Jeff, Other/Just Looking in Livonia, MI

Is this legal for a listing agent to do?

Asked by Jeff, Livonia, MI Wed Mar 16, 2011

A few weeks ago, I was working with a client (buyer) who submitted an offer for a bank-owned house. He offered a price lower than the asking price, and the bank came back with a counter-offer. My client countered a couple thousand dollars below the bank's counteroffer, then the listing agent came back with a "highest and best" request, saying that there were multiple offers. My client decided not to make another offer, and then later the listing agent said that the other buyer backed out too.

I am really wondering if there actually was a second offer, or if it was a bunch of BS by the listing agent to try to get more money out of my client than he was actually willing to pay. If this is the case, is it illegal for a listing agent to request highest & best for a multiple offer that doesn't actually exist?

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14
Derek Bauer, Agent, South Lyon, MI
Thu Mar 17, 2011
Just like effort should never be confused with results ... legal should never be confused with ethical. Just because something may be legal ... doesn't mean it is also ethical, and who knows what all applies here to your scenario.
2 votes
Chris Pagano, Agent, Greenwood, IN
Wed Mar 16, 2011
Your client should have countered back with their original counter. They would probably have gotten it accepted.
2 votes
Andy Hargrea…, Agent, Plymouth, MI
Wed Mar 16, 2011
I'll be happy to answer this: I am a bank listing agent in addition to my retail sales and listings.

The bank I work for and represent always conditions for multiple offers if indeed there are two (or more) offers. They do this to ensure that all bidders get a fair opportunity to buy the home.

To answer your question think of it this way:
Why would an agent risk losing his foreclosure listing account over one deal?
Answer is, we won't do that and we don't do that. Or, at least I don't.

The truth is that many times, people do bid on a number of homes and get several offers accepted and then back out of them in their alloted time. It's also VERY common to have multiple offers on a home within days of the home being placed on market.

Keep in mind that prices are already VERY low and (most) banks price things AGGRESSIVELY. If you're letting your clients offer low on many of these, I do consider you check the statistics and see that many/most of these sell for over asking price, especially if they are a new listing and/or in good condition. I think that last year, my list to sales % on my bank owned was over 98% LSP.

What's the best way to avoid all this? Agree to the bank's counter offer. Then you wouldn't have been in this situation to begin with.
2 votes
Scott Hulen, , 64068
Thu Mar 17, 2011
I think this happens often. When dealing with banks they do not use the same " playbook" that everyone else uses disclosers are the ultimate example, the banks or their agent know revelent issues about the home and they choose not to disclose. So much for my rant, on the upside they are usually great deals for the consumer / investor. I have had the same thing happen & sometimes its 2 months later when I get the call that the orginal offer fell through & do I want the property at my orginal bid. I just closed on an REO were I was not the top bid but one of the first 3 bids & got the deal done. REO's can be very competive its not allways "fair" but play to win the game, cash buyers help & investors with a track record of performance with certain banks can help.
1 vote
Steven Walte…, , 95650
Wed Mar 16, 2011
I get the same thing out here all the time in Sacramento. 1/2 the homes are REO. Half the time they do have multiple offers and the other half I think are made up. Remember, the bank is pulling the strings and telling the listing broker what to do. The bank tells the listing broker to say there is multiple offers even if there isn't. ya its wrong and unethical and I hate it. probably not illegal because the bank doesnt have to disclose other offers if they wish. plus you do not have any proof they are lying.
if the listing agent refuses the banks demand then well he is going to lose all that business. I think some of these REO brokers care more about their bank relations than getting good people into homes at a good price.
banks seem to be countering here 10% EMD which shocks everyone.
just my $.02
1 vote
Judy Sharma, Agent, Grover Beach, CA
Fri Mar 18, 2011
Hi Jeff,

I think the agent is simply doing what he/she is supposed to do. Banks do this all the time. Sometime they win and sometime they loose. When this kind of situation arises, I ask my clients if they want to go higher If they don't want to go, I just submit the same offer as my highest and best offer. So, if I get it fine and if I don't that's O.K. too.
Web Reference:  http://www.Judysharma.com
0 votes
Maureen Fran…, Agent, Birmingham, MI
Fri Mar 18, 2011
Jeff,

I am sure you know that legal and ethical are two different things. If you are questioning the legality, ask your broker, a lawyer or the MAR attorneys as I am quite certain there are few attorneys here answering questions.

