Foreclosure in Minnesota>Question Details

Carl, Real Estate Pro in South Saint Paul, MN

Would you consinder it an ethical practice?

Asked by Carl, South Saint Paul, MN Thu Oct 4, 2007

In your opinion.....do you consider it an ethical practice for a licensed Realtor to offer a property for sale, when the Realtor knows the home can not be sold/close for several months or longer?

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In this market there's a good chance they won't get a buyer for several months. . . but I don't see anything unethical there, do you?

Is it ethical for a buyer to make an offer on a property when they can't make a move until their own unlisted home is sold?
2 votes Thank Flag Link Mon Oct 8, 2007
I don't see an ethics issue; the closing date is always negotiable. When someone builds with us we often look for a closing date four or five months out. Sometimes we get it sometime we don't, in the end the buyer and seller have to agree.
2 votes Thank Flag Link Sun Oct 7, 2007
Sylvia -

That's a good point......and it is interesting how different markets will respond to how an offer is written. I do put an expiation date on some offers (depending on the client). Although, you can lose some points from time to time with that included on the front end........You may have heard the statement about "Minnesota nice". Whether it is a bank owned property or Mr. & Mrs. Seller some folks perceive writing in an expiration to be very pushy and can cost the buyers money in negotiations (you play your cards when you need to).

Nice response!
1 vote Thank Flag Link Fri Nov 30, 2007
It is absolutely ethical but this information would have to be disclosed at the very latest once an offer is presented. I personally would indicate this information in the listing if it was a significant amount of time out of the ordinary (like more than 60 or 90 days from the listing date).

More importantly, there are also plenty of remedies to this situation....the seller could maybe lease the property back from the buyer after the closing, the closing could be postponed to accomodate the seller with an incentive for the buyer written into the contract, the seller can offer the buyer first-right-of-refusal and let them go shop for a property...if they find nothing else by the time the seller is ready, they buyer can be given a certain number of days to "rekindle" their offer and so on.....

This is definitely ethical and something we as Realtors are accustomed to working around for many different reasons.....Hope this helps!

Angela Faulkner, Broker
Principal First Realty
1 vote Thank Flag Link Sun Oct 7, 2007
Ethics are standards that a group of people agree to. This seems pretty ethical in my neighborhood. I have people telling me all the time that they want to close on this date or that one.
1 vote Thank Flag Link Thu Oct 4, 2007
I agree with the others. There is no ethical problem when all the facts are disclosed.

There are many reasons for putting the house on the market much earlier before it can be closed; especially since this is a buyer market and houses can be on market for quite sometime - a few common ones - the sellers want to take advantage of the one time $250,000 capital break, or 1031 exchange, or rental contracts are still in effect, kids are in school, etc.

On disadvantage for seller is unless the price is great and/or the property is unique, they might not get as many interest buyers because most of the people want to move right away; but you might also find the ones with similar needs on the buyer side.

Hope this makes you feel better about the situation.

Sylvia
1 vote Thank Flag Link Thu Oct 4, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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Considering that the closing date is fully negotiable, why would that pose an ethical dillema? Simply inform potential buyers that the seller cannot close before "x" date. You only run into ethical issues if there is some undisclosed problem with the property which is forcing the delay, i.e. the seller not having clear title to the property. Such an underlying factor which is material to the ability to convey title must be disclosed.
1 vote Thank Flag Link Thu Oct 4, 2007
As long as it is disclosed in the listing that possession is a specific date, I don't see that it's a breach of ethics. How do you see that it is?
1 vote Thank Flag Link Thu Oct 4, 2007
Patti Pereyra, Real Estate Pro in Chicago, IL
MVP'08
Contact
Disclosure of closing date request in the mls makes it very ethical.
Web Reference: http://www.toddnorsted.com
0 votes Thank Flag Link Sun Jan 6, 2008
Thanks, Carl - Truth is, vice versa. We can also ask the sellers/buyers to counter the expirate date to make it legit even if we have passed the expirate date.

