We are first time NYC buyers ( we have bought and sold properties in San Francisco) and thought we understood the process but clearly we don't and I am wondering if there is any way we could have avoided this situation and saved ourselves some money. We put in a bid on a 1 bdrm coop on the UES. Our broker told us our bid was accepted and to retain a lawyer for the contract. We did so and a few... [more]
We are first time NYC buyers ( we have bought and sold properties in San Francisco) and thought we understood the process but clearly we don't and I am wondering if there is any way we could have avoided this situation and saved ourselves some money.
We put in a bid on a 1 bdrm coop on the UES. Our broker told us our bid was accepted and to retain a lawyer for the contract. We did so and a few days later the lawyer tells us that there are multiple contracts out on the property. Our broker says she had no idea that was the case.
We don't want to take the financial risk without any real certainty of buying the place so we are withdrawing our bid. So now we are out lawyer's fees ( luckily we were able to cancel the inspection) and we are a little pissed off at how disingenuous the seller is.
I know this is legal. But should the broker have known there were multiple contracts out on the apt. or is this only something you find out when you get a lawyer? How do we avoid this from happening again? If we ask the seller's attorney if there are multiple contracts out are they legally bound to tell us? What about the seller's agent, would they have to tell us if we asked directly?
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Response by jelj13
over 9 years ago
Posts: 821
Member since: Sep 2011
Was the seller using multiple brokers? I have bought and sold a number of properties over the past 30 years and have never heard of a case like this.
When the market was really hot back around 2004/2005, I gave my buyer a deadline for returning the signed contract and escrow because I had 3 other buyers lined up that same day. The other potential buyers called back to see whether the first buyer has signed the contract by the deadline.
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Response by kjay1705
over 9 years ago
Posts: 2
Member since: Feb 2009
An accepted offer is a verbal agreement. Until an contract is signed an apt is still available. Sometimes buyers with accepted offers walk away as they 1) bid on more than apt 2) find something else 3) feel they are over paying if their bid is accepted. It is not uncommon for a seller to accept more than 1 offer to ensure they are covered. The sellers agent works for the seller so they are not obligated to a buyer. This is a common risk in Manhattan real estate. To be on the safe side your attorney should complete their due diligence quickly so you can sign the contract in less than 1 week.
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Response by dubiousraves
over 9 years ago
Posts: 11
Member since: Apr 2015
@kjay1705 So Manhattan buyers just accept the risk that every time they have a bid accepted that they may lose a few thousand dollars on it with nothing to show for it? If this practice is common a buyer could easily be out 10k in lawyers/inspection fees in just a few bids.
We are not able to do due diligence because the seller is not providing the needed information: no deal sheet or financials. I think we must be a back-up offer.
We are too risk averse to throw away money like this again. I think next time I will ask the seller's agent and lawyer up front and in writing if other bids have been accepted before I retain the lawyer again. If they hedge, we will move on.
This is no way to do business. Giving the buyer a deadline to sign sounds like a much more reasonable way to go.
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Response by alexikeguchi
over 9 years ago
Posts: 38
Member since: Apr 2012
The seller and their team have their own agenda and aren't obligated to help you be the buyer in any way. It is unreasonable to expect them to provide the information you seek; rather, your broker is the one who should be professional enough to determine where your offer stands. She should have let you know that if you weren't asked to sign over a deal sheet and preliminary financials, it was a red flag that your offer wasn't being considered seriously even if "accepted." It was probably premature to retain a lawyer at that point. You may want to shop around for another lawyer as well; mine got the bulk of her fee only at closing. Finally, if spending a couple thousand in extra transaction costs compared to other markets is that big a deal for you, you may want to reconsider if you are really ready to take this step.