Buyers change their minds all the time. It sounds like neither your buyer or the other buyer wanted to be bidding against anyone else to me.
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Thu Mar 17, 2011
Jeff, just curious why are you wondering if there actually was a second offer? Is it just a hunch, or do you have some proof??

In regard to the "highest and best" request - there is nothing wrong with simply asking that ......it would be wrong, however, to mislead and state there was another offer if it didn't exist. At the very least, a grievance could be filed.

Any agent guilty of doing that is a fool, imo, as it can often backfire and scare away a good buyer who doesn't want to be involved in a multiple offer situation.

Personally, I think anyone found guilty of misleading a consumer in any way should lose his or her license!!
0 votes
allan erps,A…, Agent, Pearl River, NY
Thu Mar 17, 2011
Derek and Bob below(am sure others) are right about the legal/ethical part. Conversely I do not know if the Agent would really stick his neck out for this deal if he ultimately is "taking orders" from the Bank!
0 votes
14904Z, Agent, San Francisco, CA
Thu Mar 17, 2011
With California banks, they run the show. Often they turn down a good offer and counter higher than the listing price. The agent is told by the bank to submit their clients highest and best offer. You cannot blame the agent for this one. Agents are just as frustrated as buyers and sellers of short sales. We have buyers who are ready to buy and the banks are working on their own slow time frame.
0 votes
Phyllis McAr…, Agent, San mateo, CA
Thu Mar 17, 2011
While working with an REO team for several years, the asset manager for the REO property, did indeed request a "best and Highest" on numerous occasions. Listing agent is at the mercy of this entity
0 votes
Annette Law…, Agent, Palm Harbor, FL
Thu Mar 17, 2011
It always surprises me when a buyer finds a bank owned home priced well below market and still submits a low ball offer. Too often greed blinds buyers to such an extent they have no options except to blame others. The best buyer to represent is the one who has seen the home they love purchased by someone else. And of course, we have all counseled our buyers that the culprits who set the stage for the housing meltdown are still in business and want to sell you a home? Do you really think they have experienced an 'ethics' evolution?

(TU) Chris' made a comment that is extremely insightful. It is guidance such as this where we demonstrate our value. Know who you are playing ball with, get the emotions out of the way, and follow the plan most beneficial to your buyer.
0 votes
Andy Hargrea…, Agent, Plymouth, MI
Wed Mar 16, 2011
Steven I think you're making some pretty broad assumptions there.
While Cali may be different than in Michigan, there aren't an infinite number of banks out there listing properties.

As consumers, we don't have any "proof" that the bank is "lying" nor do we have any proof that you're telling the truth with your experiences. I'm also saying that it is not uncommon for us to get up to and over 20 offers on one property...so without exception, I'd estimate well over 50% of my properties have multiple bids if it's a new listing within the first two weeks of being on market and is in good condition.

To combat this, Fannie has recently rolled out test areas (Detroit is one area) to create more transparent offer entry programs. This helps ensure that your offer gets presented. I believe San Diego in CA is also one such area.

In addition, 10% EMD has been standard on cash sales for several years, if that's what you're referring to.
Almost all banks require it on cash sales - Fannie, Freddie, BoA, etc.
0 votes
Ron Escobar -…, Agent, Beverly Hills, CA
Wed Mar 16, 2011
there is nothing illegal with negotiating counter offers or offers....
The seller has the right to refuse, reject, accept, do multiple counters or simply deny any offers as long as the reason does not violate anti-discrimination laws...

Is a mad house out there... just work it hard and stay the course... you will get an offer accepted...

Best of luck!
0 votes
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