For all of those real estate haters out there who think that I and my colleagues are effortlessly collecting fees for selling property, here are a couple of anecdotes that you’re sure to enjoy. After all, readers of blogs like Patrick.net seem to "get off" on anything related to real estate agent angst. Well here goes because I’m deep in it right now.
Twice in the past 4 months, I have represented buyers of very large residential purchases who had the transaction implode in the eleventh hour. The buyers 4 months ago had signed the contract and provided the 10% deposit check only to call their attorney on the day the contracts were to be delivered and "kill the deal." It took a while but I got over that one…it happens. When people are spending in excess of $10,000,000 on a home, you have to appreciate "cold feet." They ultimately decided that such a purchasing in this particular project just "didn’t feel right." Just can’t argue with that. If your spending that kind of money it better darn sure "feel right."
The second incident happened today to clients I have worked on and off with since 1997 also in the $10M+ price range. Today, they were the very unfortunate receivers of a good, solid gazumping. After a 10 day negotiation, a contract was drafted on Tuesday and sent to my client’s attorney. Yesterday, I was consumed with this transaction as the seller’s agent insisted that a contract needed to be signed by the end of the business day Wednesday. After multiple phone calls and conference calls, more than 100 emails to various parties, and my office hand delivering original contracts for buyer signature and back to buyer’s attorney, I still couldn’t rest. Then I received confirmation that the contracts had been hand delivered to the seller’s attorney. I later received email confirmation from both the seller’s attorney (via the buyer’s attorney) and the sales agent that the seller was "committed" to signing the contracts at 10AM today. At 9:30AM I received a call from the seller’s agent that they received an offer this morning that was $1,300,000 over my client’s negotiated contract that they "committed" to sign. OUCH!!! The seller had refused offers as much as $1,000,000 more over the past week because she was "committed" to my clients. But that extra $300,000 was the straw that broke the "committed" camel’s back. My clients have since rescinded their offer, requested the contract and deposit be returned and the seller is proceeding with a new buyer.
Now I would be lying if I said this doesn’t sting…heck it aches. After all, we’re talking big numbers here. Having said that, what is bothering me more as the day passes is that even this moral and ethical seller had her "price" supporting the old adage that "everyone has their price." I’m sure many out there are going to say, stop with the self-righteous BS, but isn’t that part of the problem with our society. A person’s word is only worth what the next person is willing to pay for it. And to prove that I walk the talk, my wife and I accepted 5% less than a higher bidder on our last sale because we had "committed" to the original buyer. And I have many clients who have done the same but all too often money does indeed talk.
Of course I wish both of my clients had proceeded with their respective purchases but it just wasn’t "right" in both instances. I will likely sell both of them something else so it’s not about me losing a deal as much as it is about how people do business. In Manhattan, we have no binders. A deal is not a deal until the seller counter-signs the contract and deposits the 10% contract deposit. The time that lapses before that actually happens creates the "perfect storm" for gazumping.
What has happened to a person’s word or a hand shake? Sadly, it all too often doesn’t mean anything in today’s society. It’s all about "show me the money" and that is unfortunate.