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01-23-2013 08:14 PM
Our realtor brought us two offers on the house we listed with him. He recommended that we accept the lower offer, because that buyer was an investor he had worked with before. He said that the investor was financially sound, and could close quickly and cleanly. We agreed, and the deal is now in escrow.
Today we received a certified letter from a person who says that he made a substantially higher offer, which he believed our realtor never submitted to us. He also stated that his offer had been for cash, which negated the risk of a buyer being unable to secure financing. Our realtor did not, in fact, bring that offer to us.
We are now obviosly concerned that our realtor, at the very least, neglected to bring us a better offer that would result in him splitting his commission with a buyer's agent. Without going into unnecessary detail, there are other factors that lead us to question whether there was outright collusion between our realtor and the investor/buyer. We obviously feel compelled to pursue the issue.
The question is whether we should seek to rescind the current deal, or let it go through and then pursue any potential remedy after the fact.
01-23-2013 09:16 PM
Ask your realtor point blank to explain the situation and send him a copy of the letter. If he/she works with a brokerage, ask to speak with the office manager and realtor in a meeting ASAP.
Listen to their explanation and then make a decision that is best for you. At a minimum ask why you did not see the third offer that is now being mailed to you by certified mail. You didn't mention how far you are in the purchase process and if there are any contingency periods remaining for the buyer. Your negotiating power is very limited now in terms of cancelling the escrow but you could potentially sue for the difference in price and have a good chance of recovery from a broker that allowed this to happen.
01-23-2013 11:15 PM
Thanks. Your comment indicates that, once in escrow, it becomes difficult to rescind a deal. My instinct is that it would be better to stay the course, and deal with the realtor as a separate issue - as long as we aren't losing any additional leverage by doing so.
The sale is part of an estate, and there are three siblings involved. The other two are spoiling for a fight. I just want to be whole money-wise, and move on. That being said, it certainly appears that the realtor has circumvented his duty to us, the sellers. (To put it mildly.) It's difficult to resist the desire to expose blatant wrongdoing.
For the record, the difference between the two offers is $35K. And the evidence is pretty stong that he steered us to an offer that would allow him to collect both halves of the commission, plus negotiated a lower price for an investor that he knows, so that he could re-sell the property for a higher price. I'm not a litigious person, but all of that seems a bit much to simply ignore.
01-24-2013 06:31 AM
Once in escrow, your options as the seller are very limited. The buyer has the right to purchase the property and unless they miss their deadlines and you force a cancellation with a notice to perform, they control the process. That said, a contract entered into under circumstances like this may be unenforcable. (I am NOT a lawyer and if you go the legal route I STRONGLY ADVISE you to consult an attorney)
As a licensed realtor who helps people in the area I don't want this type of person in my business. He signed a document pledging to be your fiduciary and if what you've said is true then they have blatantly disregarded that.
The money may be less of a concern for you immediately and being made whole at the end is important. Put the data in front of them now, ask them to explain the situation and ask to speak directly with the principal investor that is purchasing the home. If you have an estate attorney involved with the process ask them to be present as well. (Assuming you are local). Give them the option of saving face by cancelling the contract or paying the higher offer price. Done properly I bet the sale of this property may net you even more than the 3rd offer that was mailed to you. Those folks must have been pretty pissed to see that happen.
The dual agency side is one thing but NOT informing you of other offers is to me the most serious of issues. The one and only time I've brought a grievance against another realtor was for this issue. That behavior creates the perception that the market is rigged.
If it was me I would use the sibling issue to your advantage and play good cop, bad cop. I'd use a script like this:
"My brothers/sisters want to file a lawsuit claiming fraud against your realty company and your buyer because you appear to be colluding to defraud our family. We received this letter from a third party telling us that you ignored their offer for substantially more money and with similar terms. Obviously we are in contract to sell the property and I need your help to understand why I shouldn't agree with them."
01-24-2013 10:57 AM
Thank you both for taking the time to reply. My past experiences with realtors have all been good, and I am confident that these kinds of incidents are uncommon. But the bad apples tend to get the headlines.
I'm still torn about going after this realtor, regardless of the outcome. Those things are usually long and unpleasant. But I can't help thinking about the other buyer's realtor who lost half of the commission on this sale, not to mention any future clients our realtor might mis-represent.
First thing is to give our realtor a chance to explain - things aren't always as they appear. On the bright side, we've sold a house fairly quickly.
01-24-2013 11:06 AM
I like Adam's advice. I would certainly give them a chance to make it right, although the problem here is that while the investor has the money, he's not at fault, and the agent is at fault but might not have the money.
I would add one more suggestion, which is that if possible you talk to a civil lawyer *before* going to this meeting. The reason is that every step you take -- every email you send, phone message you leave, thing you say -- has legal consequences, A good lawyer can give you advice about what to do, and what not do, to preserve your options cleanly. For me, it would be worth the $500 or so it would cost to have an solid initial consultation, particularly if it were spit between 3 siblings.
Additionally, you will be able to at least mention the name of your lawyer in any discussion. Far more people threaten to sue than actually do, and regrettably you may be taken about 200% more seriously if they realize you have already paid good money to get legal advice, and you have a lawyer actually standing by to rain misery on their heads.
Certain areas of the law also have strangely heavy penalties written into the statute, for various random reasons depending on how the Legislature felt that day, e.g. someone guilty of X or Y in certain circumstances might be on the hook for treble damages plus costs (probably more than $150,000 in your case). That REALLY gets attention. On the other hand, in other areas the law leaves you strangely naked, with a stiff hill of proof to climb, options for the other side to counter-claim, et cetera. It's good if you know how the law sees your case before you decide how to proceed.
