This weekend I've had a situation that I've found very disturbing.

I have an agent who has a large farm ($4 million) listed.

This week, an offer came in and the seller accepted it.

On Friday, another agent wrote an offer and "because he had a previous relationship with the seller", went directly to the seller and negotiated the offer. My agent, the listing agent, found out about the offer midday in a conversation with the seller. To add insult to injury, the agent with the offer sent my agent a fax of the offer saying: "I'll handle this one. All you need to do is collect your check."

Now, because the second offer closes quicker, the sellers want to proceed with it. And, they are furious at my agent for telling them that they may be sued by the first buyer. The agent with second offer told the sellers to just have their attorney look over the first contract and find a loophole to get out of the contract.

I've asked for a meeting with the sellers on Monday.

A few other points:
* The agent who brought the second offer is not a member of our mls. Thus, he is not covered by our mls' obligation to be compensated.
* My state brokerage statute has a provision that allows our real estate commission to discipline agents who interfere with a valid seller or buyer representation agreement.
* I am concerned about the sellers. I suspect they are going to ask us to proceed with the second offer despite the accepted first offer.

Any ideas how to proceed?

I would just sit down with them and explain your position and explain the law to them. They're breaking the law by accepting the second offer unless the first had any contingencies. Also, even if that agent isn't a member of your MLS they're a member somewhere! Report them!

I think if the first contract has a way out, you have an obligation to your Seller to make it happen. If the agent had brought the offer through you and the Seller had wanted it to accept it, you would have had to look for a "loophole". If there wasn't one, then you would have to advise your Seller stick with the first offer, or face a lawsuit.

I would wait until it closed and then take the other agent to arbitration. Don't jeprodize the Seller's ability to sell with the "situation".

Note: The agent behind the second offer is not a member of NAR or any local association.

The agent and broker representing the buyer of the first offer have a duty to protect their client/buyer's interest. Obviously the key will be whether or not the seller can get out of that contract. If the buyer of contract 1 is ready willing and able to perform then it would be easy to prevent the sale to buyer 2.

I agree that you sit down with the sellers and explain that your agent's admonition that they consider the risks in breaching contract 1 was a HELPFUL suggestion looking to protect their best interests. Explain that if buyer 1 ties up the property in a lawsuit, it won't close until much later than that contract now calls for and sellers may have to pay their attorney fees and buyer's attorney's fees as well.

If things go sour and agent 2's interference causes your firm to lose the listing (seller is talked into canceling the listing with you presumably by agent 2) then I would sue agent 2 and sellers for the loss of your commission.

I don't think that loss of the listing is a risk.

My biggest concerns are:

* The fact that the our sellers are getting advice from an agent representing one set of buyers.

* That the sellers may refuse to sell to buyer #1 triggering a lawsuit. As indicated above, one avenue is a contract loophole. But, if buyer #1 performs, ie. verification of earnest money deposit, timely ordering of appraisal, etc., I don't think that it is invalid.

* My strong inclination is to punish the agent behind buyer #2 harshly for interference with our seller representation agreement. My two thoughts now are 1) File a complaint with our real estate commission asking for termination of his license. 2) If buyer #2 closes, deny him a commission since he is not covered by our mls offer of compensation. 3) I'd love to get him before an ethics committee but he is not a REALTOR.

* The sellers seem to think we are working against their interests. I will try to eliminate that issue on Monday. But, I suspect that will be an uphill battle.

Another tidbit. The agent behind buyer #2 is a longtime agent. He wrote his contract on a form that is at least 10 years out-of-date and fails to comply with our current state law on several points.

He also told my agent yesterday that he knows what he is doing because he has been in the business for 30+ years.

Another factor is that he had an encounter with my agent a few months back where he expressed extreme displeasure with her listing this farm in HIS community. My agent is from the area but lives about 60 miles away. I suspect that hostility is why he did what he did.

How do you know they are an agent or broker??????

