The early bird gets the worm, but not necessarily when the seller is out of town or when more than one offer is expected on a property.
An interesting purchase-sale controversy surfaced recently when the first person to make an offer on a home wound up in second place. Granted, this happens all the time because a majority of first offers generally do not meet all of the owner’s terms and conditions or the seller waits to consider the possibility of additional offers.
However, the first offer, submitted by the buyer-investor’s attorney, was for more than the asking price. The potential buyer offered $280,000 for a home listed for sale at $279,900. In addition, the offer included a $90,000 down payment and a $10,000 earnest-money deposit. The potential buyer appeared serious and, in the real-estate vernacular “ready, willing and able” to purchase the property. It used to be that a seller would jump at such an offer.
Generally, when an offer is anticipated, the agent with a potential buyer contacts the listing agent and they present the offer to the owner. In this case, the owner was en route to Mexico to escape the January weather and left a telephone number where she could be reached.
The actual “owners” in this transaction were elderly people in a nursing home. Their daughter had their power of attorney for the sale and fielded the offers for the home. By the time she was contacted in Mexico, another offer – this one coming from a client of the listing agent – had been submitted. The listing agent told the agent with the first offer that both offers were presented by telephone and the owner had accepted the second offer.
Predictably, the person who submitted the first offer was angry. He said he would never know if his offer was presented in the same light as the offer that was accepted. He also said he would be willing to pay more for the home.
The owner said she had accepted the second offer because it was from people acquainted with the family and was only $1,000 less than the first offer. The owner and her spouse said they were unaware the person who submitted the first offer was willing to pay more until they returned from Mexico.
After the owner had accepted the second offer via email, the listing agent informed her by telephone there “appeared to be a bidding war” over the home.
Although real-estate attorneys differed on whether acceptance via email was valid and binding, the owner eventually decided to accept the second offer and sign the official earnest-money agreement. The owner, however, said she would have “pursued the issue differently’” had she not needed the money from the sale to pay immediate nursing home expenses.
“The agent did the right thing – you must submit all offers,” said Alan Tonnon, real estate attorney and author. “If you have more than one offer, you bundle them and present them all the first time you can. The agent has a fiduciary responsibility to the seller not to withhold any information.”
Tonnon said that even if the owner had been available, the owner would not have to sell the house if the offer met, or exceeded, the selling terms and conditions.
“The only responsibility the seller may have is to the agent to pay a commission,” Tonnon said. “The agent produced a buyer who was ready, willing and able to buy. If the seller changes his mind, the agent still performed the service.”
“Seller’s remorse” sometimes hits as hard as “buyer’s remorse.” Buyer’s remorse is the expression used when buyers have second thoughts about a purchase. It is common to worry about an expensive acquisition and openly wonder if a better deal can be found elsewhere.
It is not uncommon for a seller to take a home off the market when the first offer is submitted. The change of mind and heart centers on “I don’t really want to sell this place’ and fight the hassle of relocating. It also happens in divorce cases when a house is listed for sale, but one spouse finds the monetary means to buy the other’s interest and remain in the home.
There was some remorse in this case, but the owners decided to stay with their original decision. However, the person who made the first offer still questions his representation and is seeking a way to investigate the situation.
If you are going on vacation, it’s usually best to wait until you get home to consider any offers. Vacation is not a time for anxiety and long-distance phone calls.
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