Listing Agent Mistake Part 1
It has always amazed me why I get the following call
“ring, ring”---“ring, ring”
Jesse Gonzalez: Jesse Gonzalez
Suzy Super Buyer Agent: May I speak to Jesse Gonzalez
Jesse Gonzalez: Speaking
Suzy Super Buyer Agent: Oh…Hi Jesse, my name is Suzy and I am calling about that property you have listed on 19th Ave., are you working any offers?
Jesse Gonzalez: I don’t speak about the details of any of my offers I receive with anyone other than my client however, I can tell you that any offer you submit will be presented to my seller.
Suzy Super Buyer Agent: You can’t tell me if you got an offer?
Jesse Gonzalez: No, I am not at liberty to discuss my clients offers with anyone other than my client. I can assure you that if you provide me with an offer from your buyer it will be presented.
Suzy Super Buyer Agent: Well….(un-comfortable pause) I just want to know if you’re working an offer because I don’t want to waste your time, I know you are really busy.
Jesse Gonzalez: Suzy, it’s my job to present any and all offers to my seller so, if your client writes up an offer, it’s not wasting my time to present that offer to my seller.
Suzy Super Buyer Agent: So, you aren’t going to tell me if you have an offer?
Jesse Gonzalez: I can tell you that if your buyer wants to make an offer I will present it to my seller.
Suzy Super Buyer Agent: I don’t understand, does that mean you don’t have any offers?
Jesse Gonzalez: No, what that means is if your buyer wants to make an offer, I will present it to my seller for consideration.
Suzy Super Buyer Agent: Jesse, if you could just help me out here, I can prevent everyone from wasting a lot of time.
(long uncomfortable pause)
Suzy Super Buyer Agent: Jesse are you there?
Jesse Gonzalez: Yes, I am here
Suzy Super Buyer Agent: Did you hear the last thing I said?
Jesse Gonzalez: The last thing I heard was that you didn’t want to waste anyone’s time.
Suzy Super Buyer Agent: So, are you going to help me out?
Jesse Gonzalez: What was it that you need me to help you with?
Suzy Super Buyer Agent: Never mind…don’t worry about it. (click, hangs up phone)
So, the conversation above wasn’t a hypothetical situation, it actually happened and happens often. In fact, it happens to me so often that I am 100% confident that many listing agents out there are complying with these request without ever once verifying what they can or can’t do from their clients, the sellers.
I don’t know about your State’s laws and regulations on client confidentiality however, I do know what is in my client’s best interest and many times….if not all the time, it’s not in my clients best interest to inform buyer’s agents if I my seller is currently working an offer.
For many of you, that is all I would have to say and you would understand why I believe this is the case but, I am sure I need to break this down for some of you so, let’s do it together.
So, my seller got an offer on his property, he has 2 days to consider the offer and get back to the buyer. To keep the timeline easy to understand, let’s say he got the offer on 1/1/11 and the buyer’s offer time limit is 1/3/11. Obviously, during negotiations, the property is still active in the MLS and the appointment desk is still scheduling showings. Why would I let this happen?
Simply stated, my seller reserves the right to continue to market the property up to Binding Agreement because, hopefully we will continue to get offers and hopefully, one of those other offers will be better than what we got. This is in my client’s best interest and truth be told, it’s my job to make this happen, if possible. This gives my client the potential to receive the maximum possible from the market place and as a broker who has a fiduciary responsibility to my seller……I better be making sure his interest is above my own.
Ok, so…..it’s 1/2/11 and my seller hasn’t made a decision, better yet, I tell my seller not to respond to the buyer’s offer till we absolutely have to in hopes of getting another offer. It’s early afternoon on the 2nd and I check my email….BOOM! Guess what, it’s another offer, from another agent for my seller. Now my seller has two offers to consider instead of one……..this is vagenious! (yes…I said VAGENIOUS, VAGENIOUS, VAGENIOUS) LOL
Now, could you imagine what would have happened if buyer’s agent number 2 would have called me before showing the property to his buyer and I told him….”Yeah, we got an offer, we are negotiating it now”? Do you believe this agent would have told his buyer that the property was under contract and no need to see it? As the guy from the Men’s Warehouse says…..”I guarantee it” That’s right, instead of my seller looking at two offers and being in a better situation than before, he would be looking at a single offer, struggling to decide how far he can push the envelope with this single buyer. At the very least, with two offers he can run the clock on the time limit’s, negotiate each one individually and take the best offer or, notify all agent of multiple offers and let them battle it out.
So, hopefully you see my point, it’s not in my clients interest to tell any buyer’s agent how many offers we are working if I don’t have permission from my seller and or if I don’t have a offer from said agent.
I get why the buyer’s agents are making the phone call….they don’t want to put their buyer’s in a multiple offer situation however, if you are a listing agent and you are disclosing to these buyer’s agents just how many offers you are working before you have talked this strategy over with your client, in my humble opinion, you are in violation of your fiduciary duty and are in breach of your client’s trust. Granted, you may never get caught doing this…..some of you may not even have any hang-ups working with buyer’s agents to cheat your sellers out of money but, make no mistake, if you disclose this information, that is exactly what you are doing.
Comments
Hi Brandon.
Buyer's Agent, "Will we need a multiple offer disclosure for your client?"
Listing Agent, "At this time, no however, if it's necessary, I will be emailing it to you and I will notify you via a text message."
