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Homebuyer, Home Buyer in San Ramon, CA

Seller's agent ethics and legality

Asked by Homebuyer, San Ramon, CA Fri Jul 9, 2010

We made an offer for a house (actually twice, we made an initial offer and then we raised it). We were told by the sellers agent that we had been outbid by a lot and by someone with an all cash offer. We recently found out that the sellers agent had taken our offer and gotten one of his clients to up their bid to a couple of thousand more than ours so that they could get it and he could pocket the entire commission. Their bid was initially lower than ours. Forgetting the ethics of this, is this even legal? Are realtors allowed to do this sort of thing? Is there any recourse for me as a buyer? Please understand that it is not my intention to tar all realtors with the same brush, but more a genuine question - I am shocked that such behavior could be allowed. If it is allowed, wouldn't every buyer be better off dealing with the sellers agent directly?

Help the community by answering this question:


The seller's agent actually did a great job. Think about it, he put the sellers in a position to get an offer for a few thousand more, and put his buyers in a position to get the house for a price they were comfortable with.

There are two issues here: the first is multiple offers and the second is the role of the agent.

As far as multiple offers go, there is no dickering. You make your best offer first, but there is no need to offer more than you think it is worth. The exception is if it is a property "beyond price," that you simply can't replicate anywhere else or for any amount.

In terms of the agent's role: if he presented your offer then he fulfilled his obligations legally and ethically. He's not required to present it well. He was employed by the seller to sell the house. He was employed by the buyer to get the house. If you really wanted to you could have insisted that your agent present your offer to the sellers, but the sellers could have declined to do so...they are under no obligation to you or your offer.

Your recourse is to make a better offer next time. I think the real issue here is that you got out maneuvered in a negotiation and didn't get the house you wanted for the price you wanted.
3 votes Thank Flag Link Tue Jul 13, 2010
I have acted as a disclosed dual agent, however, in the case of multiple offers, it is our office policy to have another agent. or our manager, sit in on all negotiations, and I, as the listing agent with an active offer, would recuse myself from the negotiations, so that it is an equal playing field for all potential buyers.
Is this something that is legally mandated? No..........it is not.

That being said, you need to keep in mind that the sellers can decide how they want the agent to proceed.
It is not illegal for the agent to shop legitimate offers, IF the sellers instructed them to do so. Even if the agent isn't acting as a dual agent, they might be instructed to improve one offer over another offer if the sellers prefer it for whatever reason. It might not seem fair, but it is legal. This is assuming, of course, that the offers do indeed exist.

Maybe the sellers preferred the other buyers for some reason (all cash offer?), and asked their agent to share your offer in order to get them to increase their offer. That is not illegal. We really don't know all the particulars of the situation.

It is also possible that the listing agent agreed to reduce the commission if they had their own buyer (on our mls, however, this must be disclosed as a "variable" commission structure).
If that occurred - Is it fair? No - but the seller can call the shots, and to my knowledge it is not illegal.
Certainly, I would like to think that your agent was made aware of the situation.

It is never legal to lie, but it is legal to follow the instructions of the seller, even if they aren't "fair" to all parties.
As agents, we have the responsibility to let sellers know what their options are - we may not always agree with the choices they make.

Sorry you had to experience this frustaring scenario. When the market was "hot" these kind of situations happened all too often. Fortunately, they are rare these days.

Best wishes..............
3 votes Thank Flag Link Sun Jul 11, 2010
First, I'm sorry that you feel you were not treated fairly. From the details you have given I see no reason to assume that the seller's agent acted either illegally or unethically. It is the agents duty to assist their client, the seller in obtaining the most favorable terms in both a legal and ethical manner. Real estate transactions are often highly emotional and losing an offer is disappointing. I think it is a mistake to assume that because the listing agent got both sides of the transaction that they behaved illegally or unethically.
1 vote Thank Flag Link Fri Jul 16, 2010
Hi there - good points and lively discussion here. First, let me say, I hear and understand your frustration. It doesn't "feel fair", does it? In reality a few things are happening here. A listing agent's primary legal and fiduciary duty is to the seller, and if the seller gives his/her permission for him to disclose an offer to another buyer in order to try and obtain a higher offer, the agent is within legal rights to do so. A separate issue comes into play, however, and that's a matter of professional responsibility towards one's peers. No one sells real estate in a vacuum. Unfortunately, there are many agents who put blinders on, and treat each transaction as if it's the only one they may ever do, and treats each cooperating agent as if they will never meet them again.

