It is a real estate agent's job when representing seller to get the highest and best, how can that be accomplished without other buyers knowing competing offers? The property is only going to appraise for " x " amount of dollars whatever the offer turns out to be. I have heard that in other parts of PA, when there are multiple offers all the agents sit in front of the sellers and present all at the same time, of course one at a time, but in front of each other. Also, as you have stated there are other factors involved with the offer such a contingencies attached, settlement date etc, so not always is the most amount of money most desirable.

Simply stated the agent for the seller is required to represent the best interests of their client, the seller. If the seller instructs the agent to advise all interested parties of the full terms of any and all offers the agent can do so. It is neither illegal or unethical so long as all parties involved are notified with the exact same information. The buyers have the option to pull their offers any time a counter offer is made. The buyers should also know that they do not have to extend their negotiations beyond the date noted on the contract for a reply. Many times it is best for the buyer to simply say no thanks and immediately pull their offer as there are still many good homes on the market. The agent for any buyer whose client agrees to stay in the "bidding war" ,as you call it, should make all offers going forward with a contingency that they must be able to review all competing offers upon final acceptance of the best offer even if their client's offer is not the winning offer. By doing this you then force the selling party and their agent to agree to such if they accept your offer or even reject your offer. If you see that the selling agent was being untruthful you have your basis for ethics complaints before your local Realtors Association. These types of situations are never fun for the buyers but when I work with a buyer I tell them to set a maximum price and stick with it. The only good thing about knowing what the highest offer is is that you will actually know almost immediately what price you lost to while in other situations you normally must wait several weeks to actually see the final sales price once the transaction has settled. In most areas in today's real estate environment bidding wars make no sense unless the home is priced well below the current market value as appraisals are much tougher these days than they were just a month or two ago and if the appraisal comes in low nothing has been gained except a waste of valuable time in a solid buyers market.

It is nice to see most if not just about all of the agents here answered this correctly.
I wanted to throw in some facts to back up the discussion here.

I do want to make clear that each state is different and in California per the California Association of Realtors
here is what we have to go by.... "just the facts ma'am"

From the NAR code of ethics:

Article 1
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01)

Now I am sure all states have different practices. But here is what we got in the State of California:
this is from the DA disclosure that Realtors are to have their clients sign on either side of the transaction:

"NON CONFIDENTIALITY OF OFFERS: Buyer is advised that Seller or Listing Agent may disclose the existence, terms, or conditions of Buyer’s offer unless all parties and their agent have signed a written confidentiality agreement. Whether any such information is actually disclosed depends on many factors, such as current market conditions, the prevailing practice in the real estate community, the Listing Agent's marketing strategy and the instructions of the Seller."

I know law is sometimes left to interpretation but .... I believe it is rather clear that it is up to "the Listing Agent's marketing strategy and the instructions of the Seller" I hope this helps.... My 2 cents... put you offer in and you gotta wait... it is a CRAZY market out there right now!

It sounds like there are a variety of options depending upon your state, so that's interesting!

In WA state - like GA it seems - we are required to work on behalf of our clients. If they want to reset the marketing for their home and throw out all the offers and start again, the only requirement we have is to advise them of the risks (including angering buyers like Advisor02.) We have to follow their lead as we are their agent/representative.

As I review again your description of what's going on, it's clear that the seller is giving everyone a second chance.

Think about it this way: going into an offer situation, you are completely blind. Think "Pin the Tail on the Donkey." You don't know whgere other offers are and you may not even know that there *are* other offers. Your offering strategy may have been different if you had different knowledge.

As a buyer agent, I'd much rather know what the playing field is and whether my clients can/want to compete. We can always walk. As a listing agent, telling people where they need to be might be (and often is) *necessary* to represent my client in the best way and get the best possible offer. Remember: in this market, people are low-balling their offers. They may be *willing* to pay more, and the knowledge above may lead them to decide to do so.

The listing agent is being paid to create a bidding war. I know it's tough as a buyer, but wouldn't you like to be given that opportunity if you were selling such a desirable home?

A breach of ethics? That's a harder case to prove. You just don't know the conversation between the seller and the agent. We don't know if (for example) the seller went against the agent's advice. The agent would be mandated to follow the seller's wishes in this case.

I hope that helps.

In Ga. the listing agent must follow ther sellers instructions as long as they are noot illegal. So if the seller say tell everyone that I have a offer of X$ with the folloing terms and you have that offer the listing agent must tell everyone.

Not only is not not illegal/unethical in CO, there is a place in the listing contract that seller either agrees or does not agree to allowing the sellers agent to disclose info on the other offers.
The sellers agent works for the seller, not the buyers. If the seller wants to get the best price, then it is perfectly fine, with sellers consent, to disclose "we have 2 other offers, the highest being $__." That way, the new buyer knows up front if it is a waste of time to submit an offer, or if they want the property, they have an idea of the price range to get it.
Not sure about Washington, though.

