there are other offers can be problematic.

  9. Jay,

    It is sad that our industry INSIDE and out do not trust REALTORS®! The answer is professionalism. We should all expect to negotiate with other professionals honestly and professionally with integrity and unquestionable ethics. The last 3 "additional offers" that I had to deal with did not change our offer and we still were approved on all three. What each and every one of us as REALTORS® can do is commit to provide a level of professionalism and business ethics that will set the examples for others. I know this may be a "blue skies" wish but each individual needs to take on this responsibility.

  10. Will says:

    Simply doesn't matter. One other offer is really there or no other offers. You're a buyer and you make your offer. You get word that another offer is there then you make your decision. Ultimately you live with your offer. You'll have buyer's remorse no matter what.

    Situation 1: You go in with an offer and there are no others. You negotiate back and forth and get the property. After the jubilation you start to wonder if you could have squeezed some lower price out of the seller.

    Situation 2: You go in with an offer then get word of another. You don't up your offer and you lose the home. You regret not upping your offer or are happy that you gave your best shot and disappointed you lost the home.

    Situation 3: You go in with an offer and then get word of a competing offer. You up your offer and win the home. After the jubilation you wonder if you paid too much or if there really was another offer and you got taken in and paid too much. At least you got the home.

    Situation 4: You go in with an offer and then get word of a competing offer. You do not up your offer and then get word that yours has been accepted. After the jubilation you realize they tried to juice your offer and that there was no other offer. Next you wonder if you paid too much. At least you got the home.

    Conclusion: In a negotiation you can only know how much YOU are willing to pay for a home and you have to wake up the next day living with the results.

    — coming from Vancouver, BC where we still get occasional insane bidding wars and accepted offers that are as much as 40% (yes forty percent) over ask offers.

    • Jay Thompson says:

      Not much I can add to that Will. I'm trying to think of a 5th situation, but I think you've got it covered.

      It does matter though to many buyers. Maybe it shouldn't matter, but it does.

  11. Joe Sheehan says:

    The standard listing contract that most of Realtors use in PA says that, if asked, and unless prohibited by the seller, we may disclose the existence of competing offers. We must disclose if the the competing offer is a single-agent dual-agency offer, a broker dual agency offer, or a co-op offer. We must disclose variable rate commission terms as well as stated in the COE. With permission from the seller, we can also disclose the terms and details of the offer. Sometimes it has a positive effect for the seller, sometimes it backfires.

    I usually advise my seller clients to withhold the details but acknowledge the existence of competing offers. I also have asked competing buyers for best and final by 'x' o'clock on 'x' date.

    I've have had instances where none of the offers submitted were acceptable to the seller.

    I've seen a few offers in my day so I know the difference between a strong one and a weak one. My advice to buyers is to offer what you think it's worth. If I think the buyer is holding back, I might suggest they re-think their decisions and their original offer. If I think the buyer is at the max or their offer is a strong one, stand pat. In spite of my advice, the buyer has decide what the home is worth. At the end of the day, it all depends on whether the buyer and seller can agree on the value.

    • Jay Thompson says:

      Joe – when you say, "if asked, and unless prohibited by the seller, we may disclose the existence of competing offers." what exactly does that mean?

      Is the listing agent simply saying, "We have other offers" considered "disclosure"?

      Do you have to PROVE there are other offers?

      • Joe Sheehan says:

        Hi Jay,

        What I meant was that there is nothing in PA real estate law that requires a seller to disclose multiple offers. In the terms of the listing agreement it states that the seller can choose not to disclose multiple offers and the listing agent is required to abide by this decision. Also, we are not required to answer the question that is not asked, so if a buyer agent doesn’t ask me outright, I am not required to reveal other offers.

        No, in PA we are not required to prove the existence of other offers.

        Bear in mind, these comments are based on what the law and the contract states, not necessarily what my advice to a seller would be. That might vary depending on the specific situation.

        I think one of 4 things could happen in a multiple offer situation:

        1 – The seller could accept one of the offers

        2 – The seller could choose to negotiate with the buyer with the strongest offer

        3 – The seller could counter ALL the offers and start the process all over again with a new baseline. ie: best and final by date ‘x’ at ‘x’ o’clock based on the new counter-offer.

        4 – The seller rejects all the offers.

        I have been involved in each scenario except #3, but those are the 4 options I would present to the seller.

  12. Joe Sheehan says:

    Oops… my comment above may have been a little mis-leading. In the last paragraph, I took off my listing agent hat off and I put my buyer agent hat on. Since I am not a proponent of single agent dual agency so I would never be offering advice to a buyer if my client was the seller. My apologies for changing my context without warning. :)

  13. The reality is that as a listing agent you represent the seller. You don't represent the buyer or the buyer's agent. Your job is to get the best price and terms possible for the seller and to follow their instructions. I've never used the tactic of pretending I have another offer when I don't, but if a seller tells their agent to say that, and it causes the buyer to pay more, isn't that the desired end result? The end goal isn't for everyone to feel all warm and fuzzy and for the listing agent and buyer's agent to go out for beers later. The objective is for each agent to follow their client's directions and to get the best end result for that client within the laws and code of ethics.

    It's the same as talking about whether a buyer has the right to know if a seller has another open offer on the table. It's really none of their business, unless the seller tells you to tell them that another open offer exists. If they want you to tell them, then you do. If they don't, you don't. It's not up to the agent to decide, and too many agents think it is.

    I once had two offers come in on a property the same day. One came in early in the morning, and the second called to say they would be sending theirs in the evening. The sellers instructed me to stall the first agent, and not to tell him that a second offer was coming. Of course he called all day to see where his offer stood, and I stalled him. When the second offer came in, the sellers decided, for various reasons, that they wanted to accept it as-is without giving the first buyer a chance to come back with anything else. Of course that really ticked-off the first buyer's agent. He called me every name in the book, and claimed that out of "professional courtesy" I should have told him that a second offer was coming so they had a chance to offer more. I told him that it didn't matter what I wanted to do or thought I should do, the sellers told me not to tell him another offer was coming, and to wait, so that's what I had to do. His buyers had no "right" to know anything about what was happening or that another offer was coming.

    If as a buyer you make a lower offer, knowing that you're willing and may desire to pay more, you're taking the chance that other offers may come in or may already exist, and that you may loose. If that particular property is that important to a buyer, then they shouldn't play the initial low-ball game unless they're willing to lose that property.

    The ol' fake multiple offer trick is inherently dangerous, as it may cause the first (and real) offer to walk, leaving the seller with no offer. The important point is that it's not up to the listing agent to decide what to do or what tactic to use. They should be discussing the options with the seller and doing what the seller tells them to do.

    • Jeremy Isaac says:

      John,

      I understand fiduciary duty, but that doesn't mean you can LIE to someone. We are to follow our clients directives within the constraints of the law and some basic ethics. Would you make false representation about other matters in the transaction? As Norm points out, you aren't obligated to follow a clients direction to do something illegal and unethical. This is the type of attitude that results in the cynical attitudes of the public towards our profession.
      .-= Jeremy Isaac´s last blog ..Think the Manitou Incline is hard? So does Apolo Ohno. =-.

    • Joe Sheehan says:

      Hi John,

      I think I agree with part of what you said and disagree with part. If a buyer agent asks me if there are other offers or if I volunteer that there are other offers when in fact there is not, I think that's a misrepresentation and violates article 2 and 12 of the code.

      If the seller asks that competing offers not be disclosed, I think the correct response is "The seller has instructed me not to disclose the existence or non-existence of other competing offers." The old "I can neither confirm nor deny" dialog. :)

      I'm not sure how I feel about not responding at all. Is that a mis-representation by omission? Nevertheless, as I stated before, I don't think you are required to answer the question that isn't asked. I can appreciate the other agent being angry but he has no grounds. All he had to do was ask the question.

  14. Norm Fisher says:

    John,

    "I’ve never used the tactic of pretending I have another offer when I don’t, but if a seller tells their agent to say that, and it causes the buyer to pay more, isn’t that the desired end result?"

    Have a look at your state's regulations. Where I practice, the law says that any intentional misrepresentation is a "fraudulent act." You're not obligated to follow a client's instructions to commit an illegal act.

    Jay,

    "If the agent "jacks up" the price to make an extra $450, they risk blowing the sale completely, upsetting the bank, who then pulls ALL their listings from the agent."

    That's true, but perhaps the bank isn't prepared to accept $205,000 and the agents says he has another offer in an effort to get what he needs to get to complete a deal?
    .-= Norm Fisher´s last blog ..Saskatoon real estate week in review: February 15-19 2010 =-.

  15. Are you kidding? says:

    Norm, if a bank (or other seller) is not willing to accept an offer they should either say denied or the least we will take is this amount.

    I once went to a house auction. The bidding went to a dollar amount and stalled. Suddenly the auctioneer said I hear (next number). Everyone there looked at each other and tried to figure out who gave the bid. After a short time the auctioneer admitted there was no bid. The bank simply would not take less than x amount. I believe someone actually offered x amount then and bought it.

    Had the auctioneer simply said the lowest acceptable bid for this auction is x when the bidding stopped everyone there would not have felt like they were being lied to. Over a decade later and I still remember being lied to because of protecting his clients interest. Is your reputation for this profession worth people thinking you are lying to them because of the reasons stated before?

    Claiming multiple offers when none exist or are willing to be proved to exist only creates mistrust of all those involved. Explaining that you have a duty to your client does not change the end result of your actions in this matter. You are losing the trust of anyone involved in a (alleged) multiple buying scenario.

