I understand that the way this has been handled may seem offensive to you, BUT, at the end of the day, as pointed out below, the listing agentâ€™s responsibility is to the seller, not to the potential buyers. There are a couple of things that may apply here:
(1) Many short sales in our area go on the market at artificially low prices in order to attract attention. Donâ€™t for a moment think that you have a realistic chance to actually get your offer accepted at that price OR that the bank will approve your offer price â€“ ESPECIALLY if itâ€™s in an area that is currently very active. IF an agent listed low and even though offers came in at listing price or slightly higher, this could still mean offer prices are below actual market value. If thatâ€™s the case, there is nothing wrong with the agent trying to get higher offers. Just because any offer is above listing DOES NOT mean the seller has to accept it. And it is not unethical nor does it make the agent a â€œused-car salesman.â€ As Alan pointed out, she may be following the directives of the seller.
(2) There is a misconception that information on existing offers should not be used to â€œshopâ€ higher offers. There is, in fact, nothing illegal or unethical about this practice. In fact, in the C.A.R. disclosure form DA, you are actually notified that this may happen. For more information on this frequently misunderstood practice, see the following post:
Offers May Not Be Confidential â€“ 5 CRITICAL Facts To Know
(3) If you are trying to get a home in a highly competitive area and your offers are constantly being rejected, then you are bidding too low or your terms are not as good as the other offers. You have to make sustentative changes to your tactics. You have to increase your offering prices to get above the competition AND enhance your terms to be more competitive. On the other hand, if the accepted offers are higher than your limits, then in reality you need to be looking at different types of properties in a lower price range. I see a lot of buyers trying to get a â€œdealâ€ in a hot market or neighborhood. They donâ€™t exist. If you want to live there, you have to bite the bullet and pay the going rate.
The question is when is she or has she notified the bank of the offers so far received. Like I said, until the bank signs the offer she can keep going after more offers. Short sales can drag out for months and banks know they can wait for better offers. There is often no deadline to the bank.
This sounds like a lot of speculation. One of the reasons agents do open houses is to help them develop a customer base not necessarily to sell the subject property. The reality chance of selling property as a direct result of an open house is very small.
Our best advice is to not burn any bridges before knowing what is before you. Yes, in a perfect world she wouldn't be doing any additional open houses. But unless you were there, how would you know how this event was handled.
Consider giving her a call tomorrow not to chastise her but to inquire about its attendance and if she got any new leads. We certainly wouldn't recommend any "used car" conversation.
Try to remain positive......
Stay strong! I know it can be discouraging in this climate to see properties receive multiple offers and go over asking or have stronger terms. Let me just say this....
If a home looks like great value and a "deal" other buyers are seeing the same great "deal". If you're putting in offers that are listed well below market value it's often the case that the seller has listed it at that price with the hopes of getting multiple offers.
Talk with your real estate agent about a different strategy. Rather than putting in an offer on the home that just came on the market and is listed low, perhaps you go back and look at properties which have been on the market for a while slightly above your price range...or you revisit a home you originally passed on with "rehab" eyes and ask your realtor for some contractors names. Perhaps you could put less than 30% down and put in an updated bathroom, add some decking to the yard, etc.
There are many possibilities. The key is to stay focused and remain positive. Capture the low rates and excellent value in this current market and work with your realtor to find your dream home :-) It's out there!
Best of luck,
After the listing agent's bid open date, they called us to say they wanted to work with us, had the negotiator call our agent about the strategy with the banks and two loans (our abilities with more cash than typical) and we changed the paperwork, terms to meet their requirements. Then the listing agent opened the house and got 2 more offers, one beating ours.
It is discouraging that a bid open date is set, selection made, then re-neg'd. We are re-thinking our goals in being in these highly competitive areas, we offer considerably over, there is always someone else with deeper pockets, that's all. Its the price range we're in, roughly $500-550k. We seem to come in second often. Beat often by all cash offers or just a hint above what we offer.
In the State of California a seller does not have to take any offer, even if over list.
It is fundamental right of the owner.
Otherwise you have to change the bylaws of the Sate.
Same right as Free speech and Liberty. Hope it is clear.
I'll add to Carls remarks and say that if the auction is a reserve auction, if the home does not meet a sepcified amount then the seller is not obligated to sell. Unless you are all cash/no contingency the seller is under no obligation to do anything at all, provided that the listing agent is saavy enough to write the listing agreement in the proper way.
As a buyers agent, when I see the word "auction" i translate that to mean "greedy seller needs or simply wants to get more than traditional agents think the home is worth." Let me use my favorite whipping post, the banks to illustrate this.
