Can real estate agents be trusted?

April 1, 2007 1:44 PM

Are we being screwed by our realtor?

My wife and I are looking at a co-op apartment in a brownstone in Brooklyn. We saw it for the first time last weekend, and this week the realtor told us the seller had put out a call for a best and final offer. We submitted an offer, which was accepted. The next day, the realtor called us with the bad news that a higher offer had come in from "an agressive bidder," but granted us the option of first refusal -- we can match the new bid or drop out of the process. The new bid is just slightly higher than ours, and we know we could match it and are tempted to go for it. But are we being scammed? (We're first-time buyers, and the realtor knows this.)

posted by jasonsmall to work & money (17 comments total)

Is the realtor in question YOUR realtor or the sellers realtor? That is, do you have your own realtor? In my opinion this is really important. It does not cost you anything to have your own realtor, and you will not get representation if you are sharing a realtor with the seller.

If you have your own realtor, I would not expect this to be a scam. Yes, your realtor will make a little more if the house sells for more, but consider the fee increase... Lets say the realtor manages to get you to go up 10K, and he's making 3%, then he makes an extra $300. Is a realtor going to go the extra mile to make $300? Most would say probably not. Most realtors I've dealt with are in a hurry to get the transaction over with. They'd rather make $X over one week instead of $X+5% over 2 weeks.
posted by RustyBrooks at 1:59 PM on April 1, 2007

Depends on what you mean by scammed.

I would beg to disagree with RustyBrooks - You can be screwed by your own realtor just as easily as by one that reps both sides. In your scenario, if there is only one realtor he makes $600 more instead of $300, and if he scares off the only legit buyer, there is a delayed closing, and they are out double the fee for that week. The realtor repping both sides would make more by closing with you at a lower price than with an other buyer at a higher price if the other buyers have their own agent.
posted by mzurer at 2:14 PM on April 1, 2007

I agree that your own realtor can scam you. However, if you don't have your own realtor, you're pretty much getting screwed from the get go. It's like going to court and sharing an attorney with the opposing side. There's absolutely no reason for it and I have never understood why someone would do it. In my state at least (texas) if the two parties share a realtor, that realtor is not allowed to give advice or aid to EITHER party. They're just a glorified courier who makes a shit-ton off the process.
posted by RustyBrooks at 2:19 PM on April 1, 2007

Didn't they accept your offer? If they accepted your offer in writing, it is my understanding that that offer is binding and another, higher offer cannot come in at any time afterward.
posted by maniactown at 2:31 PM on April 1, 2007

Seconding maniactown on this one. If they accepted your offer then they cannot accept another higher offer. Read the text of the offer to make sure there is no way for the seller to weasel out and verify that they have indeed accepted it (you or your realtor should have a copy signed by the seller). If the offer is in fact accepted and everything is set then I would tell the seller you aren't going to re-negotiate your already accepted offer (and make sure that you proceed carefully from here on in, because it seems someone isn't acting totally ethically).
posted by ssg at 2:44 PM on April 1, 2007

There are some things missing here. Are you selling this with no realtor of your own? Most importantly, was your acceptance of the offer IN WRITING? If so, you have a contract and they will pay one way or the other unless you let them get away with it. If you have no realtor, theirs is not demanding you to pay part of the commission?
posted by Listener at 3:08 PM on April 1, 2007

The way you talk about "the realtor" suggests that the realtor is not yours. Is the realtor your realtor, or is he/she the vendor's realtor?
If the latter, then you need your own realtor asap!
posted by Count Ziggurat at 3:19 PM on April 1, 2007

Listener: the OP is the buyer, not the seller.
posted by RustyBrooks at 3:20 PM on April 1, 2007

Huh?

"Accepted" should mean "accepted," and too late for Mr Aggressive.

What do you have in writing?

IANAL/R, etc, but. Check the conditions of the offer; that all sounds very weird.
posted by kmennie at 3:28 PM on April 1, 2007

There are a lot of practices in real estate that are accepted as "just the way it is" that stack the deck against the buyer (usually), but also sometimes against the seller. I worked with a new breed of buyer's agent, who advocates transparency and common sense, and who gave me a lot of tips. One of them was for the situation you describe. He proposed that we say to the sellers/sellers' agent: "Ok, I'll pay $1.00 above any other verifiable offer up to $X." If I remember correctly, it doesn't have to be anything more than $1.00 because it's the sale itself that gets the commission for the agents, and you don't need to subsidize anything more than the sale.

Now, this only works if the seller's agent wants to play along and if you're willing to walk away from the deal if they don't want to play, but it also clears up pretty quickly what the truth is. If they aren't willing to show you the other offer, then it's almost assured that there is not another offer. If they do play along, then you and the seller get a deal you want, and the agents get the sale (and their commission).

I don't know if the laws/accepted practices are different in NY, but here in MA any offer can be accepted anytime, even if a previous offer was already accepted, as long as the sellers return your deposit. INAL yada yada yada YMMV.
posted by cocoagirl at 3:35 PM on April 1, 2007

cocoagirl - that kind of offer isn't allowed in many jurisdictions now because you aren't putting in a real purchase price and it doesn't really serve the buyers best interests. In most cases the seller (at least, the Realtor) isn't even allowed to disclose the details of other offers.

What defines a 'verifiable offer'? These types of offers backfire more often than not.
posted by jeffmik at 4:12 PM on April 1, 2007

This strikes me as fairly simple; did the seller accept your offer or not? If they did accept your offer, they are stuck with it. If they did not accept your offer you are stuck with paying more or walking away.

The question is, of course, whether you can prove they accepted your offer. A verbal acceptance is still an acceptance, but good luck proving it. If you have it in writing you're good as gold.
posted by Justinian at 5:00 PM on April 1, 2007

Let's just say that such "news" is not uncommon at this point in the negotiations. Tell the realtor that that's really too bad, and you'll just go looking for another place. See what happens. Do not allow yourself to get into a bidding war, especially when you have no proof that the other bidder even exists. Yes, it's possible that you might lose the place--but there's a very good chance that you won't (and you won't have the hassle of discovering that the "second bidder" keeps raising their offer...).
posted by thomas j wise at 5:07 PM on April 1, 2007

if you have a signed contract, you're golden.
if not, no, and i wouldn't do business with people like this in the future.
posted by bruce at 5:56 PM on April 1, 2007

I've learned in New Jersey that is against the law for a realtor to disclose your thinking/conversations to a buyer or seller. I'm not sure if New York has a similar provision, but if so, you might be able to counteract the realtor here. Of course, the buyer could negotiate without either of you, but perhaps he is not allowed to do that by contract to the realtor also.
posted by narebuc at 6:15 PM on April 1, 2007

Ignore the "other buyer" - that's a smokescreen. Are you comfortable paying more? If yes, then raise your offer. If not, tell them this process is dragging on longer than you expected and lower your offer by the amount of the difference (to cover your costs), and be prepared to walk away if they say no.
posted by Caviar at 9:19 PM on April 1, 2007 [1 favorite]

I thought that unless explicitly stated otherwise, all realtors technically represent the sellers and are legally obligated to pursue the the sellers' interests. The buyer's agent is a relatively recent innovation, and the fact that the agent represents the buyer needs to be put in writing. I'm too lazy/busy to look up the links right now, but check google "buyers agent" and check NY state law.

[Sidebar: real estate agents have one of the greatest rackets in the US economy - a monopoly fee of 6% of the largets purchases an individual will ever make. But that's another rant n' post.]
posted by RandlePatrickMcMurphy at 7:16 AM on April 2, 2007