I had three very interesting experiences last week, all with agents who didn’t quite have a full grasp of what they were doing.
One of the agents told me, “That’s such a minor detail,” in response to his complete and utter understanding of basic contract law.
But if an agent can make a mistake like this (let alone three of them…) then perhaps a buyer can too. So let me tell you these three stories, and hopefully you’ll avoid making the same “minor” mistakes…
1) Registering an offer does not stop another offer from being accepted.
Here’s an interesting one…
I listed a condominium for sale last week and implemented the “offers any time” strategy.
What I mean by that, is instead of pricing low, at, say, $449,900, and “holding back” offers until October 31st at 7pm, hoping to get multiple offers, we over-priced the unit at $539,000, thinking that perhaps the first buyer through the door might throw the boat at the place, and make a full-priced offer.
On the second day of the listing, we received an offer for the full list-price (actually rounded up to $540,000), with a huge 10% deposit, my seller’s desired closing date, and get this – no conditions.
That didn’t use to be a big deal, when every condo was selling in multiple offers, with no conditions, back in the spring. This fall, it’s been an impressive feat, and I was quite pleased with the offer.
We received the offer on Friday morning, with an irrevocable of 9:30pm on Friday night.
My seller jumped at the offer, and wanted to sign it right then and there, but I suggested we wait until 9:00pm, and see if any other offers come in.
I paged all the agents who had showed the property, to let them know that an offer was registered, and that it was irrevocable at 9:30pm.
I’d like to think this is common sense in the industry, but sadly, it’s not.
It’s a way to ensure that any interested buyers, who might make an offer to your seller, are informed.
Not only that, I make sure to include the irrevocable date – something agents don’t typically do, so that the buyers are aware they have time.
Mid-afternoon, my phone rang, and it was an agent.
“I’m registering an offer on XXX Property,” he told me.
“That’s great,” replied. “Can you send me the signed Form 801? And when can you send the offer?” I asked him.
“Sunday,” he said, “I’m gonna be sending it on Sunday.”
I told him that we had an offer that was irrevocable until Friday at 9:30pm, that was very good, and we were going to work with it.
“Oh, nuh-no, no,” he said, sounding extremely confident, “You don’t get it. I’m showing the property on Sunday morning,” he explained, “My client’s gonna love it, and I’m gonna send you an offer on Sunday afternoon.”
I may be condescending on my blog, but when dealing with other agents, I’m always straight-forward. I reiterated that we had a registered offer, it was acceptable to us, it was set to expire at 9:30pm that night, and we were going to accept the offer at 9:00pm if we didn’t have a superior offer at that time.
“No man,” he explained, “What I’m telling you is that I’m registering my offer. Now you have TWO offers,” he said, “And you can’t sell this property until you have my offer.”
Again, this is when some agents would hang up the phone, but I was somewhat amused at this point, and professionally curious. Because don’t forget, this was the person that a buyer out there in the market had chosen to represent his or her interests in the biggest purchase of their life! This guy, who had no clue what he was doing.
“Do you have a signed offer?” I asked him.
He said that he did not…….yet.
“Can you email me a signed Form 801?” I asked him.
Amazingly, he blamed me for being condescending, and said, “You know that I don’t.”
“Have you shown the property?” I asked him.
Again, he insinuated that I was being rude, and said, “You already know this – I’m showing it on Sunday.”
I then explained to him that he doesn’t have a signed offer, and thus he can’t register an offer. I reiterated that we had an offer, irrevocable at 9:30pm, and that we intended to work with it.
Then came the best part! He told me, “Yeah but don’t you see what I’m doing? I’m sticking my foot in the door! If I register an offer, then you can’t sell the property out from under me!”
I could just picture him pointing his index finger to his head and saying, “….because I’m smart like ‘dat!”
I went over the situation one more time with him just for good measure, and then I said, “I have to go now. If you have any issue with this, call your broker, and feel free to call mine.”
I’m sure he worked for a chop-shop that had no manager, broker, or photocopier, but the point was made.
In the end, no other agents came forward with buyers, and we accepted the offer in hand.
2) You cannot sign the “Confirmation of Acceptance” and then make changes to the offer.
This one was just unbelievable, but then again, not everybody is an “expert” in contract law…
I was working on a sign-back with an agent; I was representing the buyer, he was representing the seller, and we had gone back-and-forth three times.
We were primarily negotiating the price, but this agent and the seller seemed to be the type to want those little “moral” victories.
Case in point, the “visitation clause” in our Schedule A. You guys are familiar with this one, right? You usually include a clause that says, “The Buyer and Seller hereby agree that the buyer shall be allowed three (3) visits to the property, at mutually convenient times, before the closing date.”
This allows the buyer to go back to take measurements, get quotes from contractors, show family, etc.
When a seller changes the “3” visits to “2” visits, you know he’s being ridiculous.
That’s negotiating for the sake of negotiating, and while I’m sure there’s a situation (ie. an elderly woman living alone?) where the visitations do matter, it’s so incredibly insignificant, that to change the number of visits from three to two just shows you want to win something.
