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April 27, 2012

5

Mastermind for April 25th Open House Follies, Disclosure of Defects, and Bribery Between Buyers

by mark mclean

Mastermind was a lot of fun this week thanks to a surprise drop in from our Commander-In-Chief Tom Bosley who always brings it up a notch or two. So if you couldn’t make it, you missed an interesting discussion on a classic open house misstep, our duty to disclose, and a spirited conversation about a potential multiple offer bribery.

First off, we heard from an agent who was showing her clients around one Saturday afternoon. She had several properties booked to look at and a few that she didn’t book because they were having open houses. Just after 2pm, they arrived at the first open house. A crowd of people was standing out front waiting to get in, but there was no one at the home. A few minutes later a rather frazzled agent comes screaming up the driveway, jumps out of her car, apologizes profusely, opens the front door then announces to the group to have a look around while she goes and puts out her signs. She jumps back in her car and drives away. Hilarious. Do you think her insurance would cover her if the owners were robbed blind? Honestly, when I hear stories like this I shudder.

Next, we talked about our duty to disclose. So here is the question, you know for a fact that a certain house has a serious flooding problem. While you don’t have a client interested in the property do you think you have a duty to tell the listing agent? What about other agents in your office? Do you owe a duty to them or is it a case of buyer beware? Does your answer change if you have a client interested in the property? It seems clear that if a listing agent gets wind of any defect, he must investigate thoroughly, figure out the extent of the defect and determine a cost to remediate.

Finally, we talked about a very interesting scenario. Imagine two buyers sitting in their car while their agents are inside the house taking turns at the negotiation table. One buyer takes off to the bank machine and returns with $10,000 in cash. He knocks on the other buyer’s car window and offers him the money to rescind his offer. Just to be clear, it didn’t actually happen, but it opened a wild debate at our meeting. The idea is interesting. Buyers are scrambling as hard as ever to win bidding wars but is this a winning strategy? So, the question is, could it actually happen? Do buyers have the ability, outside of their relationship with an agent, to influence other buyers? Thankfully part of our job as real estate agents is to keep the process honest and civil. If you have heard of any stories where something along these lines actually happened, please let me know.

Oh and in case you are wondering, that IS Einstien’s face on my body. Have a great week.

 

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5 Comments Post a comment
  1. Apr 30 2012

    My husband and fellow real estate professional discussed this. Not sure I understand the problem with two buyers coming to an agreement outside of the negotiations. Surely they have every right to make that decision between them, as long as they each do their parts (ie., the one that gets the money actually does withdraw his offer). Are we missing something here? It may frustrate the agents and the seller may get less money that he might have got in a bidding war, but surely the buyers have the freedom to do this sort of thing. It’s not illegal. And bidding wars can be an ethics nightmare in themselves, so avoiding one is surely a good thing!

    Reply
    • May 1 2012

      Hi Christine. It is a slippery slope. I agree that it is not illegal, but ethical? I’m not sure. What’s to stop a seller from getting his friend to bring in a fake offer? Would your answer change if the agent suggested to their buyer to payoff the other buyer? Yikes.

      Reply
  2. ..money talks! I love it.

    Reply
  3. Aug 9 2012

    While the any of the REALTORS® would be unethical to suggest it, the Buyer doesn’t have to have any “ethics” in this situation. As long as it’s legal (and nothing here indicates otherwise), they are free to do whatever they wish.

    Reply
    • Aug 10 2012

      I agree. But can you imagine. It just seems so wrong!

      Reply

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