A difference of $1K over asking price may not be perceived as significant as another offer with a substantial down payment. The rationale is that the buyer with the larger down payment is in a good financial position to close the transaction. Sometimes, it's not about price as much as a guarantee that the sale will be completed. That's why it's important to consider all the terms (initial deposit, down payment, buyer investigation period, loan contingency period, etc).
Hope this helps.
1) The downpayment. In this market sellers are looking for strong buyers because they don't want to take the risk of their bank not coming through with a commitment right before closing.
2)In house deal. Sounds like it was an internal deal which means the office was likely chasing that full commission so they may have advised the seller to take the other deal (or, like you said, given the other buyer broker the inside scoop) so as to make more money. This kind of unethical behavior happens all the time and it is because the agents get paid % of the sale price (i.e. incentivised to do the selfish thing).
Regardless I agree with you 100% about this seeming like a shady ending. Unfortunately this kind of in-office behavior happens all the time in the industry ... the listing agent should have been working hard to get their seller the best and highest deal and so he/she should have approached both buyers again and asked for a "best and final" offer. This is one of those cases where unfortunately we can only speculate and may never know officially. I do like that your brother submitted a back up offer of 20K over asking because by law that listing agent has to show the seller, and unless the seller has absolutely no clue they will immediately ask their agent why he/she advised them to sign the other offer when their was another buyer willing to go so high. That should smear some mud in their faces :)
Anyway, hope that helps. Good luck with everything!
If your brother and fiance really wanted the property, they should have presented their strongest offer in the event that events unfolded as they, in fact, did.
Once an offer has been accepted in writing and a transaction is pending, the Broker shall have no obligation to market the property or present further offers to the Seller unless otherwise agreed in writing.
I understand your obvious bias due to knowing a bit about your business model. That's fine. Just please get the basics of real estate contracts correct before espousing your knowledge and opinions on real estate message boards
Now, to answers Dave's question. Dave, I agree with most of the other answers here. As a listing broker i would definately take the offer with the higher downpayment considering all things were equal. I, on the otherhand, would probably have told both buyers to come in with their "highest and best" offer making sure to explain to each of the competing buyer agents that the offer were very close in price and terms. As I stated earlier in this post, your increase may or may not have been presented to the seller. I would've told my sellers about it but circumstances warrant. If the situation warranted I would've explained to the seller all of his or her options thouroughly. Good luck and take care, Jon
Agents are bound by law to present any offers on a property. A buyer's agent may cry foul play but the fact is that this is a very difficult lending environment. If your brother wanted it so bad he might have put his best foot forward out of the gate and avoided a competitive bid situation.
If an offer came in $5000 less and was putting 20% down, I would lean towards that offer over a full price offer putting down 3-5%.
In this market financing is more important than markets in the past few years. The other offer was judged to be stronger. There is risk to a bidding war as a certain % of buyers will walk from it, so you only attempt it if the seller wants the risk to get more money for the home or the offers are substantially the same.
Perhaps a more prudent offer would have been $1,000 over asking not to exceed the highest number your brother was willing to offer (It looks like $20,000 more). This would indicate to the seller a stronger likelihood of a higher bid.
I would be curious as to how your brother would know the details of the accepted offer. Normally this sort of detail is kept private until after the closing, and could only be disclosed with the Seller's permission.
LIsting agents have a fidiuary obligation not to disclose any other in formation. The buyers agent co-incidental was working in the same office. Here is my suggestion have your Brother be represented by a Buyer's agent--everything would be explained by the agent and it's no cost to him. I would gladly speak to him. I work for Century 21-Commonwealth with 17 offices. The largest in New England, if he wuld like professional representation have him call me 617-429-4812. This is my direct cell #. By the way I reside in Needham.
Bidding war situations can be very emotional and frustrating for buyer's because there is so much unknown.
If you have any further questions feel free to email us email@example.com
I understand your point. The listing agent's job it to pursue the highest price for the home from the most solid buyer. Even in this buyers market there are homes that sell well over asking price because they are priced right.
You see, Dave, there are 3 types of properties on the market today.
1. Great Ready to move in homes priced at or below market value
2. Foreclosures and Short Sales
3. Overpriced homes stuck in "languishworld".
Sometimes listing agents encourage the seller to list below market to create urgency and bidding wars. As a result, this usually drives up the house price to fair market value.
If the house that your brother and fiance wanted was outbid, it isn't up to the listing agent to ask for counter-offers. It is up to the seller to ask the listing agent to solicit counter offers. So perhaps the seller just wanted to take this offer because he needed to close quick or whatever other reason.
Does this make sense?
Also, I love that you come after me with an assumption (and opinion) of your own. Unless you are the listing agent on this particular deal or know the listing agent and had access to the contract, you are assuming that their agreement had this language you quoted below and/or was an exclusive right to sell relationship/contract. There are other contract options for sellers. Again, that is contractual language that the seller must agree to and sometimes they don't ... " unless otherwise agreed in writing." Also, not everyone uses the GBREB's written contracts, as the state does not require or mandate that you do so, and you, Jonathan, should know that as a licensed real estate agent.
Anyway, your response seems to be slightly aggressive. Not sure this is the right platform for you. I apologize if my response rubbed you the wrong way - I see you are in fact a listing agent yourself (and represent both parties in transactions?). I am sure you are a great agent - there are a lot out there :) - who would never let an in-house deal steer you into unethical behavior but it happens a lot and there is no need to hide that from Dave or anyone else reading this post. It's just another opportunity to educate home buyers.