This week one of my agents was involved in a competitive bidding situation for an apartment in Brooklyn. Her buyer won the bidding TWICE, and was told each time that the property was his. Then a higher offer came along and it started over! Finally the third time he just gave up and lowered his offer rather than raising it. As real estate markets all across the country heat up with decreased inventory, many properties will generate enthusiasm from multiple buyers. It is what happens THEN which tests the professionalism and integrity of both the seller and the agent.
Here in New York, where commerce has always been king, it seems there is a lamentable sense that somehow money trumps all. While of course you keep your word when $5000 is at stake, the equation is not quite so clear when it is $50,000, and if we are talking about $100,000, then anything goes. Integrity all too often has a price. The idea which so many of us grew up with that your word is your bond seems to have been replaced by the notion that greed is good. Personally, I am not convinced that greed is good, especially when it results in outcomes like the one described above. I think most people are comfortable with a process in which they know the rules, and feel some confidence that those rules will be adhered to. This requires that both sellers and agents adopt certain basic behavioral guidelines:
* As agents it is our job to suggest an appropriate process for managing multiple offers to our sellers. There are many ways this can be done, and it is not my goal in this blog to enumerate them. The point I want to make here is that we select a process and we STICK TO IT! It happens too often that a process is advertised as best and final but turns out to be neither. So…
* Once a process is advertised as best and final, that is what it has to be. The agent and the seller MUST agree in advance that once the offers are collected and a winner is chosen that no other bids will be taken. Imagine the chaos in the auction industry if additional bids were listened to once the hammer had fallen. But that is what happens ALL THE TIME in our business. And truly, it lacks not only integrity but also common sense. All experienced agents know that a buyer who jumps the queue to upset a deal already in place is FAR more likely to drop out. Since the buyer who has been knocked out of first place is usually furious at this point, the seller may well be left with nothing.
* In real estate as in all things, a reputation for integrity is worth its weight in gold. While we as agents cannot control the choices our principals make, we do (or should) have influence. An agent who says “Yes we told you that you have the deal but you know there is really no deal until contracts are signed” is legally accurate but not likely to make a lot of friends among his or her colleagues. And while buyers and sellers come and go, we deal with each other all the time- month after month, year after year. You never know when the person who felt unfairly treated in your competitive bidding situation may have the listing or piece of information you need. Relationships are everything in our business, and once relationship bridges are burned they are not easy to rebuild.
We all respect people who say their word is their bond and then actually mean it. The sale or rental of real estate is no different in this respect from any other business transaction. Don’t call something a best and final if, in your mind, it is neither. Under those circumstances it is far better simply to solicit offers and then choose among them. Doing that also has its dangers but at least one of them is not reneging on an agreement. Reputations are hard to build and easy to tarnish. And for all of us, agent, seller, and buyer alike, our reputations are the most valuable assets we possess.