Sunday, May 31, 2015

The Dude Abides

Multiple offers and the call for best and highest. These are stories of two very different multiple offer situations, one with a best and highest call and one without. I was on the losing side of both of these.

The majority of my clients live in other cities and states. Many start the process before they're ready to buy so that they have knowledge of the market and properties when the time does come. I typically take their criteria and wishes/wants list and send listings that I think might fit and we fine-tune our search in preparation of the day they're ready to pull the trigger. I had been going through this process with an out-of-state prospective buyer who had been casually looking off and on over several years. I had been sending new listings as they appeared that I thought would fit well with his criteria; under $200,000, at least two bedrooms and two baths and a "deal". He reviewed and commented on the properties I sent him and we fine-tuned our search over time. He kicked his search into high gear in the summer of 2013 and told me he was ready to execute and in an email "As I promised you awhile ago, you will be the person that represents me in finding real estate, regardless of when that time comes. I promise you I will not deal with any other real estate agent for any reason, period." My antennae twitched.

By this time we had narrowed our search to a specific floor plan in a specific riverfront condo complex south of downtown Cocoa Beach. In the summer of 2013 we had two very recent sales of that floor plan unit there, one 2nd floor for $167,000 and a ground floor for $174,000. Within days of the ground floor unit closing a new listing hit, second floor better condition than either of the other two sales and asking $179,900. I drove over first day on the market and took photos and looked the unit over. I sent the photos and called my client telling him that I thought this one was a good one and priced fairly considering the comps and the condition and would probably go for close to asking, $179,900. He agreed and instructed me to prepare an offer for $160,000 (still clinging to his hope for a "deal"). He commented that if they countered he wouldn't be going higher than $165,000.

Our offer was presented and the listing agent responded shortly with a call for our best and highest offer as there were multiple offers. After careful consideration he reluctantly upped his offer to his "best and highest", now $170,000. The seller chose another offer. His response when I told him that someone else's offer had been chosen was "Why didn't you give me a chance to raise my offer?" My response was "Unless the listing agent is unethical, a call for best and highest is just that and you get one shot, as I explained to you. You told me that $170,000 was your best and highest and that's what you signed and I presented." He told me that I had mishandled the process and that I was fired. He immediately called another agent and had her present an offer on another unit in the same building that we had earlier discarded in favor of the one we offered on. He offered $180,000 and closed three weeks later. The new agent wrote one offer, showed no properties and collected a check three weeks after her first contact with him. Larry got nothing for his efforts other than an education in the nebulous meanings of "best and highest" and "I promise". For the record, the nicer unit that he lost, closed for less than he paid for the second unit. His hissy fit cost him four figures.

I was involved in another somewhat different multiple offer scenario a couple of weeks ago. I was again representing the buyer. The listing agent was a well-known and respected broker from an office across a bridge from the beach. (That info disclosed to protect any honest and ethical beachside brokers from suspicion.) I presented an offer on his crazily over-priced listing that had been on the market for a couple of months. It was a Monday. The listing agent called back and said that the seller had told him previously that a number $10,000 less than our offer was "too low". Baffled, I encouraged him to consider and/or counter our offer of $10,000 more than the seller's "too low" number. No returned calls or emails the next day, Tuesday. He emailed me on Wednesday with "Presented it, seller still not happy, will let you know later today". Didn't hear anything else until Thursday afternoon when he called and told me that there was another offer "on the table".  Rather than ask for our best and highest he told me in a conspiratorial voice, "The other offer is $Y but the seller isn't comfortable with the terms. If your guys will offer $Y I feel certain he will accept." OK. I relayed this to the buyer and he raised his offer to $Y and I presented it Thursday evening. Agent emailed Friday with "seller is signing will have this evening ".

