Offer

You must be a first time home buyer, this is the norm of all brokers. Welcome to the club.

Had a very similar experience from an unethical sponsor broker. My offer was accepted, diligence completed, and signed contract/deposit mailed out. The next day, heard from the sponsor broker that they executed contract with another buyer. Found out that after my deal sheet went out, sponsor broker shopped my offer and accepted a $25k higher bid. Sponsor broker never notified me or my broker that they had another contract out and did not even give us an opportunity to counter. I was working with a very seasoned broker/lawyer and even they were speechless. But shit happens. Sponsor/sponsor broker was Time Equities, and I will never buy from them again.

Welcome to New York! If you can make it here, you can make it anywhere. Except maybe London, where the word is gazumping, and you as a buyer can get gazumped all the way up to closing. (The concept of going "in contract" there happens only at closing.) It's totally legal and part of the market.

Seller does not know whether you will sign the contract. There are many buyers who change their mind or find something else. Hence, the seller’s broker is obligated to keep showing till the time contract is signed by both parties.

Also, they do not know if the buyer with the better offer will sign either and they will have to come back to you. They will probably get the other contract signed first before saying no to you.

There's a lot of assuming going on here. First the assumption that the offer must have been shopped and then the assumption that "all brokers do it." There's a big difference between presenting all offers which come in to your seller and shopping all offers. Depending on the market, shopping offers can backfire and a seller ends up with zero deals rather than multiple deals when the "winner" decides that they are actually the "loser."

Also, look at the listing price and high number of saves. New offers can easily roll in.

Agree with 30, many assumptions. I've never shopped an offer around, however we do continue showing until the contract is fully executed. Once we have an accepted offer we speak with the seller to decide how they want to proceed if additional offers come in during this due diligence period. Especially in this type of market, most sellers prefer to stay the course with an offer that already has the wheels turning, others remain as backups. It's a balancing act for sure, and if you miss handle it, you can easily shoot yourself in the foot.

Keith Burkhardt
TBG

In NYC, can a buyer demand an exclusive diligence and negotiating period? In other words, buyer and seller agree that buyer has 14 days to sign a contract, during which time the property is removed from the market?

Anything is possible, although it goes against the standard norms. As the buyer with the 'exclusive' privilege, what are you going to pay for that privilege? 2%, cash, non-refundable if you don't to go contract?

George,
I've seen that in commercial deals.

As far as Coops/Condos - you can get your due diligence done in 2 - 3 days if you really want to and that is your best protection of your deal. You can also do a lot of the due diligence before making an offer (especially in this market). When I advise sellers, I have told them for a long time that every day past 1 week that you don't have a signed contract from the buyer, the less chance that they are actually going to sign it.

And no matter what anyone "agrees to" brokers are obligated to pass any offers along to their sellers (even though a decent amount of brokers pretend they don't know this until they are the ones bringing the offer).

2-3 days for due diligence is very tight with the reading of minutes and managing agent questionnaire.

Seller's agent should have "standard" management questionnaire filled out when apartment goes on the market. A couple of specific questions a buyer's attorney wants on top of that shouldn't take long.

I've personally bought many deals where all due diligence was done before any pricing (a lot of auctions demand immediate contract signing).

Makes a lot of sense. However, buyer’s attorneys always try to prove their worth by having their own questionnaire filled out in the limited number of transactions I have seen.
Keith, What is your experience?

Whenever I used to see an ad in the Sunday NY Times which led off with "ABSOLUTELY NO DOGS!!" or similar it was a tell that the broker just lost a deal (often a Board Rejection after signed contract) because they hadn't done their own due diligence and presented a buyer who they never should have if they had bothered to get a questionnaire answered when they took the listing.

We do have a standard questionnaire filled out when we take a listing. We also have a pretty thorough checklist to make sure we not only have all potential questions answered and all due diligence documents ready to go; financials offering plan and amendments. As 300 points out there's typically another questionnaire from the buyer's attorney, and for that we're depending on the expediency of the managing agent. Some are very good, some are absolutely awful will make you wait 5 days for chicken scratch form.

Regarding an exclusivity for the buyer, I have seen it but it's usually just on a verbal agreement. Typically this would be given to/requested by a buyer who is all cash and stepped up with a very solid offer.

I think if you can get a contract ready to sign in 5 days you've done very well. And as long as you're well prepared in the managing agent provides information on a timely basis, it's very doable.

One thing we also check for which can really throw a monkey wrench into the whole process, open permits. If we know work was done to the apartment we always do a quick check before we take a listing. we are currently now two weeks into a contract signing because an architect failed to close out a permit on a total renovation of a condo, we are representing the buyer. On a recent townhouse deal we closed on in Brooklyn there was an open sidewalk permit.

Keith Burkhardt
Keith

I heard of a contract recently where the buyer put in so many contingencies it basically allowed him to do his diligence after contract signing and back out for any number of reasons. Not sure why the seller agreed, but it accomplished the same goal I asked about above - securing an exclusive negotiation period. In the couple of times in my life that I've made competitive offers, I've usually specified a timeframe in which to accept and send a contract (typically 48 hours) so that the seller's agent can't start an auction. I also specify that we go into contract in a week, else the deal is off, again to reduce the opportunity for shenanigans.