Signed, Sealed, &…………..Then What?

Delivered, right?  That’s how the saying (and the song…) goes?

But what if that which is signed, and that which is sealed, is not delivered?  Then what?

Believe it or not, this is a question that’s raised from time to time in real estate, and it always presents a challenge…

StevieWonder

Have you watched “The Assassination of Gianni Versace” yet?

I had high hopes for it.

Through one episode, however, I’m a little disappointed.

I heard great things about “The People vs. O.J. Simpson,” although I haven’t watched it yet.  I know the whole world loves streaming, but there’s something so unsatisfying about hooking up my laptop to the TV with an HDMI.  I’m old-school; I like the remote in my hand.  I like to be able to pause, stop, rewind, all without having to get up off the couch, lean over the laptop, and constantly close pop-up browsers with ads for Russian brides…

So, yeah.  Until the O.J. series hits Netflix, or Rogers on Demand, I’ll just have to listen to other people talk about it.

The Assassination of Gianni Versace was a bit underwhelming.

It was slow, there was too much character development, and it really just didn’t strike a chord with me.

One scene, however, did.

Although it wasn’t because I liked the show, or what was happening in the scene, but rather because it gave me an idea for a blog post.

I never know where my ideas will come from.  After ten years, 2,200+ posts, and a thorough examination of just about every topic you can think of, it’s not like I have a laundry list of topics, ready to be written.

So when I get an idea, I go with it.

And that first episode of The Assassination was so boring that I told my wife “….I’m still listening,” and sat down to write a blog.

The scene in question was after Versace was murdered, and his sister, Donatella, was sitting at a table with a group of lawyers and other figure-heads in the family business.

In front of them were folders of signed paperwork, which Versace had signed “a week earlier,” in Donatella’s words, with the intention of taking the company public.

Even though those documents were signed, and even though Gianni Versace had signed them with the intent on submitting them, the deal never moved forward.  Signed documents, and intent, are nothing without follow-through.

And it made me think of a recent experience I had selling a condo, as well as a great “urban legend” real estate story that I’ve probably told on this blog several times.  Why don’t we start with that…

For those of you who have submitted an unsuccessful offer on a property, in a competitive situation, you property didn’t find out what the property sold for until the next morning.

Maybe, just maybe, your agent sent you a text message before you went to bed, with the price.  It happens from time to time.

But more often than not, the listing agent will wait until the next morning.

Why?

This urban legend, of course…

About ten years ago, an agent in my office had a property listed, and there were a dozen offers presented on the “offer night.”

The twelve buyer agents came through and presented, one-by-one, to the listing agent and the sellers, and while I can’t recall the exact details about whether or not there were multiple rounds of bidding, or how many offers were sent back for improvement, let’s just say that eventually, there was a winner.

The listing agent told the buyer agent with the highest offer that his offer would be accepted, and to sit tight, while they signed everything up.

The listing agent then told the other eleven buyer agents something to the effect of, “Thanks for your offer, but we’re going with another.”

One of the buyer agents who lost, approached the listing agent and said, “So it’s done then?  Over?” to which the listing agent replied, “Indeed.  Thanks for your offer, but we’re going with somebody else.”

The buyer agent nodded, and said, “Okay, alright then.  So what did it go for?”

The listing agent, unaware that he was about to be the poster child for “why agents don’t give out the sale price until the next morning,” turned to the buyer agent and said, “$870,000.”

The buyer agent nodded, and then left.  But he didn’t go far.

The listing agent, back in the conference room with his clients, put the Agreement of Purchase & Sale in front of them, and they signed.  He had them sign two copies, and was just about to neatly paper-clip them together, when suddenly the door to the conference room swung open, and it was the buyer agent.

“Eight-hundred-eighty thousand,” he said, as he proudly slammed a revised copy of his offer down on the table.

It seems that after being told the “accepted” offer was $870,000, the buyer agent wasn’t willing to accept that the offer was signed, sealed, and delivered, as the phrase goes.  So he went outside to his car, where his buyer-clients were waiting, told them to put a new price and a set of initials on the offer, and then came back inside the building (this was before we had locks on the front doors), made his way up to the conference room, and threw the whole system out of whack.

Having told this story before on my blog, you might recall where this is going.

The listing agent said, “The papers are signed, and we’ve already told the other agent his offer is being accepted.  This is over.”

But the sellers, looking at another $10,000 for their home, spoke up and said, “Not yet, it’s not.”

