Sellers Instruction to listing agent

I've showed a couple of short sale properties that have sellers instructions attached to the listings.  I view this practice as intrusive and think it may open the seller to demands for lost commissions (at least in California).  In addition as a buyers broker I felt required to disclose the restrictions placed on me and by agency on my buyers.  I feel these seller requirements were at least in part of the reason why they moved on to other properties.

This isn’t something that an unknowing seller that doesn’t understand the separation of agency dreamed up, but seems to be a form included in the agents listing presentation (as I've seen it on 2 different listings with different sellers, but same agent).

 

Sellers instruction,

 

To listing agent

From seller

Date

RE property address

 

Dear (Listing agent)

 

I authorize and direct you to ask buyers agents who send you an offer on my property identified above to promise in writing that they will not write any more offers for their buyer(s) upon my acceptance and to withdraw any outstanding offers upon my acceptance.

 

I want to know whether the buyer’s agent makes this promise to you before I sign any offer.

 

Please ask agents to return the following verbiage to you:

 

I, (name of agent) as a member of the board of realtors, promise that upon seller’s acceptance of my buyers’ offer (buyers name) for (property address), I will not write any more offers for those buyers.  If the buyers have any outstanding offers, I will immediately withdraw those offers upon seller’s acceptance, because my buyer will wait for short sale approval per the terms in the SSA.

 

Signed and dated by the seller

Also attached

Bank of America disclosure to be signed by both licensees  -  [marketing efforts were in fact and “in spirit” aimed toward maximizing the selling price of Property from a ready, willing and able buyer.  Licensee has not engaged in any conduct that restricts or limits offers from buyers, including but not limited to requiring cash offers, using disparaging language regarding the property or tenants, or unreasonably restricting access.]

 

 

 

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Replies to This Discussion

Permalink Reply by Bill Sloss on November 5, 2012 at 8:27am

I agree completely Jeff. But if "you" clarified the finalization of the contract with the signing and no further marketing and seeking offers you would have far less running buyers. Im sure you realize if I want House A and that deal wont get finalized by the seller depite a signature I have no guarantee the contract will be honored. House B looks pretty good and the only one protecting my interests in reality unless the buyers agent insists on the provision you speak of is me. Im a buyer and need a house. If a buyers agent agrees to represent me and doesnt insist on that provision that agent is negligent. You watch someone is going to get hit for that sooner or later and its a winner. "You" agree to act in my best interest and dont? Ante up.Thats bad faith. Its so much easier to set it all out right away and avoid the aggravation. Thats why you have buyers problems. Not honoring the intention of the contract is now an accepted practice by using that addendum.

Permalink Reply by Ricardo E. Giacomán on November 5, 2012 at 8:31am

I do that when needed. There is always a way to have your buyer back out of the offer. I.E. If the Bank wants more money and your buyer doesn't want to go any higher, it is in the seller's best interest to cancel the contract and return the deposit before they can take another one. That will end that contract so the seller can move on and get a higher or better offer. I just got an offer accepted; the seller had about 18 offers. Some all cash and some 20%  or 30% down; my client is FHA. I spoke to the agent and told him that in order for him to see that my buyer was serious, my client would deposit 5k and was willing to wait for 90 days and if the short sale wasn't through or we didn't have a final response by then, we would move forward with the offer withrawal and get the deposit back. I've written at least 12 offers and we haven't gotten any accepted because we keep getting outbid. My client decided that if that's what it takes to get the house he wants, then, be it. Here in the Bay Area, every property gets at least 15 to 20 offers in the 1st 7 days that it is on the MLS and of course FHA and VA go to the bottom of the pile when it comes to choosing offers, specially when the seller has many offers to choose from.

Permalink Reply by Michele M. Hunt on November 6, 2012 at 5:20pm

Hello Gary,

I completely understand why a seller and/or their agent would require this verbiage...however, I represent several investors that nearly ALWAYS have multiple offers out on other properties, and fully intend to close each and every escrow; it would be impossible for my investor buyers to include that verbiage on any contract, and would actually prohibit them from purchasing that particular property. 

As a short sale specialist that has closed dozens and dozens of short sales since the 1990's, I have been burned by other agent's buyers that back out at the end of the process because they wrote on another house that was directly competitive with my listing, forcing me to start over again with a new buyer (I currently have TWO of those situations I am dealing with.)

When the suggestion was made at a local AOR meeting to devise a form to prohibit buyers from making more than one offer at a time, one of the attorneys for the California Association of REALTORS stated that it is NOT unethical for a buyer to have multiple offers on different properties at the same time, as long as they intend to complete their sale; therefore, there will never be such a form.  I agree with that decision.

A seller, however, DOES have the right to make that stipulation...and their agent has a fiduciary duty to protect their client's interest.  Whether, or not, the agent is the one that recommended that verbiage is arguably beside the point...if they believe this is in their seller's best interest, then they are fulfilling their fiduciary duty.

Of course, this does not help you in your situation...your buyer will have to determine whether or not they decide to comply with the seller's wishes.  If not, they just need to move on to a different property.  This is a consequence of our current economy, and nobody is really to blame in this.

Good luck.

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