5

I'm currently negotiating a contract for a home via my agent and a listing agent.

As part of the negotiations, the listing agent has disclosed details of another contract that his colleague is the listing agent for, to our agent.

This second contract is for a 'comp' in the same neighborhood. Both of the listing agents work out of the same real estate agency/office.

Is there anything unethical or illegal with 2 listing agents disclosing details of the contracts, and using that as leverage for the sellers NOT to come down in price? There are other comps recently sold or listed which are 20-40k lower.

  • LA#1 says to our agent: "I have it on good authority that a similar house around the corner is under contract for XXX"
  • LA#2 says the same to the other buyer's agent.

It essentially feels like we're in a bidding war with another buyer on a completely different property. I understand the value of the property is going to be dependent on the value of recently sold comps, but it feels like this is being done on purpose to artificially inflate the sales price.

Update:

I just want to add also that maybe this is not a problem, UNTIL the lender does an appraisal? Because the appraisal can only take into account recently sold properties, the aforementioned property (still under contract and not yet closed) would not be a valid comp, and now we're back to the negotiating table if the appraisal is under-list. Presumably in that case, the buyer has better leverage because it's then obvious that the property was overvalued?

So, until it's public record, does the seller have the right to disclose the buyers contract details without their permission? I should also add that it's not required to report a sale for public records, if it's not sold through an MLS listing. (both of these are, I just wanted to point out that it's not always public record, as ended up being the case.)

Finally, I was not looking to come here for any more 'free legal or advice' than anyone else asking questions here. I was simply looking for a little perspective and a gut-check on this particular issue.

ponderous
  • 161
  • 6

2 Answers2

6

but it feels like this is being done on purpose to artificially inflate the sales price.

Yes.

Is there anything unethical or illegal with 2 listing agents disclosing details of the contracts, and using that as leverage for the sellers NOT to come down in price?

No. They're working for the sellers and in the sellers best interests.

littleadv
  • 190,863
  • 15
  • 314
  • 526
3

As a buyer you must realize they are doing everything they can to get the best deal for their client (the seller). They have made the first offer (the listing price), you made a counter offer, now they are trying to get you to see that your offer is too low.

How can they do this: show you comps that they have found to show that either their listing price was where it should be, or even that it could have been higher. If there are fresh comps that are showing an upward trend, they will be sure to show you those. Another approach is to show you what is happening in the neighborhood today.

If those sales have settled, then they are public record. If they haven't settled they are not public record. Your agent should be reminding you that they are worthless as a comp until they are settled.

The only ethics issue is did the agent, by disclosing the contract, commit a violation against the rights of buyer and the seller of the other house. You have not been harmed, and the seller of the house you are interested in most likely approved the maneuver.

I would look at the documents you signed to see who owns the info on the form. Because that will tell you if your offer on the house is being used by another agent, or even your agent, as leverage in another deal.

mhoran_psprep
  • 148,961
  • 16
  • 203
  • 418