To sum up all of our answers, and to formally answer yours. Yes it was unethical, the agent was clearly looking out for her own pocket book. However if you indeed want the property, you would be happy she did so, and be glad she was your agent. I have been an REO agent for over 4 years, and have yet to work with a bank that tells me to indulge any other offer amounts to other potential buyers. Read your listing agreements form the banks. It is typically highest & best and then squeeze some more. In order to get out of the deal, simply call your agent and ask her to prepare a cancellation notice.
It seems to me that you are looking for an excuse not to buy. If your agent...dual agent...is telling you what you need to pay to buy the house and you are not willing to pay that amount...end of story. If you truly and objectively feel that it is not worth the price then you are making a good decision. If you simply are unwilling to pay that price, that is good, too. Just donâ€™t spend your time looking for someone else to blame when you lose out on the opportunity to buy the house that is right for you. You are the one making the decisionâ€¦not the agent.
Since I am not a lawyer and cannot give legal advice, I discussed your situation with a real estate attorney. His opinion is that your agent has done nothing wrong by disclosing the other offers, since offers (including price and terms) are not considered to be confidential in California. However, the sellerâ€™s agent should tell all buyers, not just you, that the bank is requesting they submit their â€œbest and final offer.â€
Dual Agency occurs when one broker/real estate firm represent both the buyer and seller, with either two agents under that broker/firm or one agent representing both buyer/seller. My personal feeling is that it is difficult for one person to fairly represent both sides of the transaction in cases where they have competing goals: a buyer trying to pay the lowest price possible; a seller wanting to net as much money as possible. This can especially become a problem where buyers are dealing directly with a developerâ€™s listing agent. In these cases, I have recommended buyers hire their own attorney to review all contracts, CC&R, and other developer documents.
You need to ask your agent about retracting your offer. If the offer you submitted was not yet delivered to or accepted by the seller within the timeframe your specified, you do not have a valid contract but should withdraw your offer in writing.
However, once your offer is accepted by the seller (in writing), you have a valid contract so you would need to consult the contractâ€™s language. The California Residential Purchase Agreement states (14D) that once the buyer removes contingencies or cancellation rights, buyer is electing to proceed with the contract. If you have removed all contingencies and the seller does not agree with your request to cancel your contract, you would need to consult a lawyer because you could automatically lose your 3% deposit (liquidated damages) and even be liable for other damages.
Good luck with your transaction!
In the past, a broker acting as a dual agent was required to tell all to both sides of the transaction, acting as a tell all to both clients. The law controlling the conduct of a dual agent has since changed. Now, when a dual agency results and both sides of one-to four unit residential transactions are represented by the same broker, the broker and his agents may not pass any information relating to the price or terms of payment from one party to the other. What price the buyer may be willing to pay or the seller may be willing to accept is to remain silent ith the broker. (CC 2079.21) I think that might be the law which relates to the matter.
I am not a lawyer but this is what I think is right.
However, I believe the listing agent can share existing offers and their amounts with the buyer - if allowed in writing by the seller - without compromising any ethical boundaries. Which I believe is the case here...
I personally don't like dual agency because I would hate for my clients to think that I am nor working on their behalf, even if I was doing the right thing, which in this case I think the agent is.
I wonder, why did you choose not to be represented by a buyer's agent instead? If that were the case, even if the listing agent were from the same office, you could choose designated agency (in SC) instead and still get full representation...
Real Estate law varies from State to State, but you cannot always assume that an Agent's behavior is unethical. It depends...