Major Bank took a home back in foreclosure a few doors down form a home I took a listing on in Concord Ca. The home was on a busy street but the comparable sales were pulled from a couple of nice quiet tradidtional neighborhoods. The other agent had sold my seller on a price of $230k. He said this was the value the bank put on his home and he could do a HAFA short sale easily. I told the seller he and this other agent were cracked and he would be lucky to get $147k. Fortunately he listened. I pulled up the history Major Bank's home and they had also approved a short sale at $230k. No buyers closed. Major bank came back on at $215k until I put my home up. I didn't get any offers until I reduced my listed price to $160k, 3 came in all at $100-$120k range. We took the highest and got a short sale approval at $134k plus fees and closed at $175k.
Now to the point, Major banks next move while I was messing around with my short sale was to go auction. they listed the home at $100k. They received scores of offers (I was told) all coming in around around $100k-$120k... go figure. Then their next move was to hold the price at $169k. they closed at $104k. Conclusion... wait long enough and everyone get what they deserve...
We work with a lot of short sales and bank owned properties and your agent needs to educate you a bit more about short sales. I won't repear the information in the above answers but will approach this from a different view. The Listing Agents responsibility is to the Seller. In this case, if the Seller has refinanced their property, or is an Investor, there is a chance that the Lender will attempt to collect the difference between what a Buyer may pay and and the Seller may owe. Therefore, the Seller, after seeing multiple offers placed on the property has every right to attempt to minimize their loss; despite the discomfort this may cause a potential Buyer.
If your Agent believes that the Listing Agent is behaving in an unethical manner the Buying Agent can gather the information on the loan/lender and send the offer directly to the lender. This is not normally done as the Seller still has to sign the offer but it is a possible solution. If the offer is the highest, the Bank will demand an explanation from the Listing Agent
Finally, please pay attention to the above comments from other Realtors. Selling Agents do have the right to hold multiple Open Houses as they are required to show all offers to the Seller until such time as the Seller asks them to stop or the property closes
Holding another open house is not indicative that the property is still available, though yes, it's not the most ethical thing to do if the property is contingent. That said, the listing agent probably has a valid reason for holding the property open after receiving 3 bids. The good news about writing 7 offers, is now you are quite educated on "about" where you need to be when you submit an offer.
Hang in there, the odds are that you will prevail soon.
Best of luck!
You sound a bit frustrated, with reason. Making 7 offers on properties and not having a successful purchase can make buyers very synical about the entire home purchase process. So, while I understand your frustration, it is best to take a deep breath and listen to some of the advice given in the answers below.
Probably the two most important things to keep in mind: open houses are often scheduled in advance and are a method real estate agents use to market themselves. And second, short sales are trying for everyone involved. When making an offer on a short sale, remember that the sellers lender is losing money on the transaction and wants to get as much as possible through the purchase, and as close to "fair market value" as possible. Buyers should make the highest offer they can, and that they feel will be supported through an appraisal. That way, a successful purchase is more likely to happen.
Good luck with this transaction. And stay in touch with your agent. He/she should have the most current information on fair market values in this particular community.
This is not the primary reason for holding open houses. But first things first:
1. Has your offer been presented to the seller?
2. Did you give a timeline by which time the seller must respond to either accept, reject or counter?
3. And what was the response?
Even if the seller accepts your offer as written, the final decision rests on the short sale lender who may even ask for a price higher than your offer, and may disallow or not approve requests for miscellaneous expenses,
Just because your offer is above asking price doesn't make it the best offer --- take a look at your terms and conditions. For example, people make an offer higher than list price, but then ask for the seller to pay for all transfer taxes, inspections, closing costs, repairs, and to also pay for delinquent HOA. These are items that the short sale lender may not approve.
1. While waiting for the seller to make a decision on the offers the sellers may have agreed or the agenst may have already advertised the open houses prior to receiving your offer
2. even if the property is "pending subject to lender approval" they can conitnue to hold open houses until they receive written approval for short sale
3. there's always room for back up offers ....It is not unusual for buyers to walk away from their short sale offer when they no longer wanted to wait or when they find something they like better. Hence, it's important to keep the interest high on a listing.
4. Getting more money out of a short sale is a goal, that's true...but the bigger goal is to get that short sale offer approved. If the bank thinks the list price and the offer price are still low, they can counter with a higher price.
5. Because a short sale property is competing with regular sales and foreclosures, they are usually priced very aggressively and less than market value in the hopes that they will attract buyers who are not afraid of writing offers on short sales
6. Finaly, the list price is merely the starting point --- the successful offer could be higher or lower. Just like a regular sale.
Hope your own agent has shared this insight with you as you maneuver your way through the short slae maze.
Even if they execute the contract, then you'd still be in the same position if they were to change their minds at that last moment. (That's happened a few times on some short-sales and REOs recently for me [and others I know].) The only time a sale is guaranteed is after it's closed--and even that's not entirely the case for properties that are part of a bankruptcy estate (which is another topic for another time).
The highly competitive nature of your local market, probably makes this agent assume that she's not going to lose the first few offers by stretching the process out. It's also possible, that she's following the direction of the owner, and if that's the case, since she's not breaking the law, she is required to follow the direction of the seller.