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I'm currently negotiating a contract for a home via my agent and a listing agent.

As part of the negotiations, the listing agent has disclosed details of another contract that his colleague is the listing agent for, to our agent.

This second contract is for a 'comp' in the same neighborhood. Both of the listing agents work out of the same real estate agency/office.

Is there anything unethical or illegal with 2 listing agents disclosing details of the contracts, and using that as leverage for the sellers NOT to come down in price? There are other comps recently sold or listed which are 20-40k lower.

  • LA#1 says to our agent: "I have it on good authority that a similar house around the corner is under contract for XXX"
  • LA#2 says the same to the other buyer's agent.

It essentially feels like we're in a bidding war with another buyer on a completely different property. I understand the value of the property is going to be dependent on the value of recently sold comps, but it feels like this is being done on purpose to artificially inflate the sales price.

Update:

I just want to add also that maybe this is not a problem, UNTIL the lender does an appraisal? Because the appraisal can only take into account recently sold properties, the aforementioned property (still under contract and not yet closed) would not be a valid comp, and now we're back to the negotiating table if the appraisal is under-list. Presumably in that case, the buyer has better leverage because it's then obvious that the property was overvalued?

So, until it's public record, does the seller have the right to disclose the buyers contract details without their permission? I should also add that it's not required to report a sale for public records, if it's not sold through an MLS listing. (both of these are, I just wanted to point out that it's not always public record, as ended up being the case.)

Finally, I was not looking to come here for any more 'free legal or advice' than anyone else asking questions here. I was simply looking for a little perspective and a gut-check on this particular issue.

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    Have these 2 agents disclosed Personal information about the seller or buyer of the other contract, to you or to anyone else, other than among themselves? Is it at all possible that there is no other contract or that details of the other contract have been fabricated? – Kevin Fegan Jun 21 '15 at 0:19
  • It appears Texas is different from mot other jurisdictions. they want to keep sale price of homes secret. In other states the county tax records have the sales price. In Texas the only record of sales info is in the MLS database. But that isn't accurate because some agents don't record all the parts of the deal, thus creating a game of liars poker with every real estate deal. – mhoran_psprep Jun 21 '15 at 10:37
  • I guess they probably haven't revealed personal information, that I know of. I am sure there is another pending contract on the other property. – ponderous Jun 21 '15 at 15:58
  • @mhoran_psprep there's a difference between "they want to keep sale price secret" and "they don't record sales". I'm sure you can understand this. I have not heard of any law in Texas that requires sales price to be secret. While I don't own any property there, I did research a couple, and have friends who did invest there. So if there was such a law - I'd know. I suggested the OP to talk to a lawyer, but the OP is cheap enough to expect lawyers to provide free advice on stackexchange, so good luck with that. – littleadv Jun 21 '15 at 18:11
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As a buyer you must realize they are doing everything they can to get the best deal for their client (the seller). They have made the first offer (the listing price), you made a counter offer, now they are trying to get you to see that your offer is too low.

How can they do this: show you comps that they have found to show that either their listing price was where it should be, or even that it could have been higher. If there are fresh comps that are showing an upward trend, they will be sure to show you those. Another approach is to show you what is happening in the neighborhood today.

If those sales have settled, then they are public record. If they haven't settled they are not public record. Your agent should be reminding you that they are worthless as a comp until they are settled.

The only ethics issue is did the agent, by disclosing the contract, commit a violation against the rights of buyer and the seller of the other house. You have not been harmed, and the seller of the house you are interested in most likely approved the maneuver.

I would look at the documents you signed to see who owns the info on the form. Because that will tell you if your offer on the house is being used by another agent, or even your agent, as leverage in another deal.

  • by disclosing the contract, commit a violation against the rights of buyer and the seller of the other house. You have not been harmed This gets to the crux of the issue, I believe. I have no legal authority to know the details of the other buyer's contract, nor do they ours. So I can't know if their rights were violated or vice versa. (ie: Inspecting my contract would not assist in knowing if the other listing agent did wrong) If the other listing agent disclosed those details, I see no reason to believe that wasn't reciprocal. – ponderous Jun 20 '15 at 22:37
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    @monk you don't have to have legal authority. In democratic countries (and I know you asked about Texas, so it's not really democratic, but still this truth holds) anything that's not forbidden - is allowed. So as long as there's no law against bluffing during the negotiations - it is legal. Whether or not something confidential has been disclosed - we don't know. For starters - we don't know whether something you've been told is in fact true. – littleadv Jun 21 '15 at 5:19
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but it feels like this is being done on purpose to artificially inflate the sales price.

Yes.

Is there anything unethical or illegal with 2 listing agents disclosing details of the contracts, and using that as leverage for the sellers NOT to come down in price?

No. They're working for the sellers and in the sellers best interests.

  • Thanks for the quick answer. My question is not about them working in the seller's best interest, but about disclosing details about a contract that they would otherwise have no (legal?) access to. It's obvious it benefits the sellers, but that in itself does answer the question of ethics or legality. The quasi-'discrete' language used is what really made me think a line was being toed/crossed. As if saying "I shouldn't be telling you this, but.." – ponderous Jun 20 '15 at 6:19
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    @monk you should probably check local laws, but in California, I'm not aware of laws forbidding sellers disclosing information about offers they've accepted. It becomes public record eventually, so what's the secret? The only reason sellers don't advertised accepted offers is so that if the purchase falls through they wouldn't be bound by that price. – littleadv Jun 20 '15 at 8:26
  • presumably, 'eventually' is the operative word. I should also note that the region is very hot currently, with many properties going into multiple offer scenarios. That said, neither of these properties have multiple offers, and both had been on the market at the listing price for over 30 days - very unusual for the area. – ponderous Jun 20 '15 at 22:32
  • @monk the bottom line is your ability to negotiate. They're trying to make you pay more, its their full right and responsibility to their clients. You can call their bluff, it may in fact be that there's no such "pending sale" at all. Or not. Have you ever bought a car in the US? Really, what are you expecting to hear here? – littleadv Jun 20 '15 at 22:35

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