This is a huge mistake. All markets eventually level out, and we, as Realtors, need the relationships we build through behaving professionally amongst our peers. Buyers agents notice, believe me, and recognize when they have been dealt with unprofessionally. And eventually that behavior catches up with a greedy agent who doesn't allow for a level playing field when fielding offers. This doesn't help you on this particular transaction, except in the sense that it's important to recognize that in real estate, like in every industry, greed often prevails, and people are affected negatively.

To say, "just go to a sellers agent directly" is a mistake. If the sellers agent happens to be unethical, just to put it simply, "whatever someone is willing to do FOR you - they are also willing to do TO you. Find an ethical, solid, trustworthy agent to represent you, and just know, you may have to roll with some of the punches to get the job done. In the end, you'll be much better off.
1 vote Thank Flag Link Fri Jul 16, 2010
In my opinion, your agent (the one who represents your interests as a buyer) should have asked the selling agent two things before they presented your offer to the selling agent: 1) are there any offers coming in that you are aware of, or strong interest and 2) are any of the buyers or strong interest coming from buyers that YOU represent? It is not the responsibility of the selling agent to volunteer tha information. But it IS the responsibility of the selling agent to be truthful. Reason why the selling agent may not VOLUNTEER that they have a buyer: the selling agent, if they represent both the seller and the buyer have a responsibility to do nothing to harm the interests of either. In volunteering any information about their buyer (including that they have presented an offer), they could potentially be harming their buyer's negotiating strength, and that is prohibited. As far as the offer that the seller countered on, and eventually accepted, we do not know that the reason that offer was accepted was because the agent would make more money. That is what you assume. The other offer could have been, (and certainly should have been a much stronger offer, given the fact that the seller knew his buyers were in a competitive situation iwith you, whereas presumably your buyer agent never bothered to find that out for you). I really don't like the inference that it is automatically the "fault" of an unethical agent. Doesn't sound like it to me! As Debbie said below, it is not always about just price. If the other offer was a true cash offer, but a little less than yours in price, it would have been a "no brainer" to go back to that buyer and say" great offer, but we need a little more money". That would have been a real win for the seller and the seller is who the seller's agent is paid to represent. Cash offers are prime, when they are backed up with proof. As far as " wouldn't every buyer be better off dealing with sellers agents directly" hard to answer that. Practicing true Dual Agency is a challenge that some agents practice more expertly than others. If you feel that an agent can fairly represent both your interests and the interests of the seller at the same time, then "Yes". I just this past week had a buyer for a listing that was my listing and so did another agent. My buyer had credit issues, the other agent's buyer was a cash buyer. If I sold the listing, I would have made 24,000.00 from start to finish. If the other agent sold the listing, I would have made 1/3 of that. I advised my seller to take the other offer and told my buyer why I had to make that recommendation when asked. Buyer agreed. The other agent's buyer got the house. They should have. You will find that there are realtors who are knowledgeable, savvy, smart, and also ethical.
1 vote Thank Flag Link Wed Jul 14, 2010
Debbie, those are some great points.

Specifically, it would be unethical and possibly a breach of fiduciary duty if the listing agent looked at the offers presented, called up only their own buyer and disclosed the terms, and got their buyer to modify the offer to get it accepted.

But it is neither unethical or illegal to shop offers. It is not a good practice, and really should only be done when the Seller is adamant about it, because many - if not most - buyers will walk away rather than "improve their offer" without being in a formal counter-offer situation.

For Homebuyer, there probably isn't any "recourse." While it is unethical of the listing agent to not treat all parties fairly, filing that ethics complaint isn't going to get them the house.
1 vote Thank Flag Link Wed Jul 14, 2010
In response to the comment: ". The seller's agent never should have told anyone other than the homeowner the amount of your offer.:

I know I am going out on a limb, here, but I respectfully disagree with such a blanket statement........
While I don't want to belabor this topic - I don't think the public should be misinformed about what an agent might want to do............ and what an agent must do legally.

We probably all agree that what occurred wasn't fair, but fair doesn't always apply to what is legal.

The seller MAY INSTRUCT their agent to negotiate with any party on a one to one basis, if they so desire. They may instruct their agent to share any or all offers with the other parties.

As I said in my earlier post, we may not always agree with what our clients want us to do, but our obligation is to let them know their legal rights, and to let them make their own decision, even if we disagree with it.

