Sunday, May 18, 2008 at 08:14AM
Publicizing Offer Prices & Fiduciary
I mentioned that a couple of offers have come in over list price on the REO listing in Oceanside, both of them a net $133,000 offer price. A reader remarked:
"Is it ethical to reveal details of offers? After all you don't reveal details of open escrows."
Let's review the definition of fiduciary:
"One often in a position of authority who obligates himself or herself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor, and loyalty in fulfilling the obligation."
My interpretation of fiduciary is to do everything I can to benefit my client. Does announcing the offer prices publicly do that? I think it does - it puts other buyers on notice that:
1. Other over-list-price offers are in.
2. Gets them to act promptly if they want to participate.
3. It makes it clear what the number is to beat.
Number three is the most important. How many times has a buyer gotten dejected because they hear that there are multiple offers, and then the listing agent further deflates them by not giving them a number to shoot at. It happens all the time, and if the buyer just had a number to beat, they might do it.
I think it is my fiduciary duty to announce the offer prices, creating an auction setting. I'm already 8% over list price, the only time I could be compromising my fiduciary duty is if a buyer out there is thinking about offering 20% over, and sees that he only has to bid 10% over to get it. In this environment, I'll take my chances on that not happening much. I'd rather inspire those waiting buyers with a number to hit - then it just becomes a yes or no, instead of playing games.
There is enough insanity out there for buyers, I'm not going to contribute to it if I can help it. I told one agent who called about writing an offer that there were multiple offers in that were over list price. What does she do? Writes a $120,000 offer on a $127,900 list price. I guess you have to do what your buyers want you to do, but don't you try to explain to them that they are wasting their time? She thought her offer might be stronger - sorry, it'll take more than that.
One of the agents who made one of the $133,000 net offers called back to to see if he was going to be the winner, and I said no, you are going to have to do better. He improved his offer by another $4,000. I think the seller will be happy I said that. In summary - let's stop with the games and just make it easy for buyers to buy.
As for the revealing of the sales prices once in escrow, I think that is an old wives tale, and I don't know why we make such a big deal out of it. Agents guard the sales price with their life until recorded, thinking that if it gets out of the bag that they have somehow breached their duty. Everyone I know who has been around the business a while knows that sellers are liable to change their mind at any point about what they sell their house for. If I have a listing at $1,050,000, and I told you it was in escrow for $1,000,000, and it fell out of escrow - don't be surprised if the seller doesn't agree to sell it again for that - they might go higher OR lower.
I don't make it a habit to tell people what the sales prices are, because it is so standard that they aren't revealed I rarely get asked. But if an agent or appraiser asked me to help them with another deal, I tell them. I don't think it's a big deal - though most every agent who reads this will be up in arms at the thought.
Jim the Realtor
in Listing Agent Practices
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Reader Comments (8)
I think it should be illegal to make buyers bid blindly if there are multiple offers.
Open negotiations, where the seller and all the buyers get together to bid back and forth would be the best way to handle a sale, IMO. The buyers should know who they are bidding against, and that way, they can alter terms (higher down, shorter escrow, etc.) as well as price -- whatever is most beneficial to the seller -- and the seller can choose which package they want. Everything should be out on the table so everyone knows where they stand and what they are willing to give & take.
I think moronic agents probably outsmart themselves by thinking it's good strategy not to disclose prices. If you handle your business without playing games, more people will want to do business with you. Let the hacks weed themselves out, Jim!
An employee of mine put an offer on 857 Orion Way,92078
They realtor was informed that a higher bid came in. This was after 2 dats. It went pending.
2 0r 3 weeks later it was back on the mkt.The realtor representing her said that the buyer claimed he offered too much and dropped out .
So it was listed at 619,900.
The second time around she offered $630 K ,
Her agent called Saturday and said someoneelse got it.
There is some thing fishy here.Its listed by TRIAD.Is there manipulation going on here
It has't gone pending as of this morning.
I told her to get another realtor(JIM).
An employee of mine put an offer on 857 Orion Way,92078
They realtor was informed that a higher bid came in. This was after 2 dats. It went pending.
2 0r 3 weeks later it was back on the mkt.The realtor representing her said that the buyer claimed he offered too much and dropped out .
So it was listed at 619,900.
The second time around she offered $630 K ,
Her agent called Saturday and said someoneelse got it.
There is some thing fishy here.Its listed by TRIAD.Is there manipulation going on here
It has't gone pending as of this morning.
I told her to get another realtor(JIM).
Its great to a see a realtor who finally gets it. I have been on the buying side of this situation twice now, when the listing agent tells me "there are multiple offers, send us your best price." I tell them I am not playign that game but I will beat the highest price if I can. Of course, they dont tell me the highest price and I dont bid. They potentially screwed their agent out of a better bid from me by not being open about it.
Oops, I meant they screwed their client, not agent.
"I told one agent who called about writing an offer that there were multiple offers in that were over list price. What does she do? Writes a $120,000 offer on a $127,900 list price. I guess you have to do what your buyers want you to do, but don't you try to explain to them that they are wasting their time? She thought her offer might be stronger - sorry, it'll take more than that."
These claims are commonly seen by buyers as a marketing ploy to make them submit higher bids than they otherwise would've. Sorry, but you're just not seen as trustworthy :) With a different agent, submitting a lowball offer would've been the right thing to do. Don't get into any imaginary bidding wars, make a reasonable offer, if it stands, it stands. This is not the last house on the market.
We bid on our previous house on the coast in a multiple-offer situation; the houses were all different there and we thought the house we bought was worth it. For the houses we saw here in SD County during our househunt last year, if a seller's realtor told us there were multiple offers on a house we just walked away, because we didn't see anything we liked that wasn't just like at least 3 or 4 other houses that were on the market at the time.