In CA is it illegal for selling agent to not submit my offer on short sell when the house is on market still?

Asked by Evan, Los Angeles, CA Mon Jun 1, 2009

I have a situation where I can prove (the seller will testify) the selling agent did not submit my offer to the seller of a short sell from the very beginning. The house closed at a lower offer then mine. Also I can prove the closing offer was not as strong as mine as it fell out of escrow went back on market (I was the 1st backup offer and the seller still never saw my offer when it fell out of escrow) but then original buyer found a way to salvage it and close. Is this illegal? If so can anyone provide advice on how I should proceed? I highly suspect the selling agent was getting kick backs from the buyer agent to close this property (or it was a friend). The property was significantly under the market by $50,000 to $75000 based on recent sales.

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Michael Magaw’s answer
Michael Magaw, Agent, Torrance, CA
Wed Jun 3, 2009
You should speak to the agent's Broker or Manager. You can also report it to the DRE or the the local Realtor Board. But how much time and effort do you plan on spending on this task. When it is finished, you still won't have the home. It already closed and that can't and won't be undone.

Things may not appear ethical from your perspective, but you may not have all the facts And you probably never will.

My suggestion is report it to the Broker and then move on.
1 vote
Josie Ranjbar, , San Diego County, CA
Wed Jun 3, 2009
This is an area that remains gray but I predict will get very black and white as new legistation and Department of Real Estate Rulings come into play.

A real estate agent does have a fiduciary duty to present all offers to the owner(s) of the property. In the case of a short sale the owner is not yet the bank, so multiple offers do not have to be presented to the lender involved.

It is becoming common practice (and considered among my colleagues to be most ethical) to have your client(s) (the owners) sign back the first viable offer that you believe will fall within the current market value and submit this offer to the lender for a short sale approval. You can continue to take back up offers in case this first offer is rejected or falls out of escrow. The listing can remain active on the market as well until the lender gives written approval for the short sale and the property is in escrow. However, the listing agent must make a mandantory remark in the listing that states that an offer is accepted pending lender approval. In this manner, all of the back up offerees are aware that their offer(s) are back ups to the first offer which was signed back by the owner(s).
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Gloria Commi…, Agent, Hermosa Beach, CA
Tue Sep 1, 2009
Hi Evan,

The next time you have an agent write an offer request a formal rejection by asking that the seller intial the last page of the purchase agreement indicating that the offer was rejected by the seller. (See page 8 final paragraph of the residential purchase agreement) As mentioned by the other agents you can pursue ethic violations against an agent but the request for a formal rejection might prevent your next offer from being ignored. If I were you, i would submit offers on REO and standard sales due to the success/acceptance rate being higher. Everyone thinks short sales are the way to go but there is a hassle factor, multiple offer situation, and ethical issues as well as a long drawn out process that might end in inevitably end foreclosure. Good luck!
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Glenn Gaspar, Agent, Signal Hill, CA
Tue Jun 23, 2009
Hello Evan, I highly recommend that you file a complaint against your agent with their local association of REALTORS which he or she belongs to.

We have a process within our community where the public and/or fellow agents can file a complaint regarding violations dealing on Ethical matters, By Laws or MLS Violation issues. Once the complaint has been filed the Grievance board will review your case, and determine if sufficient evidence has been presented in order to forward this complaint over to the Professional Standards Committee for a hearing. Often the public is unaware of this process or they are not willing to take the case forward.

You only have a specific time period where you can file this complaint so time is of the essence. But please do perform this act for we need more individuals such as yourself and fellow agents to use this process in order to properly police our community of agents.

Please note that I am not an attorney. My shared thoughts here are based upon my commitment to being a professional REALTOR, and being a member of my local Professional Standards Committee.
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Stewart Four…, , 90266
Tue Jun 23, 2009

All of the advice you have received on this issue is good. The only additional comment I would make is to make sure you get a signature on the bottom of page 8 of your "Purchase Contract Offer" that shows someone signed off on the "rejection" of your offer. This protects any ambiguity about the presentation of your "offer". It would also be your smoking gun if someone were to play games with your "offer"
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blaison samu…, Agent, Santa Clara, CA
Tue Jun 2, 2009

Most probably, your offer was submitted or received after that first offer. Normally agents send the first offer if there's no other offer to compare which one is good. Once they send that offer, all other offers will be back up, as you also mentioned that your offer was backup. And lender accepted the first offer to work with and somehow it fell through and I'm sure that buyer's agent convinced enough that they will close that deal. When the listing agent put it back on market, the listing agent should have contacted your agent which he didnt (that's where that agent was wrong). Now, question is how many days was on the market?

Now, you can either go to board of realtors as other suggested to fight with proof (I'm not sure whether that will cancel this sale) or find another house and next time, after you submit an offer, at least get a confirmation from the listing agent if its back up offer and if the agent says they are submitting then get the accpetance form from the seller, so at least you have proof on both cases.
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Patti Philli…, , Carlsbad, CA
Tue Jun 2, 2009
Evan, I would first and foremost contact that agent's broker, and also go to the local board of Realtors. If what you say actually occurred it is totally against the Realtor's Code of Ethics and shouldn't be tolorated.

I'm so sorry you had that experience. It makes me very angry when other people in the Real Estate profession don't act with integrity.

Patti Phillips
"Advice You Need, Attention You Deserve"
800-680-9133 or 619-507-2100
0 votes
Joanna Morris, Agent, Inverness, FL
Tue Jun 2, 2009
Call the local Board of Realtors.
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