Is a Home Seller Required to Accept a Full-Price Offer?
Question: Is a Home Seller Required to Accept a Full-Price Offer?
A reader asks: "My boyfriend and I are so mad at our agent we could spit fire. We'd like to know if we can report the agent to a real estate board. Right now, our real estate market is favoring sellers. You can put a doghouse on the market and sell it for 10 times what it is worth. We put our home up for sale at $325,000. First, we didn't get any offers at all for almost 3 months. Now, we have an offer at $325,000, and our agent is pushing and pushing for us to accept that offer. What? We want to sign a counter offer for $340,000, but our agent is reluctant. I thought agents were supposed to get us the highest price possible. Is a home seller required to accept a full-price offer?"
Answer: Oh, my, you should be rejoicing, not rejecting. The main reason a home seller would not accept a full-price offer is if the seller has received other offers at higher prices. Then, a seller might want to instead accept one of those offers. It is not considered ethical, and it might even be against the law, to ask a buyer to pay more than list price when the buyer has made a full-price offer. Is your home listed too low?
In seller's markets, it is normal to receive multiple offers if you are selling a highly desirable home. Sometimes, sellers confused multiple offers and the rights that accompany multiple offers, with the sole offer received. That might be what is happening in your case. If a seller has received only one offer, the rules are much different.
The first place to try to figure out the right thing to do is in your head. Let's try an analysis. Say, you are walking by a bakery and the sign in the window advertises Giant Cinnamon Rolls for 99 cents each.
You're hungry. You enter and hand the cashier a buck, asking for a cinnamon roll. The cashier shakes her head and says, "My boss has decided to sell these rolls for $3.50 each. That will be $3.50 please."
How would that feel to you? Would you feel like you are a victim of bait and switch? Do you think this is false advertising?
You might feel like walking across the street to a competing bakery to buy their giant cinnamon rolls instead for $1.50 each. What you thought was a bargain was a scam.
The legal aspect is even more important. In some states, when a seller receives a full-price offer from a qualified buyer, it means the real estate brokerage has earned the commission. This means if you reject the full-price offer, you might still owe the brokerage a commission because the brokerage has performed. This used to be the law in California for many, many years but it changed in 2013. Now, escrow is required to close before the brokerage is entitled to the commission.
But the listing agreement may contain verbiage that says the seller cannot reject a full-price offer. Moreover, the multiple listing service where the listing is published might have its own rules for offers as well.
My own MLS, for example, is MetroList. MetroList rules are if a seller receives a full-price offer and rejects that offer, we must either raise the sales price in MLS or note in the confidential agent remarks that the seller rejected a full-price offer. A note like that in MLS would probably stop other agents from recommending the home to their buyer.
Further, it can be considered misleading advertising if a seller advertises that a home is available to buy at $325,000 but really wants $340,000 and doesn't disclose it. If you want $340,000, you should advertise your home at $340,000.
Obviously, this logic and those rules do not apply to multiple offers. In your own situation, however, your home has been on the market for 3 months without receiving any offers. This says there is either something wrong with your house or market, it's in the wrong location, or bad condition or the price is too high. Whatever the problem is, it would appear that buyers do not want to buy your home, much less pay $325,000 or you would have received an offer already, even a lowball offer.
To raise the price on that ONE buyer who is willing and able to buy your home is against your best interest.
I realize this is not what you want to hear, but it is what I would tell my own seller in a situation like this. The facts speak for themselves. Most sellers in your position would be grateful and elated to have received a full-price offer, especially after such a long time on the market. I hope you will reconsider your stand and accept the full-price offer.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.