When the dust settles...I would love to know the address of this property. I would like to see if it ends up selling for more than it should have, and if the asking price was obviously bogus from the getgo.

This is another reason every buyer should have an attorney. You should also have a copy of the realtors errors & omissions insurance in case you have an actionable error in the offering.

Hi Kary,

Agreed, a counter (or any direct communication from the listing agent for that matter) would have been great. My agent still has not actually spoken with her for nearly three days now despite multiple calls and voicemails. Only correspondence has been via text which does not provide the best creative deal dialogue :-)

Stuart

Thank you for updating us.

One other possibility is they don't have a better offer than yours, and they just lost it. If so, they might have been better simply countering your offer.

First of all, thank you everyone for sharing your insight, feedback and own personal experiences...very helpful.

Well, I wish I could say that I had an update to share; however, the drama continues. After we were notified that offers would be accepted through Tuesday at noon with a decision that night, we learned that there was additional interest and that they would extend the offer period through Wednesday. As I mentioned before, due to the number of escalation offers, they requested that offers only come with highest bid (no escalation) and that they would be reviewed Wednesday with a decision later that night. Again, no feedback came from the listing agent that night (not even reachable on phone) until a text at midnight saying that they would have an "update" by Thursday. The "update" eventually came, but only that the buyers had an attorney reviewing offers and that again, an "update" would come today (Friday).

In short, the offer deadline and decision timeframes continue to keep changing with no indication that a final decision is coming anytime soon. My suspicion is that the sellers and listing agent are trying to extend this out a few more days in an attempt to get additional offers over the weekend so as to drive up the price and play off the escalation offers.

Looking into the listing agent's background, it appears that they not have much experience in this market or higher price point which I suspect is contributing to the mess. Despite how much I want the house, I have instructed my agent to walk away from the deal.

I have bought and sold several houses and work in sales/contract negotiation in a different industry and this is by far the most unprofessional, disorganized and seemingly unethical process I have ever been a part of. If I were to do this in my business, I would be fired on the spot.

Hope to eventually come back to the forum and share a positive buying experience with you all soon :-)

Thanks!
Stuart

It would be nice if Advisor02 would pop back in. I'm curious as to what the result was. Were they outbid, did it increase the amount they had to pay, or did they end up still paying the same amount. The question wasn't clear as to the result.

My understanding is that a listing agent must have the seller's consent to disclose anything to other parties in multiple offer situations, and it's not really up to the listing agent to "play God," but to advise the seller as to what the pros and cons of different courses of action might be. For example, seller "A" might be a person who feels that the buyer who brought a viable offer to the table first should have precedence over the buyer whose agent waited until the 11th hour, called the listing agent to "find out what it would take," then sent over a slightly higher offer. Seller "B" might request that their listing agent call every agent who has ever shown the house, broadcast the details of the offer they have, and encourage any one of them to bring something better.

It's really hard not to get frustrated in multiple offer situations, and I think (at least here in Seattle) most agents try to walk the line between being fair/ethichal, and (frankly), doing their job, which is to sell their client's home for the highest possible amount the market will bear at that moment. When my buyers get upset or frustrated because we find out we're going to be in multiple offers, I usually remind them of 2 options: One, write an offer that you think is a fair price for the home, that would work with your budget, and that if somebody else wants to pay more you can take a deep breath, shrug it off and walk away. And two, move on, don't make an offer at all. It's so human to get emotionally attached to a house, that we (agents and clients alike) sometimes forget there will always be others. In fact, I've had buyers lose out on a house they thought they really wanted, only to have a house they loved even more come on the market 3 days later.

Dear Advisor02,

A multiple offer buying situation is never fun for the buyers. Based on your explanation, it doesn't sound as if anything was illegal. However, the actions taken by the listing agent could have easily backfired. In situations like what you described, competitors often back away and then the Seller is in a poor position, with no offers.

It is always wise for the listing agent to handle multiple offers discreetly, letting everyone involved know there are multiple offers, and then giving everyone the opportunity to adjust their offers if they choose. By disclosing the details of the one offer, the listing agent may have actually hurt the seller's chances for an even higher offer.

Sometimes a property gets multiple offers in the first days of a listing, then the negotiation gets botched, or people get greedy and the offers fail. I've seen properties then sit on the market, after that initial flurry, and then sell for less than the original asking price.

Good luck in your future negotiations.

Warm Regards,
Karen

Not illegal. Ethical grey area. Certainly a pain in the &^%!

