Should real estate agents disclose the terms of other offers? Episode #240
Todd: Hello! Welcome to Todd Miller TV. Joined here today with Oana who has no idea what we’re gonna talk about. I’m just gonna spring something on her. So, I got an e-mail form an agent, Oana: Okay. Todd: That was complaining that one of our agents asked him what it was gonna take for the client to get the house. So here’s the scenario: Person went and saw the house, they love the house, the agent just happen to be there at the house. And the agent said “Hey look, I understand you already got a bunch of offers on the house, my clients really liked it they’re willing to beat anybody’s offer. So what’s it gonna take to get the house. The agent refused to say anything just said “Look, just send us an offer whatever” and then they complained later saying it was inappropriate to ask like “to ask”. So my first question to you is, how many agents/’cause you have a lot of REOs you get a lot of multiple offers, how many agents ask you “what does it take to get the/to beat the offer”? Oana: Most agents that talked to me on the phone asked me “what’s it gonna take?”. Todd: Okay. So, let’s talk about the risk when your bank clients and a traditional seller, okay? If you’re an REO/if you’re a bank, how do they typically work with disclosing the terms of the offer to tell a person what they need to be to beat it? Oana: Most banks do not allow that. Todd: Okay. Oana: Very few do. And then as far as traditional sellers, that’s a different story. Everybody’s different and they have different goals. It also depends on whether their property’s gonna be financed or cash, because obviously if we’re dealing with somebody who is paying cash then a whole new set of circumstances come about. Todd: Okay. So in this scenario, this is actually a cash buyer. Who’s buying in like the 160 I think range, 160-170 cash which this market is substantial. It’s over average. Oana: Right. Todd: Do you think it’s unethical if to not even present that, I know it’s not in writing but to say “Hey look, they told me they would beat whatever your best offer is there in cash. Or should they just let them submit an offer and let the seller decide from there? Oana: Look, until you have something in writing, you have nothing. Todd: Okay. Oana: So, we can’t negotiate something that’s verbal because it’s not enforceable. So if you’re interested in buying a property, out your money where the pen is, put on an offer and let’s see where things stack up. I mean, in you offer you can write all kind of things. You can put in there that it’s not subject to appraisal, so if you know that you’re dealing with multiple offers, then you know that you have to add a certain amount over list price. And you have to put in there that you’re gonna buy it regardless of appraised value and things like that because even cash buyers aren’t using appraiser right now in this market. So, just because it’s a cash deal, it doesn’t mean that there won’t be an appraisal. Todd: Okay. Oana: So we do need to still be very cautious of that. So if you really want that house and you’re a cash buyer then put in there that you’re gonna extra amount of dollars regardless of appraised value. Todd: If you were a seller selling your house, and you knew you had a bunch of offers already, and then somebody showed up and said “We’ll beat whatever your best offer is by a thousand bucks cash” How would you perceive that? Oana: I would perceive that as not giving me their best offer. Because I would say “Okay, well somebody’s going to pay me 15 pretty much not knowing what everybody else is doing out there. And you just wanna pay me 151.” Well you know, but if I don’t tell you, then you might be willing to pay me 155, 160. So I’m actually as a seller leaving money on the table. So I don’t like that. Todd: What about the offers and I know you’ve seen them, where they state “Well we’re offering 150” but they have an escalation clause which states “We’ll pay up to a certain price but a thousand dollar over is your highest offer. How do you react when you see those? Oana: Again, I don’t put much talk on them, because what they’re trying to do is gain the system and they’re not really serious about putting in/putting up with their highest dollar. What they’re saying is “We’re simply willing to match somebody else plus a buck.” Todd: Do you think the problem with that is, from a buyer prospective is let’s say that you think the house could be worth 170 but it could be as worth as less as 150? So you put in there “I’ll pay up to 170 but not more than a thousand dollars over your next highest offer” But the seller just gonna come back and go “Well our highest offer was 169 so you got it at 170.” Oana: Right. And then you know, here’s the other issue is proving that. Todd: Right. Oana: So now we have to violate somebody else’s privacy by proving that with other offers and that sort of thing. And then here’s the thing on the buyer end, Klein. I can get my cousin to write an offer for $200,000 for a $100,00 property and you’re gonna pay a thousand dollars more than my highest offer. Is that really realistic? Todd: Yeah, the buyer can’t verify that that’s a legitimate offer. Oana: Right. Todd: That that’s not the friend or relative or the seller made that up to just give to them. Oana: Exactly. Exactly. So the policy is, put out there your best offer. Whatever that property is worth to you, don’t worry what it’s worth to someone else and then add a thousand dollars to that. Put out there what that property is worth to you. Because at the end of the day, buyers will back up even all the way up to closing when they get buyers remorse because they feel that they’re over paying for a property. Todd: What about the people who let’s say a year ago were trying to gain the system and got frustrated and didn’t buy anything. And here we are a year later where prices are higher. Oana: Right. Todd: Do you think, I mean, how do you think, I mean people by nature don’t wanna pay. Oana: Right. Todd: But the perception of overpay is really, in Real Estate is really subjective. ‘Cause how do you define overpay what, if there’s 5 people and you’re gonna have to beat all of them. So technically, whoever got the house over paid. ‘Cause you’re willing to pay more than everybody else. Right? Oana: That’s right. Yes. Todd: Okay. And the list price, we know doesn’t mean anything. Oana: List price is an invitation to negotiate an offer. Todd: Okay. It’s not a statement of value or anything, it’s just/it’s not what the seller will take, it’s none of that. Oana: No. Sometimes, sometimes properties are priced low on purpose to create a bidding more. Because they’re gonna end up with more money in the end. Todd: Right. Oana: Sometimes they’re priced high for other reasons. Todd: Okay. Good. Anyway, I thought I would share those thoughts with you. Kind of a something that’s happening a lot in the marketplace where we’re getting a lot of calls from people wanting to know exactly how much the offer is and so they can beat it and stuff. And there’s a lot of reasons why that’s not a good reason to disclose that. So I thought I would share that with you. And Oana Thank you very much. Oana: You’re welcome. Todd: That is my update for today and hope to see you on another video. Thanks.