Finally, the best advice a lawyer can give is when NOT to take legal action, and you may find out that this is true in your case, that the options are too lengthy and expensive to be worth it.
In which case...I advise you not to forget that cockroaches hate the light. Being careful not to say anything which you do not know to be a fact of your own knowledge, you have the option of publishing the names of the parties involved and the relevant details of the fraud on a forum like Redfin -- and any other realty site you know, plus Yelp, Angie's List, and any other review site of which you can think. Call the local newspaper! If it's a slow day or you hit a nerve, the guy who covers realty might run a story on your case.
You can very easily take far more in future business away from this agent through bad publicity than you could ever hope to achieve in court. Indeed, given the relatively few sales these days, and the large number of agents competing to represent them, you could ruin him -- drive him right ouf of business. That would be a satisfactory final result, no?
01-24-2013 11:14 AM - edited 01-24-2013 11:17 AM
Let me give an example: I am planning to do about $10,000 of floor work on a house in the near future, and I did a lot of research on flooring companies. Once I had a list of those who looked good from their own advertising, specialities, et cetera, I took a squint at Angie's List...
Uh oh. Looks like #1 on my list has a furious review by someone who said they did an absolutely stinky job, cost them a huge pile of money, and who was pissed enough to file formal complaints with the state. The whole event was laid out soberly, without hysterics, with plenty of facts and dates. They said, at least, that they gave the company a chance to do the right thing, and were stonewalled.
So, do I know for 100% certain that this is all true, that this company is a really bad egg? No, not really.
But...am I going to give them a call, when there are four or five other companies on my list that look just about as good? Nope.
01-24-2013 11:39 AM
Your attitude strikes me as odd given the situation that you've described. There seems to be a fair number of threads on this forum that may not be based in reality. I'm not sure that this one falls into this category or not. Regardless....
I find it strange that the situation described hasn't made you wonder if there weren't other offers that you never saw? Offers that might have been for even money? And might have closed just as quickly/easily? The fundamental problem with the situation as described is that you're not getting "fair market value" for your property. You simply can't be sure what the "fair market value" of your property is because the process for determining "fair market value" was rigged.
01-24-2013 01:19 PM
Where are you in the sales process? Are you past buyer contingencies? If contingencies are still in place make sure that the day they end that you intiate a demand to perform. You can say no to any repair or price adjustment requests. If the appraisal has been done ask to see it for accuracy and the appraised value.
Either the sale will close or not. If it doesn't close what is your plan? Change agents? How did you pick your current listing agent? What would you change in order to get a stand up agent in a stand up agency?
Talking to an attorney prior to confronting the agent, manager and broker would be prudent. The attorney could write a letter on your behalf and quite possibly that would resolve the issue. If you go this route consider asking for the difference plus an amount to cover attorney fees.
01-24-2013 02:07 PM
@Mikal - Your attitude strikes me as odd given the situation that you've described.
I've seen people spend literally years in discovery and litigation. It can consume your entire life. I mentioned that there are 3 siblings involved, so our "loss" comes to about $10K each. It's a lot of money, but not life-changing. A year(s)-long litigation process would be life-changing. Are you so sure of having so many years left that you can afford to wreck one? Look... I'm in Texas, posting on a California real estate forum. That would be a strange thing to fake.
Yes, I do wonder if there were other offers. I said that I didn't want to weigh the story down with unnecessary detail - but I'll add this much. The realtor originally brought us 3 offers. One he said looked "flaky", and might not be able to get financing. The other two were supposedly from investors. The higher of the two offers was from an investor who had to wait until another house settled, before he would have the funds for ours. The other offer was lower, but he said that they would be able to settle within 30 days, and that he knew from past experience that they were financially able to make the purchase. We said that we would sacrifice some money to have a "sure thing" buyer. What we do not want is to have a deal fall through late in the process, and be sitting on a house that has been on the market for 60 days or more. Right or wrong, my experience is that people begin to question why it has not sold. The next day, he called us and said that he had yet another investor who had offered even less money, but would agree to a 10-day escrow. He tried very hard to steer us to this last offer.
Do I wonder if there might have been other offers? Yes. I also wonder if that last offer might have been from the same investor, and was tailored to our priorities. They get a lower price, and we get a quicker, more certain close. Again, there are a lot of little details that point in that direction, but saying it out loud it sounds like conspiracy theory. But if I had to guess, I think he worked with an investor friend to get the lowest price, and to get himself both halves of the commission. And, finally, I never said anything about "fair market value". I have a certified letter from someone who claims that he DID offer more money, and the realtor never presented us that offer. If true, the most likely reasons would be his desire to keep the listing/sale in house, or collusion between himself and an investor who is a regular buyer. We won't know until all the facts are in.
Would it seem more real if I ranted and raved? The offer we accepted was for our original asking price. Maybe we started too low, but in this market there are worse things than selling a house for your asking price. If the realtor did something really egregious, I may well go after his license. But I'm not going to tie up hundreds of thousands of dollars over ten thousand dollars. And I'm not going to stay angry for a year for that amount of money, either. Courts are tricky, at best. I know a fair amount about Texas real estate, but California is a different world.
That's more than I intended to say on the subject. I wanted to get some perspective, and several of you have been kind enough to provide it. My next stop is a with a real estate attorney. I hadn't considered the idea that anything we say at this point has legal ramifications. That was very good advice.