  16. mark says:

    Since this is already illegal, maybe the penalties should be adjusted? I can say, my realtor friends report encountering fake competing offers. They pull their own offer when they get one, then when the inevitable call comes about the "offer" falling through, they submit a lower offer. Sometimes much lower.

    To address your post, maybe the proof can be given, if requested, after closing?

  17. @Norm – You make a good point, but I'm not convinced that it would be considered misrepresentation or fraud.

    I'm not an attorney, but here's another example. Say a seller receives an offer of $200,000 that is lower than the asking price. They then instruct the listing agent to counter at $220,000 with a written response that this is "absolutely our lowest number and we will not accept anything less". The buyer then agrees and comes up to their $220,000 price and signs the counter offer. Is that considered fraud or misrepresentation if both the seller and listing agent knew that the seller was willing to go lower, maybe even as low as $200k and wasn't telling the truth about their bottom-line counter-offer? If that's fraud then we should all go to jail immediately, as this bargaining tactic is used every day.

    I'm not saying I agree with the tactic or that it's a nice thing to do, but I'm not sure that it's illegal. Again, I've never done it myself, but I've had it done to me and I simply instruct my buyer that it could just be a negotiating tactic and they have to decide how much they want the home before they increase their price or just wait for a counter.

    It's another one of these things that should be allowed to self-regulate instead of creating a new law to control it. If agents start doing it all the time, it will be just like crying "wolf" and other agents will ignore it. Wait, I have a better idea, let's call Obama and ask him to pass a new law with some stimulus money behind it to regulate this new problem!
    .-= John Kalinowski´s last blog ..Are you looking for a completely rehabbed, violation-free house in Cleveland Heights? =-.

  18. <a href="http://www.zimbio.com/Toronto+Real+Estate/articles/756/Toronto+Real+Estate+Board+says+Multiple+Offer&quot; rel="nofollow">Seems like this issue has been addressed in various ways in Toronto.

    From the above article:

    <<<<<<<<<>>>>>>>>>>>>

    I don't know how the laws work in Toronto, but in Ohio an agent is only required to disclose the existence of an accepted offer. If the seller instructs you not to disclose open offers, then you can not. The above solution in Toronto would require the listing agent to obtain permission from the seller to disclose the open offers, and couldn't just be done as an across-the board rule without approval from every seller.
    .-= John Kalinowski´s last blog ..<a href="http://www.liquidbluerealty.com/are-you-looking-for-a-completely-rehabbed-violation-free-house-in-cleveland-heights/&quot; rel="nofollow">Are you looking for a completely rehabbed, violation-free house in Cleveland Heights? =-.

  19. OK, the last comment stripped out the portion I was attempting to quote from the Toronto article.

    Here's the quote:

    "But not all industry insiders agree with TREB’s official position. My brokerage, Prudential Properties Plus has developed their own Offer Registry System to add more transparency to the multiple offer process. Ken McLachlan , broker owner of Re/Max Hallmark grew tired of waiting for RECO and TREB to lead the way so in October 2007 he set the following company policy for multiple offers:

    In Multiple Offer situations when we are representing the seller, it will be the company wide policy of RE/MAX HALLMARK Realty Ltd. and it's Realtors to disclose in writing, the name and company of all Realtors, who have registered an Offer on the property. This disclosure will be made, upon request to all co-operating brokers involved in the process, and will be provided either before offer presentation or after. "

    Again by John K.: I don’t know how the laws work in Toronto, but in Ohio an agent is only required to disclose the existence of an accepted offer. If the seller instructs you not to disclose open offers, then you can not. The above solution in Toronto would require the listing agent to obtain permission from the seller to disclose the open offers, and couldn’t just be done as an across-the board rule without approval from every seller.
    .-= John Kalinowski´s last blog ..Are you looking for a completely rehabbed, violation-free house in Cleveland Heights? =-.

  20. Chad Grabham says:

    Jay,

    Great Blog. I think you nailed it. It raises another point with me. I would like to hear your thoughts on disclosing whether there are any other offers to selling agents. I have found you can put it in the MLS to not ask about other offers or whether they exist but agents simply can not resist. I believe it can give hurt a seller if you answer that questions yes or no.

  21. Norm Fisher says:

    @Are you kidding?

    I understand that the correct three options are to accept, reject or counter.

    I didn't mean to suggest that he should say that, rather that an unethical agent may say that in circumstances other than just trying to bump the price for a larger commission. Jay was saying that no smart agent would risk blowing up a $6150 commission by trying to grow it by $450 and I agree with that premise. I'm saying, that in an instance where the bank was not prepared to accept the offer and a boneheaded and unethcal Realtor was looking for a fast track to put a deal together he may in fact lie about the presence of other offers. Of course it's not the right thing to do. Again, where I work there is a provincial real estate act that would define this action as fraud.

    On the question of whether one should, or should not disclose we have an obligation to discuss it directly with the seller and let them make the call. As agents, we know that a multiple offer situation is almost always good for the seller but there have been instances when the high bidder flees the scene after learning there is competition. That's how the rule came about in our association.
    .-= Norm Fisher´s last blog ..Saskatoon real estate week in review: February 15-19 2010 =-.

  22. Jay & other commenters,

    This was a great post and thread of comments. Very thought provoking and thrilled Jay posted and posed the question. Here in the Phoenix market is is very difficult to prove there are other offers when a seller's agent shares other offers and suggests H&B. Not to mention to have to go back to my client and tell them, they are calling for all H&B. It really frustrates some buyers. However, in our market I come to expect that anymore with REO agents. Educating the buyers in advance always helps.

    Two thoughts come to mind here. One, couldn't the multiple counter offer addendum (AZ form)be requested or at least (I've seen here) a written notice of multiple offers signed by all parties be a part of the transaction be included to remove the trust issue (if that exist)? Just thinking….

    Two, isn't it a requirement (just asking, don't shoot me agents) that the banks tell the REO agents to always suggest that there are 'multiple offers' regardless of any existing? It seems to be the case, I have yet to deal with an REO 'specialist' that hasn't said it to date. I share with my buyers as Jay shared above, be prepared to offer your best offer and anticipate other offers, as this can happen. I think as Jay does, you need to be able to know how to recognize BS and have your radar on when representing your buyer. There was a time back when multiple offers were super crazy when 45 offers were submitted on any given home and then came in the 'escalating clause' that included verbiage that wanted proof of the highest offer with out revealing the buyer's information that was blacked out. Anyhow, great post Jay and allowing my brain to wander more this Sunday morning!

  23. There are so many comments on this post already, I don't think anyone mentioned anything like this so here goes.

    The only thing I could think of which would be tough because it's difficult to get an agent to do any additional work would be this. Offers would be submitted just like they are now, email, fax, etc. Using the local MLS, in San Diego County we have multiple associations but only 1 MLS website we access for the entire county. When the property status was changed to pending it would require the agent to submit minimum information. The information would likely be,

    - Agents MLS ID who submitted the offer

    - Offer price

    - Any Credit's, closing costs so you could compute a net sales price

    Once the property was changed to pending, the MLS would send out an automated email to all agents confirming that they had submitted an offer but their offer was not chosen. This email would not contain any price or information that would compromise the offers in case the escrow fell out and the property was changed back to active.

    Once the property status changed to sold, the listing agent would confirm all figures and the MLS would send out a 2nd email to all agents with a summary of the offers. The system / program would be very easy to create, the difficult part would be to get the agents to enter in a brief summary of all offers submitted.

    What do you think of that? To difficult? I wouldn't be a fan of the additional work but I think something like this would be the only way to do it.

  24. @Alex – not sure how your idea would help, since it involves a property that is already in Pending status. Once it's pending, the question of whether or not multiple offers exists doesn't matter any more. What Jay is talking about is a property that is still in Active status, and has offers in that have not yet been accepted.

    The only one that makes any sense is the <a href="http://www.zimbio.com/Toronto+Real+Estate/articles/756/Toronto+Real+Estate+Board+says+Multiple+Offer&quot; rel="nofollow">system implemented in Toronto, but it still doesn't satisfy the requirement that the seller needs to agree to allow the listing agent to confirm that other open offers exist.

  25. Selling agents must be able to provide evidence of multiple offers AFTER closing a transaction if requested by the buyer. That would solve the unethical practices of some real estate agents who simply lie and state there's multiple offers. Should the selling agent not be able to provide any evidence of multiple offers then it's a breach of contract and the buyer could sue the listing agent for misrepresentation and fraud. Then let's pull a couple of selling agent's licenses and see how many agents want to keep pulling stunts like this.
    .-= Dr. John McMillen´s last blog ..Quail Lake =-.

    • Jeremy Isaac says:

      Dr. John,

      I think you're onto something there… Simply require that listing agents provide evidence after closing upon request from others who presented offers. If they were fabricating offers they get kicked out of the MLS. (note: this would be better handled by the Realtor Asso than the state. Who cares if they lose their license; if they aren't in the MLS they'll lose the REO contract anyway.)
      .-= Jeremy Isaac´s last blog ..Think the Manitou Incline is hard? So does Apolo Ohno. =-.

  26. Hi Jay, I think the saddest thing your post brings up is the lack of trust in a real estate transaction. Whether that be between agents or the lack of trust the public has towards us as agents.

    I have been in the situation of having competing offers on the table with buyer clients. I've trusted the agents I worked with and did not ask for proof. My clients in turn trusted me, so there were no problems. I personally would not give out personal information about my client if asked. Like you, I only give out very limited information about my clients and only when it is in their interest.

