Is it ethical for the listing agent to ask the seller for a "bottom line price" to give to a Buyers Agent?

Question

Our agent says she wants to give a Buyers Agent a bottom line amount that we're comfortable with. She says the agent has buyers who are willing to drop the price drastically on their home and they want "first refusal " on our house. I guess they will drop the price according to what our "bottom line price" would be. We feel uncomfortable letting this other agent know that price. First of all our agent wants us to give them a price 35,000 below our asking price.

( We have already dropped the price over 120,000!)How do we know we can't get more? Also now that Buyers agent knows how low we will go she might steer other clients offers in that direction. Again, we are uncomfortable doing this. What should we do? Is this even legal?

Answer 1

SURE, but you don't have to give it to her.  She doesn't get paid until your house sells, and a reduction in price will hit her very little.  And you're right to fear the lowered price would spread out amongst others.  You can tell her that you will consider written offers, and that after having dropped the sales price $120,000, you're pretty much at your bottomline.  I'd tell her you're not comfortable with her scenario at all.  NEXT thing, look at her comparative market analysis.  Is your price where it should be, or is it too high?  This is a horrible, declining housing market in many areas.  It may be you do need to make more downward movement, but I'd be cautious in this verbal dance.

Answer 2

Here is the bottom line --

If the seller says that it is OK to give out that information then give it out.

If you work in the capacity as a Transaction Broker you can't give it out because you can't work to the detriment of either party.

If you are a single agent representing the seller then you need the seller to tell you it is OK for you to give it out because you have a responsibility to get the most money for that seller.

No matter how you slice it the seller needs to OK this situation.

EDIT:

To answer your question more direct. The answer is YES it is ethical to ask your seller for a bottom line price. Here is the way I would approach the situation.

Tell the other agent to simply submit an offer. If the offer comes in to low then at that point your seller can counter with his/her bottom line. There is NO NEED to give out any information without an offer on hand.

But you can give the bottom line out if your seller wants you to. The important thing is to have good communication with your seller. Maybe the seller feels like the list price is their bottom line.

Remember unless you are representing the buyer and seller (transaction broker) you have a fiduciary responsibility to get the seller the most money for the property.

The bigger question is why did you take this listing on? If you already dropped the price over 100K that tells me that you were not realistic in your pricing structure before you made your listing presentation.

REMEMBER!!! In this market there is a HUGE DIFFERENCE between priced fairly and priced to sell.

EDIT #2

I know it is a horrible time to be a seller. Here is what you need to ask your seller. Do they need to sell or do they want to sell. If they need to sell then you need to make it happen and make sure they don't lose money.

We have similar problems here in my local market in Destin, FL. The comps are not worth the paper they are written on because the declining market. We have a listing in a prestigous community, lake front, huge lot, custom home with over $400,000 in upgrades and we have it listed right @ $1,000,000. ALl of thge realtors on the MLS tours say it is priced fairly, it is priced under other lesser homes in the community and still not a single bite in 3 months. This is with an heavy advertising campaign.

If the problem is not the product or the price then all you can do is wait for the market to turn or have a buyer that can't live without that particular home.

It sound slike the seller is dropping the price to make a deal happen but is behind the 8-ball everytime.

I would encourage the other realtor to bring an offer but I would not tell her the sellers bottom line. In that situation you are putting your seller in a more difficult stance in negotiations. If you present it to the selller like this and the seller still wants you to tell them a bottom line then you need to do so.

Are you transaction broker or single agent? this makes all the difference in the world.

I did not mean to insult you with the price comment. I have had to turn down about 4 listings in the last 2 months because sellers were not realistic. You can't go off comps alone. You have to see what has sold in the last few months to get a good grasp. In doing that you have to eliminate short sales and foreclosures because they are not comprable.

Answer 3

Technically, it may be ethical, but in this climate and given her position of potentially gaining something, I would say she has a natural conflict of interest.  In your position, I would just tell her, "we are there, but you can always bring an offer."  There are bottom feeders out there now, and you are in the uncomfortable position of having to trust her.  I think this is coming down to a question of how much you DO trust her, right?

Answer 4

Real Estate is all about bartering.   You don't reveal your lowest price even at a yard sale.

I don't see the benefit.  

Regarding legalities, I don't see why it wouldn't be.  Again, it's bartering and that's legal.