Home Buying in 92130>Question Details

Myax, Home Buyer in Del Mar, CA

Back up Offer represented by the selling agent

Asked by Myax, Del Mar, CA Sat Dec 22, 2012

How do we ensure that the Seller has seen our back up offer?
We went with the selling listing agent to represent us (buyer).
While we were negotiating the price the agent called and told us that the seller got a higher offer and they were going with it.
He did not let us proceed with our offer nor did he counter the offer.
So we eventually said we want to put in a backup offer in case the one which the sellers had fell through. He was not very enthusiatic about putting in our back up offer.

Eventually I got our offer in, but how would I know that the Sellers have seen our offer?

I am still a little peeved that the agent did not submit our initial offer.
He wanted us to up the offer a lot before actually submitting it.
We want to explore all the options out there and was wondering what it would take for the seller to consider our offer (not as a backup offer).
Can we go through another realtor with a higher offer?

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Answers

12
Myax,

Technically speaking, a listing agent MUST present all offers received to the seller. It is not the listing agent's choice to decide which offers to present, ALL OFFERS must be presented, even if escrow has already opened.

I an understand your frustration as it's almost a blind trust that your wishes are carried out. Your best bet is to work with a Realtor who is YOUR agent, not the seller's agent, so you know that your best interests are sought after.

Unless you have signed an agreement to work exclusively with an agent, you are free to use another Realtor.

Best of luck!

Royce Kemp
Premiere Properties
858-480-5570
1 vote Thank Flag Link Thu Dec 27, 2012
In this situation the realtor has a fiduciary duty to both you the buyer as well as the seller, as a result dual representation must be disclosed to both parties. You could go direct to the seller and ask the very question stated above "what would it take for them to consider your offer."

If you did not sign a contract with the agent then you have the option to do as you see fit. I would give the realtor the benefit of the doubt and attempt to get a little more color on what occurred. There are a multitude of things that may have happened. For example the seller could be looking to close quickly and was really looking for a cash offer. Without knowing all of the details it is difficult to state why things unfolded the way that they did. If you cannot get an answer that satisfies you , then there is now a breach of trust and will make things difficult going forward.

If you need additional insight, feel free to call me 858-947-8677. Once again I would first speak with the parties involved to see if you can resolve the miscommunication.
1 vote Thank Flag Link Sat Dec 22, 2012
How do we ensure that the Seller has seen our back up offer?

Response: If your agent says the Seller has seen your offer, why do you doubt that is true? However, there is a box on the bottom of page 8 of the standard purchase contract used in California that is titled “Presentation of Offer”. In this box, the listing agent can insert the date the offer was shown to the seller and initial it. Ask your agent for a copy.

We went with the selling listing agent to represent us (buyer).

Response: This was a mistake on your part. You should know that by now given the experience that you have detailed here.

While we were negotiating the price the agent called and told us that the seller got a higher offer and they were going with it.

Response: This is totally within the right of the seller. Of course, your agent knew all about that new offer because your agent is also the seller’s agent. Your agent may have even written the new offer.

He did not let us proceed with our offer nor did he counter the offer.

Response: Could it be that your offer was not an attractive offer? Could it be that your offer was too low for the seller to seriously consider? Could it be that the seller is quite happy with the new offer and does not want to be bothered with your lowball offer? Your agent – the agent of the seller – would know the answer to their questions.

So we eventually said we want to put in a backup offer in case the one which the sellers had fell through. He was not very enthusiastic about putting in our back up offer.

Response: Could it be the lack of enthusiasm on the part of your agent reflected the lack of attractiveness of your offer? Could it be that the new offer is so attractive that your agent does not think it is a good use of his time to push your offer?

Eventually I got our offer in, but how would I know that the Sellers have seen our offer?

Response: Ask for a copy of the aforementioned page of the contact.

I am still a little peeved that the agent did not submit our initial offer.
He wanted us to up the offer a lot before actually submitting it.

Response: This information makes me believe that your original offer was too low which is a judgment that your agent would be well placed to make since he is also the seller’s agent.