    In your first example about the foreclosure clearly the buyer did not trust his agent. That's a poor basis for any relationship and certainly not good when you're talking about one of the biggest financial transactions of your life!

    Would creating new rules help? Probably not. I don't see there's an easy answer if you're talking about multiple buyers and one seller in a real estate transaction. I believe in single agency and I think if each concentrates on the well-being of their client while practicing fairness to the others we should be in good shape. The important thing is to keep shady tactics out of the deal. We are pretty much the only profession where we co-operate and compete with our peers all at the same time. We need to do a better job at that.
    .-= Denise Hamlin´s last blog ..Weekly Real Estate Market Statistics North Liberty February 22, 2010 =-.

    • Denise,

      I agree with your comments and the fact that making up more rules really won't fix the problem. This is a free market where Sellers are free to choose the offer that fits their goals of selling a home. What we are tying to do here is bring transparency to the process, somewhat like an auction, with all Buyer's in the same room. Sounds like a good idea in theory but rarely works out best for either the Seller or the Buyer.

      I think that the consumer needs to do a better job in the selection of the agent these choose to represent them. They should work with that person for some time to determine the agent is looking our for their interests – only time will prove forge the type of trusting relationship you should have in your agent.

      Picking the first agent you run into may not be in your best interests. Particularly if that agent is the listing agent of a particular property. By taking some time working together you'll know if the relationship is a good fit and if trust is earned. With that said, even with trust built with my Clients I verify everything I can from 3rd party sources.

      I truly believe, when compared to breach of fiduciary duties, this problem is much less widespread than thought. I do however know the agents in my local market that certainly would be capable of making up competing offers – so caution and instinct as Jay says are always important.

      So what about it Jay, how about the listing agent in the office hallway that just listed a home for $550,000 telling everyone the seller is motivated and will take $350,000 with the Seller's express permission? How about a post on that – a much bigger problem in my opinion.

  27. Dunes says:

    Yes it's the Consumers responsibility to "Buyer beware" and choose the honest Agent and and and and and….

    The Agents responsibility is ??????? Accountability (This goes on but)??????

    There are a lot of problems mentioned here and elsewhere constantly in a Look through the window hear everything we discuss or say internet social media world. The public is looking through that window and making decisions about Agents, the industry, value, accountability and Trustworthiness..What do they see? What do they hear from you and your industry?

    Trust us we have YOUR interests in mind……but

    I have said in the Trulia Forum hundreds and hundreds of times….I believe in the value of Agents, they are worth the commission, most Agents are Trustworthy ect. but in the last couple of weeks decided this is not comfortable or honest for me to say is my opinion any longer…Based on what Agents say

    • Dear Dunes,

      Thank you for your comments, I certainly understand your frustration.

      I think that on-line conversations like this are healthy to pull out into light some problems, both perceived and real. Thanks to Jay he has a great way getting open discussion. Finally a consumer has a way to see into the industry, and just like all industries it is not perfect

      Trust but verify is my motto. Having an agent or any professional tell you to trust without 3rd party proof is unwise. In this particular case where proof is hard it's up to you to decide if you want to play the game or risk loosing the property. Each circumstance is different and a good agent will be helpful in your decision, but it is still your decision.

      Buying and selling real estate is a bit like a high stakes poker game so choose your advisor wisely – the Internet gives you that venue to follow agents you feel might be a good fit.
      .-= Jeffrey Douglass´s last blog ..Median Downtown San Diego Home Prices =-.

  28. Alan May says:

    @Dunes.

    the discussion that's going on here (and on Trulia) is "how do we get confirmation of another offer". And Jay, et al, is stating that there doesn't seem to be a clean way to "confirm" it, without giving up the sanctity and privacy due the seller, or the other buyer's client.

    that's not a discussion that says "don't trust agents", or that "all 2nd offers are phantoms"… we're just talking out loud (and in public view) about how do we go about obtaining confirmation, while continuing to protect the add'l clients.

    I don't have a problem with the public looking through that window, and you shouldn't either. We haven't yet come up with an answer, but we're trying to think it through. Yes, agents have said "this doesn't occur much… don't worry about it… you got that house, be happy"… but they are also trying to figure this out… WITHOUT, I might add, any pressure from governing bodies to do so… this is a good thing, in my opinion.

  29. Dunes says:

    @ Alan

    I never said or implied anywhere…“all 2nd offers are phantoms”

    The suggestion I do not comprehend or understand the topic/what is being said and am making some hasty misinformed comment…..Fine, I'll allow you Agents to continue discussing this fine discussing

    • Anonymous says:

      Okay… I can play the same game… I never said, or implied that you don't comprehend or understand, nor that you're making some hasty misinformed comment.

      What I "am" saying is that in my opinion, you're painting with too wide a brush, when you say that this discussion should be enough for you to say that most agents are no longer "trustworthy" in your eyes.

  30. I hear it ALL the time, “We have multiple offers, please give us your highest and best.” I wonder how that happens on some of these that aren’t really priced well and on the market for 2 days. But, there are multiple offers? I do wonder.
    .-= Atlanta Short Sale Listings´s last blog ..Over 400 Current Short Sales in Atlanta, GA =-.

  31. Joe Sheehan says:

    This is really getting interesting. Where does it say that a seller of ANYTHING is obligated to discuss competing offers with prospective buyers.

    Furthermore, if a seller believed that every offer he received is a "best and final offer" there would never be a point to craft a counter-offer. It becomes an easy accept/reject decision.

    Buyers should use whatever means (and I think consulting a skilled Realtor is the best means) to craft an offer that is fair and based on facts derived from current market conditions. If the buyer tries to low-ball a seller and loses the deal, well, that's the way the ball bounces. If the buyer increases the offer because he think the seller just might have a competing offer, then it's pretty clear the buyer thought the offer was too low in the first place. Why would a buyer pay more than what they thought the house is worth? Why would a seller accept anything less?

    The answer to both questions is very subjective based on the circumstances. The regret that "I could've gotten it cheaper" is false.

  32. Are you kidding? says:

    Alan, (and others) lets assume for the sake of discussion that 95% of all multiple offers are real.

    As a buyer I am going to buy one to five houses in my lifetime.

    What assurance can be given to me that MY offer is not being manipulated?

    That was the original question on trulia. It is the basis of this blog.

    As a buyer I have absolutely ZERO confidence that a game is not being played trying to steal my money do I?

    That is the whole point. Realtors ethics, percentage of times this is real or fake does not matter. Am I being screwed to the wall or am I really being bid against? NO ONE here can or will give a definitive reply. They do not see or seemingly want to find and provide that answer.

    I see things as being straightforward or fraudulent. This whole process is not straightforward is it? The truth is not given is it? There is no way to find out the truth is there? Why should I or anyone trust their agent (realtor or not) when this is going on?

    If it looks like a skunk, smells like a skunk, and raises its tail, I am running away. Your saying trust me its safe is not enough for that risk.

    • Alan May says:

      Your saying trust me its safe is not enough for that risk.

      ~~~~~~~~~~

      I have not said that once. I have been, and continue to be an advocate for transparency and confirmation of multiple offers.

  33. Joe Sheehan finally nailed this. Bottom line is it's none of the buyer's business whether or not other open offers exist, unless the seller want's them to know!

    The listing agent does not represent the buyer, period. The listing agent has a fiduciary relationship with the seller, not the buyer. From real estate school: "A fiduciary relationship is a relationship of trust and confidence, in which one party owes the other loyalty and a higher standard of good faith than they owe to third parties".

    The listing agent does not have this fiduciary relationship with the buyer, or the buyer's agent!

    As a buyer, you should not submit an offer that is lower than you are willing to pay, unless you are also willing to lose the property to another bidder, who may submit or have already submitted a higher offer. It's that simple!!!
    .-= John Kalinowski´s last blog ..Are you looking for a completely rehabbed, violation-free house in Cleveland Heights? =-.

  34. Are you kidding? says:

    John, "it’s none of the buyer’s business whether or not other open offers exist"

    OK, do not tell any buyer about multiple offers. Problem solved.

    No issues exist with losing. Issues only come from not being told the complete truth.

  35. Dunes says:

    @Anonymous

    Your comment taken as a whole certainly does imply I don't understand the discussion or topic IMO and since addressed @ me seems to suggest somewhere I said/implied “all 2nd offers are phantoms” or suggested Gov. oversight, did not want the window for the public and based my comment on this discussion even though if you actually read my comment here I stated clearly…."but in the last couple of weeks decided this is not comfortable or honest for me to say is my opinion any longer…Based on what Agents say"

    It's why I didn't post for 3 weeks at Trulia, to clear my head, return, read and give it fair consideration….Did I still believe after that as a WHOLE Agents can be Trusted based on what I was reading written by Agents and the discussions I participated in about the Industry and it's lack of accountability with Agents…..The answer was NO based on what Agents say, allow, their related stories, questions posted, business practices, views, blogs ect.

    This discussion was started just a few days ago and is just the latest addition to what the window shows not the total basis for my comment…I have put links to this site on a variety of other RE sites, I want the curtains open and I want the public to come HERE and LOOK as well as other places where Agents talk.

    They (the public) can decide, I'm fine with that.

    "I'm a bit pisswahhed… (that's french-ish for "pissed-off"). the question is… do I take this to the board? to his managing broker?? I have zero proof. Zero. But you and I both know, that in today's market… for two properties in a row (both her listings) to have multiple offers, and triple offers with back ups… 'cmon!

    Do I even tell the other agent that she's been had??"