Unless NJ follows different laws, the seller has the right to ask their agent to go back to 1 or 2 or 3 agents in a multiple offer situation and reply with any counter offer they select.
The counteroffers do NOT all have to be the same, either. They may ask their agent to share any information, too.
Whether thar's a good business practice or not, can be discussed on another thread.

Terms play an important part in any decision making process. Perhaps the sellers love the terms in one contract, but want to tweak the price - they can do that. The seller's agent has the goal to get the best price possible for their client.

I agree that the agent, as a dual agent, should have disclosed that they had their own offer on the property. However, the seller still retained the right to direct their agent to disclose other offers in order to get a buyer to increase their offer. The seller might have had a strong comfort level with their own agent selling the home, tooo - that could also play into their decision to have their agent's buyer increase their offer. There are a number of variables we don't know..

I am not defending the practice, - only separating out what is "nice/fair" to do, and what may be legal to do.

Homebuyer - to comment on your last question as to whether every buyer would be better off dealing with the selle'rs agent directly - in some cases, yes, they might.

A surprisingly large number of agents here on trulia have stated on other threads that they do give a lower commission structure to the seller if they obtain their own buyer. Many agents do not do that. Many agents might have convinced their client not to make your offer known to their buyer. There are a number of ways this could have played out.

Again, I know I am going out on a limb here, and am not defending what occurred - it's not how I would have wanted negotiations to play out.......I am just trying to explain it.

I have already stated what my office policy is in a situation like this - my manager would have sat in on negotiations so that I wouldn't be privy to the other offers. Even in that scenario,however, the sellers still could have instructed my manager to go to 1 party and try to impove that 1 contract - it is their right to do so.
I do not think what occurred was illegal -not sure what CA laws are (and, I am not a lawyer, so it's just my opinion). I don't think it was fair, either.

My personal belief is that the best business practice is to let each buyer perform on their own, without artificially pushing them up by making them "beat out" another party. That's the advice I give my sellers. Most of them usually follow it, but I can't dictate to them how to respond. I prefer tokeep all negotiations equal and fair - I think it is in everyone's best inrerst to do so.

I undertsand how upset you are - it's too bad your agent didn't explain that this kind of situation can occur, but not matter what, it's upsetting when it does occur.

Why not sit down with the Broker (of the other agent) and discuss this - see what his or her take is on all of this. You might get some answers to your questions, and feel that you have some closure..

I hope the next home you find will be an even better one!!
Best wishes..........
1 vote Thank Flag Link Wed Jul 14, 2010
Unfortunately there are no rules about multiple offer situations for sellers agents. The Sellers agent has to act in the best interest for his client, the seller, and does not need to disclose at all how many offers, what prices etc.
It was not handled professionally, believe me I I have handled those situations way more professional, but you have to move on and find another property.
I have NEVER represented a buyer and writing an offer for any buyer, when representing a Seller in a multiple offer situation, because that is a conflict of interest.
Do not get discouraged, keep working with an ethical, professional Real Estate agent, who will represent you in the best possible way, and who will ONLY act in your interest, and most of the time you will get a better deal, meaning probably a sellers concession in any form.
It is always better to have somebody on your side representing ONLY you, and you will find that very helpful, because there can be still some obsticles before the transaction is over.
Good luck!

Andreas Furtner
Broker Associate/Windermere Welcome Home
1 vote Thank Flag Link Tue Jul 13, 2010
The seller's agent was acting as a dual agent when representing the seller and his own buyer client. This is not illegal as long as all parties involved are aware of the agency. That being said, the seller's agent had the responsibility to the seller to bring in the best offer, which means as long as his buyer client was aware of the dual agency nothing was illegal, maybe just a little unethical.
1 vote Thank Flag Link Sun Jul 11, 2010
As a buyer's agent this is a very frustrating experience. The one thing that we can do is ask the listing agent if she/he is submitting an offer or if anyone in her/his office is doing so. They are legally bound to answer honestly. At least then you know how the odds are stacked and you can then make a decision to pursue this particular home or not.
Good luck to you and I know you'll find a better home and happier experience down the road.
Suzanne Looker
1 vote Thank Flag Link Fri Jul 9, 2010
Gosh....I went through this just recently. Submitted and offer on an REO property for $51k over asking, and was told mine was the first. A few days later, was told there are 4 offers on the table. Then I received the notification that the seller accepted another offer. Upon checking the MLS later, it turned out the selling agent also wrote the winning bid! We won't know until it actually closes to see how much the it would sell for. But another agent in my office who also wrote an offer is eqully ticked off.

