Real Estate Listing Has Multiple Offers! REALLY?

Most of us have been in the position as the listing agent to be fortunate enough to have a listing that gets multiple offers. If its going to happen it normally will happen within the first 2 weeks of your new listing. As the listing agent its a great feeling to have multiple written offers because in the eyes of the seller your the "Best Agent" and you know you now will have a better chance to negotiate a good and cleaner deal for the seller then if you had only one offer. That being said I don't believe there would be much depute that the "I have multiple offers, so I need your highest and best price " is not always the case. It can be true but it also can be true that it's also used to knowingly manipulate the agent to unknowingly manipulate their buyer to increase their offer without knowing if the sellers agent really has multiple offers or not. I've shown properties where certain offices and or agents almost always guarantee that the listing agent or team member will tell you they are now working on another contract for the listing you want to see. Or when you advise you will be submitting an offer they tell you they have another offer in the works. Or when you submit an offer on a property where there has been no indication of an interested party you almost immediately hear they have another or multiple offers and so they need our highest and best price. Now I know this "Multiple offers scheme" isn't always true because many of these just in demand properties remain on the market weeks after we walk away to look at others Just recently I was showing a property where the listing agent team member never mentioned anything about any other interest in the property, its normal when there is to give some indication of interest by others, in this case none. We submitted the offer, it was rejected, the seller agent advises the sellers didn't want to negotiate and will accept X amount. My buyers agreed to the sellers price, the sellers agent says great and then within one hour instead of telling us we have a deal were told they now have two other offers so they need our highest and best. My buyers upped their price and the agent told us immediately we had a deal and it was signed by the sellers. My buyers were very upset because they know they were played for over $10,000 to get the property, I was upset because I know this is the MO for that office and there is nothing that can be done about this flim flammery. Let me say that I'm not aware of any real recourse one has concerning this matter because its hear say " He said she said" with no real tangible proof of deception. Based on my experience this is not an isolated incident and something should be done by NAR to curtail this unethical practice. I'm not sure what kind of requirements should be in-acted by NAR. IMO if a selling agent tells you they have multiple offers NAR should require it be in writing to the buyers agent and NAR should also require the listing agent keep the written offers on file for x days in the event the buyers broker wants to determine if there were actual additional offers as the listing agents advised. There is a saying "That which you tolerate you encourage" right now NAR tolerates these practices and so these practices are used by some agents as a closing tool to the detriment of buyers. Its not fair, its not right, its bad business and IMO unethical.

Mixed Messages

We've been getting economic news that at times conflicts, just last week the news came in that initial jobless claims declined by 15,000 to 366,000 which is the lowest its been in almost four years, though at face value the news is good we must take into account the seasonality affect. During the holiday season its not unusual to see more hiring only to see more firings after, lets hope most of these jobs stick once the holidays pass.

Other factors that would help us to believe things are getting better is that with jobless claims falling you would like to see both homes sales rising and mortgage applications as confirmation that workers are feeling more confident. But what we have is mortgages applications decreasing by about 8% last week which wiped out the gains of the prior week, so in the past few weeks there was no gains in mortgage applications. What we would like to see is the trend growing not stalling out so we need to see what happens over the next few weeks. Year over year according to the mortgage bankers association we are just about where we 1.5 yrs ago with mortgage applications. Like I said, we need to see steady growth every month, as it stands right now its just not happening.

Though mortgage applications appeared to have stalled, housing seems to be doing some what better. According to Housing Tracker, the median asking price for homes in 54 metropolitan areas was positive three weeks in a row, growing on average 1.1% year over year. With almost half of these areas now posting positive gains in housing prices, that is very encouraging news. These stats confirm my previous posts the homes prices are bottoming and in some cases even rising.

That was the good news, now here is some of the bad news. When you look at the number of sales that the market used to handle in any given year we are still down about 50% from the peak years running from 2000 through 2006. So while we are making headway we still have a long way to go to the good old days of homes sales. In 2000 existing home sales were about 4.5 million and reached a peak of 6.34 million the end of 2005, existing home sales now are about 4.4 million, which is close to the average of the prior two years. So its does appear that both housing sales and prices have found a bottom.

If housing is to turn around the economy needs to not only grow but grow enough so that employers will feel comfortable enough to hire again. Before consumers will venture out and back into the housing market they need to feel confident with their jobs, the economy and the future, unfortunately right now thats not how most feel.

So while certain segments of the real estate market (distress sales, retirement, second home, luxury) have and will continue to show improvement the vast majority of the market will just thread water until the unemployment level starts to drop in earnest and consistently every month.

Corruption County USA

For the past several years Palm Beach County Florida has been referred to as Corruption County and for very good reason. With the help of high powered politically connected lawyers, civilians and relatives several of our elected officials have systematically undermined our local governments ability to function ethically, prudently and within the limits of the law. As a result of thorough Federal investigations our PBC city and county commissioners offices and its officials, some of which were found to be conducting the peoples business as though they lived and worked in a Banana Republic. Because of their blatant disregard concerning their sworn duty to work on behalf of and in good faith for the people of Palm Beach County, we’ve seen two of our City Commissioners and three County commissioners’ end up in jail for gaming the system to their advantage.