In my state you DO NOT have to belong to an mls or NAR or a local chapter assocation to conduct real estate business.You simply have to hold a liscense with the state real estate commission and if you are conducting commercial transactions as long as you set them up properly you don't have to have a liscense.

Our commission has a website where you can enter the persons name and there history comes up whether they active-inactive etc. and it shows ther eliscense number and any voilations in the past or sanctions by the re commission.

There are some former agents who deal in commidities training which do not reuire a liscense to perform.

There is nothing illegal about telling the sellers see if there is some way you can find a legal loophole out of the contract.Often times contracts are sloppy and there are plenty of outs.

If your agent had a first offer that was accepted that didn't have the greatest terms your agent should have counseled the buyer if there was a bunch of stipulations in there(long timelines,purchase subject to zoning,subject to assemblage,etc.)

I would see who you are dealing with first agent,broker,commodity person,developer etc. and then run this scenario by your closing attorney and see what they think.

You might ask the sellers to have their attorney send you a letter indicating how sellers plan to proceed. Tell them you need it for your file. Maybe that will at least get them to have an attorney review the situation and get some legal advice.

As far as agent 2 goes, you didn't say if he is a broker or not. Obviously if he's not, you'd want to complain to his broker. Also, there's nothing wrong with telling of your experience with agent 2 to your agents and other professionals in the real estate community as long as what you say is truthful. Whether a state agency can review his actions or not depends on your state licensing laws and regultations. You'll have to review those.

Steve, contact a RE attorney for guidance and review of the 2nd contract. You need to protect your seller, if the 2nd contract is outdated and ambiguous.
I would approach your seller with the fact that you want whats best for them, including keeping them and you out of a legal situation to where they will not be able to sell the house as quickly as they think.

Your first priority is to sell the home for top dollar.

Get it sold.

With a $4Mil property involved, you're not talking about peanuts as far as commission goes...call a lawyer and see what your options are/what needs to happen. Whatever you do, make sure to put your clients needs ahead of your own (and ahead of the annoyance of having to deal with a schlep agent). Having tens of thousands (or potentially more in this case) of commission dollars involved, you're in a tough position (it would really suck to get sued by your seller because they thought you "ruined a deal")...

Tread carefully and I would definitely look into getting a lawyer involved so there are no mis-steps on your part.

Agent #2 is a broker with a small agency (3 persons). He is licensed but not a member of any REALTOR association.

I'm just dumbfounded that someone would go directly to represented party like this. As I mentioned above, in my state, is a direct violation of our state brokerage statute to interfere with a buyer or seller representation agreement.

What are the differences in the two offers? You mentioned agent 2's offer would close sooner. Is that the only difference? Maybe agent 1's buyer can push up closing and there would be no reason for the sellers to entertain the second offer and risk litigation.

It's hard to say if Agent 2 is interfering with your seller representation. He'll say he is just representing his buyer and that you'll get the same listing side commission. The fact that he asked the sellers to have their lawyer look for an "out" means he knows they are locked in with Buyer 1 if there is no "out."

Chris,

The interference is going directly to the seller, represented by us, presenting his offer, coaching the sellers on what to do and inducing them to sign. That is a clear violation of our seller representation agreement which provides that our agency will handle the marketing, negotiating, and closing of the transaction. Of note, Agent #2 knew were representing the seller. He had expressed irritation with my agent because she had the listing.

As to the two offer, the key issue is time of closing. There is a difference of a few weeks.

As I indicated earlier, my clear inclination is, if offer #2 closes, to deny the agent compensation since he is not a member of our mls. I've never done that to anyone (we often have offers from outside our mls) but I'm feeling this may be the appropriate case.

I'd be concerned that if his commission didn't show up on the preliminary HUD statment that it might throw the deal into jeopardy.

Not really sure what other options you might have...again - gotta say I'd probably contact an attourney (or at least talk to someone at your local board and see what they have to say).

I know in Florida we can call the FAR Legal Hotline (lawyers are on staff to answer questions for us - paid for out of our state association dues)..there's always a bit of a wait...but it's better than paying several hundred for a consultation. Do they ahve something similar in Idaho?