Deal Changes After Hand Shake

Q: We put a bid on a condo unit and the sellers verbally accepted the offer.
 

We went to their Realtors office and completed the contract. She was to get the sellers to sign the following day.

Later that evening she called our home and stated the price went up $500. Is this legal or ethical?

A: Legal? In real estate, unless you have a written contract, you don't have much of anything.

Ethical? Well, if the sellers agreed to a price and then later decided to charge you $500 more, I think their agent should have held their feet to the fire and forced them to accept it.

Your situation may not have been resolved ethically, But the sellers may not have been aware of that. It's up to their agent to instruct them on proper negotiating techniques. It also could have been that from the time you went to the broker’s office to sign the paperwork, the sellers received another, higher offer and were giving you the chance to match it. Without all the facts, it’s hard to say whether the agent’s move was ethical or not.

The seller and you had a hand shake deal, but that needed to be formalized. Until it was in writing and binding on the two of you, the seller could still receive other offers and accept them.

But I'm wondering where your agent was during this process. It sounds as though you weren't represented and so the sellers agent was (in the best case) acting as a dual agent – representing both sides in the same transaction. In the worst case, you were completely vulnerable because you didn't have an experienced agent at your side.

If you had been represented, your agent should have told the seller's agent that you would walk away from the deal unless the sellers moved ahead at the price that had been agreed to verbally. The sellers would have probably backed down at that point.

Now, if there were other interested buyers waiting in line behind you, you would have had to decide if you preferred to walk away from the property for $500 or pay the upcharge. That's a decision each buyer has to make.

I'm guessing you were not represented in this transaction, perhaps because you saw the property online and simply contacted the listing agent or because you found the property on your own and thought you could get a better deal on your own, perhaps naively thinking that the sellers would share their "commission savings" with you.

And since the sellers immediately accepted your offer without negotiating your price (except for raising you $500), it’s possible that you’re overpaying for the property altogether.

But the bottom line is if this is the only problem you have, you're lucky. Many buyers who purchase on their own run into far bigger troubles. I do suggest that since you don’t appear to have an agent of your own that you hire a real estate attorney to make sure the contract you signed actually protects your interests.

NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.