Home Buying in 30313>Question Details

Kris Barnett, Home Buyer in Decatur, GA

Is it illegal for an agent to ignore a primary offer and give precedence to a subsequent offer for financial gain?

Asked by Kris Barnett, Decatur, GA Wed Jan 9, 2013

Long story short...my wife and I submitted an offer for a home. We have reason to believe that the listing agent neglected our offer in favor of a more lucrative second offer. The second party does not have a real estate agent, thus the listing agent would not need to split commission with another agent. We have reason to believe that our offer was submitted first and was ignored by the listing agent.

Is this illegal?
Does the agent have to release the second party's offer if requested?
Is it possible to get any information about the second party's offer?
Any ideas on how to verify our assumption?


Help the community by answering this question:


I would much rather have an offer on a short sale listing from an experienced buyer's agent who knows how to prepare her buyer and the offer than from an unrepresented buyer who doesn't understand the process and walks after 2 weeks or expects an answer in that time. If you had an agent prepare the offer, they would have explained what many of the agents have explained to you - in advance. In addition, it is not uncommon for listing agents to be subject to the possibility of a variable short sale commission. You don't know what fee that agent is going to get for the sale. Sellers and listing agents have their own commission agreements. None are across the board fees with across the board splits. An unrepresented buyer for many sellers means more money in the sellers pocket, not the agents nor the buyers. Do yourself a favor if you are out there and truly want a house..get a good buyers agent with experience listing and sellling shortsales, someone who knows the ropes with timeframes, contingencies, response times, equator, VA or any other matters. This type of transaction can be extremely difficult to control even with an experienced agent. Being unrepresented could, in my opinion, only make things very hard for you and your wife to succeed.
1 vote Thank Flag Link Wed Jan 16, 2013
Legally, yes, the listing agent must present ALL offers to the seller (unless otherwise directed by the seller). The seller may then choose to accept any offer they like regardless of which one came in first. Simply put, it's very possible the other offer was better and the seller chose it over yours.

The agent does not have to release the other offer to you or any info. about it. That's confidential between the listing agent and their client until the property closes. That listing agents job is to protect their seller, not you, which is why it's critical to have proper buyer representation making sure your best interests are being represented as well.

Proving fraud in any instance is a long shot and probably not worth the time and money it would cost you. The best thing is to learn from this situation and move on.

In our current market, inventory is low and competition is high. You are not the only buyers out there who are feeling this way. What my clients have found is that If they love a home, odds are 15 other people out there love it too and have all submitted offers, so they need to be extremely aggressive in the offers they submit if they want to snag "the one".

Good luck!!!
1 vote Thank Flag Link Thu Jan 10, 2013

Let's assume the listing agent is playing it strait. The order in which offers are received is irrelevant. All offers must be presented to the seller, but the seller is under no obligation to accept the first one they get. Yes, the listing agent will advise the seller about which offer is best, which may or may not be the highest offer. The seller must choose which offer to accept and submit to the bank.

Once submitted to the bank, anything can happen. One possibility is that the bank, seeing that the buyer is unrepresented, would negotiate the commission down to what the listing agent would get if the buyer was represented. So do not be so sure the agent is serving his/her own self interest.

Even if your offer was accepted and sent to the bank, you would be in for a roller coaster ride, but that is a subject for another day.

If you think you have been wronged, do as Lee said; gather your evidence and file a complaint with the Georgia Real Estate Commission.


Dave Herren
Best Atlanta Properties
1 vote Thank Flag Link Thu Jan 10, 2013
Agents are required by law to submit all offers to the seller.

Some people think that if they make an offer they have the property tied up and the seller must deal with them before considering another offer. That is not true. The seller does not have to respond to any offer they do not wish to respond to. If the seller decided not to respond to your offer the listing agent should tell your agent that your offer was rejected with no counter.
0 votes Thank Flag Link Sun Jan 13, 2013
Absolutely the listing agent must present all offers to the Seller and it is up to the Seller NOT the agent to decide which offer will be accepted. Ask your agent to get a signed rejection from the Seller's agent if you feel this hasn't happened.
0 votes Thank Flag Link Sun Jan 13, 2013
Kris, what happened to you happens to people like me (us) all of the time. It is just the nature of what we do. Add in the fact that it's a short-sale and the likelihood of this type of thing goes up.