Nothing Friday evening and agent not answering phone or emails Saturday morning. Finally made contact Saturday afternoon when he answered the phone saying he was in Ft. Myers and ended the conversation five minutes later saying he was in Ft. Lauderdale. Speeding apparently. He said he had the accepted and signed contract and would send it to me. It took three email attempts over the next several hours before he successfully attached the signed contract and got it to me. One problem conveniently not mentioned: the seller had changed the length of the inspection period which meant the signed contract was not executed until the buyers initialed off on the shortened inspection period. Buyers changed inspection back to the originally asked for and apparently previously acceptable time period and I sent it back Sunday morning to the agent for seller's initials. Agent went radio silent all day Sunday and emailed me Monday morning with "Seller is withdrawing his counter, since there is no acceptance." I called to discuss and he told me the seller accepted another better offer.

We can't help but suspect that the other buyer, whether it was the original offer or another, was told the number and terms of our offer and allowed to better it, same as we were. The stalling and maneuvering would have given the agent time to get the other deal done before we had an executed contract. This is not how the vast majority of agents handle multiple offers but it obviously does happen. All it takes is an absence of ethics and/or some greed especially if the other buyer happens to be the listing agent's customer. I'll know the answer to the latter when the property closes. There are plenty of agents that I know and work with who I would never suspect of shopping my offer but my mental do-not-trust list has grown by one agent. Shame on you Mr Big Shot broker. Stay off the beach.

Don't work with an agent you can't trust. Looking back, this agent's behavior was suspicious from the get-go and confirmed when he told me the amount of the other offer. If your agent is acting shady, trust your sensors and look for one who doesn't light up the alarms.

"The secret of life is honesty and fair dealing. If you can fake that, you've got it made."  _________Groucho Marx


  1. So what is the style of selling a seller should use when the market is hot and multiple offers are expected? Is there any sort of quasi-auction format that yields the true highest and best offer without all the unethical shenanigans you are seeing with the traditional back-and-forths which are standard practice?

  2. The back and forths of the second story above is not standard practice. The call for best and highest is usually handled the way I described in the first story. Hire an agent you trust and who has plenty of experience.

    Best way to NOT get multiple offers is to overprice to start with. Any listing that is fairly priced and is a desirable property in this market is likely to get multiple offers.

  3. I have a couple of comments on your last two posts.

    First, I am not a realtor and I currently have a property for sale in another Florida city. Isn’t it considered normal business practice for a showing realtor to leave a business card and then provide feedback to the listing broker after a showing? As a seller, I expect our listing agent to provide us feedback from any showings. I have a hard time imagining why a buyer’s agent can’t have enough time and courtesy to inform the listing agent of how the showing went. Blowing up over it is not called for but for my 2 cents, if a buyer’s agent isn’t willing to follow protocol, I don’t think I would want him/her to show our house either.

    On the second case on your latest post, you are aware of unethical conduct on the part of the listing agent. Don’t you have a duty to report this agent and his conduct to some real estate regulatory agency? If no one calls this agent out for unethical and maybe even illegal behavior, what is to stop him and others from continued unethical conduct? Can your “would be” buyer report the seller’s agent? It almost seems like the fox is guarding the hen house here.

  4. I try to always leave feedback on properties I show. It's up to the seller and their agent to determine whether that feedback is candid or just maneuvering to soften the ground for an offer. Sellers should be relying more on their listing agent's guidance than feedback from buyers and their agents. Agents of buyers not interested in your property, are likely to leave nice generic feedback rather than upset you or your agent by mentioning the litterbox smell or the too small master bath. Agents of interested buyers should be saying the price is too high. If you're not getting offers in this market you don't need a buyer's agent to tell you you're overpriced.

    I have found myself out of cards when in a property so occasionally a showing doesn't get a card. It's not uncommon for me to get a couple of dozen feedback requests after a single day's showings. Some are duplicates automatically sent out by the showing service and the lockbox and just last week I was called by the listing agent's assistant for verbal feedback after I had already left electronic feedback. I shouldn't have to answer two emails and one phone call to say "it's not the one" when the absence of an offer already said it..

    There is no proof the second agent acted unethically. Incompetence is unfortunately not prohibited as I'm reminded almost daily.

    Appreciate your comments. It's a jungle out there.