The first question buyers' agent asks the listing agent is if the listing agent is writing an offer. Because many listing agents prefer offers to be emailed to them, they are privvy to the price, terms and conditions.

If indeed the listing agent says he's writing an offer, then here's are the scenarios that we do in our office:

1) submit a sealed bid addressed to the broker.

2) OR: the listing agent asks another agent in his office to write the offer on his behalf, but he should not give any information on the other offers.

3) AND: all offers are turned over to the broker who then processes and discusses the offers with the seller who makes the decision. That would have been the right thing to do.
1 vote Thank Flag Link Fri Jul 9, 2010
Yes a listing agent can represent both the seller and the buyer.

I am a realtor in Pleasanton/San Ramon area. I definatelly do not suggest that you use the listing aget for that reason. The listing agent is not "Representing" the buyer, they are representing the seller.

A buyer will always be represented best with their own agent. A listing agent is paid by the seller and is most concerned about selling the home for the Highest and Best offer.

So for the buyer you want your best offer which even though you may want the home you do not want to pay more than what it is worth.

The realtor can represent both parties as long as it is disclosed to both parties.

I just sold a home in Pleasanton with multiple offers what I said to the offers that came in after the first one was I have full price offers . You can not tell any one what the price is or terms of other offers that is definately unethical.

I do know it is a stressfull process. i hope your current realtor explained this to you.

Realtor / Legal Assistant

Legal Realty Volo Law Group

925 699 5041

JoAnna Jensen
0 votes Thank Flag Link Tue Jul 27, 2010
I'm sorry this happened, it is agents like this that give the rest of us a bad name. 1st I would go to the DRE.ca.gov website and look up the agent. than contact his broker. If nothing happens then go to your local Realtor association and file a complaint. There will be a hearing for this agent and ramifications to his actions. If in fact he was doing what you said then yes it is wrong, but if he gave you the same opportunity to counter yourself then it was considered a multiple counter offer and you had the same opportunity as did the other buyer. I hope it works out for you, and I'm sorry that happened.
0 votes Thank Flag Link Wed Jul 21, 2010
all offers are to be presented to the seller as they are received. Agents cannot hold an offer while waiting on a better one. This practice is against the code of ethics. You should take this matter before your local board. Each party should be represented by their own agent unless agreed upon by both the sellers and the buyers.
0 votes Thank Flag Link Wed Jul 21, 2010
Is it possible that the agent let both buyers know that there was another offer and did not disclose the offer price of either of the competing buyers? I had 2 recent experiences when there were 2 buyers for the same house.

#1 I had the seller and both buyers. Both buyers put an offer in. One was full price and one was a little lower. I presented both of the offers to the seller. The seller said to tell the buyers to put in their highest and best. The first full price offer went $6,000 over asking price. The 2nd buyer kept their offer at the same price. The seller accepted the 1st offer and reduced the purchase price to full price and gave the buyer back their $6,000. The buyer who got the house and the refund acted as if the seller was up to something that they hadn't figured out yet and seemed angry. The other buyer bought a home about 6 months later.

#2 I had the seller and 1 buyer. Another agent had the other buyer. My buyer put in an offer a little lower than asking price. 2 days later before the 2nd buyer put in an offer my buyer raised her offer by a few thousand so that her offer was just shy of asking price. Then the 2nd buyer put in a full price offer and offered to let the people rent the house for a year. The seller accept the 2nd offer (not my buyer). My buyer and I are still shopping for a home.

Sometimes it can feel like something unethical is going on when it's not. And sometimes unethical things ARE going on.