As a result our new state attorney Michael McAuliffe thought it would be prudent for his office to open a formal three month investigation into City and County corruption. To insure the best result the State Attorney asked all six PBC commissioners to participate because he correctly believed they would be “an important source of information”. Astonishingly only, Jess Santamaria, Karen Marcus and a reluctant J Koons (Commission Chairman) agreed to participate from the go get; Commissioners B Aaronson, S Vann and S Abrams declined the initial invitation to cooperate, interesting!

On May 21, 2009 the State attorney published its Grand Jury findings, of which I was able to get a copy while attending a forum meeting held by Commissioner Jess Santamaria. Asst. State Attorney Alan Johnson was there to speak on the results of its Grand Jury investigation, after listening to Mr. Johnson I decided to read the Grand Jury report for myself and pass along a summary of its finding to you, as follows;

Grand Jury Summary

“Palm Beach County is facing a crisis of trust in public governance”, “ The erosion of public trust in the institutions of governance, whether caused by actual or perceived corruption, has undermined the legal, political and economic pillars which support this community”, “the grand Jury finds that current state laws governing both ethics and criminal misconduct are inadequate to effectively deter the broad-based misconduct (including non-disclosure of personal interests and conflicts) that has become all to common, not only in Palm Beach County, but throughout the State of Florida.”

Grand Jury Recommendations

1- Strengthen state criminal statutes and county ordinances to address conflict of interest, gratuity and theft of honest services by public servants.

2- Fully fund an effective independent “watchdog” entity to monitor the activities of the county government.

3- Increase transparency, accountability and oversight of county matters involving land transactions.

4- Eliminate bond underwriting by rotation adopt the Government Finance Officers Association (GFOA) recommended practices

5- Eliminate the current system of commissioner-based discretionary funding of county recreation and infrastructure projects.

Grand Jury Findings

Bond Underwriting- Grand Jury found that while “The competitive bid process” is the most cost effective method to market general obligation bonds, the PBC commission in 1992 decided to underwrite these bonds through the more costly negotiated sale method. Since 1993 it’s estimated that using the negotiated sale method has cost the county $880,000 in excess underwriting fees and up to $1.3 million in unnecessary annual interest expense! The Grand Jury indicated “it was astonished that the current bond financing system was allowed to continue for sixteen years.”

Land Transactions- Grand Jury found that a glaring deficiency in how land deals are handled by Palm Beach County is the overvaluation of property for purchase and undervaluation of property for sale or trade, in other words Buy High and Sell Low. Case in point Mecca Farms, 2000 acres, appraised value 20-30 million, PBC commission paid more then 3 times its appraised value, when you include the initial ground improvements of approx 20 million the commission obligated PB County to a debt of approximately $100 million dollars on land that has no intrinsic value. The Grand Jury further found that developers have a significant advantage in trading properties with the county, getting more valuable land in exchange for their less valuable land. The grand Jury found “Little in terms of an over-arching set of practices which encourage transparency and accountability” and further “Currently, no effective (i.e. timely) public disclosure of appraisals in land deal exists” and “Land disposition conflicts of interest currently are not typically disclosed until closing.”

Commissioners Discretionary Funds- In 1994 PBC commissioners created the Recreation Assistance Program which allocated 200,000 in funds to each commissioner on an annual basis with the unused portion rolled over each year. The Grand Jury found “That by giving each commissioner millions of dollars to distribute essentially as he/she pleased, the process eliminated oversight and, at a minimum, politicized the manner of funding. The Grand Jury recommends the use of discretionary funds be formally terminated and freeze all remaining discretionary funds.

Ethics Laws- The Grand Jury found that there is a serious disconnect throughout the State of Florida regarding ethics and governance. The Grand Jury believes Palm Beach County should adopt an ethics ordinance similar to the Miami Dade Conflict of Interest and Code of Ethics Ordinance.

Anti Corruption Criminal Law- The Grand Jury learned that many of the statutes utilized to combat corruption in federal court as was done with PB City and County commissioners do not exist in Florida state law. The grand jury recommends that the Florida Legislature adopt the proposed anti- corruption statute “Theft or Deprivation of Honest Services” as introduced this spring in the Legislature.

The findings of the Grand Jury brought to light PBC Commissions serious ethical and corruption problems that have grown worse and more blatant over the years. It’s obvious when you read the Grand Jury report that our County commissioners have not been able to police themselves, to believe going forward they will is naïve. Only with independent oversight will fair play and virtue find its way back into the offices of our County Commissioners.

This is such an important matter that we cannot leave its outcome to chance. If you’re tired of Palm Beach County being known as Corruption County, tired of seeing your hard earned money wasted, tired of special interest being served over yours, then let each and every commissioner know that you

“Expect them to include the Grand Juries suggested reforms on the 2010 ballot”

Call, write and email your commissioners to let them know what you expect of them concerning this issue and make sure you attend the Commissioners July 21 meeting where they will discuss the Grand Juries final report. This public forum is where you can really hold their feet to the fire by asking them if they are for or against the Grand Jury recommendations. If any hesitate, blink, stammer or stumble in response, give them five reasons to say YES: Tony Masilotti, Warren Newel, Mary McCarty, Ray Liberti and Jim Exline. These one time elected officials are now doing hard time in jail because they forgot their fiduciary was to the people of Palm Beach County and not Special Interest Groups. Let every commissioner know that unless they are working for you they are working against you and it will show come next election time.