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Response by Admin2009
over 9 years ago
Posts: 380
Member since: Mar 2014
fire your lawyer . . . ASAP
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Response by front_porch
over 9 years ago
Posts: 5316
Member since: Mar 2008
Once the offer is accepted, it's pretty standard practice for the buyer's broker and the seller's broker to set up a working timeline for when contracts should be signed. (e.g., the last deal I did, it was a multiple-bid situation, and the seller's broker said, "you've won it if you can get into contract by Tuesday.") "Good" seller's brokers sort of go into overdrive at that point to make sure that timeline is being followed... seller's broker and your broker should have been talking/emailing/texting once or twice a day, every day, till the contract was fully executed.
Sending out multiple contracts is sort of seen as a d---k move, but usually when it happens seller's broker notifies buyer's broker as a cudgel ("whoever returns the signed contract first gets the apartment" sort of thing).
If there were multiple contracts out without your broker knowing, either:
1) you were taking way too long to get into contract ("inspection" makes me think this might have been the case, because unless you're buying a house we often don't inspect in Manhattan), and you need to think about picking up the pace for the next deal since that seems to be the custom in this particular market at this particular time, or
2) seller is one of those people who thought that applicants should be pitted against each other -- in which case you don't want him/her as a counterparty, so thank your stars this fell through, and move on to the next one.
ali r.
{downtown broker}
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Response by lad
over 9 years ago
Posts: 707
Member since: Apr 2009
My neighbor did this -- sent out three contracts, first one back with the highest price wins. In the end, all three buyers ended up walking. They eventually coaxed one back, at a lower price than the buyer initially bid (but still over ask).
As the Board President / Treasurer at the time (no managing agent), I was majorly annoyed since I had three lawyers calling me and emailing me demanding immediate responses on behalf of their frantic clients.
Hopefully your lawyer gave you a break on the price? I worked with three different real estate lawyers in New York, and all gave a fee discount in case the deal didn't go through.
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Response by dubiousraves
over 9 years ago
Posts: 11
Member since: Apr 2015
We were definitely not taking too long to sign the contract. In fact, our lawyer and broker have been hounding the seller's team to get the contract moving from the start. They were delaying - likely they wanted to see if something better came through.
I know you don't usually do inspections in NYC but this was an old self-managed tenement with just 10 units so we knew we'd be on the hook financially if something big was wrong. I didn't ask for an inspection contingency the way you would in San Francisco.
The lawyer has agreed to reduce the fee to something manageable, with the assumption that we'll use them for our next go round.
I think the broker should have known what was going on. Since you don't have contracts with brokers in NYC like you do in SF, I think we may try to find someone else.
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Response by snezanc
over 9 years ago
Posts: 121
Member since: Oct 2007
inexperienced buyer's brokers can get tripped up with the seller's agent because they don't think to approach the transaction as equals. I had a strange situation where the seller's attorney was taking 5 days to send back contract revisions and you can be damn sure I was on the phone 3 - 5 times a day with anyone I could talk to on the other side using the buyer's attorney and the seller's agent as a cudgel to get some answers.
The main takeaway from all of this is that your broker should have explained it to you. It's my job to warn my buyer about all the terrible things that can happen, what I can do about them, and where my powers falter ( the contract stage and the appraisal).
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Was the seller using multiple brokers? I have bought and sold a number of properties over the past 30 years and have never heard of a case like this.
When the market was really hot back around 2004/2005, I gave my buyer a deadline for returning the signed contract and escrow because I had 3 other buyers lined up that same day. The other potential buyers called back to see whether the first buyer has signed the contract by the deadline.
An accepted offer is a verbal agreement. Until an contract is signed an apt is still available. Sometimes buyers with accepted offers walk away as they 1) bid on more than apt 2) find something else 3) feel they are over paying if their bid is accepted. It is not uncommon for a seller to accept more than 1 offer to ensure they are covered. The sellers agent works for the seller so they are not obligated to a buyer. This is a common risk in Manhattan real estate. To be on the safe side your attorney should complete their due diligence quickly so you can sign the contract in less than 1 week.
@kjay1705 So Manhattan buyers just accept the risk that every time they have a bid accepted that they may lose a few thousand dollars on it with nothing to show for it? If this practice is common a buyer could easily be out 10k in lawyers/inspection fees in just a few bids.
