The pre-written price reduction – I think you just crossed the ethics line

These markets bring up all sorts of shades of grey don't they?  Seems like a violation to me.  Short sale agents seem to be less versed in listing etiquite and often just trying to make the bank happy.  My experience has been they like to sell it themselves and often ignore offers that have been presented to give them more time to get buyers themselves.  Hard to prove as they are good at documenting, but I've experienced it.  Good luck with that one, hopefully another will come up with an ethical and fair minded peer.  Good luck to you.

the pre-written reduction is not an ethics violation (as you well know)... the violation came in divulging that information to you and other buyers.

todd, not only is is not an ethics violation for you to used the information about the fortcoming price reduction, it would be a violation if you didn't disclose that info to your buyers!

Todd,

This sounds like a violation.  How can this be in the best interest of the client?  Did the seller authorize the agent to disclose the terms of the listing agreement?????
YIKES!

Ann 

Hi Todd, yep, sounds like a serious ethics violation.  What a knucklehead!

Wow!  I'd say the listing agent blew it and your clients have a smart agent working for them.  I would have recommended withdrawing the offer as well.  Good job!

Gosh, Todd!  This is wrong on so many levels!  The only explanations I can think of are: either this guy is a robot who is reciting "I must reduce on this date, I must reduce on this date.." or he has an opportunity to double-end it with a firend who can't pay what your client can.  Sure, the commission would be on a smaller figure, but if he has both sides of the deal he still makes more.  Either way, he has totally and completely discarded all concern for his clients.  Maybe he's just an itidiot.  Either way, looks like your client may get a bargain (if the other agent ever gets himself in gear and gets the paperwork in).

Unless the seller's agent has written permission from the seller's to divulge the existence of the pre-written price reductions to interested parties, he is definitely in violation.  How sad!

Tina in Virginia

Thta's crazy!  Are your clients going to make another offer? 

I would report him after it's all said and done to his supervisor.  It's shocking that he is so negligent, you'd think he's want to speed it along and get a deal going already.  Strange.

ooops, That was me, I clicked on the link from the AR newsletter and it looked like I was logged in, apparently not.

Shouldn't the pre-written price reduction be between the listing agent and the seller.  At the time stated, we get together and make the change? If we have an offer, obviously we don;t make the change? And the agent should not disclose the existence of a future reduction, unless the seller authorizes such disclosure.

Patrick Boyle wrote: Todd, it's just a reverse auction. . .  Your client can sit and wait, but another offer may come in while you do. What will be your story to your client when they were willing to offer full price, but another bought it for less? 

My response: I do not see anything automatically wrong with announcing that a price reduction is forthcoming, as long as the seller agrees to it. It can be a powerful incentive for a buyer to make an offer now before another buyer appears. It is a legitimate sales tool, and those who automatically jump the  conclusion that this is an ethics violation without knowing all the details might want to rethink their positions. 

thomas, I agree that the jury's out on the ethics issue until all the facts are in. But how can you think it's serving your clients by telling potential buyers, yeah, it's $300k right now, but wait a couple of weeks and it'll be $$250k. that makes no sense. Under no circumstance. Announcing a forthcoming price reduction only delays offers. Forthcoming price reductions are not powerful sales tools, they are realities that discount the value of your property. Please tell me if you think I'm wrong and if so, why and how it's a sales tool.

Hey Give the Realtors guns at closing and pay no commission because they will no doubt shoot each other.

I do not think you have crossed any ethic line.  If you feel that way which article and standard of practice are you talking about?

I think the moment the offer wasn't presented to the client

Hmmm you submitted an offer to the agent that has not be presented to the sellers sounds like a law violation in my state.  All offer must be presented.

And unless you have the sellers written permission to advertising a future price reduction (which makes no sense to me at all) then in Georgia you can not do that either.

Sounds like they need a new listing agent as the sellers interests are not be properly cared for.  I hope your clients get a great deal.

I have actually seen the following posted in the property description on MLS:  "The property will have a price reduction of $5,000.00 every week until it is sold".  (???!!!)  Million-dollar property, too.  I'd like to think they had the owner's permission.  Possibly a marketing strategy...  Wish I had followed it to see what happened - know it did not sell immediately ;) 

Hope all works out well for your buyer and he thanks you for the savings!

Charlene posted: . . . Forthcoming price reductions are not powerful sales tools, they are realities that discount the value of your property. Please tell me if you think I'm wrong and if so, why and how it's a sales tool.

 My response: In this market everyone understands that price reductions are a way of life. If the property does not go under contract the price will normally be reduced. So everyone can wait for that reduction and take a chance on losing it or go ahead and make the offer now. Price reductions do not discount value -- they just recognize it. So WITH THE SELLER'S PERMISSION it could well be useful to mention a possible upcoming reduction. The idea is to attract attention to the listing and to create a "fear of loss" in the buyer. As you will remember from your negotiating classes, the fear of loss is a powerful incentive to bid NOW -- before someone else beats you to it.