The only thing that the agent COULD have done illegal is, not present the offer. But good luck proving that. Other than that, all is fair in love and war when it comes to multiple offers.

One other note: on a short-sale the owner is who you are negotiating with, not the bank. So the owner may have seen your offer but chose not to pass it on to their bank. Nothing illegal about that.
0 votes Thank Flag Link Sun Jan 13, 2013
The listing agent has to present all offers. Sometimes the best offer is not th eone with the hire price. An offer with no contincincies is better than one with a mortgage and inspection contingincy. Unfortanately they can not be forced to give you any info on the other offer, you have to wait until it closes and then can see the selling price as public information. If you believe wrongdoing took place, your options are meeting with that agent managing broker, going directly to the state real estate commission or hiring a lawyer. Good luck working things out
0 votes Thank Flag Link Fri Jan 11, 2013
In this market today buyers are competing against one another when trying to purchase a home. The listing agent's responsibility is to the Seller, which is their client. It is required by the listing agent to submit all offers to the Seller for review and allow them to choose which offer is acceptable to them. If all the terms of the offer and the price is what is more desirable to the Seller, they probably would choose that one no matter whether the buyer has buyer representation or not.
0 votes Thank Flag Link Thu Jan 10, 2013
The short sale process is a very complex one. Purchasing a home via short sale is not at all an easy process. A lot will depend on how experienced the Listing Agent is. You can expect for most short sales to take at least 3-6 months from when the seller first contacts their mortgage lender(s). If they have a 1st and 2nd mortgage, they must get approval from both companies.

Short sales have so many ways in which they can go wrong. Many short sales simply never close after several weeks or months of work. This is a fact that every buyer needs to completely understand. If you are purchasing a property and must close by a certain time, then a short sale is probably not your best option.

A lot of the reasons for the fallout depend on the seller. To qualify for a short sale, the seller must submit all of their financial documentation AND prove that that currently have a financial hardship. Many sellers don’t submit the proper paperwork resulting in delays. Some sellers cannot demonstrate the required financial hardship. If a seller files Bankruptcy during the process, that will cause a delay. There are countless things that can and often will go wrong. Some can be overcome, some cannot. No Listing Agent, no matter how good they are, can control every action of a seller.

A short sale is VERY time consuming for all parties involved. A Buyer’s Agent has absolutely no control in the short sale process. They are solely dependent on the Listing Agent and the seller.

When it comes to offers, GA Real Estate Law requires that the seller be presented with all offers made. It is strictly up to the seler on which one they may ultimately accept. Many homes today are going for at or above List Price. I have buyer right now offering on a regular re-sale that just hit the market. After 3-4 days, there were over 25 offers. Only one of those buyers will ultimately have their offer accepted and that assumes the seller even does that.

With a Short Sale, seller acceptance of an offer is just the first step. The seller's lender must also agree to all of the terms.

Offers are privileged information and are not a matter of public record. Only the two agents, the buyer and the sellers are privy to the contents. It would be unethical for the agent to disclose information. Once the transaction has closed, the sales price, seller contribution amount, loan type, and closing date will become available.

Working with a knowledgeable and seasoned professionals is critical in today's market.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes Thank Flag Link Thu Jan 10, 2013
Based on the information you provided (long story short) your offer LOST!.
The listing agent is required to represent the seller and advise if required, what would be in the best interest of the seller, not the buyer. Additionally, the listing agent and the seller have reached agreement regarding how purchase offers received will be processed, at what time intervals and the evaluation process.
You allegation, 2nd party does not have a real estate agents, typically results in a savings to the home owner, the SELLER, not exceptional income to the agent. My 'Buyer Elite Pan," and "First Look" program are all based on that premise. The seller benefits through savings. I, the agent, benefit because I have control over the process providing a greater assurance of the closing occurring on time, within budget and as stressful of possible.
TRANSLATED: My time is not wasted with poorly vetted buyers
Your assumption, like most, is not based on any fact that you have revealed.
"Any ideas on how to verify our assumption?"
You are chasing smoke.
Consider offering a fair market value free of contingencies. You would be surprised how well that works.
Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor FL
0 votes Thank Flag Link Thu Jan 10, 2013
Agreed. The days of low balling short sales and foreclosures are long over. Unfortunately, as stated below, buyers always think it is commission driven and we are simply trying to advise them to pay as much as we think will get the deal done, and us paid, instead of getting them a "steal".