In any event, we had negotiated the price, the deposit, the conditional period and the closing date, and it felt like we were just about finished.
The listing agent called me and said, “My guy has accepted, congrats, we have a deal!” and I waited by the laptop for the paperwork to arrive in my inbox.
But when I received the completed Agreement of Purchase & Sale, and opened it up to look it over, I actually laughed when I saw what he had done.
In the “Chattels Included” section, his client had struck out “outdoor patio table and six chairs, gas barbecue, two lounge chairs,” and yet he signed the Confirmation of Acceptance.
Do you see the problem here?
If you are going to accept an offer that was presented to you, whether it’s the first offer, or a sign-back, you cannot change anything on that offer, otherwise you would be signing back to the buyer.
In this case, the seller had accepted our offer, but removed about $3,000 worth of chattels.
If the seller wanted to remove the $3,000 in chattels, he would have to do so, initial the change, and send it back to us as a sign-back.
Any change, no matter how big or small, renders the previous offer null and void.
I called the agent to ask if this was an oversight, and he said, “No, why?”
I told him that legally, if he wanted to make these changes, he’d have to sign it back to us. Or, he could have accepted the offer as it was.
He told me, “No, look, we’re okay with this deal, we’re accepting. But we’re taking out the furniture.”
It was like he didn’t listen to what I’d just said.
I once again explained the basics of contract law, and he said, “That’s such a minor detail! If I were accepting the offer and increasing the price twenty grand, I can see how you’d have an issue.”
Clearly, he thought that if you mixed black and white together, you always got grey.
But unfortunately, no matter if the change is “minor” or if it’s major, a change is still a change, and the original offer is void.
Incredibly, he didn’t want to back down! He told me, “But my guy has accepted it! It’s done!”
I actually began to worry that this was going to become an issue. The agent had no clue what he was doing, and those agents are dangerous. It’s not just what they’re doing in front of you, it’s what you’re doing that you can’t see, what they’re telling their clients, etc.
Once again, I explained the two options that he had:
1) Remove the chattels, initial the document, sign it back to us.
2) Sign the Confirmation of Acceptance as is.
Problem being, of course, he had already done both, and sent it back to us. So as far as I was concerned, we had to start all over again since he had figuratively puked all over the offer, and we could no longer read it.
So before he could come up with any more bright ideas, I re-drafted a new, fresh offer, with the terms and conditions as they were during our last sign-back, with the chattels included, and sent it to him. I wanted to tell him, “You can either accept this, as is, or delete the chattels and sign it back to us. But you can’t do both,” since I really wanted this to be a teachable moment, but I didn’t want to give him the option. I told him take it or leave it, it was our final offer, and I didn’t trust him any longer so I would advise my client not to work with his sign back.
They accepted (without making any changes), and it was a done deal.
While this was the first time I’ve ever experienced an agent trying to make changes to an offer and accept it at the same time, a quick poll of my colleagues shows this incident was far from unique.
3) Two business days is two business days, it’s not complicated.
Here was a case of simple math if you ask me.
When you purchase a condominium that’s conditional on a lawyer’s satisfactory review of the condominium corporation’s Status Certificate (financial statements, budget, reserve fund study, rules and regulations, etc), you include a certain number of days for that review.
It’s usually 2-3 days, and my standard condition has two days.
I submitted an offer last Tuesday night that was accepted on Wednesday morning.
Our condition was, as I mentioned, two business days.
The listing agent, upon sending me the accepted copy of the Agreement of Purchase & Sale, wrote, “I look forward to receiving the Notice of Fulfillment of Condition on Thursday.”
The deal was struck on Wednesday morning. One day to take us to Thursday, one day to take us to Friday. What was I missing?
I asked her if this was a typo, and she said, “No,” and then gave me this amazing explanation.
Around midnight on Tuesday, she had emailed me the Status Certificate.
Her contention was that the two business days is from receipt of the Status Certificate, which, to be fair, is often how these clauses read.
But receipt doesn’t really matter if you don’t even have a completed deal yet!
By her logic (as I later explained to her), she could have sent me the Status Certificate the previous Thursday and the Waiver or Notice of Fulfillment would have been due the day before we made the offer!
She said, “But I emailed you the Status Certificate on Tuesday, so two days means the Waiver is due Thursday.”
Forget that it was well past the end of business day on Tuesday, or that I could have been asleep when it hit my inbox.
Just use some logic here.
We did the deal on Wednesday.
Plus two days = Friday.
I’ve sold fifty condos this year, and this is the very first time this has become an issue.
In fact, I’ve sold hundreds of condos in the last thirteen years, and yes, this is the very first time I have ever had this conversation with another agent.
Amazingly, after she accepted the situation, she wanted to draw up an Amendment to explain the idea behind a “business day.”
The first situation I described had to do with the offer process, and the second was with contract law, but this was just simple math.
I understand the market can be dynamic, fast-paced, and that not every buyer out there knows the ins and outs of the market.
So hopefully a few of you read this, gained some insight, and can use it in your journey moving forward.
As for the agents in my stories, there’s just no excuse.
Be careful out there, folks. And I’m not just talking about driving on Halloween!