We are in the process of buying a condo in Chicago. I have a question concerning practices here in Chicago and Illinois as a whole. Is it common that after an offer is made and the counter offer stage begins, that the realtors simply call or email each other and report their clients numbers without the formality (and paper trail?) of written counter offers? This would absolutely never fly in California, but appears to be the case here. It would seem to give the realtors enormous power and that the result could be an increased potential for croneyism and conflict of interest.
I realize this is not neccessarily Wright related, but I know there are a couple of Illinois chatters who might have some insights into the practices here.
Thanks...
Illinois Real Estate
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Wrightgeek
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- Location: Westerville, Ohio
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Paul Ringstrom
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Hello, longtime lurker here and full-time Realtor!
Contracts only need to be signed by both parties when agreement is reached on all contingencies (price, financing, inspection, etc.) It's common practice in Illinois to negotiate in good faith verbally until the contingencies are agreed upon, instead of faxing back and forth with initials after each negotiation; Real Estate License law in Illinois doesn't mandate this. What it does mandate, quite clearly, is confidentiality/fiduciary responsibility owed to the buyer/seller by his or her Agent.
Hope this helps!
Contracts only need to be signed by both parties when agreement is reached on all contingencies (price, financing, inspection, etc.) It's common practice in Illinois to negotiate in good faith verbally until the contingencies are agreed upon, instead of faxing back and forth with initials after each negotiation; Real Estate License law in Illinois doesn't mandate this. What it does mandate, quite clearly, is confidentiality/fiduciary responsibility owed to the buyer/seller by his or her Agent.
Hope this helps!
Well, either you trust you Agent or you don't, and you shouldn't be working with him if you don't.peterm wrote:Thanks. That sounds good, but without a clear paper trail, how is one to know what goes on between the realtors?
Agents are mandated, by license law, to represent the client's best interests, which include, but aren't limited to, confidentiality. The Agent is only allowed to disclose information which which the client has given him permission to disclose, i.e., a counter-offer of price during negotiation.
In Illinois both agents work for the seller, unless you contract with a Buyer's Agent. They may act like a friend but they are not.
Paul Harding FAIA Restoration Architect for FLW's 1901 E. Arthur Davenport House, 1941 Lloyd Lewis House, 1952 Glore House | www.harding.com | LinkedIn
That's not only pessimistic, but it's false.pharding wrote:In Illinois both agents work for the seller, unless you contract with a Buyer's Agent. They may act like a friend but they are not.
The seller signs a listing agreement and pays his broker a commission at closing. That broker may, and usually does, choose to pay out a "co-op" commission to an Agent who brings a buyer. Regardless of source of compensation, however, the agent representing his buyer client owes fiduciary duties to his client and his client alone. A signed buyer agency agreement not only protects the Agent (who can spell out exactly how much of a commission he expects to receive for his services, most if not all which is paid by the seller's broker), but also the buyer, by obliging the Agent to act according to Illinois License Law to work in the buyer's best interest.
The best way to "protect your interests" is to work with a professional whom you trust.
It's been a few years, but I have bought and sold many properties in illinois. The good agents would have you change the contract price with a new set of initials at each step of the negotiation process. Occasionally, even the good ones get a bit lazy and request a step or two via a phone conversation. Don't let them. Make them earn their commission!
In Michigan both agents also represented the seller until some legislative changes (mainly disclosure) were adopted about 15 years ago. Now a cooperating agent can still operate, but they must disclose who they are really working for.
There is an inherent conflict of interest since their commissions are pegged to the ultimate sales price.
It is either necessary to hire a buyer's agent - whose loyalties are spelled out in the standard buyer's agent contract - or use someone you trust (someone who realizes that they get such a tiny part of every additional $1000 in sales price that it isn't worth it to milk the buyer).
I have worked with agents that insist on written offers and counteroffers, as well as those who "negotiate" informally and then reduce it to writing when an offer or counteroffer has a good chance of success.
There is an inherent conflict of interest since their commissions are pegged to the ultimate sales price.
It is either necessary to hire a buyer's agent - whose loyalties are spelled out in the standard buyer's agent contract - or use someone you trust (someone who realizes that they get such a tiny part of every additional $1000 in sales price that it isn't worth it to milk the buyer).
