Dear Real Estate Adviser,
I made an offer on land in South Carolina to build a home and the owner accepted it over the phone, but the agent didn’t take it to be signed. In the meantime, a presumably better offer came along and I lost out. Is ignoring our verbal agreement legal? I even offered escrow money to hold the land but the agent told me, “Don’t worry about it.”
— Paul B.
As you almost certainly realize by now, the absence of a signed and fully executed contract gives you little to no leverage in this sort of deal, despite your verbal agreement. While verbal agreements occasionally hold up in court in some areas of law, they rarely do in residential real estate. Otherwise, the court dockets would be crowded with “he said she said” combatants with few winners, save for attorneys.
What likely happened is the seller’s agent and seller knew that a better offer was possible and used yours as a negotiating point to prod another buyer, who came up big — or at least bigger. If that’s the case, “Don’t worry about it” actually meant, “Do worry about it.” Yes, real estate can be a rough sport.
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How a buyer’s agent could have helped you
You don’t mention using a buyer’s agent but if you did, he or she should have been able to convey to the listing agent that you were interested in matching or exceeding other offers (a “highest and best” right of refusal) if you really wanted that land. You would at least have had another shot at it.
A few things, such as proof of funding, will move sellers when all else is equal. But because it was land, there were fewer things you could do to differentiate your offer from others, unlike with a house, where you can waive all sorts of contingencies.
Take some solace in the fact you’re not alone in the broken-promise/broken-heart department. We’re hearing similar stories from buyers in overheated sellers’ markets around the country. In most major South Carolina markets, by the way, it looks as though residential land prices have jumped 15% to 17% since the start of 2015.
Another tool in the arsenal
While your offer may have just been used as bate to lure bigger fish, there was a way to expedite it. Many, if not most, agents are embracing electronic document-signing services these days such as DocuSign to present legally acceptable contracts for signing immediately, via smartphones, desktops, iPads and other mobile devices. If you had a tech-savvy buyer’s agent, you might own that land now. That’s something to think about for your next offer.
And yes, what happened was unethical, but not really uncommon. I wish you luck in your land search.
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