You have been looking for an apartment for months now, seeking out that right combination of value and emotional pull. You finally found it and work your way through the negotiations process, and celebrate upon arriving at an accepted offer. Time to break out the bubbly, yes? So you go along with the process, take your time in finding just the right lawyer, sign the contract and … wait … and wait some more. One week later, the seller’s broker notifies you that the seller has accepted another offer and countersigned that contract instead of yours.
Is this ethical or not? This is a very tough question and one that sellers need to determine for themselves. Particularly in today’s market when deals fall apart for seemingly any reason, agents often feel it’s in the seller’s best interest to send out multiple contracts and see which they even get back before making a final decision and ceasing all negotiations with other buyers. Technically speaking, an accepted offer means nothing, mind you. Nothing really counts until you have received back a counter-signed contract binding you and the seller subsequent transaction. Ask brokers how many buyers never even sign the contract and back out after their offer is accepted, only to leave the seller high and dry, with no other alternatives and having not shown the apartment for weeks.
With this being the case, here is what you can do as a buyer to maximize the chances that your accepted offer will convert into a purchase:
- Have your lawyer lined up ahead of time to avoid any potential delays
- Make sure your broker is on board to play liaison between all parties, sending out the deal-sheet ASAP (the document outlining all of the parties involved, terms of the deal, etc.) and communicating an appropriate sense of urgency
- Pick your battles in terms of what you will and will not accept in the contract
Keep these very general time-frames in mind: 2-4 days to receive a contract once the offer is accepted; 2-4 days from a signed contract to a counter-signed one. Should things go beyond this point, make sure you understand the hold-up and that it seems reasonable to you before you break out that bubbly.
{ 2 comments… read them below or add one }
I am often asked this question. Although I don’t have a strong opinion on the ethics of this, I often ask the question, is it ethical for a buyer to get two accepted offers and back out of one of them. Is there an ethical difference?
It’s a very interesting question, Richard. I actually invite other agents to chime in. The “cleanest” way to proceed in this case would be to inform both parties that two offers have been accepted and set guidelines on how the contract execution would work. That said, your question is really around the idea whether more than one offer should be accepted in the first place.
If we switch sides, however, how much would you expect a buyer to stick to an accepted offer and not shop around any further, committing to the deal? In other words: buyers seem to be implicitly “allowed” to walk away at any time prior to their having signed the contract. (We have come across many instances where buyers negotiate to an accepted offer with 3 properties and then choose the “best” one, leaving the other 2 hanging.) Somehow, it does seem that sellers’ ethics are more front and center in this kind of debate than the buyer’s ethics. What do you think?
In my view, this is a result of the legal structure of the deal. If nothing is binding in any way until the contract is signed (unlike in other states), then there seems to be a huge gray, ethical area in which to maneuver.