A Bonnie Brae Paradox (You get what you pay for)

TeamCox recently represented husband and wife buyers relocating from California. This young couple had previously lived in Denver and knew they wanted to be in one of the close-in Denver neighborhoods.

It seems like we covered almost everything available when suddenly a listing came back on the market that previously had been under contract. We were able to get the husband into the home right away. His wife was traveling, but he knew a good value when he saw it. He wrote a contract, contingent upon his wife’s approval. The home was listed at $925,000 but he offered $875,000. While it wasn’t an insult, we also knew this was a very low price for this beautifully remodeled home in this particular neighborhood. After the contract was presented to each of the sellers — a pair of divorcing doctors — the listing agent told me that the husband would have accepted our offer, but the wife declined.

The agent told me, though, that if I could get my buyer to increase the bid by $10,000, our offer would be accepted. “How do you know that?” I asked. The listing agent told me: “She would have to take the offer of $885,000 because it was in the divorce decree.”

Confidentiality. If there were commandments in real estate, the rule of confidentiality would be up there at No. 1 or No. 2. Did I really hear right? Obviously, I did not represent the sellers but I truly felt sorry for them for having hired such an unethical, lame-brained Realtor. But my commitment and obligation was with my clients, and in this case, I was acting as a buyer’s representative.

I immediately called the buyer and told him what I had learned. He asked me if I was certain that if he raised his price by $10,000 we could “get the deal together.” I told him I only knew what I had been told by the listing agent. I suspected it was true, and I also suspected that the only person this agent was representing was himself. Armed with this information, we raised our price by $10,000 to $885,000 and the contract was immediately accepted. The wife had no choice but to accept. We were able to get all signatures — other than the wife’s — in place.

The next day, a Saturday, the listing agent said how lucky we were to have acted so quickly. Apparently, another agent presented a contract that morning for $915,000. I have no reason not to believe this happened. It is, after all, Bonnie Brae, a very desirable neighborhood. The second buyers did not care to go into backup position. When they heard that someone had beaten them to the home, they withdrew their offer. Going in at $915,000, I am sure they probably would have willingly paid $920,000 or possibly even full price. The sellers, the two doctors, never knew about the second contract.

One week later, we had our house inspection. Since the home had been totally remodeled within about a year, we did not expect any problems. And after a very extensive four-hour inspection, the inspector turned up nothing. That did not stop our buyer. He listed about ten items he wanted the seller to address. Mind you, this is a “structural inspection,” not a minor cosmetic inspection. All of our buyer’s requests were purely cosmetic. But I knew that this agent would roll over. Within an hour, he had his homeowners agreeing to do all of the minor cosmetic repairs, which totaled roughly $1,000. Again, he sold his clients down the river. A seasoned agent would have certainly advised their client differently.

At the closing, on the seller’s side of the transaction, the realty fees are itemized. The two doctors had hired the agent that “represented them” for 2 percent of the sales price. That would be a savings of .8 percent from what most established agents would be paid. That translates to $7,080 on a home sold at $885,000. If the second buyer had only been willing to pay the $915,000 offering price against the $925,000, that alone is $30,000. Add insult to injury with the $1,000 in cosmetic repairs and conservatively, this agent COST his clients $23,980. Of course, the divorcing couple will never know this. No, they will each go their separate ways to their separate dinners and cocktail parties and tell everyone how much money they saved by hiring an agent who represented THEM and THEIR needs for 2 percent.

On the other hand, our buyers, astute young business people, fully recognized and appreciated the way TeamCox conducted its side of the transaction. We never lose sight of who we are working for and whose needs come first: the clients we represent!

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