Kathie Romano, Assoc. Broker
Keller Williams Real Estate
Exton PA AB066051
1) did the bank/owner authorize the agent to disclose the highest price to one or all buyers? If they did it's not unethical. I've been in loads of multiple offer situations both as disclosed dual agent, buyers agent and sellers agents. As a disclosed dual agent, if a buyer asks me what to offer I always tell them that I'll provide them with all the information they need to to make an offer that they feel the most comfortable with, but that I can't advise them what to offer because that would be a breach of ethics as a dual agent's core responsibility is to represent both the buyer and seller's interest fairly, honestly and equally without putting the interest of one ahead of the initerest of the other. I then tell them to make their best offer up front. If a seller tells me what they will accept prior to offers being received, I don't disclose that until after I receive the offer(s). However I do discourage "low ball" offers with my buyers telling them that is the best way not to get the home if in fact they truly really want it. but I will present any offer that they will put in writing as I am obligated by law to do so. If a buyer at any point during negotiations tells me "I'll pay the list price or higher" in some rare occassions I then ask them to put that in writing. If they say we'd like to try this first then I comply and see what the sellers response is. I don't disclose to the seller the fact that the buyers are willing to pay list price unless again the buyer (as a client) authorizes me to do so. And then let negotiation go on from there. Counter offers are then handled by the same standards listed above. If a seller says just bring me "highest and best final offers only" (as is the case in most foreclosed properties and short sales) then I tell all potentional buyers and their agents that is what I've been told by the seller. If none are acceptable to the seller. I then ask for a bottom line number and terns that they will in fact accept. Once I receive that number & terms I then share that with all buyers and their agents. I also disclose to other agents if there are any alternate commission agreements between the seller and myself as obligated in the Realtors(R) code of ethics. Agents can then decide if they will match that alternate commission agreement or not. I willing disclose to all outside our firm agents if I personally have an offer or others within my firm have offers submitted. that leads me to my next questions (posted on separate response due to length)
Right now, in this very, very competitive market, when there is more than sellers profit at stake - but rather, the consequences of a foreclosure on one's record, versus a work out agreement, the rules of the game have been temporarily altered. Suddenly, with the multiple unknowns of dealing with a bank's process and systems, agents are quickly adapting to new procedures in order to protect the best interests of the client.
I have been a listing agent on a short sale where clients have approached me to "double end" or, in other words, represent both sides in a transaction. The lure and enticement of two sides of a commission is tempting. Personally, I have handled this situation with kid gloves. Not only do I have an obligation to my client, but I have a reputation in the real estate community to think of. Anyone who kids themselves into believing that one can be greedy and disreputable at the expense of fairness to our cooperating agent brethren is kidding themselves. If you have any hopes for longevity in a market, you will treat your co-agents with the respect that you would hope to receive.
My policy has been to clear things first, in writing, with both parties, buyer and seller - then, if my seller agrees, I will disclose a competitive range in which they should consider making their offer. (I will do this even-handedly, btw, to any caller who inquires). In a very recent closing, I was approached by a buyer who made it perfectly clear that he was approaching me directly, hoping for advantage in the bidding process. I gave him the same competitive range that I reported to any cooperating broker who asked me. (with the permission of my seller). In the end, an all cash offer came forward that, while comparable to my "double ended commission" offer, was clearly the strongest offer. I whole heartedly recommended to my seller that they take the other agent's offer to present to the bank.
I guess my point is this, if you feel that an agent is being underhanded, and whispering out of both sides of their mouth in a situation where they stand to make substantial gain - most likely you are absolutely right. I tell my friends, my clients, and anyone who will listen: Whatever somebody is willing to do FOR you - they are willing to do TO you. It is not "all is fair in love and war...and real estate". Ethics are not something that can be faked -regardless of what somebody says, watch how they behave and react to situations. One's true nature is bound to reveal itself. It is then up to you to decide whether you are willing to get in bed with a snake, or prefer sleeping soundly within the boundaries of your own conscience.
Jeri Creson, Broker
TotalAccess Realty Advisors
If you decide to retract your offer all you have to do is just fax him the the first page of the contract, cross it out and put withdraw in large letters on top. It can get tricky if you still decide to pursue this property and continue making offers with someone else. You get into situation when he can claim that he was a procuring cause for your purchase, as well as he might have buyer-broker representation agreement.
if you like the property and you think it is worth the money he is suggesting for the counter offer you should probably continue with him. Bank might be also willing more to work with the same agent representing both sides.
Hope it helps,
Dmitri Stupachenko, REALTORÂ®
SO MANY buyers do not realize that selling agents who work with buyers usually receive the full commission of both parties. Just because a buyer has no agent does not mean that he gets any financial benefit from a lesser commission being paid!! The same commission is being paid; it's just being paid to the selling agent! I can't understand why buyers continue to believe this misconception and I think this is the most serious misinformation out there that needs to be corrected!
The industry needs to do a better job of educating the public on this matter! To this end, I believe there should be a national campaign to educate the public about this serious misconception involving representation. Buyers should know that it is to their distinct advantage to have an agent representing them in a buying or selling transaction. Until the public is better educated, there will be dual agents that benefit from the public's ignorance.
You may wish to discuss this with his broker - and if he is the broker - with the seller directly.