I have worked with agents that insist on written offers and counteroffers, as well as those who "negotiate" informally and then reduce it to writing when an offer or counteroffer has a good chance of success.
Be careful with what information that you share with your broker. Tell the broker information on a need to know basis. In Illinois whatever information that you share with your broker will be shared with the other party's broker. Bear in mind that if you make a low offer and your broker asks you to increase it to avoid offending the other party, whatever offer you make legally must be presented to the other party. If you are serious about a property, my suggestion is to have a real estate appraiser do an abbreviated appraisal. Real estate broker comps are not very reliable. Mortgages are extremely difficult to get right now so well qualified buyers have substantial leverage. If I can help you further please feel free to contact me.peterm wrote:I get the feeing that you're right, Paul. Any advice on how to protect our interests?
Paul Harding FAIA Restoration Architect for FLW's 1901 E. Arthur Davenport House, 1941 Lloyd Lewis House, 1952 Glore House | www.harding.com | LinkedIn
The misinformation, paranoia, and fallacious advice here is alarming.
The OP asked if verbal counter-offers are legal in Illinois. They are. They are in no way indicative of an agent not willing to "earn his commission;" there can be any number of reasons why verbal counter-offers are used, time being the big factor. Would you like to lose a house your bidding on because you've mandated that the agent "earn his commission" by faxing the neatly initialed counter as soon as he could get to a fax machine, trusting that the receiving agent will be there to accept it immediately? The agent's job is to work in the best interest of the client within the limits of the law to reach the client's ultimate goal.
In the area of real estate appraisers, did you know that lenders choose the appraiser, and more often than not they have to travel dozens of miles to appraise a home in a neighborhood that they need a GPS to find? How, please tell me, is this more accurate than a real estate professional's presentation of real numbers on recent closed properties (we call active listings "unsolds")? The ugly truth is that lenders do rely on these potentially uneducated appraisals during the loan approval process. Abbreviated appraisals are great if you know your lender is going to use that same appraiser in the approval process. Wouldn't you rather see actual numbers and make your own conclusions about your initial price offering?
Illinois is not a sub-agency (listing agent represents both seller and buyer, even if the buyer has his own agent) state. Like Michigan, it used to be but isn't anymore.
Lastly, information shared with your broker is absolutely confidential once a listing or buyer agency agreement is signed. Sharing confidential information with the other broker is a violation of Illinois License Law and is punishable by hefty fines and/or loss of license to practice. There are many agents who talk way too much, and violate this all the time. Why, then, would you ever choose to work with a person like that?
The OP asked if verbal counter-offers are legal in Illinois. They are. They are in no way indicative of an agent not willing to "earn his commission;" there can be any number of reasons why verbal counter-offers are used, time being the big factor. Would you like to lose a house your bidding on because you've mandated that the agent "earn his commission" by faxing the neatly initialed counter as soon as he could get to a fax machine, trusting that the receiving agent will be there to accept it immediately? The agent's job is to work in the best interest of the client within the limits of the law to reach the client's ultimate goal.
In the area of real estate appraisers, did you know that lenders choose the appraiser, and more often than not they have to travel dozens of miles to appraise a home in a neighborhood that they need a GPS to find? How, please tell me, is this more accurate than a real estate professional's presentation of real numbers on recent closed properties (we call active listings "unsolds")? The ugly truth is that lenders do rely on these potentially uneducated appraisals during the loan approval process. Abbreviated appraisals are great if you know your lender is going to use that same appraiser in the approval process. Wouldn't you rather see actual numbers and make your own conclusions about your initial price offering?
Illinois is not a sub-agency (listing agent represents both seller and buyer, even if the buyer has his own agent) state. Like Michigan, it used to be but isn't anymore.
Lastly, information shared with your broker is absolutely confidential once a listing or buyer agency agreement is signed. Sharing confidential information with the other broker is a violation of Illinois License Law and is punishable by hefty fines and/or loss of license to practice. There are many agents who talk way too much, and violate this all the time. Why, then, would you ever choose to work with a person like that?
Nonsense George90. The statute of frauds requires that contracts be in writing. Verbal offers are not binding. Good agents alert other agents that an offer is forthcoming. The other agent is obligated to present all offers. I guess the current market is so overheated that there is often not enough time to take 5 minutes out to fax an initialed counter offer. The practice of verbal offers does vary regionally though however bad the practice is.