    From a Blog you wrote about this very type of situation and it illustrates my point….Is the Agent still pulling the same thing? Did we pursue it, call out the Agent suspected of, inform anyone of our suspicions (like the board?)

    The other Agent and their client who were had….well they don't know so………..

    There is no accountability and no drive to have any, just discussion of…

    The debate/discussion is not about how the client thinks it's worth it anyway or they ultimately were willing to pay, it's their decision……..It's about did they DID THEY PAY MORE THAN NECESSARY because AN AGENT LIED and in this case is most likely still doing it…..

    Yes you protected YOUR client but the next member of the public and the next dealing with that Agent who lied, what about them? No guilt there cause my client?

    No accountability……..Discuss away and if talking defines being an Advocate then be the Advocate for, but let's not pretend like it's really action you possibly passed that corner when you did nothing about the Agent you suspected of Lying and costing members of the public more than necessary IMO….Not my responsibility, low on the priority list?

    That's what WE see looking through the window, a lot of talk about it's not our fault, it's their fault, the other Agent not me, the consumers fault, it don't matter, we control the MLS so wheres the public gonna go, too bad but call me email me you can Trust us…..

    But we see no Accountability or Action suggesting Accountability is something to look forward to…….

    This is 2010 and you are just now discussing this competing offer issue of consumers may pay more than necessary due to….Rock on…..NAR announces housing prices increase lol.. Rock on

    Painting with too wide a paintbrush, heck ya need a Spay gun to paint the Trust/Accountability ISSUE.

    To all a challenge..Clear your mind, become UnRealtor, spend some time away from Blogging ect. AND BE A MEMBER OF THE PUBLIC FOR A FEW HOURS, don't go to the familiar blogs/discussion ect..pick at random from those you do not know, read some discussions between Agents you do not know….Then tell me…..Consumers/the public should Trust us.

  36. Alan May says:

    sorry… that wasn't meant to be anonymous… clearly, that was me… (not quite used to Jay's blog site)…

  37. Wow, way to go and stir up a hornet's nest, Jay!

    There are 4 ways a seller can respond to an offer … Accept, reject, counter, or IGNORE. Someone above stated something to the effect that the buyer has a right to see the multiple offers and if they don't it constitutes a breech of contract. How do you figure? Until an offer is signed by all parties there is no contract to be breeched.

    When a seller receives multiple offers they have the choice of accepting one of them as written and ignoring the rest, countering one at a time until he receives acceptable terms, or countering ALL of them at once thereby creating the "multiple-offer situation."

    Most REO sellers will counter all with a "highest-and-best" request … note that the seller does not give away their position by doing this, either. The buyers can up their offer, hold fast, or withdraw. Once the H&B has been responded to the seller will pick one to counter – either by accepting as written or submitting their own counter. There is no hard and fast rule stating that the REO seller will agree to the H&B offer as submitted.

    On the flip side, I have also had REO sellers receive multiple offers and just go ahead and pick one without countering anyone. They simply make their choice and ignore the rest. The seller or the seller's agent has no responsibility to disclose that multiple offers were received or give a reason why the other offers were rejected.

    Sorry, but I just don't understand the sense of entitlement I'm getting in some of these comments. The fact that a buyer submitted an offer does not guarantee that they will get the property or even that they will get a counter. I do understand the frustration when a buyer keeps losing properties to multiple offers, but maybe their agent should better advise them of the market conditions and make sure that they submit the best offer they can up front on properties that would typically generate multiple offers in their market.

    • Dorrie Quinn says:

      "Sorry, but I just don’t understand the sense of entitlement I’m getting in some of these comments. The fact that a buyer submitted an offer does not guarantee that they will get the property or even that they will get a counter."…

      It's not a sense of entitlement- it's a matter of being frustrated with seemingly shrinking ethical behavior by some agents. When a buyer submits a full price, or over asking price offer and their offer is rejected because there is a "better" offer accepted- and they find that property closed for more than 20k UNDER what they offered and that their offer wasn't presented to the seller because the agent was manipulating the pool of buyers,- makes you wonder if it's not the agents who have a sense of entitlement- that they are entitled to screw the buyer who made a good faith offer and the seller who should have gotten more for their property!

      • Jay Thompson says:

        Not presenting an offer to a seller is wrong (unless the seller has given specific instructions of offers to exclude from presentation). Obviously "manipulating the pool of buyers" is horribly wrong.

        I would NEVER defend those types of things.

        But, it is important for people to know that the offer amount is not the only thing a seller considers when they review offers.

        We recently had a seller accept an offer that at first glance would appear to be $18K "less" than a competing offer.

        Why?

        It was an all cash deal, with a 12 day close. The other offer had minimum down, very little earnest money, a questionable financing situation and a 90 day close. If they had accepted the "higher" offer, my clients would have had to make an additional 3 mortgage payments and they felt the possibility of the deal falling apart was high — if that happened how many additional payments would they have to make? They chose to accept a little less in their pocket (though not nearly as much as it seems once you factor in additional payments) for the peace of mind and stress reduction of getting the home sold and closed.

        I'm not saying this is what happened in your situation Dorrie, but it is something for people to consider. For all I know, buyer #2 in my case walked away saying, "We got screwed! We offered $18K more! That agent is manipulating the buyer pool!"

        Of course I explained to that buyers agents WHY we took the other offer. How she explained it to her client, I have no idea.

  38. Dunes says:

    Alan it was obvious enough I figured it lol, I doubt seriously anyone thinks it was something other than you say….

    To all

    I think Are You Kidding made some good points and shares his view with far far more of the public than Agents seem to believe…

    Are ya countin on the economy to drive buyers to the door? In 2010/11 the Trust/Accountability Issue may be THE issue for Agents IMO facing MLS challenges (Google?), declining prices and the other oft discussed topics of gloom. What tool or advantage does the Agent have to counter lack of public Trust in 2010/11, are you gonna depend on optimistic it's getting better it's getting better all the time observations, things are lookin good?

    I am in no way suggesting Gov. interference of any sort, I'm saying IMO it's up to you….Put up or shut up, the public sees you as ….so do something and it is what it is deal with it already……

    You want to sell Trust then produce Trust

    They are not held Accountable then make em accountable

    No rule, then make rules

    Do something

  39. Oh, and another thing … To whoever made the comment along the lines of how do you know that you're not getting screwed by paying more than you had to for a property … Think of multiple offer situations like a blind auction. If you're not comfortable with it, don't participate.

    Before making an offer of any kind you should have comps of the area and know how much the property is worth before jumping in. The only way you can get screwed is by not being armed with the correct information.

    Let's assume a property is listed at $220k and has the comps showing it could be worth up to $230k … You offer $200k. The seller states that they have multiple offers and requests you submit your highest and best offer. You decide to up your offer to $215k. The seller accepts.

    Now, for some reason you find out that there were no other offers … Are you pissed because you paid $15k more than your original offer or are you happy because you still got a $230k home for $215k?

    On the other hand, if during the negotiations you up your offer to $240k, you still can't call yourself screwed because you willingly went above the comps. No one was holding a gun to your head during the process. Only you know how high you will go and only the seller knows what he will accept.

    Bottom line – If you are comfortable with the offer you submit you have no right to be upset. It's called negotiation and it is how things are bought and sold. Don't hate the players, hate the game. Someone is always going to walk away feeling a little bit screwed. The seller is trying to get the highest price he can and the buyer is trying to get the lowest price he can. There is an inherent conflict during the negotiation process … Once everything has been agreed to then it is time for both sides to work together for the common goal of the closing.

  40. Dunes says:

    I think I stated my view so won't continue to rant but do Thank everyone for considering my view.

    I mostly wanted to congratulate Jay….I Googled the words (Competing offers) into the Google Blog search and Jay your blog was in the first spot.

  41. mark says:

    James: your scenario about the $15k: It's meaningless how the buyer feels, he was defrauded by an illegal practice. No, I don't feel entitled to inspect other offers during the process. That's not what I think people are saying. There need to be protections in the system that protect buyers while being fair to all. There is far too much money at stake here, and unfortunately, as dollar amounts increase, so does fraud.

    Also, I agree with the poster who said that banks often direct this practice. That's the impression I got from friends, and I don't want to lay this soley at the feet of realtors.

    • Sorry, I guess I'm still missing something. Please explain what part of my scenario was illegal or defrauding the buyer.

      What is it you are saying the buyer needs to be protected from? If a buyer wants to pay $500k for a $200k house is that illegal? Buyers set the price on anything that is purchased. A seller can ask anything they want for a property but if there is not a buyer willing to pay than it isn't worth it. Is the seller committing fraud by asking a higher price? Supply and demand at its finest, folks … Capitalism in its true form.

      Now, if a seller convinced a buyer that what they are selling is worth more by providing false comps or if an appraiser is paid off to provide a false appraisal then you have an argument for fraud.

      I don't see how the disclosure or non-disclosure of multiple offers or even a representation that there MAY be multiple offers in and of itself constitutes fraud. It's a negotiating tactic – no more, no less.

      A buyer making an offer on a property that has been fully informed by his agent with regards to comparable sales and market conditions goes ahead and submits the offer with his eyes open. If he wins the bid and goes under contract there are several laws and safeguards to protect the buyer … APPRAISAL, home inspections, etc.

      Sorry, but the more comments that are made, the more it sounds like frustrated buyers and buyer agents who are making low-ball offers and nothing is sticking.

      The sooner folks realize this is not the buyer's market the media portrays it to be the better off they will be.

  42. Are you kidding? says:

    James " Bottom line – Don’t hate the players, hate the game." exactly what I have been saying this games sucks because the rules are not in force.

