"An Offer is In, Not Accepted": Enough..!
A: I'm venting! I'm telling you right now that I'm venting in this post and I can care less how my fellow brokers view me after reading this. I'm a straight shooter in dealing with clients and fellow brokers and expect the same in return. Either an offer is accepted and a contract is out or its not! End of story!
I just can't take it anymore. Im sorry. Over the last 4-5 weeks I must have heard at least 4 times from the listing broker when I called to schedule an appointment that, "...just letting you know I have an offer in, that has not been accepted, so please tell your client".
WHY WHY WHY! Is it because you are lazy and only want to show the apartment to direct clients or brokers with clients who are extremely serious? What purpose does this serve? Tell me! I'm right here and I want to know! Does your seller know you are doing this and turning off potential buyers who don't want to get involved in any bidding war; especially against themself!
It's very simple. Either you have an offer that is serious and in the range of acceptability by your client, or you don't. Saying you have an offer in w/out it being an acceptable offer either financially or price wise, makes NO sense! What good does it serve? Oh, my goodness, an offer is in. I better tell my client that they better act fast because someone else put in an offer that was not accepted. Sometimes I wonder if the broker's that practice this scare tactic even understand its self-defeating nature?
Do you see how ridiculous this sounds, yet it happens so often here in NYC? Case in point, I'm going to share with you my experiences but leave out the brokers involved:
WRONG WAY:
300 W 53rd Street - Elliman broker had this listing for a while. On one occasion I called to schedule an appointment for my client, and the broker told me an offer was in; not accepted. But that we better get in fast and bid as close to ask as possible to get the property. This was 6 weeks ago. So, I took my client in. Three open houses later, the apartment is STILL on the market for $549,000. So, we go back to an open house about 3 weeks after our first weekday visit. This time, the broker was there with a colleague who took me aside before I left with my client. She said, "...just so you know, we have an offer over $500,000 so if your client wants it, tell him to bid fast and over $500,000".
Why tell me this? I know your lying! If you had a bid over $500,000 than accept it! Its a condo with no board approval process and your getting $1,000/sft for the property. Honestly, if I was the seller I would take it and run! But did they? Apparently not. The listing is no longer with the Elliman broker and was removed from the system. If there was an offer over $500,000 that got accepted, I would have seen it in the central systems and the webad would definitely still be up pending a signed contract.
RIGHT WAY:
155 E 76th - Now this guy did it right! It was a new listing and I wanted to get my client in as soon as possible to view it. After setting up an appointment with the broker, he never said anything about an offer being in! However, the next day he calls me to say that they just go an accepted offer and a contract is being sent out within 1 day. He also asked me if I would like to keep the appointment or cancel. I cancelled and asked him to keep me in the loop if a contract doesn't get signed.
This broker never said anything about an offer being in when I setup the appointment because nothing was accepted yet. Which is the right way to go about it. When the offer was accepted and deal sheet put into place to proceed, then he called me and told me about it. Very respectful and tells you something about how some brokers work for their clients and towards fellow brokers.
In this day and age, with real estate cooling and buyers being very savvy it just doesn't make any sense to play games. Brokers should be professional and ethical about how they treat clients and fellow brokers. I guess what I'm saying is that there should be more 'strictly business' agents out there who focus on getting the job done right and fairly with their clients best interests in mind.
WHEN BROKERS SHOULD NOT DISCLOSE UNACCEPTED OFFER
WHEN BROKERS SHOULD DISCLOSE UNACCEPTED OFFER
Everything else is garbage! Saying "...I have an offer in & its NOT accepted" simply means NOTHING HAS CHANGED and the PROPERTY IS STILL AVAILABLE. Get it!
UrbanDigs Says To Brokers: Unless you have an OFFER ACCEPTED & CONTRACTS OUT or about to be sent out, don't even mention anything to other brokers unless they or the client specifically ask you if any bids are in. Then it is OK to say, "yes we have had a bid submitted but it was not accepted". But using the phrase, "I have an offer in that wasn't accepted" as a scare tactic is outdated and misleading. Who cares that an offer is in. The buyer who submitted that offer might be playing games or unable to qualify to pass the board. In both cases, the offer as far as I'm concerned is non-existent. In fact, if I was the seller broker hired to market the property I wouldn't even pass on an offer from a buyer who wasn't able to pass a co-op boards preset financial guidelines for purchasing; after all, part of my job is to pre-qualify potential buyers. Until a contract is signed, the apartment is still available and should be marketed fully. End of story. I think its time for a change.
Add to Newsvine
Comments (13)
as a buyer without a agent, I've run into this several times.. I just ignore them and take my time.. but I always remember to check back several weeks later to see if they were lying or not..
Posted by uwsider | February 9, 2007 9:09 AM
Uwsider - thats the way to do it. Just shrug it off. I just wish this practice will become extinct as real estate investing becomes more transparent.
I just dont see the effectiveness of disclosing that an offer was in but not accepted. It would certainly turn me off as a buyer.
Posted by Noah | February 9, 2007 10:38 AM
In my market (Charlottesville, Virginia) this happens from time to time. Perhaps the greatest difference is two-fold. One, we are required to have the Seller's permission to disclose the existence of other offers to potential buyers/buyers' agents and two, I know almost all of the active Realtors. If they are trying to BS me, I'll know.