No law was violated given the brief amount of information given. If the listing agent and seller were inundated with multiple offers they weren't expecting, this kind of thing is actually quite common. Despite the best efforts the listing agent has to represent the best interest of the seller. So if the seller changes their minds, the rules change. It's their house after all and they can do what they want with it.

I wish the rules were more clear but we are in a recession and even when we are not, sellers want the most they can get for their home. This strategy, despite the frustration for everyone who didn't get the house, actually worked quite well.

It's a crappy way to make a few extra bucks on your house but such is the world when big amounts of money are involved.

If it makes you feel any better, I have been involved in short sale transactions that are far more convoluted and the bank can essentially do whatever they want whenever they want prior to close.

Count yourself lucky and move on to the next house. In your mind assume that the house was littered with mold and waving the inspection made it the buyers problem. That will help you sleep better.

In Florida it would be against the rules and very unethical. Contact the board of REALTORS there

Advisor02,

I agree with most below who took the objective view: the agent is representing the seller.

While there are rules that an NWMLS agent must adhere to with regards to advertising offer receipt dates/tiems, the seller is really the one who makes that decision and they can change their mind - even mid-process. They can reject all offers and start again. It's typically a "review" date not an "accept" date. Kary's also right in that terms and conditions often override price: a lower offer with no financing or inspection may beat out a higher offer contingent on these items..... This happened a lot in the previous, seller's market, but is not so prevalent any more.

If the listing agent's purpose was to raise the price via a bidding war, then they are doing their job - representing the seller. It's certainly not "nice" but being nice is not their job.

I hope this helps.

Advisor02,
It is exactly this general misunderstanding of what an agent's responsibility is to the general public (not their client) that often leads to people equating agents with used car sales people (no offense guys). And all agents can relate to an occasion or two when it seems the management of a mutliple offer situation didn't seem so 'fair'. Regardless, our job is to do the best on behalf of our clients to get the best offer (all terms considered) without violating te law and the Realtor's Code of Ethics. Most do it with panache and class.

There are NWMLS rules when it comes to the 'scheduling' of date/time when offers will be reviewed. Anything other than the Buyer's (Selling) Agent being able to present a signed offer to the seller within a 24 hour time frame requires a notation in the listing and/or a letter on file. But even then, what the listing agent does once that day and hour comes is up to the individual agent and the seller. Most agents will recognize that delivering consistent and honest information to all interested parties will help avoid any legal issues down the road.

It is sometimes hard for people to avoid becoming suspicious and speculative when the details of competing offers are either disclosed or kept under wraps. It can work both ways. Educated buyers schooled by good agents will feel comfortable (though possibly disappointed) with the outcome as long as they made an independent and level-headed decision. So do your homework regardless of whether it is a multiple offer situation or not. It is an emotional process during which clear minds need to prevail. When it comes your time to sell you'll appreciate the agent who understands their dutes and works solely for your benefit.

Keep up the good search.
Steve

Hi there,

Hope this helps...

In this market, especially with the tax credit deadline quickly approaching, many buyers are jumping in with offers. A multiple offer situation, especially if it's a purposely undervalued short sale or foreclosure, doesn't surprise me. It is common to also ask for all parties to present highest and best in a multiple offer situation.

As frustrating as it is for the buyers, there isn't anything illegal about implementing this strategy or sharing details. As mentioned, they only need to be honest about the details. The sellers and listing agent have the right to do what they need to do to get the best price for their home. In fact, (yikes!) they may even feel as though they did you a favor by allowing you to resubmit your highest and best offer rather and simply taking the best offer in the first round.

They just need to hope that the offer they choose has heart in it and the buyers are prequalified and have serious intention on purchasing the home. I have seen some instances where the highest offer was not neccessarily the most sincere.

Good luck!

Jennifer Nilssen, TEC Real Estate

There is nothing illegal or unethical about revealing the details of competing offers. The Listing Agent's duty is to the seller and the decision to share the details of offers received with the competitors should be made by the seller after discussions with his agent. There is strategy involved, of course, so there is no right answer as to whether or not this should be done in every case. Honesty is required, especially if trust is to be established, so the situation should be handled with as much openness as possible with everyone knowing what is happening. I don't believe there is anything "unfair" about it either since everyone should be given the same chance to compete.

The most common disagreement I've heard has been from people who believe that multiple offer situations should be handled one at a time in the order they were received, accepted, countered or rejected each on it's own merits. That may be someone's idea of "fairness", but it does not necessarily result in the best price and terms for the seller.

Not enough details on the other issues to make a clear judgement.

Bev Peppard

I think most of us feel the same way, but are unsure of the full details of the situation. Ardell's is right on about ethics requiring the agent to be "honest" vs. "fair"--this requires us to know what the agent said/wrote etc. We don't know that, so we can't say if he/she was being "honest".

