What would you do?

[darkness05]

Hey all - last week I had a deal go south on me and I am curious as to what you would do in my situation.

A bi-level home came onto the market here in Kelowna BC and I got the jump on it. Called my agent that morning and had them do up an offer for 10K over asking without viewing the property (Ask was 399, offered 410). Went above asking because it was a great unit, in a great area, that was priced to entice multiples, and they had 15 showings lined up the next day. I figured fair value for it was $430-$435 after looking at comps. Seller promptly countered at $430K. I walked away. I don't like to play games so it just wasn't worth it to me.

Next evening I get a phone call and surprise surprise they are willing to accept my offer of $410K. They did a bunch of showings but no offer was as high or as clean as mine. I was pretty happy as now the ball was in my court. I set up a showing, and after noticing some issues and knowing that I had the upper hand, I submitted a new offer at full ask ($399). The next morning to my surprise the seller countered at 415k because the seller had 15K in mortgage discharge fees - he wanted to end at $400. My agent verbally countered at $410 (my original offer) and to everyone's surprise the seller agent said that it had SOLD to another buyer the night before. Apparently, the seller sold it to his friend and the agent had no idea. Deal is dead!

Now I have very limited experience when dealing with these kinds of situations but that doesn't seem right. Are RE agents, not required to deal with an existing offer before they move on to others??

I waited another week or so and noticed that the property was still on realtor.ca so I emailed the agent (anonymously) and requested a showing. The agent said that conditions were to be removed the next day but that I should view it so I could have a counter offer ready. I asked him more details about the pending sale and he informed me that he was representing BOTH the buyer and seller on the deal so he knew the in's and out's of it and that it would be a good idea to view it. That got me right PISSED OFF!

So does that sound legal to you guys? I am looking into filing a complaint to the RE council to skewer this SOB. It was a great buy and I feel as though I got screwed.

What do you all think?

 

[Thomas Beyer]

A conditional offer is merely a suggestion until accepted by both parties. Even then it is a mere option to buy but an obligation to sell.

If multiple offers are presented or the market is hot the seller and the seller's realtor has the upper hand and can you around or deal with offers in any order.

You chose to counter at 399 rather than tying it up at 410. Blame yourself not the seller or his realtor.

A "he said she said" complaint will do nothing.

Be prepared to go firm next time when you know it is 20-25 below market value. You played games and lost. A look in the mirror will tell you who to blame.

 

[darkness05]

Hey Thomas - thanks for the harsh but true words. You are 100% right here. At the end of the day, I felt slighted because they threw away my 410K offer and I felt as though I could take advantage. Important lesson learned here is not to mix business and emotions.

Thanks for the post

 

[Thomas Beyer]

Two lessons learned here for you, or other folks reading it:

A) in a hot market aim high with your offer, with at least one condition, such as "Offer is subject to inspection satisfactory to purchaser" . An offer is an option to buy but an obligation to sell. You can always walk if you so chose. In other words: get the asset under contract THEN look under the hood.

B) If you do not have a realtor submit the offer through the listing realtor as he/she now gets both sides of the commission and is more inclined to work with you / favor your offer if several are close.

78 more lessons in my book linked below ...

 

[Cory Sperle]

I somewhat disagree with lesson A about aiming high. It should be aim for what's reasonable with the cleanest offer possible. I have seen a sellers market with multiple offers and some will aim unrealistically high to tie it up conditionally and then grind the vendor down once the bidding war is over and they're the only ones left. As a seller I would chose the cleanest offer vs. The highest, and with this much interest it's not unusual for an unconditional offer. I would also be reluctant to sell to someone who has not viewed the property. As a buyer I would be prequalified and view with an inspector or some expert the first time, then offer as clean an offer as possible.

 

[Thomas Beyer]

They asked a rich man once: "How come you have all these properties?". He answered: "Well, I paid the highest price in almost all occasions when I bought an asset."

Of course you should not pay an outrageous price. You must understand the market and its volacity ! However, in a market like Kelowna with tight supply and rising prices, where you (as apparently in this case) know the price is $430-435,000 you should not bid low.

Lesson C or really a senior addition to lesson A above: When you waive conditions you have the most negotiation power to reduce price.

You send a contract amendment and condition waiver document in one, UNSIGNED, that states

The contract ____________ regarding property _____________ hereby waives clause ________ (the conditional clause) and hereby reduce the purchase price from ______ to ________.

The seller now is in a bind: accept it, and have a firm deal, albeit at a lower price, or call the buyer's bluff and do nothing, and possibly lose this buyer. Very high chance she/he'll sign it. Not 100% but 95%.

Senior addition to this step: If you send it unsigned, and you know the deadline is 5pm the next day, and you still want to buy, even without the haircut, just waive the condition anyway by 4:58. Hence, it is important to send the amendment unsigned, as it could be construed as a contract change if signed. try it. Worth hundreds of thousands over 10 or so deals.

 

[Cory Sperle]

If I were to receive an offer like this with an amendment, vs. a clean one that is identical this one would go in the shredder. This may work, but if your prepared to waive conditions regardless, why not simply present the cleanest offer the first time? I fail to see what is gained here, besides paying more and adding a condition you didn't need in the first place.

 

[Thomas Beyer]

Any initial offer has conditions unless you know the market very well.

 

[trevismcconaghy]

There are always more opportunities, and the more experiences you have, the more knowledge you will have to sign another deal. You can never lose face because the same people may have another opportunity tomorrow, or next week or next year. If you are the professional, you always need to create a win- win. If the vendor doesn't play 'ethically', I would step off the plate. To your success on your next 'Kelowna opportunity'.....

 

[KeithnCalgary]

I would contact the BC regulator and see what they say. If you were in the middle of negotiations, a counter offer is still an offer then the selling Realtor has an obligation to tell your Realtor that there is another offer now on the table and it is a multiple offer situation. This way you have the chance to resubmit your counter offer if you choose. If it was the selling Realtors client and offer then the fact that the selling Realtor did not advise of a multiple offer situation is unethical and likely against the BC Rule and Regulations.

If you want to follow through with the complaint be prepared to have to provide documentation of everything.