Good luck and let me know if you have any other questions.
Keller Williams Realty
#1 Buyers Agent KW Los Angeles Region
In addition, interest rates are at an all time low. Subsequently, due to the laws of supply and demand, homes are getting multiple offers and prices are being bid up. Your full price offer may not have been their best offer.
Agents have a fduciary duty to their clients. They can only disclose the details of other offers if authorized by their clients to do so. Disclosing that information is not always in their clients' best interest. Unfortunately, getting your offer turned down doesn't entitle you to know the details of the accepted offer. There are also no rules as to what offer to accept. It is the decision of the sellers.
When evaluating offers, there are many things to take into consideration. Much of them hinge on the likelihood the buyer sucessfully getting the loan and closing the sale. Most people don't realize that the main reason sales fail to close is that the buyer doesn't get the loan. Unlike virtually every other kind of loan, in Real Estate a buyer can have loan "pre-approval' and still fail to get "final approval" for a variety of reasons.
For this reason, cash offers often "win" the property because they are a "sure thing". Second, conventional loans are often preferred because the requirements are a little less stringent than FHA and VA regarding the properties condition and underwriters guidelines.
Other things that elevate one offer over another (besides offer amount) are how much money is initially put into escrow (earnest money deposit),amount of down payment (signifying strength),whether or not buyer is asking seller to pay their costs and several others.
Unfortunately, there is nothing you can do in this situation but keep searching and watching to see if this home comes back on the market.
There are many reasons that your offer may not have been accepted. A lot of agents price short sales below market value in order to receive offers quickly to get the short sale process started. The asking price may not end up to be the sales price that the bank will insist on. Someone could have offered the same as you only they had money to cover incase the bank's appraisal is higher. There are lots of conditions on a purchase agreement that make one offer stronger than another besides the purchase price.
In regards to your other worry about the seller accepting an offer from a relative, there are very strict rules regarding 'arms length' selling on a short sale. These are put into place to protect the banks from having people sell to their familys at low prices or so that they can buy it back from them.
When you submit an offer on a short sale, if your agent does his/her homework, your offer should be at market value and one that the bank will most likely accept and approve.
Don't fret too much over a rejected offer... just move on and keep on trying.
Your home will show up sooner or later!
Hope that helps!
951 415 9002
The Listing agent has a fudicuary duty to represent the seller first and foremost.
SOOOOOOOOOO many buyers walk away after submitting many offers in hopes to get an offer accepted. Listing Agents don't want to convince you to hold on since they know you may have to hold on and be waiting 3,6,9 months to close escrow. I hope this answer helps. :)
I understand your concerns but want to also re-emphasize that you may not want to jump to the conclusion that your offer was never considered or presented fairly. The cases I've seen recently where an offer is beat out is more often than not related to investor cash offers, concerns of sellers with loan financing falling through, and even just buyers knowing the competitive market (with the help of their agents) and offering over list price to be more competitive in the first place.
And a final note, often times I see short sales priced very low. Note that these can be rather arbitrarily priced by agents (to generate interest), but won't be approved by the bank if they're priced too low. Those who know the comps may offer higher so that they have a better chance of getting their offer accepted (and will realize the competition the low price will generate) and getting it actually approved by the bank. I don't know the specifics of the property you were offering on, so I don't know how it was priced, but just throwing this out there as a thought to consider too.
The bank does take interest in what the property sells for, the bank will send out their own appraisers before approving the short sale, if the offer the listing agent submits is too low, the bank will counter. The buyer's agent can't really do anything in this situation, what they & you can do is keep you offer on the table & held as a back up should the 1st buyer back out.
The listing agent should only be submitting 1 offer to the bank at a time, in fact most banks will only work with 1 offer at a time.
ANSWER: No, but it can happen. More precisely, the sellers can choose not to accept a list price offer. The agent has no role in that; it's up to the sellers. It could be, for instance, that the list price was set deliberately low in order to encourage multiple offers above the listing price.
You ask: "After just one day the selling agent notified our buyer agent that they accepted another offer, but refused to disclose or make a counter offer."
ANSWER: A seller can accept (or reject) any offer he/she feels like. And it's entirely legitimate for the seller and the listing agent not to disclose the accepted offer. That can remain private until the sale is recorded. As for not making a counter offer, there's no obligation for the seller to counter. Suppose, for example, that the short sale was listed at $100,000. You offer $100,000. Someone else offers $120,000. There's no reason for the seller to counter back to you, especially if it would imperil the $120,000 offer.
You ask: "In my opinion, this sounds like potential fraud, especially if the seller is protecting a related party making an offer."
ANSWER: Where's the fraud? You're suggesting that the sellers sold to someone else for less than you offered. But I doubt that's the case. Maybe they did sell to someone else for less than your offer. But perhaps their offer was stronger--all cash, for example, versus an offer from you for 20% down, or even FHA at only 3.5% down. They can sell to whomever they want. Can you prove that an inferior offer was accepted?
You ask: "I'm sure the bank would be interested in this practice."
ANSWER: Sure they would. They'll be involved in the entire short sale process anyway. So by definition they're interested in this practice. But, again, you're assuming that because your full price offer wasn't accepted, that something illegal was going on. That's probably not the case.
You ask: "What can a buyer's agent do in this situation?"
ANSWER: Not much. Your agent can call the listing agent and say, "Hey. I know the specific terms of the transaction don't have to be revealed until after closing, but can you give me some idea of what the accepted offer looked like?" Sometimes the listing agent (with the permission of the sellers) will actually reveal what the accepted offer was. Sometimes the listing agent will say something like: "All I can say was that the offer was substantially above the listing price." Or--as happened to me once when my buyers didn't realize that they had to offer more (despite my repeated requests): "We received 8 offers, 5 above the listing price. And your clients' offer was the lowest of the 8."
Hope that helps.