How likely is this broker scenario?

seriously?

Yes seriously, because isn't the whole idea to go back and forth if there are two competing buyers? Why would they just preemptively stop the bidding at full ask? By saying "Meet the bid and it's yours" instead of letting her meet it, and then telling the other guy that the ball is now in his court. Isn't that the way it generally goes?

LJR - unfortunately there are no rules about this behavior. The seller can make up any story he/she wants to get you to bid higher. They can also put out contracts to multiple buyers. I know it sounds crazy but in this market with little inventory it is happening all over the city.

The only answer is to know your market well, and only pay a price you think is fair value. If you thought the seller was bluffing, then it was your right to tell them you were not going to make a higher offer, or make a higher one, but not at full ask. If the price was a still a reasonably good deal at full ask based on your local knowledge, then it wasn't a mistake to come up to full ask.

It sounds simple, but its the only way.

Basically what I'm saying is: know your market really really well. That way, you will only pay what you think is fair regardless of the games. You can't control the games, but you can control the price you are willing to pay.

Bfgross--thanks, that makes a lot of sense. A lot has to do with other factors, such as there being some kind of urgency to getting an apartment.

In my own case a couple of years ago, we had sold our place and needed to make a deal on a new place as soon as possible in order to avoid having to store our possessions and be without a home for a period of time--or move twice. We zeroed in on a particular complex we wanted to buy in--and at that time there was little on the market. We bid on the place we liked best, but it was newly listed and the owner was holding out for a price much higher than what we wanted to pay. She rejected our bid and didn't even want to negotiate. (PS, it took her a few years to sell, and in the end, she got less than what we had been willing to pay. But at the time, she was holding out for more.)

Meanwhile, we bid on another place and got outbid--and decided to pass on that one because there were some problems with it. Then we bid on the only one left, by that time very anxious to make a deal.

The seller had been trying to sell for quite some time, but still she played her cards right. She took her time getting back to us, making us even more anxious and worried that we might have competition. In retrospect, I'm sure she didn't have anyone else. She just knew how to make us think she might. And she stood very firm on her price, only coming down a little bit.

We met her price even though we thought it was a bit high for an unrenovated first floor apartment in this area--because we just badly wanted to get an apartment in this particular place and to get it fast, so we could get our mortgage, get our board approval, etc, before the deadline to get out of our old place. We paid more than it was worth for that reason.

And in the end--we did have to store our things and be homeless for a month, because the coop lawyer had a vacation planned and we could not close fast enough. It still bothers me that we paid as much as we did, but that's how it goes. Plus it still bothers me that if our timing had been different we might have had the first place we saw--second floor renovated--for less than what we paid for the one we got.

We are happy with what we've got--but still would have preferred the first one, and if not, to have paid less for this one! It's like musical chairs--there's a lot of luck and timing involved that you cannot control.

Without a doubt there is a lot of luck and timing beyond our control. And lets not forget that for the past year or two we have been in a tremendous sellers market so that the "games" they play tend to work a lot better, as the buyers clamor to find something, anything that will meet their needs. Just a few years ago, it was obviously a huge buyers market, and so the selling games didnt work very well. In fact it was the buyers who held the cards, and could often successfully play the games.

It's a sellers market right now. In my own building, apartments are selling very quickly- with contracts going out anywhere between 5% below asking to a bit above asking. With inventory tight- one unit was just listed recently, and two offers were extended within the first few days of being listed and it may go into contract at or above asking- despite asking prices hitting new highs.

bfgross basically summed it up nicely. As a broker that only reps buyers I very rarely ask the listing agent anything about price, other bids. The bottom-line is they are working to get the seller the best possible price, why let what they are saying cloud our process.

That said their are buyers who fall in love with a space, in this very competitive market we have to try and understand what is a reasonable premium to pay to wind up in contract. No one wants to be foolish, but if you wind up paying 3-5% more than a quantitative analysis of the property leads you to, most can live with that (especially over the course of a 7-10 year hold time). Many want to try and take the emotional component of buying out of the process. That can be very difficult to do when buying a home.

Keith Burkhardt
TBG

bfgross is mostly right, but is incorrect about one very important thing: the dept of state ethics laws state that if a broker is presented an offer, they HAVE to convey the offer to the seller. By allowing the broker to persuade your friend to bump her offer up, she effectively bid herself up when the seller may have been responsive to her. People need to know what their rights are in these situations, and tell brokers that my offer is my offer, and you need to give it to the seller and let them tell me it's too low, and we'll go from there. The broker could always lie and just SAY that they presented it, and that it's too low, but most won't because that's something they could get sued over later.

I once helped a buyer purchase an apartment, and the seller's broker said "we have this other offer, you need to bump yours up right away or you'll lose the apt". My client loved the apartment, so she did. Fast forward to the closing, and the seller was there. She said something to the effect of "we were pleased with your offer, we've had no offers for such a long time, I'm glad someone could see what a great apartment this is, etc etc". So clearly there never was any other offer. Oy.

The situation reminds me of a story that I like to tell clients sometimes when we're in a situation like this while bidding. I went to a short seminar on negotiating that was being run by an attorney who was considered, within his field, a master negotiator. He was a leader in negotiating mergers between massive corporations. He told a story about shopping for a vacation home with his wife. They saw something that they both loved, and he went to go have a meeting with the listing agent, and his wife said as he was leaving, "don't come back without the house". The seller wanted an unrealistic price that was a bit over market. When the moderator of the panel asked him what negotiating magic he worked to secure the house at a reasonable price, he said, "I didn't. I overpaid".