We want to explore all the options out there and was wondering what it would take for the seller to consider our offer (not as a backup offer).

Response: If the seller is in contact with the new buyer, the seller cannot consider your offer except as a backup offer if it was actually signed by them as a backup offer or as what I shall call a fallback offer in case the first offer fails. The seller may have seen your offer, knows that you are strongly interested in buying the house but the seller can still seek other offers if the first offer fails unless the seller has signed paperwork, along with you, placing your offer in an official back up position. You have given no indication that has been done. If it has been done you should have copies of the paperwork.

Can we go through another realtor with a higher offer?

Response: NO! If the seller is in contract with the other buyer they cannot arbitrarily break the contract in order to accept a higher offer. Think about it. If a buyer could just cancel an existing contract to accept a new contract what would be the value of having contract? What would prevent the seller from canceling your contract if a better offer came along? In addition, you already have an agent who is representing you in the attempt to buy this house. You cannot simply engage a new agent to write an offer for the same house without getting into a battle over who is truly your agent when it comes to payment of commission. If you don’t believe me, talk to your agent about that issue.

Better yet…forget about this house and go and get yourself a new agent who will represent you in the purchase of a different house. Be sure to tell your new agent about this learning experience.
0 votes Thank Flag Link Sun Dec 23, 2012
It continues to surprise me that any buyer would use the listing agent as their representative. What Buyers are not seeming to realize is that you are hiring your agent to represent you. Why would you choose the other side's rep as yours?

If you have your own agent/broker you will know that you have someone who is only representing your interests, which is as it should be.

The problem with going through another realtor is that the listing agent could claim that he is due commission because he was the procuring cause. If I were you I would find a great agent/broker that is only your rep and find another house.

Another thing you need to understand is that the notion that realtors universally subscribe to a higher standards of ethics is complete BS. While SOME do, many engage in some of the slimiest practices I've ever seen. Over the last year we've had at least 4 documented instances of agents trying to get sellers to change to them WHILE WE HAD THEIR PROPERTY listed on the MLS. And our clients tell us that a large percentage of the time they go to open houses on their own they are solicited as clients even after they are told they already have an agent.
0 votes Thank Flag Link Sun Dec 23, 2012
Lot of information provided here which I will have to think through tonight.
I have signed the contract for the backup offer. Have to go through the document again to see what my contractual obligations are.

There is a possibility that I will not get this house, since it will be a lot of effort involved to go through another venue.

I am still not sure how to find out if the seller has seen our offer. I have take the realtor's word for it.
The realtor is a reputed person from the neighborhood and I trusted my gut instinct when I went with this.

I guess I learned my lesson.

Thanks to all who took the time to answer my question above.
0 votes Thank Flag Link Sat Dec 22, 2012
There is no way to ensure that a seller sees all offers. The listing agent by law is supposed to present all offers, but no one would know if he actually did or not. The listing agent controls the presentation of offers.

There is a lot of questionable stuff going on out there. Recently I submitted a cash offer for a client and was told that the seller had accepted another offer. I assumed it was higher than ours. When it closed escrow I was shocked to see that it sold for $20k LESS than we had offered. Also, I noticed that the selling agent was from the same office as the listing agent. I'm not saying anything underhanded was done, but if it was it would mean that the listing agent cost his seller $20k in order to give his friend/colleague the sale. I did inquire and the explanation was that the buyer had requested repairs and rather than start over with a new buyer, the seller gave the buyer a credit for the repairs and it brought down the price. I did find this hard to believe because my client would not have asked for repairs or credits. He was going to fix up the place himself and we made that clear from the start. There's a lot of crazy stuff giong on... agents are being paid off, etc. It's quite a market out there.

Back to your situation, if your back-up offer was low that was probably why the listing agent was not enthusiastic about submitting it. The listing agent usually knows how low the seller will go. If your offer was lower than that, then the listing agent would see it as a waste of time. You should have your own agent representing you anyway because the listing agent is working for the seller, not the buyer. As a dual agent representing both parties, a listing agent has a duty to be fair to both parties but one of his priorities is still to get the highest price for the seller, whereas a priority of a buyer's agent is to negotiate the lowest price for the buyer.