Kary's comment gets to the point. As soon as you don't believe the agent based on one issue (offer period), you may not believe them about competing offers. Revealing offers isn't a problem, but maintaining trust by being honest during the process is necessary.

Ardell, I don't think it's clear there was actually a counter-offer here, but the facts are not clear.

To add to what you say about disclosing the price, I'd point out that price isn't always the deciding factor. I've seen a number of multiple offer situations where a lower priced offer is accepted due to other terms, concerns about the buyer, or even concerns about the buyer's agent. So buy disclosing the amount of an offer, the agent might discourage a slightly lower offer that the seller might find preferable for reasons other than price.

Sam DeBord wrote: "Contrary to popular belief, an agent can tell other potential buyers how many offers they have received, and the amount of the other offers. It's not illegal, and is used by some agents to get their clients a higher sale price. Every agent has a different opinion on this practice. "

I'd add to this that the problem is one of belief. If a listing agent says they have an offer of $240,000, the buyer's agent won't necessarily believe them, or probably won't believe them. When it comes to escalation clauses, however, if your offer is bumped up based on a competing offer, you do have a right to see that offer.

Off the top of my heat, I don't see how it's illegal at all. The listing agent represents the seller and has a duty to try to get the highest price possible. I'm also having difficulty with the unethical portion of the question, but I'll withhold judgment on that for now (in part because it's too early--not enough coffee in the system).

I'm having a bit of a problem with how the listing agent "decided to extend the offer period another day." That's not something that can be done without the buyer's agreement. I assume instead you mean they extended the date to review bids another day, which if so, already means they had a bidding type situation set up. Presumably if that was the case (e.g. bids reviewed on 9/21/09 at 6:00 p.m.), IMHO the offers that came in should have had expiration dates shortly after that (e.g. 9/22/09 at noon, or even 9/21/09 at 9:00 p.m.).

Assuming that's the situation (bid review time and your offer expired over 24 hours later), I can see your concern. If you bid $200,000 with a $240,000 escalation clause, and the highest other bid by the original review date was $210,000, but a new one came in later at $230,000, all that new bid did was drive up what you had to pay. If the new bidder knew that, there's a possibility it wasn't even a real bid. If, however, that new bid came in at roughly $240,000 or above, and your offer had an expiration date of 9/23/09 (using my example), that is simply a risk you always face by having a longer expiration date, even if there is no offer review time stated in the listing. Even if the seller had left the review offer dates alone, if a new offer had come in, they could have accepted it if they had not yet accepted your offer.

I would also note that this type of situation is an example of why I think escalation clauses should be used very rarely. Even ignoring bid review periods, and other issues in your question, escalation clauses are just prone to issues because you're disclosing your bidding position. When you make a $200,000 offer with an escalation clause of $240,000, there is nothing that says the seller has to accept your offer. They could counter back at $240,000, knowing that is what you're willing to pay. And that is part of the reason I'm having trouble with your question. The escalation clause merely binds you to a higher price if another offer comes in over $200,000. It doesn't mean that the seller has to accept $200,000. And they're very unlikely to accept such an offer, knowing someone is willing to pay 20% more!

BTW, nothing herein should be construed as legal advice. To the extent that you believe you have a claim against someone you should consult an attorney who practices in the area. If you need an attorney referral, please feel free to contact me.

Contrary to popular belief, an agent can tell other potential buyers how many offers they have received, and the amount of the other offers. It's not illegal, and is used by some agents to get their clients a higher sale price. Every agent has a different opinion on this practice.

In your case, the question of ethics resides purely on the "offer period" that you're speaking of. We're going on what you've told us so far. This is in no way a criticism of the specific agent in your case, as we don't know enough of the details.

If a listing agent told all potential buyers that all offers must be in by Monday and a decision would be made that day, he/she should stick to that date. If the agent then extended the offer period through Tuesday, it would create a situation of mistrust for the other agents and their clients. Ethics could be called into question here.

If a buyer wrote an escalation clause that was good through that Monday, he/she would be off the hook when the offer wasn't signed on Monday. If the buyer wrote an escalation clause that was good through Tuesday, that buyer must be prepared to pay up to the maximum escalation price, even if new offers come in on Tuesday. What's written on your contract counts - promises and verbal offers by agents and buyers/sellers are worth nothing if they're not written.

We can say have your offer be your highest bid but not share the details on what you have received.
That is not fair to the original or second offer with the escalation clause and you certainly don't
state they have waived the finance contingency and inspection - this is when buyers and other agents
don't have faith that they have these other two offers, and if it is a cash deal with no inspection and
with an escalation significantly higher than asking price - I would say the seller and listing agent should
be estatic with that offer and sign it around! Definitely an ethics violation!!!