    "if a seller convinced a buyer that what they are selling is worth more by providing false comps or if an appraiser is paid off to provide a false appraisal then you have an argument for fraud."

    That is no different than providing a false competing offer.

    The buyers decision could be changed based on fraudulent information. Comps, appraisals, inspections, other bids all are in the same category. False information purposefully given just to defraud the buyer through lies and manipulations.

    Misleading is misleading, fraudulent is fraudulent. You can not say one thing is ok to lie about but another is not just because it helps you or your client.

  43. It is different because at that point the offer has been accepted and a contract is in place. The seller did not force the buyer to submit an offer nor did they force them to accept a counter offer. You cannot cite or enforce contract law until there is a contract.

    If a seller or an agent or an appraiser provided false information which cause a buyer to suffer a loss then there is a problem. There is no loss during the offer phase so there is no fraud. There is ample time and safeguards in place after an offer becomes a contract for the buyer to continue with his due diligence and discover if there is any fraud being perpetrated. There is also recourse after closing for a buyer who was a victim of fraud.

    There are not a whole lot of rules that I can think of when it comes to negotiations. Contracts are a whole other animal. If you don't like the game take your ball and go home. Find someone else to play with that doesn't have a line of folks waiting to play with him.

  44. Joe Spake says:

    Good array of viewpoints, Jay. I explain the situation to my clients, and mention that the listing agent agent might be bluffing. It's the client's decision, but I LOVE to call a bluff. I have had clients walk when they were advised of a competing offer (which could potentially be disasterous for the listing agent), only to have the listing agent call me a couple of days later to ask me if my clients still wanted the house. Of course, the fun part begins there when you respond: Yes, but our offer just went down $10K.

  45. Are you kidding? says:

    I have always heard realtors talk about their code of ethics and how that code of ethics was there to protect buyers. From everything I have read above I now believe that is not true.

    If the code of ethics does not even say that it is against lying in negotiations how can a buyer ever feel that their agent is really looking out for them?

    Apparently ethics only come into play when the contract is being written but anything that leads to the contract being written does not count. Somehow, I thought that offers and counter offers WERE contracts.

    James said "There is no loss during the offer phase so there is no fraud. There is ample time and safeguards in place after an offer becomes a contract" If an offer is written it is a contract. The offer being based on fraudulent information is really contract fraud based on misrepresentation.

    The counter offer stating we have a (phantom) counter offer is also a contract. Someone needs to read some law books to better understand terminology.

    It must be nice to compartmentalize your ethics into convenient and not needed yet so lie until you absolutely can not get away with it.

    • Joe Sheehan says:

      I don't think anyone in this thread has suggested that it is OK to lie to anyone about anything in the course of a negotiation, although there has been acknowledgment that it may be happening.

      The theme of most responses as I understand it is that the seller has no obligation to share the terms of any competing offers with anyone, including other buyers and their agents.

      The VALUE one places on a particular property really has very little to do with the PRICE. A buyer ought to make their offer on a property of interest based on their own perception of it's value, not the perception of someone else who may be interested in the same property.

    • "Somehow, I thought that offers and counter offers WERE contracts."

      Sorry, but you are wrong. An offer is an offer. It does not become a contract unless all parties ratify the offer. If it were otherwise, as soon as an offer was submitted by the buyer the seller would be bound by the terms which they are not. You cannot have a contract without a "meeting of the minds" which does not occur until both buyer and seller sign the offer, any and all counter offers, notice is delivered to the party that made the final offer/counter offer AND acknowledged by same.

      If we go by your definition of an offer being a contract then here we go …

      I, James Malanowski, offer to purchase "Are You Kidding's" personal residence for the amount of $1.00 payable in annual installments of $0.01 per year to be financed by the seller with an annual interest rate of 0% amortized over 100 years. Earnest money of $0.01 shall be deposited into an escrow account within 3 business days. Seller shall pay all of buyer's costs and cover all taxes and transfer fees. Seller to purchase a 2010 Ferrari and transfer ownership of same to buyer at close of escrow. Escrow period to be 15 days. Buyer to take possession of the property at 5PM on the date of the close of escrow.

      OK? Let's go … According to your way of thinking I just made a binding contract with you, right? So c'mon, where's my stuff? How ridiculous do we want to make this?

      BTW, I want my Ferrari in red.

  46. Dunes says:

    And as far as I know no one is suggesting any Agent should reveal the terms of anything, just that the offer exists…It's as simple as that, confirming the claimed other offer actually exist nothing more than that..Don't care if the other offer is more, less.. just that the other offer claimed to exist by An AGENT actually exists.

    How difficult is it to grasp the concept that a consumer may want to know that before offering more or that not being able or willing to confirm could be reasonable concern to consumers plus add to the Consumers already shaky view of Agents?

  47. @Joe Sheehan: You've hit the nail on the head. Thank you.

    @Dunes: You hit it also. The concept is not difficult to grasp at all – the fact that the buyer would want to know if there are other offers has never been disputed. The issue that started this whole thing was that buyers/buyer's agents are wanting more than the listing agent's word that there are multiple offers. What else can we give other than our word? I will not be sending copies of the offers to other buyers which would be the "ultimate proof" I suppose.

    I understand that there are agents out there who may lie and say they have them when they don't, but is that the norm? As I stated before, I only say I've got them if I do, so I can only speak for myself on this. If someone doesn't take my word then that is their problem.

  48. Dunes says:

    "If someone doesn’t take my word then that is their problem."

    I disagree…If you are the one selling the Services then it's YOUR problem and that of the Industry you are part of. I think most people in the public would agree with me.

    Not seriously considering the possibility I'm right is a Business decision in my view and all who are in Business are free to decide for themselves the importance of, the relevance of this or anything else they wish. It's your Business.

    I'm just saying I'd consider it and I'd consider it Seriously. I'm also just saying why.

    Credibility…. Because without that, hope of ever being considered a Business to Trust is unlikely.

  49. Jay Thompson says:

    “If someone doesn’t take my word then that is their problem.”

    I have to go with Dunes' take on this one.

    It *IS* our problem. "Our" being the real estate industry in general. We've hot a HUGE perception policy within much of the general public. I know for a fact my clients can trust me completely. But I've still got to earn that trust with each and every one of them. And sometimes the arcane practices within real estate make this difficult.

    We can't just say "trust me" and expect people to follow blindly. We've got to earn that trust.

    I feel a blog post coming on… ;)

  50. Sorry, but I don't feel compelled to take on the task of boosting the image of the industry as a whole … my shoulders just aren't that big. My business is built on my word and reputation so when my ethics or word are questioned by someone that doesn't know me from Adam pisses me off. There are way too many people to work with in the world for me to waste my time trying to right the wrong that was done to them by others.

    Personally, when I work with another agent that I have not worked with before, I go into the relationship giving them the benefit of the doubt until they give cause to make me change my mind. We have to assume that our colleagues are honest otherwise the system fails. The folks involved in this conversation have either been screwed in the past or are inherently distrusting. That's understandable, but I am not their therapist and I am not the one who screwed them.

    If someone comes to me with the attitude that I am going to screw them over I may try to show that I am not the same as the "last guy" but if after a few exchanges and they are still on the defensive I will not work with them as I have better things to do with my time and energy than to right the wrongs of the world.

    Salespeople of ALL types have a perception problem in the world. That will never change. *I* don't trust salespeople. I guess that's why I've never considered myself a salesman … I'm a consultant and a customer service rep. I suppose my way of seeing things comes from being in the construction and service business my whole life before moving into real estate. Contractors don't have the best reputation as a whole either so I guess I'm used to the adversity and tend to ignore it at this point in my life.

    Both of you quoted my last line "If someone doesn’t take my word then that is their problem." What you didn't take away from that statement was that I stated that I am speaking for myself. I choose not to work with people that constantly question my honesty based on their past experience with others.

    Jay, you said, "I know for a fact my clients can trust me completely. But I’ve still got to earn that trust with each and every one of them. And sometimes the arcane practices within real estate make this difficult." I totally agree with this and this is also my way of working. My statements are directed towards folks that are constantly questioning my word no matter how many times I show that I am trustworthy.

  51. Are you kidding? says:

    "We have to assume that our colleagues are honest otherwise the system fails."

    Since we have examples above that strongly suggest that some agents are claiming multiple offers where none exist I agree. When proof is shown then no ones word is ever doubted. We can see the truth and not rely on hope. I hope that other agent is telling me the truth.

    The system fails.

    • There will always be those that are not worthy of trust in any industry or life situation in general. My question from a few comments ago was "is it the norm?" It another case of "one bad apple" … and please don't say there's more than one bad apple because obviously there is more than one and from your comments it seems you may have run into one or two of them in your own dealings.

      You bring us back to the original topic of this post (thanks) … What type of proof would be acceptable to you? I contended that the statement of the listing agent *should* be proof enough. We cannot provide copies of the offers, so what would you consider to be satisfactory?

  52. Scott says:

    It's funny…I am in FL which is pretty similar to AZ in terms of short sales, REO sales, etc. I get the same response from seller agents. IF the home is on the market for over 2 months, I always question them with the same "It's a remarkable coincidence" line. Jay, its funny because I start my response with the same 4 words you do! It's just short for telling the agent that they are full of sh!t….and they ought to know that.
    .-= Scott´s last blog ..Construction Financing for Borrowers of Primary Residences =-.

  53. Dunes says:

    The thought just seems odd…..RE Agents cannot think of a way to verify if there is actually another offer as claimed by another Agent…

    Alright I completely believe many Agents do not see a need to be able to verify….

