Reader Question: I showed a home to my client eight months ago. The price at that time was $1,200,000. The current price of the property is $624,900. The listing broker told me that because my client looked at the higher price, they still must pay the original price even though the price has dropped dramatically. To demand a price the market has rejected seems absurd. I have been selling real estate for years and never heard of this! Can a seller do this?
Monty’s Answer: The seller of a property can change the asking price of their home to different buyers. This strategy is likely to alienate early lookers who may drop the property from consideration. The very idea of the demand is confounding and there are several potential issues they may not have considered:
The Listing Broker – The credibility of the listing broker is in question, particularly if the broker is the mastermind of this scheme. Even if the listing broker is taking direction from the seller, one could wonder how skilled and knowledgeable the broker may be in allowing the seller such freedom to dictate such a nonsensical condition. It could also be something very simple; the listing broker has their hot prospect not quite ready to act, and they are stalling for time.
The Listing Contract – The amendment reducing the price of the property should be carefully worded to absolve the seller of paying a commission if the buyer who was now being asked to pay a higher price made an offer meeting the now reduced price. While the seller could not be forced to accept the offer, the listing broker may be entitled to the commission agreed to if the selling agent brought a ready, willing, and able buyer at the reduced price.
Fair Housing Law – If a buyer who looked earlier is now asked to pay the original price is a member of a protected class and complains against the seller and the broker, the results of that complaint could be very costly for both the broker and the seller.
How to proceed
With the major issues out on the table, barring the fact we know little about the history, one fact not to overlook is staring us in the face. Both the seller and the buyer are still actively looking to accomplish their goals. While the entire situation may seem insurmountable, it is situations like this where a good real estate agent may find a way to turn a lemon into lemonade.
A few starters
- Seek to understand, and then be understood. It would be a smart to meet with the listing agent and the “broker of record.” You have the potential buyer who has been looking for some time, which is not unusual in the higher price ranges. Your goal is to establish rapport with the listing broker and explain you want to meet to understand any extenuating circumstances in hopes of explaining to your client in a way they will not walk away. Part of this conversation will be to make certain the listing broker (and the designated broker) is aware of the issues mentioned earlier.
- If the broker(s) declines your offer to meet, then your next step may be to encourage your buyer to propose their offer to buy the home at the now listed price. If you have disclosed the seller’s demand the buyer will understand nothing may come of the offer, but if they like the house, you are willing to put in the time to try.
- It is entirely possible the listing broker did not protect the seller against commissions from an original viewer in the amendment to reduce the price. It is also possible the listing broker has invested time and money promoting this property and may appreciate ways to nudge or educate the seller to change their strategy.
Fairness stimulates reason
The true value of the property and the motive of the seller may be the center of the conundrum. The huge price reduction is a clue. Have you initiated a market analysis as to the range of value? Your thoughts about the fair value are a part of the conversation to have with the listing agent when you present the offer. While there is no guarantee your work here will produce results, the concept of “fairness” is a powerful tool when the calculations are clear and based on good comparable market data.
“Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. Send him questions at DearMonty.com.”