From my buyers' perspective, this happened last week. There was in fact another offer and the Seller directed the listing agent to wait for the other offer to come in before he responded to ours (we were first). We didn't get the house, but we also were not pressured into raising our offer simply because of the other offer. But we got the next one. :)
Posted by Jim Duncan | February 9, 2007 10:53 AM
Noah - I have to confess - I have said "there is an offer, its not accepted, please show on back up". Here is why - This is pretty much more so for co-ops. If I have an offer, and a good offer, I can not disclose anything yet, until I have ran credit reports, seen W2/1099's or recent pay stubbs from my buyers. So, even though I have an offer, I can't get an accept on it, until I know the buyer shows they are qualified. So, I do have an offer - until I qualify my buyers 100% - My sellers cannot acept, but for the sellers safety - I continue to show - on back up -
In few instances - when the buyers do not qual - I am not stuck holding a Dummass sign over my head - we still continue to show for the benefit of the seller. Not ME, I show up until the contracts are signed by BOTH ends.
Posted by Christine | February 9, 2007 2:09 PM
Christine - Your one of them!!!! Just kidding!
Its different here in Manhattan, even for co-ops. When an offer is presented, a fin anaylsis form + offer letter w/ salary, job position, attorny info, lender info + pre-approval for loan is provided so that seller broker can do their pre-qual of the buyer.
No physical docs are checked until AFTER contract is signed and board package is prepared. So, as you can see, seller broker knows immediately, or at least should know right away, whether an offer is ok to pass the board. Price is another story.
I just think given these conditions on how its done, its a meaningless thing to say and is more of a scare tactic done to show that there is activity on a unit.
Posted by Noah | February 9, 2007 2:55 PM
Noah said: "after all, part of my job is to pre-qualify potential buyers."
Christine said: "I can not disclose anything yet, until I have run credit reports, seen W2/1099's or recent pay stubbs from my buyers."
Wrong. Not your job. Their/your/a banker/lender needs to do this and you need to have confidence in their work.
Also, from my blog/book: "10. Do not listen to realtor comments about their listing. They will say things like “I think that we have a couple of offers coming in tonight.” If I heard that once I’ve heard that a thousand times. It means nothing. And, when they offer reasons why the owner is selling, tell them to be quiet. If you have any questions you will let them know."
http://millionairenowbook.blogspot.com/2006/07/basic-criteria-for-acquiring-real.html
Realtors can't shut up. Use whatever comes out of their mouths against them when negotiating......
Posted by Larry Nusbaum | February 9, 2007 7:49 PM
Hi Larry - Let me clarify.
Pre-Qualify Buyers: Not for a loan, although having a pre-approval is comforting yet meaningless until a loan committment comes in.
The co-op board lays out financial guidelines as to what they want to see in prospective buyers in terms of debt/income ratio, salary and liquid assets after closing. Every board is different and the sellers job to contact managing agent and find out what is required to pass the bldgs board.
Getting a loan committment is between buyer and lender. After all, Ive seen buyers get a loan committment, yet fail to pass the board review.
Passing on a offer to your seller from a buyer who does not earn enough salary to afford monthly payments or have enough liquid assets after the min down payment requirement and closing costs, is a complete waste of time for the client (the seller).
Posted by Noah | February 9, 2007 7:57 PM
"Pre-Qualify Buyers: Not for a loan, although having a pre-approval is comforting yet meaningless until a loan committment comes in."
I see. In Arizona, a commitment letter is part of the contract as of 5/05
Posted by Larry Nusbaum | February 9, 2007 8:32 PM
Your kidding? Here in NYC, its necessary for the board package for review prior to closing.
Actually, these docs take the longest to get and is the main reason why it takes 4-6 weeks to complete a board package for review.
I'll do a post on this in the near future. Amazing how different NYC is from many other markets.
Posted by Noah | February 9, 2007 8:38 PM
There are few co-ops outside of NYC. The few here in my county require all cash and were built in the 1960's
Posted by Larry Nusbaum | February 9, 2007 9:24 PM
I agree with you Noah that a broker who is revealing that there are offers on the table, without being asked, is probably trying to hype the listing. As policy, I show exclusives until a fully executed contract is in hand, not just an accepted offer. It's just not a deal otherwise.
We can second guess the motivations of our colleagues forever, but that will not close any business. The only way I know of to make sure that an offer is NOT accepted, is not to make one.
I don't know anything about your customer's readiness to buy, so take this with a grain of salt. But I think that in the case of your E76th St buyer you should have shown the property anyway, and transmitted an offer if instructed by your customer. High or low, it doesn't matter. They should consult with you, and make the offer they see fit. If the other guy dropped out, you would be in a stronger position. If your customer fell in love with the place, and chose to bid aggressively, they might still be able to sway the seller before a contract is signed. The other buyer would likely be given an opportunity to match the offer, but no guarantee that they would. But without showing the space to begin with, neither scenario could happen.
Posted by Peter Comitini | February 9, 2007 10:28 PM
Peter - Thanks for the comment and for stopping by.
Yes, I agree with you that the buyer should have kept the appt in case the deal fell through. However, this client didnt want to keep the showing or get involved in any bidding war. As you say, her buying readiness isn't pressured right now.
Usually I encourage clients to go to the showing until contract is known to be signed. As always, great comment!
Posted by Noah | February 10, 2007 9:09 PM
300 W 53rd Street
I saw this one offered as a rental either on streeteasy or craigslist at the same time. So I think it was more like a situation where the seller wanted to see if he could get 550 for it rather then having an active interest of selling it.
Posted by JK | February 11, 2007 2:48 PM