If you are troubled and need resolution I would file an Ethics Complaint with your local board. The form is probably 1 page of fill in the blank items (name, address, phone, property address) and a few sentences about what happened to you. You can probably download the form from on the local Board"s web site. You can also probably download a copy of the Code of Ethics. Read through the Code of Ethics and determine which Code you feel the agent violated and put that on the Ethics Complaint. The listing agent will get a copy and explain what happened.
0 votes Thank Flag Link Mon Jul 19, 2010
Wow, did not realize this would be such a hot topic :-) Thank you all for your answers. Brenda, I think you highlighted the main issue perfectly. As long as I am comfortable with the price I am offering, it does seem to benefit the seller, seller's agent and myself if I go with the seller's agent. Seems to me that the person who loses the most in all of this would actually be the traditional buyer's agent, which is why I thought you would have rules to protect them. And I think this is even more true in a foreclosure situation (as long as the seller agent is willing to assume dual agency of course, which more often than not, they do seem to be).
0 votes Thank Flag Link Mon Jul 19, 2010
I'm not sure about CA, but here in MA we have mandatory Agency Disclosure rules in which the Agent (listing or buyer) must notify their client(s) when a Dual Agency situation arises, which this sounds like. The Selling Agent has a responsibility to his/her Seller to get the best and highest offer possible, whereas a Buyer Agent has a responsibility to his/her Buyer to get the house they want at the lowest and best price possible. As you can see, this presents an outright conflict of interest for an Agent and it is one reason why the State of MA requires Agents disclose to both parties when this situation arises and the parties both need to agree to the Dual Agency, in writing. So the only thing that could be "wrong" here is that the listing agent didn't disclose to either of their parties that this was occurring. If that's the case, the only reasonable complaint that could be filed would have to come from either the Seller or the actual Buyer, as they are the only ones who could claim "damages" from the transaction being handled improperly.

I find it curious, though, that you would feel you were abused by the Selling Agent and then end up with the convoluted logic that you would be "better off dealing with the sellers agent directly" in the future. This implies that you feel the problem was somewhere with your Buyer agent and not the Seller's agent. Please explain why you feel you'd be better off dealing directly with the selling agent in the future. Remember, it's the Seller who pays the commission, so the selling agent will ALWAYS do what's best for their listing client and not you, the buyer.
0 votes Thank Flag Link Sun Jul 18, 2010
It's unfortunate that you have had to experience something like this. Like everyone the has posted previous has stated --- it is not illegal, and not really unethical either. The agent was clearly looking into the best interest of the sellers and who knows...maybe the sellers told the agent to bring the offers to them so they could see which deal worked the best for them
0 votes Thank Flag Link Fri Jul 16, 2010
I am so sorry to hear you found yourself in this situation. It is unethical and a breach of an agent's fiduciary duty to disclose the terms of a competing offer to another interested client. As a listing agent, they should treat all parties equally and fairly. However, It may not have been the agent's fault as there is always a Seller in the background, and that Seller has the right to ask the agent to disclose an offer to another interested Buyer in the hope of creating a bidding war on their house. That likely may have been the case. Frustrating, yes.
0 votes Thank Flag Link Wed Jul 14, 2010
I also hold a CA Real Estate Brokers Liciense with the Department of Real Estate. You can complain to the DRE if you feel there was bad faith and they will investigate. Sorry to hear about this.
0 votes Thank Flag Link Wed Jul 14, 2010

I regret that you have been mistreated in this real estate transaction. Agents like this often give a bad name to all real estate agents and make homebuyers think twice before asking an agent for help. This can be harmful for both buyers and sellers.

As you've read, there are unfortunately no laws in most areas about the way agents may handle these situations. However, as a general rule, these agents' reputations will eventually catch up to them and other agents will no longer want to do business with them. Dual agency can be a tricky thing for an agent just as much as for buyers and sellers, and often agents make poor decisions.

In real estate training, agents are taught to handle each transaction ethically, to disclose things which should be disclosed and to keep confidential things which should be kept confidential. The seller's agent never should have told anyone other than the homeowner the amount of your offer.

The Brenda Dacus Team
0 votes Thank Flag Link Wed Jul 14, 2010
The Seller's Agent's job is to get the highest and best price for his Seller. Ethics depends on how he may have handled the multiple offer situation so it's hard to tell without quite being there.

If he found a Buyer and told him that the house is on the market for $150k but that there's already an offer on the table and his Buyer (without knowing the offer amount) said that he would offer $155k and it happened to be over your offer, then he did nothing wrong and legally double dipped. Overall, it is they SELLER'S decision which offer they choose to take.

The Agent worked it to benefit the Buyer, which in turn, benefitted him as well. There's nothing wrong with that, however, if he stated that there's an offer on the table for $152k and that's your offer and he didn't give you the same opportunity to bid over the other's price, just giving his Buyer the advantage, that can be construed as unethical. It's sort of a gray area depending how it went down.

