My last post involved "open listings", and my feeling that they may be opportunities for promotion.

One of the assumptions that I had about "open listings" was that the seller would pay one agent (likely a buyer's agent) an amount LESS than a full listing dollar amount- negotiable, as we all know. I'm not from this area, so have absolutely no experience with "open" listings- they simply aren't done in most areas.

Seems simple, though: no listing "fee", just payment to the buyer broker.

AMAZINGLY, I received the following call from an astute, frustrated homebuyer literally on the heels of the other post (ok- a day later) regarding an agency question- specifically, BUYER AGENCY.  The coincidence was that it was one of those "open" listings, complicating the scenario a bit.  The following occurred:

Seeking a property in the "high end" arena, this prospective purchaser on Long Island located the perfect house, suitable for all of his needs.  We'll call him...Mike.

Mike, having engaged with a local Realtor, made the decision that buyer agency was a good plan for him, and they diligently sought out appropriate properties.

One of the properties happened to be an "open" listing, so when the decision was made that "this is it", this astute buyer, understanding the importance of having representation with this purchase, signed a buyer agency contract. In New York, this agreement includes the "fiduciary" requirement on the part of the buyers agent in much the same way that the listing agent (were there one in this case) offers up diligence for the seller.

While not a "perfect" transaction, Mike was happy about the purchase in so much as he paid what he felt was the correct amount based on the input of his agent; operated with the benefit of someone watching out for his interests, and assumed, as all clients of buyer agents should, that his best interest were being diligently overseen.

48 HOURS BEFORE CLOSING, he received a call from his attorney.  His attorney (they are often used in NY, for those in other states that don't have lawyers involved) told Mike that he had received a disclosure statement via fax from his buyers agent that, per the real estate broker, needed to be signed prior to closing.

THE DISCLOSURE READ THAT IN FACT, MIKE'S AGENT REPRESENTED THE SELLER.

Evidently, this transaction included no representation for Mike.  All along.  Despite the signed buyer agency agreement, and Mike's willingness to participate in payment to the buyer broker.

Without getting into how the attorney should have done this or that (really- with most states not needing the legal contingent, it's moot) Mike, as suggested, called his agent.  The Realtor indicated that, because there was an agreement with the seller all along, Mike needed to acknowledge that there was, despite payment FROM Mike to the agent, in addition to the buyer agency contract, no representation after all.

While I am assuming that the "buyers agent" likely provided (as a result of having located a buyer) some form of commitment for payment from the seller, I am guessing that what was presented to the seller was a "listing" agreement, which instigates seller agency from the listing broker.

Except, because the agent working with Mike didn't define or disclose that there was some kind of agreement with the seller that compromised the agreed-to-in-writing buyer agency, Mike feels justifiably screwed (sorry, but it's the most appropriate word that I can think of).

In the inimitable words of that good lookin' Broker Bryant, "what say you"? Any help is greatly appreciated from anyone that has ever experienced something like this- or just has 2 cents to contribute.

Know that Mike closed a few days ago on the property; 48 hours was simply not enough time for him to digest the full implication of this scenario, and there was a need to close.

It is understood that any responses are opinion, not legal advice. I found myself speechless.

Like most of you, I've experienced a good market, and a horrible market. 

A good market involves diligence with a guaranteed outcome; a bad market involves diligence with odds of 60-40 to close, and a horrible market involves weekday visits to church, or a daily visit with incantations in front of a mirror with scented candles (which I don't do).

A "bad" market also provides a bit of perspective.

Having engaged in an attempted "short sale" with prospective sellers that seemed eager, we persevered. No return calls from the lender, an attorney that "checked in occasionally" with a request for updates (HUH? We thought that you were helping with this nightmare) and ultimately...FAILURE.

The sellers, in addition to having made the decision to put their house on the market as soon as financial issues enveloped them, had two sons headed to Iraq.

By the time we met, their sons had been deployed.

While we received a viable offer of $510k, the bank hired an out of location appraiser, whose results compelled the lender to "go ahead and foreclose- there's plenty of equity."

The sellers relocated to a southern state, where another of their children lived. The sellers attitude?
'expletive YOU. We've tried to sell the house, can't, so...best wishes."

The house, having failed to sell at auction, is now on the market for $449k. with an REO company.

I returned from an open house last weekend, and who was on our front porch, but the SELLERS?

They looked AMAZING. Relaxed, happy, and full of stories about how their life in the Southern town is working out beautifully- the properties are so much less expensive there, the people are friendly, and their kids own a townhome that's gorgeous, occupied by our sellers (talk about a fabulous renter).

For these people, I can only say CONGRATULATIONS. You survived a situation that no one anticipated, and came out generous, healthy, and always respected. That you made it through this lending debacle is a testament to the reality that everything is "cyclical", and restoring your "good name" was not neccessary. It was never lost.