Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
The story below is all factual and accurate: A Broker did not reflect a $5 million offer.
I created Nestapple 2 years ago, and I have repeatedly heard, “I don’t like dealing with brokers,” “I’ve had a bad experience with a broker before,” “All brokers are the same.” Above all, I’ve heard everything.
My answer has been consistent: there are good and bad brokers like in every profession. As a result, our issue is not with brokers personally but with the industry itself. The real estate sector is outdated and inefficient.
I need to share the story, TRUE story of what recently happened to us. To protect our client and potentially not damage an ongoing investigation, I will refrain from giving names and addresses.
Buyer A was searching for a home. He had a healthy budget and was a very savvy client. He found an apartment in the city that met his family’s needs. Therefore, they attended an open house. Remember: a person can visit an open house unrepresented. He spoke to the listing broker and asked questions. It the exchange between Listing Broker and Buyer A it was not discussed if he had representation.
Buyer A reached out and asked us to represent him. We decide to make an offer.
Next, I introduce myself to the Listing Agent (aka the-most-unprofessional-broker-ever). I get some initial push back about not attending the open house, wholly unrelated and insignificant. I informed her we were working on an offer and would receive one soon. Asking price was $5,800,000.
Yes, it is not a full ask offer. It is true, we were $500k apart, but it was a reasonable offer. After all, we provided all relevant supporting material: proof of funds and pre-approved letter. That means the offer was complete, serious and it came from a legit and committed buyer.
The Listing Agent responded. She said our offer was insulting and too low, and the seller won’t even counter.
Her response didn’t make any sense. A very pretty peculiar property that’s been sitting on the market for months receives a legit offer, and the seller doesn’t even respond nor counters? Something didn’t smell right. I asked for an offer acknowledgment. In other words, I wanted proof of the reflection of my offer; Listing Agent said no.
Fast-forward to a couple of days, and Listing Agent contacts Buyer A (my client) directly. A clear violation of the ethics code since both brokers are members of REBNY. My clients notify me, and I remind Listing Agent that we are representing them. Any further communication should go through us. NY State regulations also prohibit this behavior:
“No real estate broker shall negotiate the sale, exchange, or lease of any property directly with an owner if he knows that such owner has an existing written contract granting exclusive authority in connection with such property with another broker.”
After discussing some potential renovations and trying to make number work, my client loses interest and moves on. As a conclusion, they no longer want to move forward.
Months pass and we notice the property goes back on the market with a new reduced price of $4,800,000. Now, there is a new listing agent, and it is all very suspicious. Since Listing Agent did no longer have the exclusivity agreement, we contacted the seller directly. Casually we asked if she had received our offer from months ago for $5,300,000, and unfortunately, our suspicions were confirmed: the seller never received our offer.
The illegal and unethical behavior of the Listing Agent had drastic consequences. For instance, it cost the Seller millions of dollars in an eventual sale. In addition, it has also limited my Buyer’s the possibility of buying a home and prevented my earned commission.
Why did she do it? Unclear. Maybe she didn’t want to share a potential 6% commission if the Buyer was unrepresented? We will never know.
The seller is unsure about pressing charges or file a claim against the Attorney General, which is why we are considering our options. Stay tuned as the saga unfolds. However, what is accurate is that the Broker did not reflect a $5 million offer. In conclusion, a story to share for time to come.