That's a great question. We are required by MLS to change the status of a listing within 24 hours of accepting an offer. There are 2 ways a status can be changed. The first is to go to Under Agreement right off the bat. Most listing agents do not use that option to protect the seller.
The 2nd, and most common, status change is Accpeted offer, accepting back ups.
That notifies everyone that an offer has been accepted (signed by all parties) and the buyer is protected with that contract. Because most offers come with contingencies that can include, but are not limited to, home inspection and financing, there are many reasons the accepted offer does not stay together.
As previously stated, some buyers use the home inspecition as an opportunity to renegotiate the price with the seller. Some homes have so many problems that the buyer makes a decision to withdraw the offer after the inspection. It's also a possibility that the buyer was unable to secure financing to purchase the house.
Until the purchase and sale contract is signed the buyer can get out of the contract fairly easily without penalty. And then, there is "cold feet" as stated by Donna.
The benefit of accepting "back up" offers, is that the back up buyer is in the queue, so to speak, so that if anything does happen to the original offer that it falls apart, they are in line to negotiate a new offer on the property. So, instead of a buyer's agent telling the listing agent, "If anything happens to the deal, let me know. I have an intersted buyer", and maybe getting that call, a firm offer is in place to begin negotiating.
The flip side is that often times the lsiting agent, doing their duty for their client, the seller, will use the back up offer as a way to put pressure on the existing buyer to move forward with the transaction.
So, to answer your questions for this scenario, if the explanation you received is accurate:
1- Yes, it's legit
2- There is nothing being done that is not within the law
3- The reason your offer would be used as a pawn in the exisitng offer is not to neccesarily drive the price up, but to let the existing buyer know that if they do not move forward there is another offer on the table the seller will negotiate with if the buyer backs out. The "take away" is often enough motivation for the buyer to keep moving forward and remove unreasonable demands of the seller.
I am a firm believer that when it's meant to be it will happen. So if that house does not work out for you, there must be a better home waiting for you to come along!
I hope that helps.
Good luck in your search.
There is a way to flag a property "active" showing for backup in the Massachusetts Multiple Listing Service(MLS). By the rules of MLS, if there is an accepted offer on the property an agent has 24 hours to put it under agreement or active showing for backup.
Unfortunately, the active showing for backup does not show up on all websites. So whether is is legit or not is hard to say. Personally, if I represent a client and this situation happens. I insist that it is handled correctly in the MLS immediately.
If you like the home I would put in an offer. And, yes there is always a chance you could be a pawn, but there is always a chance you can get a home you like!!
In the case of short sales, there are other offers allowed to be accepted and entertained. And the property does stay active on the MLS. Until approved by the bank and into escrow.
And generally the potential buyers have all signed an addendum saying they understand other offers can be entertained.
Talk to your agent to get some answers. You deserve some clarity on the situation.
If a property has an accepted offer it should be showing as under agreement or active showing for backup. If there is an accepted offer no other offer can trump the offer or contract in play, though back up offers can be accepted and come into play if the first offer should fall through.
Quite frankly, yes as an interested party you can become a pawn in the game. A seller will feel a little more confident if they know there are interested parties if the current offer should fall through. Is it legitimate and legal?..... most likely!
As a home buyer you should consider working with a buyers agent. A buyers agent represents the home buyer and sort through all of this and explain to you your available options. When you call the listing agent directly, you must remember that agent is going to do what is best for the home seller, not what is best for you. It can be complicated and you need someone with experience to help you and work on your behalf.
When an offer is accepted the listing should show up in MLS as being under agreement but it is possible to continue showings and encourage back-up offers in the event the first offer doesn't move forward (different website may show this status change with different symbols)- this may occur for various reasons, perhaps an issue resulting from the buyer's home inspection or a change in the status of the buyer's finances, or perhaps the buyer is just having second thoughts and exhibiting regret at having made an offer on this home....commonly known as "cold feet". I've seen it before . If the purchase and sales contract has not yet been signed and the buyer's home inspection has caused the buyer to try and renegotiate based on newly discovered problems, the buyer may ask for monetary compensation or Credit at closing - but the seller is not obligated to respond favorably - in fact, the seller quite often has a take it or leave it attitude, especially if he or she has already made what they believe to be a concession eg.,in the acceptance of a lower sales price perhaps or urged to include appliances originally excluded. Once either party does not meet the terms of the orignal accepted offer with respect to time-lines, inspections or the signing of the P&S, one party or the other may want to be released from the offer, most often this stems from inspection related issues, but not always...so when you called the agent ,the listing may have been in the midst of coming " back on the market" , the seller not willing to make any concessions, modify the price or perhaps perform a repair of some kind - or the buyers may have decided the house was not right for them , too far from work or family, too big, too small, too expensive, or perhaps, just scared. If you really like the house, have a buyer agent make an appointment for you to see it . If the other deal falls apart, which it sounds like might happen, you will be able to make an offer. If you tell the agent now , what your offer will be ..well I think its best to wait and find out if the other offer is on or off the table. If the agent says they are accepting other offers, have your buyer agent call and get the whole truth...
Lots of deals never make it to "Under Agreement" status. Sometimes issues come up at the home inspection that either (a) the sellers are not willing to address or (b) the buyer are not willing to deal with. Sometimes the buyers can not get their financing committed. If the original buyers truly are trying to negotiate the sales price after their offer was accepted, maybe it's due to something that came up at their home inspection.
If the listing agent is accepting back-up offers, and you guys like the house enough, it might make sense to get a back-up offer in. Obviously talk it over thoroughly with your agent and definitely don't get sucked into any negotiations games. Offer what you think is a fair market price for the property REGARDLESS of what the first party may or may not do. Stand your ground and if the first party gets back involved and ups the ante, be prepared to walk away and move on to the next.
There will always be another awesome home that fits your needs. Although I obviously can't say for sure, but this may very well be legit as many deals fall apart soon after the offer is accepted and never progress any further for a number of reasons.