Let's talk about a controversial topic.....a seller's attorney cancelling a fully agreed to, signed, and delivered purchase offer.
What? Wait! That happens??!? Yep. Though it is a fairly rare thing to happen the hotter the market is the more likely it will. Why, you ask? Good question. An example is called for........Seller Sally lists her house with Agent Annie for $200,000. An offer to purchase comes in immediately from Agent Bob who represents Buyer 1. Seller Sally and Buyer 1 agree on a sale price of $198,000. The purchase offer and all disclosures are signed and sent by Agent Annie and Agent Bob to the respective attorneys. Way to go! Deal done.
Not so fast! The purchase offer has an attorney approval clause (using the Elmira-Corning Board of Realtors purchase offer).
Let's continue on with our example. We were at the part of the example where Agent Annie has sent the accepted purchase offer and disclosures to Seller Sally's attorney and is now popping open the Champagne. Just then Agent Claire calls Agent Annie and tells her she is representing Buyer 2 who wants to put in an offer of $210,000 on Seller Sally's house. Does Agent Annie reject that new offer? No way. It's not her call to make. Agent Annie is obligated to tell Seller Sally about the new offer.
The attorney approval clause (from the Elmira-Corning Board of Realtors purchase offer) states, "This offer is contingent upon approval by buyer's and seller's attorney as to all matters without limitation. Unless Attorney's written disapproval is received by the parties respective attorneys, with notifications to the buyers and sellers brokers, within [fill in the blank] days after the acceptance of this offer, this contingency shall be deemed to be satisfied".
So what does Seller Sally do now? There are a couple of ways this can play out. 1) Seller Sally can advise Agent Annie that she is happy with the first offer so she rejects the 2nd offer. 2) Seller Sally can have her attorney cancel the 1st offer and then ask for what is known as a "final and best" offer from both buyers. Or, 3) Seller Sally can have her attorney cancel the first offer so she can accept the second offer. [These examples assume that the financing and contingencies are similar between the offers]
In our example, Seller Sally talks with her attorney who cancels the first accepted offer so Seller Sally can accept the higher offer. Following his client's wishes, Seller Sally's attorney sends a letter out to let the parties know Seller Sally's decision. Sorry Buyer 1 and congratulations Buyer 2.
So Seller Sally sells her house to Buyer 2, while Buyer 1 feels cheated and blames losing the house on his real estate agent, Agent Bob, and on Seller Sally's agent, Agent Annie. But did you notice it was Seller Sally making the decisions? Real estate agents work for their client, they take direction from their client, and they advise their client....the real estate agent does not make the decisions. We advise our client to the best of our ability so they can make an informed decision. I'll let you in on a secret though....real estate agents don't always agree with their clients decisions....but we have to abide by them (as long as they're legal but that's another topic for another rainy day).