I've always found one of the problems in telling buyers the amount of the highest offer is that the amount could change on one of the other offers at any time before the seller's acceptance of one. Yes, the listing agent is now legally able to divulge (and hopefully to all buyers, not just the one he/she may represent) the highest offer, but some buyers will also mistakenly use this information to artificially keep their bids lower than if they were just given the instruction "highest and best." When I'm representing sellers and I have multiple bids, I like to give everyone no more than a general ballpark range of where the offers are. If I give a specific dollar amount on the high offer, I might get less than highest and best.
Don't be afraid of getting into a bidding war, multiple offers are just the norm now for many properties, and worth is relative. In some areas houses are selling more than can be supported by current comps, but that doesn't mean that the value is the lower amount as determined by an appraiser. Although you don't want to pay an unnecessarily high price for a property just because other potential buyers have pushed the price higher, that higher price is probably much more a true indication of where the value is. If you make offers over and over and never get the house even if you're going over full price, you're either still bidding too low for today's value or the other features of your offer aren't strong.
Best of luck in finding a great house!
Keller Williams Realty, Los Feliz
20 Years of Sales and Service
I recently was involved in a similar situation, though not dual agency on my behalf. I represented one of 4 buyers, and it was nearly mirrored to your situation. We were told to present our final and best offer, and we did. We then found out that the property went to the buyer that the agent represented. The agent also represented the bank, and my clients felt that it was unfair to us that the agent could have told their clients what was the best offer, and they beat it.
Now you are on the other side of the fence, and the agent works for you. It sounds like your agent is in fact adhearing to his fiduciary responsibilities to you, as you are his client and he owes it to you if he knows other bids are higher. It would be more upsetting to you if he didn't let you in on the fact that someone else beat your bid. Also I am sure he wants both sides of the comission, but he is obviously earning it isn't he?
I would go for it if you can! Just don't let this continue over and over.
I am surprised that they bank is okay with dual agency. However, if they are, then I would focus on what you think the property is worth.
You may or may not be aware of the appraisal problems that the industry is having. I would discuss this with your Realtor also.
We have digressed. The most important thing that you should take from this discussion is that it is almost always in your best interests to have your own representation. You will not save any money by using the listing agent. In most markets in California, the commission is paid by the seller. If there is only one agent representing both sides, then that agent gets the total commission. If there are two agents, then both usually split the commission. In either case, you will be paying the same amount for the home and will not have to pay a commission to the agent helping you.
If the information was provided to all, then there isn't an ethical question. However, if s/he only provided to one potnetial buyer, then there would be an ethical question.
Linda, I took no offense, I just wanted to clarify and I appreciate the viewpoint of everyone, especially those that are from different states with different regulations. It is nice to get a fresh perspective that is not constrained by California's, sometimes good, sometimes bad, regulations.
I might be misunderstanding the question. The way it reads to me as that only the 4th couple were told and asked to submit highest and best. It has been a long day and if I am not reading this correctly, I apologize. And if the agent has, in fact, given the same information to all four then it would not be illegal in Wisconsin either and the agent has done nothing wrong.
Again, if I misunderstood the question, I apologize. Please accept.
The agent telling a potential buyer the highest price is not unethical or illegal in California. However, if s/he was only doing it for one buyer, then you are correct it would be unethical and possibly illegal.
For more information on ethics in general visit http://www.scu.edu/ethics/practicing/decision
At the least, the banks will ask for highest and best through the listing agent without putting it through with a multiple counter document, however, I do not believe it to be ethical to give preference to one buyer over another. There is no way of knowing whether or not one of the other three buyers might be willing to meet your highest and best unless they are asked.
There are ethical requirements for both selling and listing agent. However, you are now working with a business who may have given different instructions to the listing agent that he must abide by. We really do not know all the details and therefore are limited in our advice.
It's always in your best interest to have your concerns represented by a "Buyer Agent". Their job is to advise and protect you. Any changes in your intent to purchase must be given to the agent in writing.
Pay what you're willing to pay and not a dime more. That highest and best routine is standard procedure for psyching people out so they pay more than makes sense for them (the "I must win" auction mentality you see on ebay and among newbie auction-goers). In my experience, banks don't bug anyone but the top bidder with the highest and best threat. I'd hold firm. I know of several people who's highest and best was actually lower than their first offers, and they got the house.