To answer your questions specifically - the seller's agent has no obligation to you whatsoever. They don't have to show you, nor should they show you, any other offers presented or accepted. Is it unethical for them not to present an offer? Yes. Could you submit a complaint to the regulatory agency that oversees real estate agents in your state? Sure. Will it make a difference in the end and will you gain anything from doing it? Probably not.

The real estate business is not "policed" so to speak. We are all bound by a code of ethics - however it doesn't mean that everyone follows that code - and the almost impossible part is "proving" that the agent deliberately didn't.
0 votes Thank Flag Link Thu Jan 10, 2013
Kris, I understand - I can assure you that if you offered the list price, then that is most likely why you did not get that house. I haven't won a list price bid for quite some time now. Most clients don't or won't listen to their Realtors when we tell them to bid over list price. They always think it is commission driven. It is not. We are In the market daily and we see the trend. Properties are listed for a low price to drive a "bidding War" and ultimately end up with a much higher price. After sending a good 12 or more bids for my clients - who tired low balling, then a little under list price, then at list price, then a little over list price, then 1,000 more than list price, then $5,000 over list price and ultimately we did not get a house until my client bid $8,000 over list price.

It seems to me that there was a sudden shortage of homes a few months back. By withholding inventory it drove up prices and frustrated Realtors because there was nothing to show our clients.. So now there is a shift in the market and the banks seem to be shaping it "again.”

So, as I stated, you have to find the house you want, and bid like a "Pit bull" - Aggressive. You Realtor should advise you to look at the house with your inspector or contractor and make a decision to buy. Look at what the house was worth before the economy crashed was it $300,000? See what the comps are showing in the area? Is it listed for $150,000 and values are in that ball park? You need to bid at least $158,000 "AS IS", Closing in 25 days with an APPROVAL not a pre approval, and don't ask for closing cost. You can ask for the right to inspect although you are purchasing the property as is. If you overbid - you will have to bring the difference in cash to the closing table if you are financing.

I also strongly agree with the other Realtors here; don’t take it personal, and just keep it moving. Have your Realtor send you some more listings. If your Realtor has had experience listing homes, then take his/her advice because they know what they are looking for in an offer, so they know how to write the winning offer for you. I am sure you picked a Realtor you have confidence in and I am sure the Realtor has or will do the best for you. When you screen your Realtor, go ahead and trust your Realtor and take their advice to help you win your deal. It is so hard to work for clients who are always suspicious and second guessing us. Most Realtors are good; we have to go through ethics training to even earn the title of Realtor. We are governed by strict laws and we work hard to get and maintain our licenses. I would never suggest that anyone try to sabotage someone’s career on speculation without solid facts. The truth is a client may send a house in the morning that is active, and you call them back and say I am sorry the house is under contract – they don’t believe you. It happens to me every day. They second and double guessing and doubting everything we say and do are extremely frustrating. Our number one priority as buyer’s agents is to protect our client from getting a bad deal. And to help you win the bids on the home you really want. You can’t protect someone, nor help them win if they are suspicious and won’t listen. And you won’t listen if you have the mindset that you can’t trust your Realtor. Find one that you trust. And let them know you trust them. It’s something about those words that makes a professional take pride in what they do. Tell your Realtor everything you want and the truth about what you are working with. A good Realtor is going to cover you on things you don’t even think about. And now that you have used the trust word, he or she is empowered, and feel confident about the relationship and is going to work twice as hard to make sure you are protected and you win your deals.

