No Pre-Emptive Offers
April 16, 2021
Oops, Just Kidding!
If you've been shopping for a home in San Carlos, or anywhere on the Peninsula for that matter, then you are all too familiar with the following scenario: A new listing hits the market on Friday, and the listing agent remarks in the comments “No pre-emptive offers, please. Offer date will be on XYZ date“. You go see the place with your agent and of course you fall in love with the home. You race off to get your ducks in a row to write a winning offer for XYZ date, and to your horror, you see the very next day that the house is PENDING SALE. You're angry and hurt that your dream home is now gone, and you never had a chance at it.
What happened is that some buyer's agent decided to disregard the listing agent's request and submitted an aggressive pre-emptive offer that was significantly above the asking price — so much so that the seller decided to forgo the planned stay on the market and the high likelihood of multiple offers and accept the early offer. In this situation, sometimes the other interested parties get notified that an early offer comes in, but often times they don't
So who wins in this situation? You may think it's the seller, but I believe everyone loses in this scenario. All of the other interested buyers are spitting mad because they missed out on their dream home. Often times this anger is directed at their own agent because they played by the “rules” and honored the listing agent's request to withhold offers until the published date, while obviously someone else didn't. The listing agent invariably gets bombarded with angry calls from the buyer's agents who honored the code then looked foolish in front of their clients.
The sellers are certainly happy because they got what they think is a great price. But in reality, who's to say that the price they accepted was better than anything they would have received had they just waited for the aforementioned offer date?
An erosion of Trust.
Sadly, trust is not a word that many people associate with Realtors and the real estate market, especially when the market is as hot and dynamic as it is right now. Behavior like this just further violates that trust, and the chaos that ensues in these scenario critically erodes that process of selling a home. The buyers who missed out in the scenario above certainly aren't going to make that mistake again, so they become the next perpetrators to try to cut in line, and the process just keeps repeating itself.
This behavior puts the listing agent in a tough spot. Unless it's previously agreed to in writing, the listing agent is obligated to present any and all offers that they receive to the seller. Buyer's agents know this, and they know that by dropping an unexpected offer in the lap of the listing agent, they've created their own private audience with the seller, and more important, started the clock running when nobody else was ready.
So what is the solution?
To put an end to this extremely disruptive practice, listing agents either need to take one approach or the other: Either set a listing date and stick to it, or state that the seller will review offers as they come. Anything in between just puts gas on a fire that's already burning hotter than the industry can handle.
Just my two cents..