Agent handing over contract to sign © iStock

Dear Real Estate Adviser,
Can my real estate agent file a lawsuit against me if I don’t accept the highest offer on the table?
— Seth S.

Dear Seth,
Yes, an agent can sue you for not taking the highest offer, but that’s unlikely to occur.

Under many listing agreements, an agent does have grounds — albeit, somewhat shaky ones — to sue if the contract states that a commission is earned once the agent has produced a ready, willing and able buyer who has agreed to the stated price and terms.

But it’s not so simple

However, these contracts are seldom enforced except under the most egregious of circumstances because that would require the agent to sue the client, which is never good business for an agent or agency relying on word-of-mouth to survive. Plus, one of the gray areas in such listing agreements is the definition of “ready, willing and able.” Many offers from supposed full-price buyers include requests for seller credits, repairs and other contingencies that ratchet down that net offer and arguably don’t meet those original listing terms anyway.

Moreover, some “able” buyers, it turns out, aren’t so able after all, especially when their loans are denied for any number of reasons, including an appraisal by the bank that didn’t match up with a full list price. As long as you haven’t signed a sales contract with a buyer or made a counter-offer, the option of choosing which buyer you’re going to sell to is really up to you alone, regardless of any agent bluster.

Highest offer doesn’t always win

You don’t say why you’re rejecting the higher offer, but some of the most common reasons for doing this, aside from the aforementioned lower “net,” are:

  • The buyer demands things such as a home warranty or seller-paid closing costs.
  • A “sure thing” cash offer comes in, without a loan-approval contingency.
  • The seller honors a previous offer, perhaps from someone the seller knows.
  • The would-be buyer won’t fit into the neighborhood culture, and the seller worries what the neighbors would think. (However, if a seller refuses an offer based on a buyer’s race, disability, gender or sexual orientation, those are valid grounds for a different sort of lawsuit — a federal one.)
  • The seller worries that the listing price was set too low, or reconsiders selling.

Negotiate with the agent first

By the way, readers, you are free to negotiate with an agent before signing any listing agreement so you’re able to choose a buyer with no negative legal consequences or strings attached, regardless of offer size. Some agents will turn down such listings but most will accept them, although briefing the latter with your motivations will better enable the agent to plot a strategy.

Isn’t it nice, though, to be fielding multiple offers? Good luck!

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