Agent obligated to submit offers?

proformance

Hi guys,

We have submitted an offer on a property to the agent which is an offer made on the backbone of sound analysis (at least in our opinions). It's 15pc below the asking, which seems like a lot, but we felt the asking was at the top end.
This was 1.5 weeks ago and every time we call the agent for an update, he says something like "haven't had a chance to speak to the vendor and don't want to email the offer over because it will lack context and persuasion".
I'm wondering why the agent would be compelled to withhold the offer from their vendor and what we can do to ensure that the vendor receives it?

I'm new to property, so I have no idea how these things work, but it seems really really odd that they are operating in this fashion.
Thanks!

Z

macman

They are under a legal obligation to the vendor to pass on any offer received, however under-target it might be. I'd say, after 10 days, that they are in breach of that obligation.
However, they're not working for you, so you have no basis for complaint. I'd simply tell them that you will be contacting the vendor directly, true or not.

princeofpounds

They have a legal obligation to forward the offer on, in the absence of any instructions from the client to the contrary.

On the other hand, it's not likely there is some grand conspiracy (although it happens sometimes, lowball offers are not what they would be afraid of in such circumstances). They probably want to avoid upsetting the vendor, looking foolish if the offers come in at a different level to their valuation (regardless of how sensible or not your offer is), and if they don't feel a deal is going to happen it's going to be right down their priority list anyway. 

You have a couple of options, but none will win the agent over (you may not care). You can raise a written complaint with them, and remind them of their obligation to pass on the offer, with reference to their ombudsman/code of practice etc as well if you like. Or you can tell them that if the offer is not passed on shortly you will approach the vendor directly. Or you can just go ahead and do the latter. 

davidmcn

"Haven't had a chance to speak" doesn't necessarily mean the agent is withholding the offer (and I suspect they aren't), it could be they haven't been able to discuss with the vendor for other reasons. I presume the agent hasn't suggested they'd be any more likely to get a faster response if you increased the offer?

Davesnave

I think they have a legal obligation to forward offers, unless the vendor has instructed not to be informed of  offers below a certain figure.

In that eventuality, however, they should surely inform you of the fact, not waffle about context. In the final analysis the agents just want a sale and their commission, so presumably they feel sweet talking will assist.

eddddy

By law, the EA must tell the sellers about your offer as soon as reasonably possible.

But if you believe what the EA says, they are on your side and trying to help you get your offer accepted.

Rather than send a 'cold' email stating that they've received a low offer, the EA wants the opportunity to break the news to the seller gently, and use their persuasion and negotiation skills to try to soften the seller into accepting or counter-offering.

Alternatively, a 'cold' email might get a response of "that person's insulting me and my home with that low offer - I'm going to teach them a lesson..."

Unless, you think the EA has other motives...

proformance

I just spoke to the agent again. He has now confirmed that the offer was "formally submitted" and "formally rejected" as of yesterday !
Still seems iffy to me though that they dragged their heels for so long.
But I thank everyone for their responses! Some really good rationale in there... It does seem like they dragged their heels because they may have over-promised to the vendor and/or want to keep it on the market to attract more offers and continue to test the water.....

Davesnave

Prices in most places are only going in one direction, and it isn't up! The agent ought to be promoting sales rather than seeking higher offers, because the effect on their commission will be minimal and losing a sale might backfire badly.

eddddy

proformance said:

It does seem like they dragged their heels because they may have over-promised to the vendor and/or want to keep it on the market to attract more offers and continue to test the water.....

I'm not sure that makes sense.

The EA just wants their commission. Let's say the property has an asking price of £300k - and the EA takes 1% commission.

The EA would very much prefer to get the property sold today for £255k and get £2550 in commission, and then move on and sell other properties for more commission - as opposed to grafting with this property for another 2 or 4 or 6 or 8 weeks and 'maybe' getting £3000 (or £2900 or £2800 or £2700) in commission.

Or maybe getting nothing at all because the seller moves to another EA.

That's why the EA would have been keen to get your offer accepted.

proformance

eddddy said:

proformance said:

It does seem like they dragged their heels because they may have over-promised to the vendor and/or want to keep it on the market to attract more offers and continue to test the water.....

I'm not sure that makes sense.

The EA just wants their commission. Let's say the property has an asking price of £300k - and the EA takes 1% commission.

The EA would very much prefer to get the property sold today for £255k and get £2550 in commission, and then move on and sell other properties for more commission - as opposed to grafting with this property for another 2 or 4 or 6 or 8 weeks and 'maybe' getting £3000 (or £2900 or £2800 or £2700) in commission.

Or maybe getting nothing at all because the seller moves to another EA.

That's why the EA would have been keen to get your offer accepted.

We're talking about a 10pc difference from what I think they'll settle for and what we had initially offered though.. So it wouldn't be such a farfetched assumption that the EA would play hardball, blaming the vendor for their inflexibility to boost their commission, would it?

Probably well aware that we are 1st time buyers and thus (assuming) a little less savvy than typical property investors/flippers/B2Lers?

AdrianC

proformance said:

We're talking about a 10pc difference from what I think they'll settle for and what we had initially offered though.. So it wouldn't be such a farfetched assumption that the EA would play hardball, blaming the vendor for their inflexibility to boost their commission, would it?

Let's assume it's a £200k property on a 1% + vat commission.
Full asking: They get £2,000 + vat.
15% under: They get £1,850 + vat.
No sale: They get £0.

If commission was their main driver, who wouldn't shrug and say "Soddit, let's take 85% now, rather than put a lot more work in and risk 0%"...?