You can report it to DBPR or move on and find another home. Without factual evidence, it's sort of difficult to determine if there's truly an ethics issue here. The fact that it was a CASH deal may have been enough to sway the Seller since they didn't have to wait of final approval from a bank and it was a sure bet.
0 votes Thank Flag Link Wed Jul 14, 2010
First thing first: If this happen the way you're reporting it, you need to report (online or written)this type of unethical and possibly illegal behavior to the California Department of Real Estate: http://www.dre.ca.gov: Sacramento-Principal Office:
California Department of Real Estate
Commissioner: Mr. Jeff Davi
2201 Broadway
Sacramento, CA 95818-2500
Hope this helps!
M. C. Campbell, DRE#: 01819507
Broker Associate
Coldwell Banker Sunset Strip office
0 votes Thank Flag Link Tue Jul 13, 2010
Once the deal closes your agent should be able to find out if it was an all cash deal, that info should be in the mls and there would be no bank recorded on the deed. If it was an all cash deal, then even if you were to match or offer more than the cash buyer, your offer is less attractive to a seller. Going through the loan process these days is difficult. Lenders throw all sorts of curve balls. If the home does not appraise, the bank will only lend to appraised value, not purchase price.

After explaining the pro's and con's to my sellers regarding cash buyers vs down payment buyer, I have had sellers even take a bit less, just to get the cash buyer.

As for the way the agent acted. I would like to think he was instructed by his seller, to do what he did, based on the seller having all the above info.
0 votes Thank Flag Link Tue Jul 13, 2010
Hello Again,
I just wanted you to know that there are many of us, me included, who have had the opportunity to represent both sides or shop offers and have passed because it was not an advantage to our client. Keep the faith, most of us are ethical and those that aren't share a reputation that will eventually come back to bite them...
0 votes Thank Flag Link Sun Jul 11, 2010
Given that multiple-offer situations, outside of short sales, are relatively rare nowadays - the presumed benefit of being the listing agent's pocket buyer has a very small chance of ultimately paying off.

It is a violation of Realtor ethics, and probably of licensing law, for an agent to lie about other offers.

Does anybody think that it is unethical or illegal in any manner for a listing agent to shop offers around, though?
0 votes Thank Flag Link Sat Jul 10, 2010
Dear Homebuyer,
I'm so sorry you have had such a situation happen to you.

The fact of the matter it is NOT allowed,nor is it ethical and it's likely Illegal as well.
If you have proof of this behavior, you can report this "person" to the Department of Realtors for disciplinary action.
The website for this is http://.www.dre.ca.gov" target="_blank" rel="nofollow">http:// http://.www.dre.ca.gov ..the matter will be throughly investigated and appropriate action will be taken.
0 votes Thank Flag Link Fri Jul 9, 2010
Thank you all for your answers. Bottom line is this:
Unless there are significant consequences, I do not think it is wise to rely on ethics trumping self interest. Don't meant to impugn the honest realtors out there that wouldn't do this, but if a seller's agent had to choose between 20K extra for his seller (and 3% of 20K for himself) or an extra 3% of the total price for himself, call me a cynic but I think I know what I would bet on. IF there are no consequences that is, and that is precisely what I have been trying to find out. So far I seem to have gotten two directly contradictory answers - 1. It is unethical, but legal and 2. It is illegal. Could someone point me to where I can get an unambiguous answer? Goal, to reiterate, is not to take action against this realtor, I don't really care about that. Goal is to see whether there is any way, when I make an offer, to make sure the dice are not loaded against me with respect to the seller's client and see if I can make it more of a level playing field without being forced to go with the seller's agent myself. Can I force the sellers agent to follow Pacita's process, for example?
0 votes Thank Flag Link Fri Jul 9, 2010
From my understanding that is illegal for a Listing Agent to shop a bid with other prospective buyers. I'd call the DRE and file a complaint.
0 votes Thank Flag Link Fri Jul 9, 2010
Just to add a few comments to the many good ones below:

One thing to do to discourage your offer from being shopped is to put a short time frame on your offer. That doesn't prevent your offer from being shopped, but it puts more pressure on the seller--a bird in hand is worth two in the bush. Unfortunately, that technique doesn't work well with REOs, but in a conventional sales situation it's something to consider.

And you ask whether, if it's allowed, wouldn't buyers be better off dealing with the seller's agent directly? Not really. A buyer's agent provides you representation that the seller's agent really can't offer. And dealing with the seller's agent doesn't put a stop to shopping offers. True, there's an incentive for the seller's agent to work with your offer, rather than one from a buyer's agent, because of the greater commission the seller's agent will receive. However, it doesn't stop the seller's agent from shopping the offer to other potential clients and thus receiving both ends of the commission on a higher offer.