Like you said; it really depends on the motivation / market on both sides - as long as you are both upfront and understand the position of the other side, then things can work out - part of the skills in negotiation, maintaining good network, reputation and relationship to make sure things work out right for our clients.

Sylvia
0 votes Thank Flag Link Fri Nov 30, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
Contact
But isn't there an expirate date on your offer already? If it's past the expiration date then you don't have to recind, do you? In CA, that's the case
0 votes Thank Flag Link Fri Nov 30, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
Contact
Paul:

I think we are on the same page with how to handle the situation. Rescinding is a great tool to use to keep things moving for our clients.
0 votes Thank Flag Link Fri Nov 30, 2007
To answer the question, no I don't think it's ethical, but I wouldn't let there be a question as to the ethics of another. I simply recind the contract and before it gets to that point I remind the listing agent about my right to recind, and write it into the offer.
0 votes Thank Flag Link Fri Nov 30, 2007
Yes, I do agree, Carl. For foreclosure or even not foreclosure but short sales or the ones the sellers are behind on payments, the response from the seller (in this case, seller + lender) could take a long time. My assumption is that the listing agent might be lack of knowledge of this or unfortunately, just lazy, and not communicate the fact that most of the agents know by now.

It should be a courtesy for the listing agent to tell the selling agent who presented the offer that it might take a while to receive response from the lenders. As a matter of fact, CAR has a special short sale addendum now for those properties.

Sylvia
0 votes Thank Flag Link Fri Nov 30, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
Contact
My bad......The unspoken part is the time after the 2 -3 week period and there is no communications on the offer. I had a client this past summer that really loved a home and understood that it may take some time to get an answer.......we were three months into it (without an answer) and we pulled the pin and bought a different home.

Hope this helps with visualizing the question.
0 votes Thank Flag Link Fri Nov 30, 2007
I don't understand, Carl. What "unspoken" part? Why would it be 2 or 3 weeks to get an answer? Are you talking about a forclosure, then? If you were making an offer on a forclosure you would know that when you saw it and the agent should tell you it could take a long time. Otherwise I don't know why it would take weeks for an owner to get back to you, even if they couldn't close right away.
0 votes Thank Flag Link Fri Nov 30, 2007
There are always two sides to the coin.....isn't there?

The ethical part of my question is the "unspoken" part that "it may take 2 - 3 weeks to get an answer to be accepted, rejected or canceled". Many agents handle this type of sale with great professionalism; while others are in question. The unspoken part of the sale comes when I see properties actively listed for 12 & 18 months in my market that are bank/cooperate owned which are still active. I know from talking with other agents in the area that have put in an offer on the same property (Agency relationship was not compromised).......and there is no action taken on the sellers/banks side to communicate the negotiations. We can do alot of speculation on what the listing agent may be doing, but that would not be appropriate.

This was a curious thought to see what other agents are experiencing with the increasing numbers of foreclosed properties.

It is perfectly understood that everything is negotiable. I don't think anyone should have a problem with that.

Best wishes in your next transaction!
0 votes Thank Flag Link Fri Nov 30, 2007
Carl....Many things on a purchase agreement presented by the Buyer to the Seller are negotiable, the closing date being one of them. So, that's ethical. If you have an question in your mind as to whether you should do it or not, to ease your mind, use the verbage "Seller is requesting closing date be 1/31/08 or after." in the agent remarks in the MLS listing.

I hope that helps.

Thanks, Todd
Web Reference: http://www.toddnorsted.com
0 votes Thank Flag Link Thu Nov 29, 2007
Hi All,

Carl posted additional information about this at the link below.

Best Wishes,

Emily Gibson
Customer Service Representative
0 votes Thank Flag Link Thu Oct 4, 2007
Define several months? 2 months? 14 months? ...and for what reason is this subject property not able to transfer until a certain date?
0 votes Thank Flag Link Thu Oct 4, 2007
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
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