Expert: liznarr - 2/22/2009

Question
QUESTION: Hi, I am hoping that you can help me to fine or get the right information I need.



I am in the process of buying a home with a VA lone, I have a buyer agent and I placed an offer on a home.

The seller agent counter my offer in writing, I had my buyer agent to counter their offer. My buyer agent told me that the seller agent did not except my counter offer. At this point my agent tells me that she spoke with the seller agent on the phone before she fax my offer over to him and he said that he would not except my counter offer. She tells me to initial my counter offer to with draw it.

I ask my buyer agent after I initial my counter offer to with draw it, why she did not just fax my counter offer to him and let him put it in writing that it was rejected.

She said to me that, the two of them talked on the phone and that was good enough.





I feel that my agent should have fax my counter offer to the buyer agent and let him reject it in writing, so to have a paper trial.

Can you please help me out with some information on this matter or direct me in the right direction for help.

Thank you very much.


ANSWER: Hi Otis,

Your written counter offer which was rejected … should be rejected IN WRITING by the SELLER.  Absent a Power of Attorney from the Seller, the listing agent has no authority whatsoever to make decisions on behalf of a Seller, unless the listing agent also happens to be the Seller.  Either way, the Seller’s rejection should be in writing.

Real estate law in my state requires that all WRITTEN offers and counter offers be presented to a Seller.  The only way your agent could prove that your counter offer was presented to the Seller and also rejected is to get you something back in writing from the Seller.  You are very smart to recognize that a paper trail is what you need and are entitled to.  

I would suggest calling your state’s Real Estate Commission to determine if laws in your area are the same, but I would suspect so.

If you signed a buyer agency agreement with your agent, she is obligated by law to represent YOU.  She also is required to obey any LEGAL instruction you give her relating to the offer you made.

I would call your agent’s Broker-in-Charge (BIC) and let him/her know what is happening, and ask that your agent be required to secure a written rejection from the Seller.  If your agent happens to be the BIC – or if the BIC refuses -- let each of them know that you will contact the Real Estate Commission and file a formal complaint if your legal request is not honored.  

Don’t have great expectations from this type complaint, as Real Estate Commission staffing across the nation has probably been cut due to the economy.  Your complaint will be of record, however, and will ultimately be processed.

Next, I would strongly recommend that you also inform your agent’s BIC that you want your buyer agency agreement terminated on the grounds of breach (due to your agent refusing to follow your legal instruction to secure a written rejection of your counter offer).

For your agent to tell you simply that she and the other agent “talked on the phone and that was good enough,” she insulted you and should not be representing any buyer if this is how she operates.  The real estate industry could well do without agents of her caliber, and she is a disgrace to the industry.

You are also well within your rights to refuse to reject your own offer under the circumstances you described.  Doing that would let the Seller off the hook.

Next, you need to find another agent that will properly represent you and have your best interests at heart.

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth

---------- FOLLOW-UP ----------

QUESTION: Thank you for this information..

This is what I have in front of me now; I really do want this home because of the asking price and its good condition being a foreclose home. I already have one home and its too big for just me and the wife, so we will let the kids stay in it. The asking price is $34900.00 and I offer $40900.00 at the start with $3000.00 of that for closing cost. The seller agent counters my offer by saying that he could only pay 3.5% on my closing cost and would need to have $500.00 earnest money and he would not move from that even after knowing what my offer was implying.
My VA lender said that my closing cost would be $3888.89 less the 3.5% and the balance would be out of pocket, thinking this was kind of high, this is the point where I made or should I say I though I were making my counter offer in writing for $38900.00 to off set some of the closing cost and paying the $500.00 earnest money.

With every thing included, my mortgage would only be about $489.00 a month, just what I am looking for at times like this.
After doing some more thinking, I e-mail my buyer agent to find out if I could make another offer, waiting on her reply.

I am thinking now that I could just go ahead an offer the seller $40200.00 and $500.00 earnest money because I think it would be a good deal for me, the (Total EST. fair market price with the city is $105,100).

What would be your input..thanks again.


Answer
Otis,

If the asking price was $34,900 and you offered $40,900 with $3,000 to be deducted from that for your closing costs, that leaves a balance of $37,900 – which is $3,000 OVER the asking price.  Granted, there may be some additional commission and other additional closing costs for the Seller to pay on the increased sales price, but those should not amount to over a couple hundred dollars at most.

Under the terms of your offer, did your agent prepare a net sheet for the Seller, showing him/her the approximate amount that should come to him/her at closing?  Does this Seller not understand that he would be netting out more than he would at full asking price with no concessions?  ($40,900 less $3,000 = $37,900 versus the asking price of $34,900)  

Maybe I’m missing something, but I don’t know why the Seller would not have accepted your offer, because it would have netted him MORE than he would have received at full listing price, paying no closing costs.

Or is the Seller now simply saying that he wants MORE than the full asking price?

Without doing additional research, I am not up-to-date on VA loans as to what their down payment requirement is and also the allowable closing costs that the VA will allow a Seller to pay, but here is a question I would ask your lender:

If you offered $34,900 (the full asking price) and state in your offer that you will pay your own closing costs and not ask for any other concessions from the Seller … do you qualify for, and/or will your VA lender allow you to ADD TO your loan amount your total closing costs?

You stated you might now offer the seller $40,200 and $500 earnest money.  I assume this is asking for NO closing costs of yours to be paid by the Seller.  

I agree with the $500 earnest money, but again, I believe I am missing something in your communication as to why you would pay MORE than list price with NO concession for any closing costs, unless you are in a bidding war with other buyers – which has not been mentioned.

If the estimated fair market value of this property is $105,100, my thought is you should act quickly to secure this property.  If it’s in good condition, it’s not going to last very long.

I hope the above is helpful to you.  Let me know if there is additional information I am missing in order to better advise you.

Regards,
Elizabeth