    Thanks for the discussion gonna go back to AgentGenius and finish reading the discussion on how to built Trust/Credibility with the public…

    • That's an unfortunate cop-out to a decent discussion. You were asked what you would consider appropriate proof.

      As a broker, I say that my stating that one exists should be good enough because *I* know that I do not lie. Since you have an inherent distrust of my word as a broker, I'd sincerely like to hear any suggestions you may have so I can assure you that I do in fact speak the truth.

      If you have a reasonable idea I would be more than happy to consider the suggestion and put it into practice so that when I come across a customer such as yourself I will be able to put their mind at ease.

  54. Dunes says:

    "unfortunate cop-out"

    The Blog is a Question about should Agents be able to confirm the existence of another offer and if yes then how could it be done…I answered the first part of the question (Yes) and gave my reasons for my answer.

    The second part of the question seems like something Agents should be more qualified than me to answer because it your system, your culture, your rules, your profession and your problem…..

    Who's copping out by asking Consumers how to do it?

    What would satisfy me? That you are able to verify the existence of another offer. Why?

    1. I gave my reasons already

    2. Want something that would satisfy me? A idea?…..Put the burden of honesty/accuracy on the Buyers Agent.

    They can verify it (how? That's the industries problem to figure out) and if they don't the responsibility/ legal liability falls on them.

    I know I have immediate action I can take/who to blame/who is responsible/whatever if the offer did not exist and that resulted in costing me more than necessary.

    • I wasn't referring to the blog question, I was referring to my question to you (actually to "Are You Serious?") which I thought you were replying to.

      We're going around in circles now. I want to hear from an untrusting consumer what they would consider to be proof. If you're asking me to respond as "part of the industry," when I'm told by a fellow broker that there are other offers I have no choice but to take them on their word.

      I still don't understand how you figure that there is any legal liability regarding the existence or non-existence of other offers. I also don't understand your repeated comments about the existence of multiple offers (or lack thereof) causing you to "pay more than necessary."

      If you submit and offer and the seller states (or directs his agent to state) that there are other offers (when there are none) to entice you to up your offer and you decide that you are willing to pay more to secure the property how have you been wronged? The fact is, the seller wasn't willing to accept your offer as written and you were willing to pay more. You did not pay "more than necessary" because it was necessary for you to pay more for the seller to accept your offer.

      Let's turn this around for a minute. If you submit an offer that is lower than you are ultimately willing to pay is that defrauding the seller? What if you submitted your low offer, were willing to pay more, but instructed your agent to tell the seller that the offer submitted is your best and final offer? What if the seller somehow found out that you were willing to pay more money, should he hold his agent liable? Your agent? What if the seller asks you for proof that you are not willing to pay any more for the property … What proof will you provide?

      We constantly have buyers submitting offers on multiple properties hoping that one will stick. Typically, the buyer does not disclose that they are doing so. My seller decides to accept the offer and we are told that the buyer has already opened escrow on another property so they no longer wish to move forward with ours. Is this tactic OK with you because it's the buyer doing it and not the seller? Should the seller have any recourse because the buyer did not tell the truth and disclose what they were doing?

      The point is, once again, negotiation can be a rough thing to go through for both a buyer and a seller. You, as a buyer, need to work with an agent that will provide you the data to make an informed decision on your purchase. Before making your offer you should know what the property is worth by studying the comps in the neighborhood and know what your max is that you're willing to pay. If you decide to offer low and negotiate it does not matter what the seller's negotiating tactic is … You know how much you're willing to pay and if you can get the property for that price or less you should be satisfied.

  55. Dunes says:

    I'd like to address this theme also..

    "The VALUE one places on a particular property really has very little to do with the PRICE. A buyer ought to make their offer on a property of interest based on their own perception of it’s value, not the perception of someone else who may be interested in the same property."

    I do not see this as a discussion on why someone should or should not increase their bid. I see it as a discussion about….. Should a client have an expectation that when the Agent (Who is being compensated for their services, doesn't matter from who just that they are) representing them says…."There is another offer" it is indeed a fact.

    Why?… James said it best early on in this thread.."The only way you can get screwed is by not being armed with the correct information."

    Trying to dump the blame for paying more than necessary in a scenario like the one Jay presented back into the lap of the consumer with they should they should, it's their own fault seems to me (and I truly think most non-agents in the USofA would agree) to be a poor defense to shouldn't YOU (Agents) be able to verify an actual legitimate second offer actually exists.

    Who cares why the people in this scenario raised their offer, the decision to do so was motivated by "There's another offer"…. period. Why they decided to or if they should of or they should have known…Who cares?

    • Our comments are crossing over each other, so I already responded to some of this above.

      In the quote of mine you are referring to I was talking about pricing information not negotiation tactics.

      To reiterate, there is no such thing as "paying more than necessary" if the seller has said that they will not accept your offer. No matter how they say it, that is what they are saying. They are giving you the opportunity to increase your offer if you so desire. If you don't want to you don't have to.

      But we keep straying from the question. What, as a consumer who does not trust the word of an agent, would you consider to be good-enough proof of multiple offers?

  56. Dunes says:

    "In the quote of mine you are referring to I was talking about pricing information

    not negotiation tactics."

    I understand….the quote is true in one case..pricing information but not negotiation….

    Isn't it the Consumer/client who decides to negotiate (through the Agent) or not and how much lee-way the negotiator (Agent) has? And based on what?

    What's the point of worrying about negotiations in the presented Scenario anyway the Buyer ended up paying $15000 because there was no other offer. The buyer basically was negotiated UP in price by a non-existent offer.

    "But we keep straying from the question"

    Multiple offers is straying from the question… just confirm A offer exists first.

    • "Isn’t it the Consumer/client who decides to negotiate (through the Agent) or not and how much lee-way the negotiator (Agent) has? And based on what?"

      Actually, by not accepting the offer as written, the seller has initiated a negotiation if he chooses to counter but of course, negotiations are between the buyer and seller either directly or through the agents. Agents have no power other than what is given to them by their client. The final decision is always made by the buyer and seller – agents are not principles in the negotiations.

      The basis of the negotiation is what the buyer is willing to pay and what the seller is willing to accept (other terms are involved too, but let's keep it simple).

      "Multiple offers is straying from the question… just confirm A offer exists first."

      That is exactly the question I keep asking and no one wants to answer. How can we prove, other than our word, that another offer exists short of providing you a copy of the offer?

  57. Dunes says:

    "That is exactly the question I keep asking and no one wants to answer. How can we prove, other than our word, that another offer exists short of providing you a copy of the offer?"

    And I already gave my answer/example and as far as how Agents verify to each other..

    Your problem

    • As I have given mine.

      I just went back and re-read all of your comments on this thread and nowhere did I see you offer any ideas. You just keep saying it's "your problem." That is not an answer nor is it helpful to the conversation. I don't hold an inherent distrust of agents, so the way I see it, it is your problem.

      If you enter into a relationship, business or otherwise, already decided that you don't trust the other party then the relationship is set on a course towards failure from the get-go. In my years of experience and numbers of transactions, there are a lot more honest agents out there than dishonest ones so I tend to take them at their word unless I have reason to doubt them.

  58. Jeff Silhacek says:

    It's all relative to market value. If the buyer feels it's a good deal at one price point, is it still a good deal at the higher? A game of chicken with regards to call for highest and best, or being told there are other offers. Stay or raise. Much like poker.

    Market value, market value, market value! :)

    Even as a buyer's agent, I believe in the blind bid. I have to trust in my colleagues…and I say that with a sigh, because I know of a few bad apples. You read it the best you can and provide that info to your buyer. Am I right all the time, hell no. But, providing your client with the best info and explaining the game is all you can do.

    Win or lose, don't descend to the level of the worst of the industry, rise to the level of the best.

  59. Dunes says:

    I guess I just don't get it.

    I would think if any Agent asked their client if they would like them to verify that there is actually another offer before they go ponder the situation that most likely the client would appreciate being able to do that and many would avail themselves of the Service/openness of the Industry.

    I wouldn't think in many cases they would say, No thanks I was thinking of bidding $15,000 more because there are no other offers and I don't want to blow this deal or I was thinking the Property is worth more and making another offer anyway…

    If you are the BUYER and you have made a offer on a property (the only offer) and that place sits for awhile odds are in this housing market in many markets you got a shot especially if it's sits or the owners are desperate and if the offer is unreasonable the SELLER can refuse it…Too many possible Scenarios that could work in favor of the client/buyer to discard this thought when considering advantages, negotiations, prices ect…

    But I guess I just don't get it….That's ok I'm not the industry with an image problem or trying to think of ways to gain consumer confidence….

    Good luck, gonna go read the " Occum's Razor " theory

    • You say: "I would think if any Agent asked their client if they would like them to verify that there is actually another offer …"

      Again, my question is verify HOW? Please don't say that it's my problem because I've lost enough hair already during this conversation. As a listing agent, if I have an offer I say so and expect the buyer agent to take me at my word. As a buyer's agent, if I'm told that there is an offer by the listing agent I believe him. As far as I'm concerned there is no further verification needed. I have no reason to think that the other agent is lying as I don't see the point of the lie. The only way to have physical verification is if I actually see the offer in question which is not going to happen.

      You say: "I wouldn’t think in many cases they would say, No thanks I was thinking of bidding $15,000 more because there are no other offers and I don’t want to blow this deal or I was thinking the Property is worth more and making another offer anyway…"

      If you or your agent truly has a feeling that other offers are NOT on the table and the existence of another offer would be your sole reason for increasing your offer then you always have the option of calling bullshit. If the seller is bluffing he'll flinch and you win.