But seriously - you really have to bid more, and ask for less.
0 votes Thank Flag Link Thu Jan 10, 2013
All offers must be presented unless the seller has, for some reason, told them not to present some or all offers. You can always ask that the seller strike a line through the rejected offer and sign it. That way, you have at least some assurance that the seller saw the offer.
0 votes Thank Flag Link Thu Jan 10, 2013
I see a couple of attention getters for me - apparently unrepped buyer and a short sale....toxic

I don't show short sales and advise my buyers against them as strongly as possible, in short it's like three card monty. The agent is expected to present all offers and most recommend the best one to the seller. The seller accepts - binds - one offer and that offer is submitted to the lender. The accepted offer doesn't always mean highest offer, it usually means most likely to close. However, buyers are pretty much hostage to the short sale process once that offer is sent - all of the vairables are outside of their control and when things blow up, they realize the time wasted.

As Lee said, you're way too into this. You being accepted hardly means the deal would close so let it go. You might be correct in your assumptions, there are many deceitful and manipulative agents out there as this business does nothing to control them.

Do you have an agent? If so then have him/her press this to find out why you were rejected. If you don't have an agent, then interview and find an experienced one. Also, understand the siren song of short sales - they're not what everyone thinks and the days of scoring major bargains are over - http://hankmillerteam.com/2013/01/04/no-short-sale-bargains/

All that said - I agree with Lee, if you feel something is worth chasing then contact GREC let them look into it.
0 votes Thank Flag Link Thu Jan 10, 2013

You are way too emotionally attached to this real estate transaction.

Prepare your evidence, file a GREC complaint and move on...
Web Reference: Http://intowninsider.com
0 votes Thank Flag Link Thu Jan 10, 2013

We can certainly understand why this is disappointing to you and why you are questioning the process. As described...illegal, probably not. Unethical, a matter likely best presented to the local board of realtors for their ruling.

As a "short sale" initial acceptance of an offer by the owner is only the very beginning of an often stormy process and one in which the lender makes the final decision. With these types of transactions,"it aint over until it's over."

Our recommendation is to have your agent continue to monitor the progress of this transaction. Agents will tell you that it is not uncommon for these types of sales to go "pending" and then return to "active status." If this is the one, don't throw in the towel prematurely......

Good luck,

0 votes Thank Flag Link Thu Jan 10, 2013
LET me answer your questions.

Is this illegal? (If the seller's agent fails to present all offers to seller,that agent is in violation of Georgia Real Estate Law)

Does the agent have to release the second party's offer if requested? (Not sure what you mean. If you requests it?)

Is it possible to get any information about the second party's offer? (No. Not if the listing agent is a good agent)

Any ideas on how to verify our assumption?( No, However it would be good to never fall in love with a house you have made an offer to purchase. Too many things can happen from offer to closing. The next time you plan to make an offer on a property make sure you have a good buyer realtor to work with you.
0 votes Thank Flag Link Thu Jan 10, 2013
Iits possible to hear back about an offer that quickly. The 2nd offer had something your offer did not. The bank may have chosen a higher offer. Commission has nothing to do with it. I would advise not to fall in love with these houses because your favorite will likely not be attainable.
0 votes Thank Flag Link Thu Jan 10, 2013
Being that this was a short sale the order of the offer does not matter if you got an answer a day or two after your offer.more than likely someone had a better offer and there was no need to forward your offer to the bank. Several months ago you could low ball a list price and still get the house, now in most cases the lowest bid is the asking price and that person ends up losing the banks only interest is in which offer
Will net them the most money.
0 votes Thank Flag Link Wed Jan 9, 2013

What does your agent say? obviously you are being represented by an agent, you should really consult with him/her.

that being said, there is no such thing as a "primary" offer. Agents are legally obligated to present every offer received to the seller, and the seller (with the advice of the agent) decides which one to take. Your offer has no advantage just because it was submitted before the other one. In fact, often times seller may chose to wait and see if any other offers come in after receiving a first offer.

As an agent, i would have a very difficult time convincing a seller to accept one offer over another just because i can get more commission out of that one. A more likely scenario is that the second offer had some advantage to the seller. Maybe the price was higher, maybe the closing costs were lower, maybe it was all cash and had a quick closing, etc.

Might I ask how you know the second party doesnt have their own agent?

If the second offer has been accepted, then yes, your offer is effectively "in a trash heap" until something changes, for example: the short sale bank doesnt approve the terms of the offer, or the buyers terminate because of inspection issues. I encourage you to have your agent continue to check in with the listing agent to be sure the property is not available again. Many listing agents dont bother contacting previously submitted offers if the first one falls through. they simply re-list the property and hope for another offer to come in.