Hope that helps.
0 votes Thank Flag Link Fri Jul 9, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
Unfortunately, it is my understanding that in California it is legal for an agent to "shop a bid". I come from a construction background and find it HIGHLY unethical. I always use a form that discloses to my buyers that their offers are not confidential, but there is also another form where we can require that an offer NOT be disc losed to any other buyer. We present that BEFORE giving the seller's agent the offer, and if they are not willing to sign it, then you have the choice of finding another house, or dealing with what you are dealing with now.

I know this has been a difficult situation, but you will find another house, and you are probably better off not getting this one, and having to worry about what other slippery things may be going on. If someone is not ethical in something this big, then you will probably be worried throughout the that they are not being ethical in other equally important aspects of the transaction.
0 votes Thank Flag Link Fri Jul 9, 2010
Ah yes, if only everyone were "logical". But wait, who gets to define "logical"? Is it logical for a seller to accept a lower price for an all cash offer? Is it logical for a buyer to bid more than list price for the "home of their dreams"?
0 votes Thank Flag Link Fri Jul 9, 2010

Let's just agree to disagree. Just because I can afford to pay more doesn't mean I should. Keep in mind that we are taking a couple of thousand relative to an offer price of well over a million. Do I think I made a fair offer? Absolutely (and it was close to 100K over asking). Would I have paid a few thousand more if I had to? Yes. This option of bid the highest you can in one shot seems to me to be, in a word, ridiculous and I do not see this as common practice in any other business. If that is indeed the case and I had been outbid then, I would be fine fine with that. The sellers agent should not then be able to selectively go back to just his own client and get them to bid again. You can't have it both ways. The point was that this process seems broken and, as described, serves only the seller's agent well. If, as you describe, it was all out in the open, that to me seems like the fairest solution, to the buyer and the seller. Or, the process that Pacita describes. As to how much of a seller's market it truly is, let's leave that discussion for another entry :-)


Thanks. At the end of the day, I am just trying to gauge how common this is, and if it is indeed widespread, whether the standard practice of having your own agent and sticking with them actually puts you at a disadvantage.
0 votes Thank Flag Link Fri Jul 9, 2010
I think buyers are being swept by emotion into placing unreasonable bids on homes. The schools in windemere are ALL wait-listed. Even if you pay top dollar to get into the Windemere schools, your child will have to wait YEARS to get into those schools. You are better off just getting something in the neighboring school districts since those are the actual schools your kids will go to anyways. Why pay mello roos AND a high price AND deal with such unethical behavior?

There are plenty of homes that are still under water and these sellers will have limited options if the market continues to be like it is now. Do not bid high on these properties. Be patient. The rates are not going up anytime soon. It is the emotional buyers that are making this a seller's market. If more logical people were buyers this would indeed be a buyers market.
0 votes Thank Flag Link Fri Jul 9, 2010
Homebuyer-San Ramon

Gosh, we go through this process many, many times. And listing agents don't always win. It's actually more the rarity for a listing agent to "double-end" the deal.

A seller's agent wants the best and highest possible price for his sellers. The buyer's agent wants the best and lowest possible price for his buyers. An agent who represents both sides may be conflicted.

Many listing agents prefer not to also represent the buyer because it does become a challenge to properly represent each side --- in that scenario, the agent serves as a conduit of information. Whereas by representing only one side, we become our clients' diligent and forceful advocates. Just like in a courtroom, when each protagonist is represented by his own lawyer, you would want to have your own Realtor (as opposed to agent) representing your interests.

Don't give up....think of it this way. The reason why you didn't get this house is because the right one for you is yet to come.

Good luck!
0 votes Thank Flag Link Fri Jul 9, 2010
In a bidding scenario like yours the listing agent is legally bound to present all offers received by him/her to the seller. The seller can take any, or no, action on any of them by whatever criteria the seller deems important to the process. It is within his right to say "I like that buyer because his offer is all cash, but I want that price. Ask that buyer to raise his price and if he does I will accept his revised offer." The seller may have been short sighted not to counter all offers, but that was his choice.