      I guess my problem is that I don't understand what the benefit of this tactic would be in the first place. When a seller states that they have multiple offers they run the risk of losing a buyer who doesn't want to get involved in a bidding war. Why would they want to lose a possible buyer? If you make an offer and the seller isn't happy with it they can simply make a counter offer and open negotiations. By calling for "highest and best" as if they had multiple offers the buyer may up their offer but the offer may still not be what the seller wants. At that point the seller would still have to make a counter offer, so what's the point?

  60. Dunes says:

    "As a buyer’s agent, if I’m told that there is an offer by the listing agent I believe him."

    Then in my opinion as a Consumer you should be held liable for the $15000 for making that assumption if it is incorrect and there is no other offer. It is your assumption based on whatever, it's not your CLIENTS assumption and your CLIENT should not pay more than necessary because YOU choose to make that assumption.

    Anyone is free to disagree with me….I think the question Agents should be asking themselves is not who is right or wrong but which one of us is the Public, the buyer pool going to agree with.

    Answering that question will supply accurate information for Agents in determining how to gain and maintain the Trust of Consumers IMHO….

    We disagree and that's ok….I have nothing at risk or any Services to sell, I'm not competing for clients, or looking for leads..It's just my opinion

    • Dear Dunes,

      Hopefully someday you will be successful in purchasing your home and see this discussion from another angle.

      This is free market at work and you cannot take out all the uncertainty. If you don't wish to bid on a property don't. Depending on market conditions you may or may not get the property. It is your choice!

      There will never be universal trust of real estate agents, just as there won't be of Doctors, Attorney's, or certainly whatever profession you are in.
      .-= Jeffrey Douglass´s last blog ..Last Park Terrace Studio Priced at $195,000 – Builder Closeout =-.

    • The client can choose to believe or not. The client can choose to up their offer or not. You keep going back to the "more than necessary" line but if the seller won't accept the buyer's offer than it is necessary to offer more whether or not another offer actually exists.

      If the buyer gets his offer accepted for less than the list price is the agent liable to the seller for the $15,000 that was "stolen" from him if it is discovered that the buyer said he would not go any higher because he didn't qualify for a higher loan when in fact he could?

  61. Dunes says:

    Just in closing to support of the importance of these kinds of issues as a major.. I said MAJOR consideration when discussing Consumer Trust and/or Credibility in anyway…

    Consider this…RISMEDIA, February 5, 2010—"Real estate-related issues were the leading legal service request among members (customers) of Pre-Paid Legal Services, Inc. during 2009 followed by 2) consumer finance, 3) family law, 4) collections and 5) estate planning. The top five legal service requests for 2009 is based on the total volume of 2.3 million member requests for legal services to the 40 independent provider law firms that assisted Pre-Paid Legal members throughout the U.S. and four provinces of Canada for calendar year 2009."
    http://rismedia.com/2010-02-04/real-estate-issues

    Things like that just make me lean the direction I do

    • I am well aware of the public perception of real estate agents. It is unfortunate that the few destroy the reputations of many. The stats you quote don't surprise me especially with the climate the way it has been the last few years.

      If I could wave a wand and fix the industry and the perception of the industry I'd do it. Sadly, I'm one broker who can only serve his clients the best way I can.

      I heard Jay has a wand … maybe he'll wave his. :)

  62. Dunes says:

    BTW Jeffrey you are totally correct in your portrayal of me..

    Good point you win..

    Social Media workin for the Agent and Industry

  63. Great Information…Thanks

  64. Are you kidding? says:

    James said "As a listing agent, if I have an offer I say so and expect the buyer agent to take me at my word. As a buyer’s agent, if I’m told that there is an offer by the listing agent I believe him."

    James said "If you submit and offer and the seller states (or directs his agent to state) that there are other offers (when there are none) to entice you to up your offer and you decide that you are willing to pay more to secure the property how have you been wronged? The fact is, the seller wasn’t willing to accept your offer as written and you were willing to pay more."

    Jeff said "Even as a buyer’s agent, I believe in the blind bid. I have to trust in my colleagues…and I say that with a sigh, because I know of a few bad apples… But, providing your client with the best info and explaining the game is all you can do."

    Dunes said " if the offer is unreasonable the SELLER can refuse it"

    James said "the seller would still have to make a counter offer, so what’s the point?"

    Here is the point. Realtors do not trust each other. (Thanks Jeff) They know the poor buyer is being lied to about multiple offers at least at times.

    If the seller is not willing to accept my offer come back with a counter offer. Simply say I reject your offer. COme up in price. That is simple enough. No fraud could be claimed that way. I try to make you come up in price, you try to make me come down. Either we meet in the middle or no deal happens.

    By claiming false multiple offers (as suggested by James) the buyer has been lied to. The sales contract is based on misleading information and that is enough to invalidate a contract. If a contract is based on false and misleading information it can be (and has been) invalidated in court. Contracts are invalidated when the basis they were formed on has been found to be fraudulent.

    • Joe Sheehan says:

      Believe it or not, in circumstances where there may be multiple offers, a seller agent may disclose this information not only to benefit his client but also to benefit the buyer who may actually want the property and would be willing to strengthen their offer. Notice I said "strengthen their offer" rather then raise their price. I have represented buyers who have lost in multi-offer situations to lower price offers with contingencies more favorable to the sellers, especially true in REO situations where banks don't like inspection contingencies.

      Perhaps we should change the expression to "highest AND best" to "higher OR best", or maybe just plain "best".

      Isn't asking for the buyer's best offer the same as saying your offer isn't good enough, I need you to do better? Isn't it the same as making a counter offer? I think it's the same question, just different words.

      I am not a lawyer, but as I understand it, disclosing that multiple offers exists when there are none is certainly a lie, an untrue statement, a misrepresentation. In order for fraud to occur, the victim must suffer and prove consequent damage. I think that in order to prove consequent damage, the buyer must show the seller would have accepted the original offer had the buyer not increased the offer based on the misrepresentation.

      Certainly, the surest way to know there are other offers is when the seller agent calls and says "Sorry, the seller has accepted the other offer".

      I just tell my buyer clients to just give it their best shot and hope for the best.

      Caveat Emptor.
      .-= Joe Sheehan´s last blog ..Pinewood Derby =-.

    • First of all, I did not come up with this false multiple offer scenario, I have only kept with the line of discussion that was brought up by others. I, personally, do not and would not use this tactic nor do I even think that it benefit my seller client in the first place.

      You said: "If the seller is not willing to accept my offer come back with a counter offer. Simply say I reject your offer. COme up in price. That is simple enough. No fraud could be claimed that way. I try to make you come up in price, you try to make me come down. Either we meet in the middle or no deal happens."

      This is exactly what I stated should be the correct way of handling the negotiation in the first place in several of my prior comments.

      Joe Sheehan says: "I am not a lawyer, but as I understand it, disclosing that multiple offers exists when there are none is certainly a lie, an untrue statement, a misrepresentation. In order for fraud to occur, the victim must suffer and prove consequent damage. I think that in order to prove consequent damage, the buyer must show the seller would have accepted the original offer had the buyer not increased the offer based on the misrepresentation."

      And I could not have said it better myself.

      Again I will say that I do not agree with any agent that uses this tactic and I would not do it myself … This is only a discussion of a scenario that a few have brought up that may or may not have had happen to them.

      As I said before, I do not have an inherent distrust of other agents as you are implying or as it appears that you have. Of course there are some bad apples but there are bad auto mechanics, bartenders and preachers too.

  65. Mike Thomas says:

    I know very well about Trulia Voices Community. Trulia Voice Community is helpful for everyone like real estate buyers, sellers and professionals.

  66. Dunes says:

    Only here because I received an email asking me to explain what I meant by this..

    "BTW Jeffrey you are totally correct in your portrayal of me..

    Good point you win.."

    ———————————————————————————————————

    I did not mean I was a frustrated buyer unfamiliar with the process who is angry at Agents….

    I meant I have had discussions with hundreds/thousands of Agents and after that have nothing to really say if all ya got is suggesting the other side of the view (if it's a non-agent) must be that of a frustrated consumer just blabbing with no knowledge of the industry or who's still trying to figure out how to buy or possibly a Troll ect.

    I have little to say tocomments like "Hopefully someday you will be successful in purchasing your home and see this discussion from another angle." as if that makes some sort of point like no need to consider your position you are just anti-industry anyway…..I have made hundreds and hundreds of comments in a National Forum in support of using Agents and in support of their credibility over the past 15 months…

    Thanks for confirming I have do have reasons to do so no longer and putting my mind more at ease in saying hundreds and hundreds of times in the next 15 months in a National Forum where I have might possibly have "EARNED" a tad bit of credibility….

    Don't trust Agents because……..

  67. Jason Crouch says:

    Jay – I wrote a post on this topic just over a year ago that has nearly 200 comments. I didn't read all of the comments here, but you might find this to be helpful/interesting:

    http://activerain.com/blogsview/958061/My-Plan-to
    .-= Jason Crouch´s last blog ..The Importance of Knowing Your Audience =-.

  68. MyTitleGuy says:

    Great post Jay, my wife and I bought 3 REO properties in Phoenix almost a year ago. We paid cash, obviously a better bargaining position. How ironic that we received the "highest and best" language from 3 different agents representing 3 different banks. We chose not to increase any of our offers, (1 was not suitable for FHA financing so I figured that one was in the bag), we got all 3. I would have liked to know if there were actually other offers. As a consumer first, does it reallly hurt anyone to say "the highest offer is X"? I would think that transparancy would be a better win for all the parties….am I wrong?

