Prickly Real Estate Offers

Prickly Real Estate Offers

 

A couple of years ago when the market was hot there were buyers writing multiple offers on different homes in hopes of winning at least one bid.  Their excuse was....we can back out of them during the first 10 days of the contract, right? Wrong! This is fraud.

 

It's back and it's happening again. We just had a buyer request to submit multiple offers with this same reasonng this morning. It is time to re-visit this case study.

 

When a buyer writes multiple offers knowing full well they can't afford to buy all of the homes it is fraud.  Think about this situation for just a minute.....

 

 

 

If you were the seller and you accepted an offer thinking it was a bonafide offer made in good faith...only to find out later it was one of multiple offers the buyer had made...how would you feel?  A bit prickly? The contract looked pretty but it was ready, willing and able to stick you.

 

The buyer knew full well the he/she could only afford one home. Yet they proceeeded to write multiple offers and ended up winning 3 bids.  The buyer has just bought 3 homes and can only afford one. Now what?  They can make it look like they're simply backing out during the home inspection period but this is fraud. But wait....where is their agent in this scenario? Why is the agent allowing this to happen?  Or perhaps the buyer is using multiple agents so nobody knows what is happening.

 

What about the other 2 sellers that believed they had a willing, able and ready buyer only to have the buyer back out during the inspection period?  And making it worse the sellers turned down other ready, willing and able buyers for the fraudulent buyer's offer.  Ouch!

 

Seasoned agents most likely have run into this situation and know how to handle it correctly.  Newer agents, perhaps not?  Now is a good time to renew this case study and make sure we're educating our buyers, sellers and agents properly.

 

Let's keep our contracts legal...not prickly.

 

 

Prickly Real Estate Offers

 

 

 

Phoenix Property Shoppe  

 

 

Anna "Banana" Kruchten
Designated Broker & Owner
CRS,CRB,GRI


Phoenix Homes For Sale

 

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Comment balloon 12 commentsAnna Banana Kruchten CRS,CRB • June 16 2009 02:15PM

Comments

Unfortunately this situation is all too common in my area.  It's truly black and white how real estate should be done, but both listing and selling agents are trying to turn it grey, especially when it comes to short sales.  There are listing agent's submitting multiple offers to the bank, then we have selling agent's submitting offers on multiple properties.

So where does that leave the agents who do business the right way?  Usually in the dust, especially when it comes to buyer's because if you won't write multiple offers for them the next agent most likely will.

All I can say is what goes around comes around.  If you practice bad business, you're going to get bad business.

 

 

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) over 8 years ago

Anna --- It never ceases to amaze me what people will do.  I'm like you, where is the real estate agent who would allow their buyers to do such a thing?  I'm teaching a class this Thursday on contracts and I will certainly bring this up.

Mama Liz's Signature

Posted by Liz Loadholt, Realtor--Broker-in-charge - Trainer--Relocation Director Covering SC (Liz Loadholt- AgentOwned Realty- Covering SC) over 8 years ago

Hi AnnaBanana!

Agree, certainly in the case of the multi-buyer who won all 3 properties. Doesn't sound like they disclosed the other offers they were making. Not fair. Now they bought 3 homes.

I think as long as the disclosure is made to the seller that buyer is also pursuing other properties . . . and buyer understands that they can only withdraw prior to execution . . . the seller would have the info needed to choose to either sign the contract NOW and bind the buyer, or reject it based on that info.

I advise buyers who 'need the house now' to stagger the offers (one at a time) and disclose that they will go on to choice 2 if choice 1 is not responded to timely . . . that way the 'drop dead' is adhered to (or not) and the buyer's not buying multi-homes.

Posted by Candice A. Donofrio, 928-201-4BHC (4242) call/text (Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker) over 8 years ago

Michelle - we are obligated to follow the contract law. There is no getting around that ethically.  Listing agent can submit multiple offers to the sellers/banks. There is nothing unethical with that in fact it's what they should do.  It's the buyers that should not be submitting multiple offers and not disclosing to the sellers that they are submitting multiple offers but can only afford one. That is fraud. 

 

Posted by Anna Banana Kruchten CRS,CRB, Arizona's Top Banana of Real Estate! (Phoenix Property Shoppe) over 8 years ago

Hi Liz....it is amazing that no matter how many times we teach this stuff agents don't seem to get it. It'd be interesting to find out what your students have to say about it.  In my experience the older ones (ok seasoned!) ones get it and the newer ones are so busy trying to put deal together they don't understand the implications.

Posted by Anna Banana Kruchten CRS,CRB, Arizona's Top Banana of Real Estate! (Phoenix Property Shoppe) over 8 years ago

Hey Candy....good to see you back today!  Yes disclose disclose disclose!  But with that being said I don't know of any sellers (especailly foreclosures bank/sellers) that are willing to take this kind of offer even if disclosed........when they've got other offers to consider.  They know the risk of the buyer flaking is great.  Hey.....I haven't used that word in years. What a day it's been.

How's your weather there?  We are having unusally cool weather for us.  Haven't been in the pool yet!

Posted by Anna Banana Kruchten CRS,CRB, Arizona's Top Banana of Real Estate! (Phoenix Property Shoppe) over 8 years ago

It's raining here! ;)  But it's a dry rain . . . HAHAHAHA

 

Posted by Candice A. Donofrio, 928-201-4BHC (4242) call/text (Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker) over 8 years ago

Too funny!  I sure needed a laugh after this crazy day!  So if it's dry rain do you have any clouds? Probably lots of lightening strikes for sure!!!

Posted by Anna Banana Kruchten CRS,CRB, Arizona's Top Banana of Real Estate! (Phoenix Property Shoppe) over 8 years ago

Prickly indeed Anna !  I love your photo of the cactus, the flowers are beautiful-- but the thorns and multiple offers? OUCH!!

Posted by Mary Douglas, REALTOR, Red Feather Lakes, Colorado (United Country Ponderosa Realty, Red Feather Lakes, Colorado) over 8 years ago

Hi Anna,

I just wanted to respond to your response and clarify.  Yes, listing agents have to present all offers, however I've been advised by our legal department that if the seller is doing a short sale and signs an offer it's just like a regular tranaction, contingent on both lenders.  Additional offers can still be submitted to the seller's bank, but the seller can only accept one offer, otherwise he would be selling his house to multiple buyers.  

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) over 8 years ago

Hi Mary.....I love that picture too!  Looks like one in our front yard when it's blooming.  You must not have much of this stuff in your town, right? 

Michelle.....short sales are a differnet animal entirely. This is not the case with this case study but rather these homes are reo's. 

Every state has differnet rules for short sales. Ours is going to be changing again within the next few weeks to clarify all the problems (hopefully). 

Posted by Anna Banana Kruchten CRS,CRB, Arizona's Top Banana of Real Estate! (Phoenix Property Shoppe) over 8 years ago

Very interesting Anna! In NC we have an option period for the buyer as an Alternative 2 in the contract. No one would know if the buyer did this unless the stars aligned just right. This could well be coming our way. I have already noticed in the last several years and certainly now in a buyers market, that buyers do not feel that signing a contract obligates them if they want out for any reason.  This is clearly unethical and I certainly hope there are NO agents involved in this knowingly but I think we all know that that is a possibilty. Interesting times breed interesting ethics.

Posted by SarahGray Lamm, Realtor - 100K Hours of NC Real Estate Experience (Allen Tate Realtors Chapel Hill, NC 919-819-8199 ) over 8 years ago

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