“Offers to Be Considered on a Future Date”: Is This Really Fair to Buyers?

As I work my way back into the market following the launch of my real estate firm, I am learning just how difficult it is from a buyer’s perspective.  Specifically, I am trying to get a client into a $400-500k home in West Seattle.  It turns out there are only a few thousand other people looking for the exact same thing, and a few dozen homes that fit the description.  OK, I’m making these numbers up, but you get the drift.  It’s tough out there.

Until this week, I had a high degree of respect for sellers and their agents who noted in the listing that the seller would consider all offers on a particular date in the future.  This allows all interested buyers to really put their best foot forward, particularly by pre-inspecting so that the offer is not contingent on the inspection.  Particularly in older neighborhoods like West Seattle, where homes routinely approach or exceed the century mark in age, sellers appreciate knowing that there will be no renegotiation based on the condition of the home.

So on Wednesday afternoon, I met my client at the “target” home where we were awaiting the arrival of our inspector for a pre-inspection.  The seller was to consider offers on Friday morning.  Buyers and an agent were inside, I assumed simply touring the home.  Suddenly, the owner emerged from the house and announced she had just sold the house to the folks who were inside with her.  As the kids say, WTF???

It turns out that the seller had every right to accept this offer, notwithstanding the “offers to be considered” date as stated in the listing.  NWMLS rules specifically allow a selling agent to present an offer directly to the seller long before the stated “deadline.”  So it turns out my anger and frustration at the seller, the listing agent, and the selling agent who pulled the coup were all misplaced.  (I wouldn’t even rule out an apology, now that I know the rules.)

But it begs the question: Is that fair to buyers?  What if my client had completed the pre-inspection?  He would have been out-of-pocket money specifically in reliance on the seller’s and listing agent’s representation in the listing.  And even without that expense, it seems unfair that a stated “deadline” can be wholly circumscribed by one buyer at the expense of all others.  If it were up to me, the rules would be changed. But all I can do is continue working towards providing buyers with an improved home buying process.

About Craig Blackmon

I am a residential real estate attorney in Seattle . I am also an owner and the designated broker of Quill Realty, a new model real estate firm. Quill helps both buyers and sellers. At Quill we recognize that real estate consumers need two types of services: broker services (like listing a home, or tours) and legal services (like drafting and negotiating a contract). So Quill provides its buyer and seller clients with an attorney, so they can Sign with Confidence. And Quill charges less than a typical agent, so our clients save money as well.

Comments

  1. janaschmidtre says:

    This situation would infuriate me if I it happened to my buyers. That being said, I think the tragedy is expecting the real estate market to be fair to anyone? Fair really isn’t part of the equation. After all is it fair to a seller when they get low-ball offers in a buyer’s market? Be sure to educate your buyers on the fact that the market is not fair to buyers right now as it is seller’s market and than make sure your seller is aware of your offer or intended offer as early in the game as possible. Best of luck to you and your clients.

    • Thanks Jana! At least with low-ball offers, one buyer doesn’t snatch a major advantage at the expense of the other buyers who are playing by the stated rules. Real estate is certainly cruel, I agree. But this seems to be particularly unfair as well. Thanks for the words of encouragement!! Oh, and I definitely was infuriated. Did I mention I might owe someone an apology? :-)

  2. That is brutal Craig. I also would be infuriated as well. In general though, I do feel your pain. I’m still slugging through this brutal market with no end in sight. Could happen next week, perhaps years from now. Only time will tell. Hope you’re doing well.

  3. Really interesting article. I have to completely agree here, disclosing that offers will be considered on a future date and then accepting whatever offers come along – in my opinion – is unethical. Perhaps not from the seller’s standpoint, but it should be from where the agent is standing. Buyers should see the offers as they come in; they could even temporarily decide what offer they like best; but the final approval should wait until that date. I hope that MLS rule gets amended.

  4. I had a similar situation to yours 2 or 3 weeks ago in Fremont-Ballard. Someone made the seller an offer they couldn’t refuse. Yesterday I saw a form, I think it was 7 or 7A, that a seller apparently would have to sign to prevent this from happening.

    I must say that when I first started seeing “offers will be reviewed on” my first thought was that it really can’t be legally enforced on the seller, who is not a member of the mls. The law in pretty much every State says that all licensees must present all written offers. If the offer written and presented expires prior to the “will be reviewed on date”, I don’t think it is legal to refuse to deliver it to the seller or to force the seller to not take it if that is what he wants to do. mls rules don’t trump the law in that regard.