  69. Are you kidding? says:

    MyTitleGuy "As a consumer first, does it reallly hurt anyone to say “the highest offer is X”? I would think that transparancy would be a better win for all the parties….am I wrong?"

    You are absolutely correct. But throughout this who blog and the thread on trulia it became apparent that no realtor (well almost none) want to be honest and show the buyers what is really going on.

    Since we can safely assume that a realtor will NOT show there really is a competing offer I say the safest thing when told that is to drop your offer in reply to this kind of push.

  70. It would be great to know if there were truly other offers, and especially helpful to know the terms.

    Typically, the listing agent simply claims to have one or more offers and requests “highest and best.”

    I wouldn’t want my buyer’s offer being sent to anyone else. However, ironically, in the California Association of Realtors Forms, one of the standard disclosures, provided after acceptance of the offer, states that the listing agent may disclose “the existence, terms, or conditions of Buyer’s offer unless . . . all parties have signed a written confidientiality agreement.” So, I suppose the listing agent can divulge any information they want to provided they are not also the buyer’s agent.

    This could make things very interesting, though I haven’t seen it done before.
    .-= Christine Donovan´s last blog ..Is Your Offer for on a Costa Mesa Home More Likely to be Accepted if You Pay the Seller’s Closing Costs? =-.

  71. Paco McDooby says:

    For all of those who intend to lie about offers, you're probably committing civil fraud under Arizona's Consumer Fraud Act. Here's the meat of it (A.R.S. 44-1522(A)):

    "The act, use or employment by ANY PERSON of ANY DECEPTION, deceptive act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact WITH THE INTENT THAT OTHERS RELY upon such concealment, suppression or omission, in connection with the SALE or ADVERTISEMENT of any merchandise whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice."

    Before you object and say that real estate is not "merchandise," let me clear that up. For the purposes of consumer fraud, real estate IS merchandise: "'Merchandise' means any objects, wares, goods, commodities, intangibles, real estate, or services." A.R.S. 44-1521(5).

  72. Bill Gassett says:

    Excellent article Jay. I enjoyed reading the comments just as much. I would agree with the opinions that many have about the lack of professionals in our industry that seem to hang out and provide a constant source of misinformation over at Trulia. It always amazes me when Realtors comment on legal matters in other states where they have no expertise.
    .-= Bill Gassett´s last blog ..Handling Offers When Selling a Massachusetts Home =-.

  73. big says:

    Buyers, don't get stuck on a single property. There are millions of properties for sale. If someone claims to have another offer on the table, do this. Make no offer and notify the owner/listing agent that your not going to waste your time if someone else is going to out bid you. You may mention that if the other offer is not accepted you would like to make an offer, although I never do. Very frequently, more than 50% of the time the listing agent has come back to me asking for my offer. My offer then is always at least 15% lower that it was going to be before the competing offer was mentioned. Here is the rational you are correctly using. If the other offer is not accepted it must have been a low offer or something is undesirable in the deal. If the other offer is never made then you are the only 'bidder'. Remember if the property sells there are millions more to choose from!

  74. Chris says:

    Seems like most posts are from real estate agents. I'm not, but I'd like to share my experiences.

    My husband and I are in the market to buy a home. We're pre-approved and do not have a house to sell. We've found 3 homes over the last few months that we've been interested in. All three have been on the market for over a year with no recent reductions (within the past month or so).

    The first was an REO that was snaked out from under us. We had worked out with the agent a "pre-inspection" prior to our offer since he said no contingencies but the day our inspector was there two other showings happened. Mind you, up to this point, there hadn't been any recent showings according to the REO agent. Our inspector said that he had walked away from his paperwork for a moment to come back and find an agent looking at them. An offer was put on the house that afternoon.

    The second was a normal sale and the day that we were going to put an offer on someone else put an offer on it first. The agent played the "don't bother"/"submit your offer" game with our agent. It was more than we wanted to spend. We decided to let it go, and it went.

    The third is a short sale. We were planning to meet our agent this Wednesday to put together our offer. Our agent was just informed that they received another offer this morning. This is the incident that brought me to with article.

    I know it's not unusual to have multiple offers. But we're not having any luck across the board. My husband has grown very skeptical of both selling agents and our buying agent (pushing us to go over what we said we wanted to spend). So much so that we've fired two agents. We're at our wits end. We don't know wether to trust the agents or not. Obviously the second home we lost was legit but it's making me not want to buy.

  75. Chris – I don't see how you were cheated in any of the examples you gave. In the first one, you took a chance by conducting a pre-inspection before you made an offer. If the home sold while you were taking the extra time to inspect, isn't that your own fault for not making an offer with and inspection contingency? You still have the ability to back out of a contract after an inspection on REO properties, and some lenders will even make repairs. Sounds like you just needed better advice from your own agent, but you weren't cheated by the listing agent. It's their job to sell the home for their client, the seller, not to wait for you to conduct inspections and decide if you want to make an offer.

    In the second example, you decided to back out because you didn't want to pay more. Again, your decision, and you said it did sell to the other buyer, so you weren't being lied to by the listing agent about a phantom second offer. And, in the third example, you just didn't move quick enough and someone bought it first. Again, how in the world were you misled or cheated?

    Sounds like you just need to hasten your decisions, and maybe to do a better job of interviewing the agents you choose to represent you. I don't think it's fair to blame your lack of results on the listing agents or to claim you were cheated.

  76. Marc Brodeur says:

    Jay,

    It looks like a few did read your entire blog! I think your first explanation makes the most sense. No agent in their right mind would "make up" another offer. Most agents simply want to sell the house, end of story. Why risk blowing it and have your only buyer walk? If you "made up" and offer, you have violated your fiduciary duty to your seller.

    I can see how it would raise suspicion in the mind of the buyer. In my experience, when the price is dropped to a certain level, suddenly a few buyers will come out that were watching it. If there has been zero offers, with no price changes, and then suddenly there are offers, that raises more questions if I am representing the buyer. I can always respond with, as you did, this is our highest and best.

    I think the chances of someone making up a fictitious offer, though not impossible, is very unlikely. There is too much down side, primarily losing the one buyer you do have

  77. Joe Leary says:

    I am a buyer and just finished the highest and best game with an REO property. I did not win, but in order to be a better buyer and perhaps be able to complete the transaction next time, I would like to know what the completed contract terms were. It seems to me that once buyer and seller have signed the contract, that information as well as the other competing offers (price and trems) should be made available to the competing parties. Where is the harm in that? If the original deal falls through, it most likely will be after several weeks and the players may have moved on. If not, one or more may still be interested in the property and the game begins again.

    The seller is not hurt, the real estate agents are not hurt, and the potential buyers know that there were actually multiple offers and can make better decisions next time.

  78. Rob says:

    Same this happen to me. List at $324,900 we offered $299,000 they counter with $320,000. We counter back with $310,oo0 then all of a sudden after 121 days on the market some offered $334,000 but the real estate agent said they would sale it to us for asking if we offer.

    What BS. They handcuff you once they find out you truly like a house. Watch out and it should be illegal.

  79. Dave says:

    Once the offer has been made, it should be required that the listing agent supply proof that the competing offer was genuine. At that point, no compromise exists, and the listing agent should be liable for the increase in purchase price which, lets face it, was obtained by deception.

    Of course, if the competing offer was, genuine, the listing agent would have nothing to worry about, and neither client would have been compromised.

  80. Bill Fox says:

    Why can't all offers be made public after the closing. That would force all the agents who might be tempted to do this from taking the risk. Seems simple to me.

  81. Chris says:

    I have had my own experience over the past year with last minute bids coming in to the table after nothing happening for months. This happened in the Orlando area. In one of my failed transactions the builder actually took a lower bid than what I had offered. On Friday it looked like a sure thing but by Monday it was a totally different situation. Apparently the builder’s realtor knew someone or the realtor bought it themselves. A couple weeks later the property was flipped and already on the market for a higher price.

    This is a weird case where the higher bid did not win out but it does make an interesting point. Realtors that also dabble in buying real-estate could be the competition. In my case, I believe that is what happened.

    The story has a good ending. I now have a two bedroom condo that overlooks Lake Eola. I also got a good price. It just took some luck and time to get.

    My recent post We love our place

  82. Not sure how I missed this post before but it's not only well written but hits on a major "issue" we face in the real estate industry. It's just my opinion, but I'd venture to say most agents would not risk losing a deal over $450. After splits, referrals, brokerage fees, etc. they stand to get only a portion of that "extra" cash anyway. Yes, there are some unscrupulous folks out there but the vast majority of "us" are playing within the rules. If I say I have another offer, you best believe I do…always.

  83. Wow, your explanation says it all. I often get confused with the proofs and banking things too, but now I know what happens behind the scene.

  84. David says:

    Very interesting post. I was wondering if an existing offer has been submitted to the seller does that at times deter potential buyers from making an offer? I have just made an offer on a house that was just been put on the market. My question is 1. will other buyers be informed that an offer exist when they go in for a showing? 2. If so, would they be less likely to make an offer with that knowledge? Wouldn’t it be better if they didn’t know then submit an offer and then find out. Many questions I had were answered by reading this article. Thanks!

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  2. GallupRE says:

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  3. [...] Can I get proof of a competing offer? – If you are asked to raise your price because there is a higher offer can you get a copy of that [...]

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