2) has the agent disclosed to the buyer that he or his firm personally has such an agreement? By the Realtors(R) recently revised code of ethics he has that ethical obligation to buyers and subsequent other agents should they ask
3) has the agent disclosed to the buyer that he or his firm personally has other offers presented through them? Again, By the Realtors(R) recently revised code of ethics he has that ethical obligation to buyers and subsequent other agents should they ask
4) Has the agent been authorized by the seller to share that highest and best price to all of his buyers/all agents presenting offers? If the seller says that they like the qualifications and terms of one buyer over another and only wants me to share that with the one buyer they like best, I secure that instruction in writing or via e-mail and then proceed as directed. Howeve I do advise them that it's in their best interest to give that same opportunity to all buyers and their agents to match terms. I prefer though getting one final price and all terms that they are willing to accept and then give each and every buyer and their agent the final opportunity to accept those terms. That is the best way to treat all parties involved fairly, equally & ethically.
Without answers to all of those questions I can't see how anyone can say the agent acted unethically.
One last thought directed towards all who've said "get another agent" or "you should have a buyers agent only represent you. " It seems that it is too late for that kind of advise. I don't know what the laws regarding "procurring cause" are in California, but here in NJ a new "hired" agent can be working for free on a transaaction where another agent showed the property and especially has written an offer. Because that agent in fact was the procurring cause. And it can cause both the buyer and seller as well costly time and heartache if the showing agent does in fact sue for procurring cause. I avoid those situations as much as possible.
It also seems very clear to me that most most of the agents in our industry do not clearly understand section 6-2a of the Law of Real Estate Agency Pamphlet which legally should have been given to you and read by you.
In My humble opinion this agent has done nothing more than work in his sellers best interest (unless the seller has a written statement requesting the agent not to disclose the highest offer terms) and also "not in a detrimental" manner to the buyer so long as he is being Honest about the offer terms. If they dont' beat it then they don't get the home!! Is that what is best for the buyers?
It's a fine line but I think the best answer is to get your own agent! Usually always the best answer!!
What if the bank has an appraisal at a certain dollar amt and he is asking you to meet or exceed that number.
How do you really know whether or not he has these other offers? When someone is dealing dishonest it can be hard to know where they stop their web of tales. I had a similar situation with an listing agent who told me the pending sale amt because she thought it was to fall out of escrow. I wrote the offer for my buyer as instructed by listing agent . Then an hour later I was called by listing agent that she had gotten the original buyers to match us toe to toe. This is a veteran agent in Roseville CALIF. I told her that in my opinion she used my buyer and I to get what listing agent and the seller really wanted more money and lessrepairs. Her response that she should not have given out any information about the deal over the phone. I remember her name and stay away. So we in the trenches working to do the right thing for the best interest of our buyers find ourselves with these situations as well.
I never recommend using a dual agent. No one can represent both sides fairly and equally, it just isn't possible.
To answer your question, my husband and I have been leisurely looking for homes and wanted to save a little more so that we can afford to live in the areas we like, thus we have not looked for an agent to represent us. We came across this bank owned property at an open house and decided to submit an offer with the selling agent as the listing price was within our current budget (and homes in this particular area sell quick).
Thank you everyone for your responses!!
As previously stated it does not appear that the agent is doing anything illegal and I don't see the ethical problem. If the agent is allowed to disclose the highest offer, by the seller, then the agent is doing you a favor by allowing you the opportunity to make another offer.
You are under no obligation to make the higher offer if you don't feel that the property is worth it to you.
Also previously stated, you should get a buyers agent that will look out for your best interests.
As for your quesiton about how you can retract your offer: Offers generally expire in 3 days, but that depends on how you wrote it. You can always contact the agent and tell him/her that you want to cancel the offer and then it is a simple matter of signing a form saying that you have cancelled the offer.
I wish you luck in your home search.
This past year a new law passed (in California) that unless the seller specifically instructs his agent, the agent is indeed allowed to disclose the offer price(s). Anytime you're in a dual agency relationship, you have to know that the individual agent is not working only for you. Especially in the case of an agent working with a foreclosure listing, the listing agent has a longstanding relationship with the seller while the listing agent just met you. In this case, the listing agent probably does many listings for the lender and so who do you think is his first allegiance?
Just out of curiosity, why aren't you working with your own agent?
It is unethical for the agent to disclose the highest amount on an offer. As Dorene mentioned, it is better to have your own buyer's agent represent you.
Keller Williams Realty Beverly Hills
I always do advise buyers to work with their own agent. The seller pays our commission so we work for you without charge. We only ask for your loyalty in sticking with us with a Buyer/Broker agreement. If you are working with someone who has your interest foremost you will feel more comfortable with the process.