Agents Criticize Advice to Home Buyers
Like other licensed real estate agents, I work diligently on behalf of my clients, whether buyers or sellers. Although the law requires my fiduciary duty to my own clients, I am also obligated to be honest in dealings with other agents and their principals.
I was shocked to find in the “Bidding Wars” article (Sept. 6) the suggestion by Bob Stallings, a broker yet, that a buyer should not make the sale of his home a contingency in a purchase offer, when in fact the source of the down payment was the equity in the current home. If Mr. Stallings uses the current California Assn. of Realtors’ contract forms, perhaps he should read them more closely. The financing contingency paragraph itself (which he uses to purportedly protect his clients) states that “[o]btaining deposit, down payment and closing costs is not a contingency.” Bold type is used in the contract.
Further in the contract, paragraph 15, clause A, states that “[t]his agreement is NOT contingent upon the sale of Buyer’s property, unless paragraph 15B is checked.”
Failing to disclose that the buyer does not have the funds to close or to qualify for the loan without the sale of his or her home would appear to be unethically misleading, if not an outright lie.
In allowing the financing contingency language to stand, the buyers indicate that they do, in fact, have the funds and would therefore seem to be placing themselves at risk of fraudulently signing the contract. The agent who prepares the contract knowingly would appear to be in even more jeopardy, because it’s his crafty idea.
Maybe we’re a little backwards here in the sticks of San Bernardino, but an agent who would deliberately portray a buyer as financially able would soon find his contracts suspect and his buyers being interviewed by lenders familiar to the listing broker to ensure that the offer coincides with their true financial picture.
Rather than enhancing his buyers’ prospects, such an agent would find his offers at the bottom of the priority list.
JOAN HATTON
Jim Cimino Realty
San Bernardino
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If a buyer needs money from the sale of his home for the down payment toward the purchase of a new home, it absolutely should be disclosed to all parties that this is a contingency of the escrow. It is the fiduciary duty of the agents representing both buyer and seller to disclose this.
Not disclosing the sale of the buyer’s home as a contingency of the escrow could jeopardize the buyer’s earnest money deposit and could lead to legal action.
Real estate agents have a duty of honest and fair dealing as well as good faith upon entering a real estate transaction with one another.
HENRY SUAREZ
via e-mail
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Though Marcie Geffner was partially correct in two of her answers in her “Bidding Wars” article, her responses did not take into consideration real-world situations.
First, when she advised buyers not to put in backup offers on existing escrows, any good agent will first find out if the escrow is in trouble, i.e., if the buyer and seller are renegotiating the price after the inspections, if the present buyer has already been turned down for a loan or other factors that might shortly place the house back on the market.
Second, regarding advising buyers not to make themselves instantly available when a multiple counteroffer is presented: In the real world, having a buyer signing a counter on the spot, as opposed to having a buyer who takes two days to respond to a multiple counter, can mean a lot to a seller.
Also, since the seller can change the rules and not wait until the multiple counters are to expire, the seller might rescind the counters to the other parties and then accept the first signed counter he receives.
BRADY WESTWATER
Coldwell-Banker / Jon Douglas Co.
Malibu
