Keep Your Word or Lose the Deal

Phil, this just happened to a clients of ours who were selling their home in Buffalo NY, they shared with us that they had a contract but waiting for a deposit check - honestly I just thought they didn't understand contracts, and that maybe they had a verbal offer not a contract - excuse after excuse (for 3 weeks) when they realized the buyer was never planning to send that check... in the meantime, they packed their belongings because of a quick close date.  Now back on the market. 

I am glad you provided the link above - and here I thought we had it tough working as transaction brokers instead of representing our clients.

I think it's been said that a verbal offer isn't worth the paper it's written on.

Excellent post!

It was smart of you to go back to the first buyer, most agents I know, never go back to the other buyers.

I was recently in a "multiple offer" short sale  situation where the seller just took the other offer which was $2,000 higher (not giving my buyer an opportunity to raise the price) despite the fact that I told the listing agent that my buyers were in it for the long wait since they had a home to live in that they were not selling.

Last week, I noticed that a week after the property went pending, it went back on the market...had the agent called us, we would have jumped on it...I can't even believe that she did not...now it is a stale listing and my buyer is under contract for something else.

We go immediately under contract in CA but the dynamics are similar in short sales where there is a wait for bank response and a lot of bidding wars. There is a lot of buyer's remorse after a biddng war.  It is a challenge to make sure that high bidder is serious about the property or if they are just throwing their weight around. 

This also happens to REO agents here all the time.  They have an insane amount of offers, verbally accept the best one, then the high bidder refuses to sign the bank addendum that they later generate.  I do feel sorry for the agents who have to go through 3 or 4 rounds of it.  But not the banks.  With every round the amount they get for the property goes down.  But hey it's their game -- sometimes it works beautifully, other times -- not so much.

Seems kind of crazy to pay for inspections and such and then negotiate.  We have contract language that allows the seller to walk if the inspections are unsatisfactory.

Never burn bridges & keep the lines of communication open. I wonder what this 'syndrome' is actually called as it happens a lot. Suddenly the winning buyer starts to drag their feet, question everything, tries to negotiate again, etc.  Don't understand it, is it the agent's fault for not explaining the process? Do things move too fast for these 'turtles' in life?

As with Tni's examples above, it's an unseasoned agent that doesn't tell the buyer what to expect & in what order. Of course the bank addendums are going to say they know nothing, saw nothing, won't pay for nothing. 

Sorry to hear that. In Florida when the offer is signed and initialled by both buyer and seller it is a contract. This usually happens 24-48 hours of the accepted counter. Have heard about the New York. Must be a lot of attorneys up there. 

Keeping in touch with the backup offer is the key.  Great job.

J. Philip:

I read your blog which described your contract and what is done with it.  Thank heaven that is not the way we work in California.  As others have said the offer once ratified by all parties becomes the contract.  Lloyd
Binen, #42, gave a very good example of the way some multiple offers are treated, at least in my area.  During last multiple offer I had, there were 35 offers.   Seller with my advice, decided to counter 10 of the highest at a price slightly higher than the highest offer.  Many dropped out and we ended up with 2 offers who countered our counter.  The highest counter offer was accepted.

In PA, all offers have to be in writing to be considered an executable contract.  In addition, any changes made after it is submitted have to be initialed by both parties.  Only after all this is done can an offer be considered "accepted" and become binding.  I'm not sure if I'd be able to tolerate all that waiting around and uncertainty that is involved with verbal offers.

Losing all the buyers (the high bidder and any other bidder) is a legitimate risk in any multiple bid situation.  I have dealt with multiple offers several times this year on my Nashville Tennessee are short sale listings.  Due to the way that contracts are handled and executed here in Nashville, I am able to guide my short sale seller clients through this situation by only notifying the buyer who lost out on the property after the high bid contract is executed.  After that, I promise to keep all the other agents informed of the progress of the accepted contract in case it gets shaky and contract termination is likely.  That way if the other buyer or buyers are still interested in the property we can quickly move forward with one of the other offers.

Hi Brad. I believe that the issue is NY is that real estate contracts are always subject to attorney review and approval.  Therefore, even after an agreement is reached with a buyer it is not binding until that attorney review is complete.  As a former top producing broker in Pennsylvania I am glad that PA did not operate that way.

Good post and good points.  Never write off a buyer and until you have it locked up.

Here, that is a good way to lose earnest money.  There is no re-negotiating after all parties have signed and it has cleared inspections.  i have buyers try this all time and the result is always the same, you walk away from your EM and open yourself to litigation.

great job for your sellers.  Shame on the buyers & their agent if the agent knew what was going on and perpetuated it.

This is very interesting.  I was going to ask how things work in your parts but it looks like you already wrote a post about it.  I'll head over that way. -Kasey

J. Philip: Yikes!! I do like your advice of staying in touch. It's fantastic to be in a position where you have a back up offer so don't do anything to jeopardize it, including ignoring the buyers. Carrie

My first exposure to real estate practice in NY was in about 1993 when I was working with a relocating couple from NY.  The hubby was a Marine and stationed here.  Wife was a real estate agent in NY and gave me an education. 

She was very impressed that when the contracts were signed and the EM deposited I ordered the home inspection, termite and title work.  Thought that it was risky.

She was impressed that everything went according to schedule from the day of ratification and we settled in about 3 weeks.

Me?  I was just doing my job.

Phil, what's interesting is that the real estate community in New York continues to support the process- lawyers are not required in New York, yet, many real estate agents are so used to it that they don't effect change by questioning the "WHY CAN'T WE WRITE THE CONTRACT" (as done in most places).  It is most definitely NOT that NY Realtors are stupid (it's just the lawyers that seem to believe this)...just non-proactive in changing a system that is $upporting the legal contingent.

Phil -  perfectly said... We recently switched to an all cash offer..In our case it worked out as the first bidders were nickle diming us everywhere as they felt 'in charge..'  It felt nice to say good by and close just 20 days later with the second buyers...  but just as you say, when they start dragging their feet.... it is time to look at the best, solid deal.. and I love to hear that the buyers 'love the house..''' makes it that much easier..