We are not able to do due diligence because the seller is not providing the needed information: no deal sheet or financials. I think we must be a back-up offer.
We are too risk averse to throw away money like this again. I think next time I will ask the seller's agent and lawyer up front and in writing if other bids have been accepted before I retain the lawyer again. If they hedge, we will move on.
This is no way to do business. Giving the buyer a deadline to sign sounds like a much more reasonable way to go.
The seller and their team have their own agenda and aren't obligated to help you be the buyer in any way. It is unreasonable to expect them to provide the information you seek; rather, your broker is the one who should be professional enough to determine where your offer stands. She should have let you know that if you weren't asked to sign over a deal sheet and preliminary financials, it was a red flag that your offer wasn't being considered seriously even if "accepted." It was probably premature to retain a lawyer at that point. You may want to shop around for another lawyer as well; mine got the bulk of her fee only at closing. Finally, if spending a couple thousand in extra transaction costs compared to other markets is that big a deal for you, you may want to reconsider if you are really ready to take this step.
fire your lawyer . . . ASAP
Once the offer is accepted, it's pretty standard practice for the buyer's broker and the seller's broker to set up a working timeline for when contracts should be signed. (e.g., the last deal I did, it was a multiple-bid situation, and the seller's broker said, "you've won it if you can get into contract by Tuesday.") "Good" seller's brokers sort of go into overdrive at that point to make sure that timeline is being followed... seller's broker and your broker should have been talking/emailing/texting once or twice a day, every day, till the contract was fully executed.
Sending out multiple contracts is sort of seen as a d---k move, but usually when it happens seller's broker notifies buyer's broker as a cudgel ("whoever returns the signed contract first gets the apartment" sort of thing).
If there were multiple contracts out without your broker knowing, either:
1) you were taking way too long to get into contract ("inspection" makes me think this might have been the case, because unless you're buying a house we often don't inspect in Manhattan), and you need to think about picking up the pace for the next deal since that seems to be the custom in this particular market at this particular time, or
2) seller is one of those people who thought that applicants should be pitted against each other -- in which case you don't want him/her as a counterparty, so thank your stars this fell through, and move on to the next one.
ali r.
{downtown broker}
My neighbor did this -- sent out three contracts, first one back with the highest price wins. In the end, all three buyers ended up walking. They eventually coaxed one back, at a lower price than the buyer initially bid (but still over ask).
As the Board President / Treasurer at the time (no managing agent), I was majorly annoyed since I had three lawyers calling me and emailing me demanding immediate responses on behalf of their frantic clients.
Hopefully your lawyer gave you a break on the price? I worked with three different real estate lawyers in New York, and all gave a fee discount in case the deal didn't go through.
We were definitely not taking too long to sign the contract. In fact, our lawyer and broker have been hounding the seller's team to get the contract moving from the start. They were delaying - likely they wanted to see if something better came through.
I know you don't usually do inspections in NYC but this was an old self-managed tenement with just 10 units so we knew we'd be on the hook financially if something big was wrong. I didn't ask for an inspection contingency the way you would in San Francisco.
The lawyer has agreed to reduce the fee to something manageable, with the assumption that we'll use them for our next go round.
I think the broker should have known what was going on. Since you don't have contracts with brokers in NYC like you do in SF, I think we may try to find someone else.
inexperienced buyer's brokers can get tripped up with the seller's agent because they don't think to approach the transaction as equals. I had a strange situation where the seller's attorney was taking 5 days to send back contract revisions and you can be damn sure I was on the phone 3 - 5 times a day with anyone I could talk to on the other side using the buyer's attorney and the seller's agent as a cudgel to get some answers.
The main takeaway from all of this is that your broker should have explained it to you. It's my job to warn my buyer about all the terrible things that can happen, what I can do about them, and where my powers falter ( the contract stage and the appraisal).
Best