    It’s like the garage sale that starts at 9 a.m. and all the people who show up at 7 or 8 to try to pick up all the good stuff before the sale starts.

    My client is in escrow on a different property and I am starting to see more and more “no pre-inspections allowed” to reduce the seller’s potential liability for the cost outlay of multiple buyers. Can’t say I’m crazy about that either as it pushes you into waiving inspection vs pre-inspecting.

    I was a little ticked when one house bid up $100,000 over asking and put many buyers to the expense of pre-inspections because the same scenario had just happened one street over. My thought was shouldn’t there be a penalty for under pricing at the expense of multiple buyers? The first house you could say “who knew?” the market would react that way. But for the 2nd one not to up the price at least halfway, basing that on the sold price of the most recent sale, seemed “unfair” to all of the people being led to believe they might get the house for $100,000 less, which of course no one did.

    There is no way to cover all of the moving parts of an ever changing marketplace. When there are 5 to 40 buyers who all want the same house, fair to all is not usually the outcome on one level or another. Is it fair for an FHA buyer to never be considered? Is it fair for all cash to beat all financed offers? The seller gets the same money at the end of the day, but it is the seller’s right to pretty much do whatever he wants if he isn’t breaking a law vs a “rule”.

    At the end of the day agents don’t “make” people do things, they can only advise, plead, and in some cases walk away. But we do not have enforcement powers on the general public….nor should we.

    • I’m not so sure, Ardell. The seller already agrees to be bound to MLS rules in a myriad other ways. For example, in the Form 1B, the seller agrees to “not promote or advertise the Property in any manner whatsoever” prior to the posting of the listing. Why can’t the MLS require a selller to honor the terms of the listing when it says “all offers to be considered” some date in the future?

      Yes, a licensee has a legal duty to present all written offers to the client. But that’s not inconsistent with an MLS rule preventing the seller from negotiating or accepting that offer until the seller has received all offers as the seller promised in the listing.

      Yes, there are many aspects that may be considered “unfair.” But of all your examples, none specifically confers a benefit on one buyer at the expense of all others.

      Admittedly, there may be an enforcement issue. I’m not sure how the MLS would treat a seller who advertised the property prior to the posting of the listing, though, either. At a minimum, the conduct should at least be against the rules.

      • But the rules are for members. Many owners have their property on Zillow as what used to be called “make me move” and now is called “pre-market” prior to the property being in the mls.

        Last year I contacted an owner who happened to be an agent who I thought might be interested in selling, The owner did not reply to me but rather posted the house as a For Sale by Owner on Zillow. I advised my clients to make that contact through Zillow and they were able with my assistance to purchase that house. That was a real gray area given the owner was an agent. But it all worked out.

        I just looked up the property where I had the same situation as yours in this post. It closed in less than three weeks at $100,000 over asking price. Not all cash either. That buyer was likely losing to all cash offer, as was mine, in the 2 or 3 weeks prior to that happening. The buyer was trying to get a house and looking for a way to beat the odds and he found it.

        Now I ask you to put your lawyer cap on. Once the seller has accepted an offer, whether he was “supposed to” or not, there really is no basis for negating that contract, is there? I, like you, was fairly incensed for 10 minutes or so. But then my brain turned to the fact that nothing, as far as I know, could negate the contract the seller had signed. So it became a moot point and we moved on.

        That tells us where “rules” stack up in the hierarchy of what a buyer and seller can and cannot do. Once the seller has a valid and enforceable contract with a buyer…the rule that he “shouldn’t have” doesn’t negate that contract. But maybe I’m wrong. You’re the lawyer. Is there really any way for the seller to change the situation if we rant and rave about it? I think the buyer in contract would have more of a legal action against the seller than all the buyers whose offers never made it to the seller.

        mls rules are more about brokers being fair to other brokers, and that is important. But no mls has ever had any real teeth when it comes to people who are not members of the mls…the buyers and sellers. Could a buyer or seller breaking an mls rule become an actionable offense against a buyer or seller? I don’t think so. In fact the seller trying to right his wrong by backing out of the contract he signed would likely be more problematic.

        • Sorry, Ardell, I have no interest in chatting with you about the “lawyer perspective.” The last time I went down that road, the conversation ended up including such distasteful terms as “duct tape,” “wet dream,” and “thumbs up their butt.” Lesson learned on my part, I’ll stay squarely within my experiences as a broker when chatting with you! :-)

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