Also, if the current offer falls through, just because you have submitted a back-up offer it does not mean you will get the property. In order to get the property, the seller has to accept your back-up offer. If it's lower than he wants, he could simply put the property back on the market and wait for a higher offer. Or he may try to negotiate an acceptable price with you. If not, you could always submit a higher offer and see if he will respond to it. Naturally, a seller is not obligated to respond. Conversely, a seller can accept any offer he chooses, even if it's not the highest offer.

To answer your other question, if a buyer comes along with a higher offer after the seller has already accepted an offer, the seller cannot accept the second offer until the first offer falls through. The buyer with the first offer would have to breach the contract in order for the seller to cancel it and accept the second offer.

Let me know if you have any further questions or if I can be of any further help. I would love to help you submit your offers and find your next home.
0 votes Thank Flag Link Sat Dec 22, 2012
Hi Myax.
You need your own agent to help you. When I submit offers I always BCC the buyer so that they know they offer was submitted and so that they get a copy. In order for the sellers agent to represent you and the seller , you need to sign an agency agreement and get both the sellers and your signatures.
It's even more important in this market to have an agent to represent you and all your needs.
Once the seller has accepted an offer and opened escrow, the buyer has 17 days as per the contract to complete all inspections. The buyer needs to release all contingencies after 17 days, if they don't then the seller can submit a notice to perform and if the buyer doesn't they the seller could cancel the contract and move on to the back- up offer. Short answer - once the seller has accepted an offer an opened escrow they can't accept another offer.
You should go with an another realtor because - You are not happy with your current representation and you don't trust your Realtor.
Please check my recommendations and allow me the opportunity to help you.
Thank you
Janet McCarthy
Professional Realtor
Connect Realty
jmccarthyhomes@gmail.com
858-243-5719
0 votes Thank Flag Link Sat Dec 22, 2012
Honestly, your first mistake was in using the listing agent to represent you. The listing agent represents the seller first and foremost and his/her priority is to get the seller top dollar.

You always want to have your own Realtor as a buyer - the Seller pays for it.

That said, once they have accepted an offer, there's not a lot you can do. Sellers are free to choose which offer they want to accept. Price pays a huge role, as well as the terms. If another offer was all cash or had a larger down payment than you did, they would probably take that offer,.

There's nothing saying you can't have another agent write another offer...but you need to find out if there is a signed contract at this point.

I work Carmel Valley all the time and would love to speak with you further, Please feel free to call me.

Cindy Davis
0 votes Thank Flag Link Sat Dec 22, 2012
A listing agent is required to submit ALL offers to a seller as long as the property is actively for sale. You can use another agent to submit a higher offer unless you have a contract with the original agent that stipulates that he is the only one who can represent you. You can also ask your new agent to personally submit your offer directly to the seller thus insuring that you have been represented fairly to the seller. Many buyers go directly to the listing agent and find out that they may have been better represented by a buyer's agent. In the future, find a great buyer's agent to work for you and stick with that person. You'll be better off in the long run.
0 votes Thank Flag Link Sat Dec 22, 2012
include an escalation clause, up to a maximum of _______
0 votes Thank Flag Link Sat Dec 22, 2012
The good news- if the listing agent is also representing you than it would be in his best interest to ensure your offer was at least put in front of the sellers.
The bad news- he could be representing the other potential buyer just as well and trying to go with the cleanest offer with the quickest close of escrow.
Either way by law all offers should be presented to the seller unless the seller has given alternative direction.
If you have additional questions please feel free to contact me direct (858) 922-2812.
0 votes Thank Flag Link Sat Dec 22, 2012
Lots of questions and lots of answers. You can call me to discuss options. 619-261-1133.
0 votes Thank Flag Link Sat Dec 22, 2012
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