The implication in your question is that you would have raised your price to get the home. Please be aware that in many markets including San Ramon WE ARE IN A SELLERS' MARKET. Just because the prices are30% lower than 3 or 4 years ago does not change that fact... And in a sellers' market you HAVE TO ASSUME that you must put your best offer in to start with ... no holding back, no bluffing to see how great a deal you can get. If you want the house put together the best offer you can ... and if you get it great... and if you don't get that's okay because that was the best you were willing to do on that house at that time.

A final note for your consideration. By tradition the offer process, even in multiple offer scenarios, is what I often call a "secret ballot" ... no one knows anyone else's offer. That is usually considered to be to the sellers advantage. There is nothing from a legal standpoint that requires that secrecy... unless you specifically write it into your offer. And in fact there are several REO lenders who have taken the exact opposite approach ... all of the offers on their properties are submitted online and are entirely visible to everyone else considering an offer... the goal is to construct an offer that results in a better bottom line for the lender. An interesting approach and one I think will gain momentum as time passes... I will be writing more on this on my blog in the days to come. Stop by if you have a moment.

Good luck with future offers

Broker/ Owner
0 votes Thank Flag Link Fri Jul 9, 2010
I agree with those below. Unethical - Yes! Illegal - not so clear! I am hoping the listing agent is an Agent and not a Realtor. A Realtor is a member of an organization the subscribes to a certain degree of professionalism and ethics. Many people think all agents are Realtor's and this is not true.

This is happening way to much.
0 votes Thank Flag Link Fri Jul 9, 2010
Thank you for the answer. Yes, that would seem to be the right and fair thing to do. However, the impression I get is that this process never really happens in reality since it is the sellers agent who controls this process. And that, at the end of the day, this kind of behavior, although frowned upon openly, is more widespread than is acknowledged? The comment I have heard often is - it is very hard to compete against a seller agent's own client.
0 votes Thank Flag Link Fri Jul 9, 2010
No, I don't believe that in point of fact it was an all cash offer. Just something that he said to throw us off. And if he had countered, we would in fact have bid more. Therefore, I do not see how you could characterize this as acting in the best interest of the seller. Let's not kid ourselves here - the only person whose interests he was representing was his. Leaving my dissatisfaction aside,this gets to the heart of my question. If this is within the parameters of acceptable behavior (as you do seem to imply in this case), what is the point of any buyer getting his own agent? As long as he is comfortable with the price he is willing to pay (and in this day of easily available comps, it is easy to at least get in the ballpark, with regards to estimates), he would be much better of maximizing his chances by getting the sellers agent to represent him as well.
0 votes Thank Flag Link Fri Jul 9, 2010
HB -

I would definitely contact the agent's broker and go over the details. If the agent is a broker, you can report to the DRE.


In answer to your last question, unless you are dealing with a high integrity agent, working with the seller's agent is almost always questionable. The agency agreement is pretty clear and tied to civil code on what the agent's duties are whether representing buyer/seller or both.

a.) Fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either the seller or buyer.

Web Reference: http://www.TalkToCJ.com
0 votes Thank Flag Link Fri Jul 9, 2010
It may be worth a conversation with the agent's broker, but keep in mind that, unless you signed a buyer-broker agreement (and maybe even with that), the listing agent's fiduciary duty is to the seller. Is it snarky (or some other term of your choosing?) Yes. Is it unethical? It's not something I would personally do, but I don't know that maneuvering to get your client the best price should be seen as unethical.

Also remember that all cash offers are very much in the seller's interest. It is not unusual for a seller to take a lower cash offer than higher offers requiring financing. These days lenders can be so picky, that a lot of things can derail a sale (and not just lenders), so from the seller's point of view, all cash eliminates most of those possibilities, and that is usually worth some amount of money.
0 votes Thank Flag Link Fri Jul 9, 2010
Keep in mind that not all agents are created equal--for the legality portion of your question, do consult with an attorney who specializes in real estate--as for ethics--if the agent did in fact do as you say, yes, unethical--and you may wish to speak to his/her broker owner and discuss all your concerns; if you can prove the agent's action you can report him/her to the local Realty Board.
0 votes Thank Flag Link Fri Jul 9, 2010
That is HIGHLY UNETHICAL. I would contact the listing agents Broker then possibly the CA DRE. I'm there are more people in this forum that can help guide you further. Sorry to hear of such a poor experience. I would love to know their name.

Best of luck,

Web Reference: http://www.loansquawk.com
0 votes Thank Flag Link Fri Jul 9, 2010
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