As a listing agent, one has the responsibility to protect the seller's interest. But how far should one go to protect? Should you try to keep the buyer's deposit?
On a recent transaction, I had a buyer who was purchasing a 2 unit home to occupy one of the units. He was being financed by an FHA loan. Per FHA guidelines, the buyer must take occupancy within 30 days. The condition on the P&S was to have one of the tenants vacate the premises. The seller was not able to meet this condition by the mortgage contingency date, so I requested an extension from the buyer's broker. The buyer's broker attempted to contact the seller's agent for two weeks. The listing agent did not return the calls. We needed to go around the agent to obtain the extension. The listing agent grew angry over this and called a meeting complaining of the buyer's broker going around him.
When asked why he did not return the calls of the buyer's agent, the listing agent responded "I wish to obtain leverage in the transaction by NOT extending mortgage commitment dates. Thus, I did not want to obtain an extension. By threatening to hold a buyer's deposit money, I can force them into a purchase, in case they wish to back out."
What do you think of this "strategy" by the listing agent?
Is this even legal?
Is this an ethical practice?
What are your thoughts?
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