Yes, the listing agent had already verbally communicated acceptance to the buyer agent who had submitted the “winning” bid of $870,000.

Yes, the sellers had already signed two copies of the Agreement of Purchase & Sale, confirming the acceptance.

But the offer had yet to be delivered to the buyer agent.  So while it was signed, and there was intent, there was no legally-binding deal just yet.

I honestly can’t recall how this story ended.  Perhaps the listing agent offered the original “winning” buyer-agent an opportunity to match.  Perhaps he threw that other agent out the window.  I don’t remember.  But the point is that a deal is never done until all parties are holding copies of the completed, accepted, and executed agreement.

Last week, I submitted an offer on a condo for my buyer-clients, and even though it was in the $1.6 Million range, of course we ended up in competition!

The property was on the market for one day!  Just our luck, right?

I could delve into another lesson per se, this time about how being professional, courteous, and respectful when dealing with fellow agents, can go a long way to getting you a deal.  But then I’ll run off on one of my patented tangents, and we’ll be here all night.

Let’s just say that the listing agent and I got along swimmingly, and she was not a fan of the agent competing with me.

But like him or not, she still had to work in the best interests of her seller, and get the most money for the property.

When she reviewed the two offers, mine was lower.  But as I said, we got along.  And thus she asked me to simply match the other offer, and we’d have a deal.

She was honest with me – she said she gave the other agent every opportunity to better his offer.  My offer was unconditional, his was not.  He refused to remove the condition, and refused to come up in price.  So she said, “Match his offer, and the property is yours.”  And we did.  And it was.

But not without incident, of course.

My phone rang, and she said, “David, you’ll never believe…” and that was all I needed to hear to think I just got screwed.

Like I said, a verbal acceptance is meaningless without paperwork.  A promise, a guarantee, a congratulations – nothing matters except the accepted APS.

But she continued, “David, you’ll never believe what just happened, but don’t worry, of course, we accepted your offer.”

Phew!  And as she said that, I saw the offer come through my inbox, and now was able to relax and listen to her story.

“We had already signed your offer,” she said.  “It was accepted, and we were ready to send it over, but I called the other agent first for some reason, I dunno, just to get it out of the way.  So all of a sudden, he’s had a change of heart, and he wants to remove his condition, and add $10,000 to the price!”

At this point, I was scrolling through the accepted APS to ensure that it was fully signed, and that this story was just some fodder for the night.  I didn’t like where the story was going.

“I had to tell my clients,” she told me.  “I didn’t like his game; I didn’t like him at all,” she said, with a laugh.  “But we hadn’t sent the accepted offer to you yet, so I had to tell them.”

How in the world did this turn out in my favour, I wondered?

“I told my clients, and they chewed on it.” she began to explain to me.

She continued, “They said, ‘Didn’t you tell us that he wouldn’t remove his condition, and his price was firm?’  I told them that was correct.  And then they said, ‘So it’s only now, after you told him that we had accepted another offer, that he said he would revise his offer?’  I told them again this was correct.  So to my amazement, my client said, ‘I don’t like it.  I don’t like the game he’s playing.  We made a deal.  Let’s honour it.’ ”

Wow.  Did I run into the nicest, most honourable agent and seller, or what?

Perhaps another topic, for another day, would be how different cultures negotiate in real estate.  There are certain cultures where they refuse to accept “no” as an answer, and you could literally show them the accepted APS, and they’d just smile and say, “Okay, so how much do you want?”  It’s not until they’ve already lost the deal, that they want to start playing.

In any event, this is what I was up against with my $1,650,000 condo last week, and I was lucky that the sellers didn’t like the agent’s “game.”

The seller went with our offer, the listing agent sent me the paperwork, and the deal was done.

But they had every right to accept the other offer, with another $10,000, even after they had already accepted my offer, and signed the paperwork.

“Signed, Sealed, & Delivered,” the phrase goes.

The absence of one, may as well be all three…

 

13 Comments

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  1. Bristol Builders Network says:

    Negotiations in real estate must vary across cultures. I can imagine that bartering is far more prominent in some countries

  2. Jennifer says:

    I dont think you need physical delivery to have a binding agreement. As long as you communicate it is accepted and all documents are signed, that should qualify as “delivery”. Your client is in the right that the seller went with them, they legally had to. No?

