It is the Listing Agents job to get the most amount of money for the Seller's house as possible, as the Listing Agent represents the Seller. If the Seller agrees to that kind of Listing arrangement , that remains between the Seller and the Listing Agent. It will either attract many potential buyers or it won't. I am not a fan of this but again , it is between the Seller and their Listing Agent.
As a buyer looking at a home listed by a realtor, you will either contact the listing agent or use another agent who should also provide you with information regarding the price of comparable closed properties in the area to help you establish what a suitable price to offer is. If the information does reveal the property was priced low the agent should suggest you come in with your best offer and terms, which may include making an offer higher than the list price.
Your best recourse is to use the services of an experienced real estate agent to represent your best interests.
P.S. I am not a fan of low ball pricing to create a bidding war. In this market where the number of buyers may be limited, putting a home on the market way below market value (with the intention of creating a bidding war) could put the seller in a sticky situation if the only buyer is a cash buyer who has offered full price.
I understand your frustration. However, some sellers want to sell quickly, so they price the house to sell. There is nothing illegal or unethical about it.
Instead of sending them a certified letter, you should have your agent put you in as back up offer to their attorney.
If you have been looking for awhile, you know the values. When a home is priced below market value, a bidding war is inevitable, even in this market. You need to go in with an excellent offer as I have found that being the first in with a full price offer will usually mean an acceptance. If it doesn't and they ask for best and final, you have to determine how much the house is worth to you. Don't be afraid to pay above asking price if the house is worth it.
I am working with an investor in Bradley Beach. We have been outbid on numerous homes. It happens. The best advice I can give is to listen to your agents recommendations. And, don't give up just because the house goes under contract. Until it's closed, anything can happen.
I do agree with what others have stated - that the list price was agreed upon by seller and agent and the agent's job is to sell the house for the most money. With that being said, before you made your offer, your agent should have done a buyer's CMA for you so you would know what similar homes in that neighborhood recently sold for (i.e., market value). So even in the event of a bidding war, your offer would still be based upon those numbers (market value). You wouldn't pay or offer more than what the house was worth. If your agent ran those numbers for you, you knew when making your offer that the list price of the home was below market value but you continued to write your offer and now want recourse because you didn't want to be in a bidding war? With that being said, I've seen homes in desired areas which were priced at or above market value end in bidding war. These homes I am referring to were NOT priced low to mislead the consumer - some of them were priced even higher than market value but the buyers through their agents made educated offers.
On another note, there are many homes on the market that are overpriced. If your agent ran sold comps, you would make an offer based upon those sold comps. If the seller refused your offer, you couldn't litigate against them because you feel they overpriced their home.
A seller can list their home for whatever price they choose but a buyer should never agree to pay more than its worth today (bidding wars included).
When we are listing agents it's our job to get the best possible price for our sellers. However it's ultimately the sellers choice on what to list at, after they hear all the information from their listing agent.
Aggressive pricing (what you refer to as low ball list price) is one way to get buyers into the house and, YES, make offers, often resulting in a multiple offer situation (not a bidding war), resulting in a higher sales price to the seller (which was our job to begin with!!)
Seems to me that you are not comfortable in a multiple offer situation, as many buyers are not, and that's your preogative. Why you think agressive pricing which gets a buyer is a cause for litigation is beyond me. The sellers know what price they are listing the home at when they sign the listing agreement.
If the agressive pricing gets them a multiple offers AND a buyer with a higher offer price, what would make you think the seller would consider any legal action against their agent. The agent essentially did what they were hired to do, sold the house and at the best possible price.
All contracts presented to a seller who has an agent are from "qualified buyers". Sometimes price is not the only reason a seller accepts an offer (even in multi offer situations). It could be the offers are very close in price, and the decision is based on closing date, down payment, or other things that tip the scale towards one buyer over another.
Even in multiple offer situations, if the accepted contract falls through, typically the listing agent will then contact the other interested buyers agents (you ARE working with an agent too right?) to see if their clients are still interested in the property.
Forgive me, but your question/statement seems more to me like sour grapes. " I liked the house but wanted it at a bargain price. I am not willing to go any higher , or give my highest and best offer (which is what typically occurs in a multi offer situation). I lost the house because of multiple offers, so now I am angry with the listing agent for pricing it to sell (but not to me)!!".
I'm not an attorney, but I doubt you would have standing to enter any litigation about a contract between the seller and the seller's agent with regard to their contract.
My guess is it isn't done very often. In my market ( Crestwood Villages, Whiting) some of our prices are so low it seems like we are trying to get into a bidding war, we are not. I just sold a home listed at $17,500 for $14,000, ouch! After 40 years of doing this business I have never seen home values like these. Our office had sales from the mid TEENS in 2011 to over $900,000.00 WHAT A RIDE.