Again, you should speak to your agent about this.

Levi Afrah
Chapman Hall Realtors Premier
I am proud to be a Dekalb Association of Realtors Pinnacle Award Life Member!
0 votes Thank Flag Link Wed Jan 9, 2013
Hi Levi,

That makes more sense now. My agent/broker is actually the one who initially suspected wrong doing and said "this is not how real estate is practiced". We discussed the details and she encouraged us to simply submit a back-up offer (which we did). I just wanted to check with others to make sure that we were doing everything we can. I am normally very trusting, but when my agent brought this up I felt that I need to practice due diligence and get more information.

On another note...when we submitted our back-up offer the listing agent would not give the contracted party's information even though the document clearly requested it. This is another reason that our agent was a bit suspicious. Is that protocol?
Flag Wed Jan 9, 2013
The Listing agent represents the seller. That is his client. Not having a Real estate agent creates more liability for the agent and makes his job twice as hard. And,most problems come with that scenario, so I would not say that would motivate an agent to ignore your offer. Ultimately the client makes the decision and all offers must be submitted by law. If you know the second offer was more lucrative then that is more than likely the reason they accepted that offer. When I list properties, I love working with buyers agents and I respect and submit all offers. Never the less, I will advise my client to accept the best offer. Best offers are not always Money. A best offer could be one that is most likely to close than an other. How serious are you. For example. I had a client with a home listed for $25,000 - how perfect does this house have to be????? I spent months showing it, to first time homebuyers that was looking for a mansion for $25,000. Finally one lady put an offer own it for $25,000 and stated she would send $500 when the short sale was approved. This lady vanished for three months after we were under contract and never did send the $500. So I re listed the house. Now my antennas are tuned up. I got one offer for $25,000 with $500 and 10 day due diligence ( that means 10 days to back out) and I got another one for $28,000 cash with $2800.00 down. No due diligence, AS Is close in two weeks. Which one do you think I advised my client to take? The one that was a Serious offer. After having this home listed for almost a year, going back and forth with "so called" investors My net profit was $380 or less.

Make offers like you are serious - you have to be a "Black Friday Christmas Shopper" type of home buyer nowadays. Bid like you want it. Low ball days are over.
0 votes Thank Flag Link Wed Jan 9, 2013
Thanks for the response Brandi.

Our offer was for the exact listing price and we have 20% down in cash. I simply do not understand how the agent can submit and offer to the bank, get an answer from them, and get back to us within a few hours. I spoke with the broker 2 hours before we put our offer in and she noted there were no offers submitted yet. We are not trying to low ball anybody. If we put a bid in we are serious as a heart attack.
Flag Wed Jan 9, 2013
Oh, you too Ralph. Because of the time frame involved, it would be impossible for her to get the thumbs down from the bank so quickly. So is there anything left to do? I know some of the information will be in the public records post-closing, but I don't want to act too late if there is something I can do now. To be honest, it seems like our offer is in the trash heap right now because something more appealing came in a few hours later.
0 votes Thank Flag Link Wed Jan 9, 2013
Thanks for the input Rhonda. I appreciate it! The house was a prospective short sale. Do all offers have to be presented to the bank? The first and second offer were hours apart and we heard back from her the next day. If the agent can be the "gate keeper" for which offers go to the bank, it would make sense for them to only present offers that will allow them to reap the largest financial incentive (e.g. more commission).
My apologies if I am totally off base. I am just trying to figure this out as my wife and I have been searching for many months and absolutely fell in love with this home. If nothing else, the listing agent was extremely lack luster at her job : (
0 votes Thank Flag Link Wed Jan 9, 2013
an agent must submit all offers to the seller. The seller decides which offer they want to accept not the agent.
0 votes Thank Flag Link Wed Jan 9, 2013
It could have been a highest and best offer. They may have offered more for the home. All offers are to be presented to the seller. It probably doesn't have anything to do with commission. Most likely the agent took the highest and best offer. The agent does not have to release any information to you. He or she represents the sellers intetest.
0 votes Thank Flag Link Wed Jan 9, 2013
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