As far as telling buyer’s agents that there is multiple offers some of the Asset management companies will not look at the offer unless a multiple offer addendum is signed. The buyers agent in your area states "I have a client interested in the property at 19th ave if we are writing an offer on the property will we need a multiple offer disclosure for your client" how are you answering that one?
Jesse,
Very interesting blog. I must admit that I had always thought that letting a buyers agent know if offers existed on a listing was just fair to them, but you changed my mind. So last week I started answering the question " Do you have any offers working??" with "I can assure you that the seller will be presented with any offer your client makes."
It really throws them. There is usually a long pause and about half the time they follow it up with.. "Oh, so does that mean you are working offers or not?." To which I reply, I am not at liberty to disclose that, but I can assure you that if your buyer makes an offer, it will be presented to the seller."
It annoys some, probably keeps some from showing, but I think it also eliminates the buyer's agent thinking "...Great, no offers, now we can lowball even further than we had originally planned."
Thanks for the article.
Hi Billie,
I think you hit his nail on the head. I think the reason buyer's agents call to ask about offers before they show a property is because they are looking for an advantage for their buyer, not because they want to encourage their buyer to make their highest and best bid out the start gate.
The reality is, as a listing agent, offering up this type of information before we can confirm an interst even exist is providing the buyer with an advantage over my seller. I am sure some agent don't see it that way but, let me explain a bit further.
If I, as the listing agent have no information as to the level of interest the buyer has in the home, then I am working in the blind so, if I tell an buyers agent we have multiple offers, then how do I have any assurance that isn't going to drive that buyer away? How do I have any assurance it's going to cause that buyer to bring in thier highest and best............I don't.
So, the advantage is the in the buyer's court now. He can make a decision if he wants to join a bidding war, before he even has had a chance to view the property. In essence, I have taken my sellers advantage by not revealing that information, untill all parties are notified at the same time, and given it directly to the buyer.
This, in my humble opinoin isn't how we as Listing Agents work to our seller's benefit. A successful bidding war should work like this....
1. Buyer or multiple buyers view the property.
2. Buyer's agent calls into verify offer status.
3. Seller's agent informs the buyer's agent that they all discuss offer details with their sellers however, they can reveal that the propery has been actively showing.
4. Buyer submits his offer, unknowledable multiple offers have been submitted.
5. Seller determines if he wants to negotiate offer individually or notifing all participating buyers of multiple offer situation.
If you were to swtich steps 1 and 2, I don't see how you are protecting the seller's interest.
I like that idea Bob.
Jesse, there is a modest amount of inventory now, but quality inventory is low compared to 2008 and 2009. A large portion are now short-sales which most buyers run from. It was in 2009 that we had that subdivision where most of the properties generated multiple offers and 100's of calls. Some were investors but most were owner occupants.
And it just may be the difference of our marketplaces also. People here are use to competing for a quality home. Even investors will play the game sometimes. But every property that had multiple offers sold for more money then the few that did not.
And some of the local REO agents will always tell you they have offers pending when you call, even when they reduced the price the day before. It works and it's encouraged here to get people in a bidding war. Heck, some banks will under price a property to get the bidding wars started!
Oh, the old "supply and demand" theory doesn't mean anything when someone has already fell in love with that property. They will do anything to get it!
In my market San Jose California, the amount of inventory is up a little from last year, but down from 2009 and 2008. So it is still a supply and demand situation with the supply being limited.
The last 4 sales I have had on both sides have been properties with multiple offers. All of them on the market less that 30 days usually less than 10 days.
As far as telling buyer’s agents that there is multiples offer some of the Asset management companies will not look at the offer unless a multiple offer addendum is signed.
Some REO agents post how many offers they have and the cutoff date to get your offers in, they also post that they are waiting for the bank to sign the REO addendum before they place it pending. This is a great resource so buyer’s agents don’t waste time showing something that is not available.
Here is a web page from one of those agents http://www.nancyvanegas.com/custom10.shtml
Steve.....yea, we do have that obligation but, how can you justify that giving a buyer's agent, who hasn't scheduled a showing, calling you up to verify if you have any offers, isn't fishing for information to keep his client out of a multiple offer situation? Unless you flat out ask, "hey Mr. Buyer's Agent, are you wanting to know because you want to tell your client to send in his final and best or are you wanting to know because you don't want to put your client in a multiple offer situation" .....you can't know.
I have to go back to my original point. How is your market breaking a fundemental law of supply and demand? In my market, we are saturated, we ahve 9 months of inventory and so, it's more logical that in these situations where buyer agnets are calling me to verify offers, it's not because they are going back to their buyers and saying, "oh hell Mr. buyer, you better get your ass in gear and make a crazy insane offer because, this mug gots hisim 3 other offers working." That seems backwards to me.
Isn't it better to protect that information, tell the buyer's agent that any offer he submits will be presented tot he buyer? This strategy allows your seller to make the decision if he wants to enter into a multiple offer situation and notify all potential buyer vs. allowing a buyer's agent and buyer to make that decision.
I guess that is my biggest concern, when we tell buyer's agents that we have multiple offers, we are potentially moving the decision to work a multiple offer situation from the seller to the buyer and that is a violation of a Realtors fiduciary responsibility because you are obviously not doing what is in the best interest of the seller.
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