KeithB is right. If you truly love something, sometimes paying a bit over market is ok.

If your friend is still in the pre-signing phase she has the option to walk away from the deal.

No, she did already sign and put down a deposit. Question: could she possibly ask for substantiation that there was in fact another full price offer, and if they cannot provide that, accuse the broker of dishonesty/dereliction (sp?) of duty in not presenting her intermediate bid and in using the supposed other offer to get her to bid full price...and somehow that might justify her getting out of the contract? I'm just asking. Is this in the realm of possibility? Thanks for all the thoughtful, well-informed comments.

She needs to ask her attorney that question

"there was a full price bid and could she meet it, because if she could, then they would give it to her "as a courtesy" because she was the first bidder. "

So it sounds like the seller received the first low bid and seller basically told broker they would not entertain any other offers from buyer unless it matched the other full price bid. So if instructed that way by seller, does broker still have to present the intermediate even when seller basically said it would auto-rejected? Who knows if there are any case law contours on this but the facts alone make it sound like a tough argument as grounds for buyer to back out.

>accuse the broker of dishonesty/dereliction (sp?) of duty

Seriously?
The broker owes you (sorry, your "friend") no duty. And the party to whom a duty is owed has not been harmed.

1. being an agent of a 3rd party is not a defense to a fraud claim
2. but the "merger" clause in the contract of sale should be

3. the typical sales contract specifically states that the buyer is
not relying upon any representation, written or oral, made by
anyone, except those representations In the contract of sale

4. New York's highest court held in Danann Realty that someone
who signs such a clause cannot thereafter sue for fraud based
upon representations which were not in the contract itself

2-4 yes, and even 1 is a yes but there is no fraud here.

Huntersburg--hate to burst your bubble of superior all-knowingness, but I actually AM posing these questions on behalf of a friend. Is that so unimaginable? She has been asking my opinion throughout this process, and I thought I could gather some informed opinions on Streeteasy. And it's really a shame that a broker should not owe any party to the transaction the duty of honesty. I know this is a foreign concept in this context, but why should that not be a requirement?

It may be that "you were first" is code for "you are better qualified," especially if it was a co-op. If Bid A is preferable on all aspects except price, and Bid B is preferable on price, getting A to match B's price is the best of both worlds.

In my building, we've had a couple of situations like this. Buyer A had a large dog; Buyer B did not. Buyer A was a parents-buying-for-child situation; Buyer B was not. In both cases, the seller was able to get Buyer B to pay Buyer A's price or better. In reality, maybe Buyer B would have still gotten the apartment depending on how much the seller wanted to gamble.

ljr:

1. brokers are required to adhere to strict standards of honesty
2. both under the common law and their licensing statutes

3. but proving a false oral claim about a second bidder is very difficult
4. and the rule of Danann Realty is followed because it cuts off false fraud claims

>Huntersburg--hate to burst your bubble of superior all-knowingness, but I actually AM posing these questions on behalf of a friend. Is that so unimaginable?

Actually, my shock comes from the fact that your friend is an idiot, and there's a SECOND person who is as much an idiot - you.

> And it's really a shame that a broker should not owe any party to the transaction the duty of honesty. I know this is a foreign concept in this context, but why should that not be a requirement?

If I hire a broker to represent my listing, I want him or her to represent my listing. Not you, not the other party. His or her duty is to me and my listing. As far as the honesty, this goes back to what the broker represents on my behalf - the property. Not the market. The broker should be honest (as should the seller) in all material respects as it pertains to the property. The buyer is paying for the property. Whether or not there was another offer, and at what price that offer may be, is irrelevant and has no material bearing on the location of the property, the size of the apartment, whether or not there is a leaky roof.

Re: Huntersburg: Is Huntersburg actually allowed to be so uncivil on this website? Aren't there rules? I am tempted to hurl insults back, but I would prefer to remain where I am, well above his/her level. I think it's a him, though. Women don't tend towards the kind of moronic swaggering his commentary displays. (Well, maybe that's just my personal feeling.) His second comment is absurd (to use a gentler term than idiotic).

Rb345: thank you for the very intelligent explanation! Makes sense and succinctly clarifies the issue for me.

ljr, don't feed the trolls. Huntsie is on Ignore for a reason.

ljr, do you live in the real world? You want rules to protect your silly sensibilities on a message board because your friend and you are so naïve in the real world? Woman up, so you don't get taken advantage of in the real world. You protect yourself. Don't count on anyone else to be protecting your own interests.

And the funny thing is I was just reading the article in the NY Post about Tori Spelling complaining that her husband cheats.

>Rb345: thank you for the very intelligent explanation! Makes sense and succinctly clarifies the issue for me.

Now that the issue has succinctly been clarified for you, what do you plan on doing?

Huntersburg:

1. please lighten up a bit
2. it is often impossible to know whether there really is a second bidder

3. I went through something similar to what ljr's friend experienced just this
past week until the broker began making inconsistent claims, at which
point I dropped the deal (as a possible buyer)

This situation seems really unfortunate. I wish everything in life were more straightforward. Maybe the government could regulate this, start by setting the prices and the standard apartment sizes that are allowed.

Bid 'em up Charles.

Dude, those jump-cuts are killing me.

He needs some gimmick.

Fend for yourself. And don't fall in love with a place.