    On another note, the most curious part of the post is that the listing agent told you the other buyer’s price. I don’t think that’s right and is unfair. Either everyone knows everyone else’s price/conditions or no one knows. That buyer got the short end of the stick just because the listing agent liked you more and/or disliked the other one, or that agent was hoping for a return favour in the future? Maybe another blog topic.

    1. Sarah says:

      It’s a relationship business. Might not be ‘right’ per say. But it happens. You scratch my back, I’ll scratch yours

    2. RPG says:

      Oh grow up!!!

      It’s a relationship business. Experience wins. If the other agent was nicer and knew how to play the game, he’d have had a better shot. But he didn’t. That’s it. Accept it and don’t complain.

      1. Jennifer says:

        @RPG And this is what is wrong with the real estate business. Agents thinking it is about them. The main focus of the relationship is between you and your client, not you and the other agent trying to do favours for each other. “Experience wins” (besides your client simply having more money) because of negotiation skills, not because an agent hands you on a silver platter the other persons offer price.

        1. Sarah says:

          Jennifer – I’m sorry. But if you deep down in your heart believe that this world runs on ‘fair’ – you are probably sitting at your desk in a unionized position, with your annual pay bump, complaining it is “impossible to get ahead without bumping minimum wage”.
          Take real estate out of it. 90% of your c-suite executives got there because of who they know, not what they know. And they’re there because of the relationships they have built.
          That is life. That is every industry, not just real estate.

    3. Condodweller says:

      This whole “signed sealed and delivered” sounds like it ancient common law in place since before email and even the telephone. I wonder what would happen in court if someone actually challenged it. As much as I know about contract law I believe a verbal contract is just as valid as one signed sealed and delivered. The only difference is that a verbal contract may be difficult to prove in court if it comes to that. I assume this holds true for RE contracts as well but could be wrong there.

      With agents accepting offers via email, I can see a follow up email stating “offer is accepted, will email signed copy back asap. Perhaps a voicemail left by the seller agent verbally accepting the offer could be used in court to challenge it if the seller plays games like this.

      I doubt anyone would challenge this in court though, but one never knows.

      What doesn’t make sense to me is that people are willing to leave $10,000 on the table like this because they think the buyer may cause problems. From the seller’s point of view who cares? That’s why you pay the agent to deal with problems. Once conditions are removed what are they going to say? Please fix the nail holes you left behind?? We know what the outcome of that will be….

  3. Marina says:

    I don’t now… I think for an extra 10K on a 1.65 million condo I might also go with your offer, just because I’d be worried the other agent would be a nightmare later on. Like wanting us to repaint the kitchen because there was a dot on the wall behind the fridge or something. Not that he would get it, but I can imagine him being a pain, and is that really worth less than one percent of my asset? Actually more like 1/2 percent after commissions and stuff.
    I don’t know, maybe if I was looking at the money I’d bite, but from the sidelines I can see the sellers not wanting to deal with potential headaches.

    1. Natrx says:

      Exactly! Imagine the games come closing time? For the agent, 1.5%-2.0% or whatever the list fee off $10K after taxes, brokerage fees, is not worth it.

    2. Condodweller says:

      I don’t follow the logic. Just because the first buyer changed his/her mind last minute to up the offer AND removed all conditions, that makes him more likely to be a “problem” closer than David’s client?

  4. ed says:

    Perhaps another topic, for another day, would be how different cultures negotiate in real estate. -David

    Not just real estate David. I was in the car business for over 20 years and when dealing with certain cultures you learned quickly that for the sake of a sale you had to alter the negotiation process.

    1. Paully says:

      Yes Ed, I missed a number of deals as a newbie when I was met with this opening gambit: “This car is piece of S***. Why would I buy your crappy car when I could buy better *** for less?”

      I rapidly transitioned into some form of “Okay, so you don’t like this car? No problem. Don’t let the door hit you where the Good Lord split you!” I truly did not understand why someone would want to waste their own time, and mine, looking at a car that they proclaimed to be a POS.

      As time went by, I discovered that this was a very common opening gambit for a certain culture and that if I ignored it completely, there was often a happy sale waiting at the end of the rather unpleasant interaction!

      1. Negotiator says:

        In negotiations you also learn the value of allowing the other side to save face. Deals where one party is making all the concessions often fall apart, but if you give them one small things, even if its fairly meaningless, this sometimes makes people happy because they can feel like they’ve earned something from their bargaining.

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