My wife and I recently made an offer to purchase a home. The offer was accepted by the seller. Our initial offer was $60,000 below the asking price. Shortly after receiving this offer, the selling broker told us she had received another offer the same day. She did not tell us the amount of the second offer. She said the seller would not accept either offer and wanted both parties to submit new offers. We raised our offer by $40,000. The selling broker then told us an additional $10,000 would clinch the deal. We increased our offer by $5,000. Our offer, now $15,000 below the asking price, was accepted.
During the offer and negotiation period, my wife and I had no way of knowing if another offer existed. We now believe there was no other offer and that the selling broker had lied in order to pressure us into making a higher bid. Had we been negotiating only with the seller, and not competing with a 'phantom' buyer, we would not have raised our offer by $40,000.
Questions:
1. Is it illegal (in addition to unethical) for the selling broker to fabricate an offer for the purpose of extracting higher offers from a potential buyer?
2. Can we find out if another offer existed?
3. If there was no other offer, is there any recourse for us to recover funds from the selling broker and/or seller?
Misrepresentations by broker
First, I should point out the obvious: You are not the first buyer to wonder about a mysterious "second offer." Hopefully, there are very few instances where a real estate agent actually lies about the second offer. However, that doesn't mean it can't happen. If the broker or agent lied about the existence of a second offer, that is certainly a violation of the code of ethics under which the broker works and also a violation of Massachusetts consumer protection laws.
If you have some actual evidence of such conduct, you could contact the Massachusetts Board of Registration for Real Estate Brokers at 617-727-2373 and talk to them about filing a complaint. You could also contact a Massachusetts attorney and talk about taking legal action. If you filed a law suit, you would be able to use discovery to determine if, in fact, a second offer existed. But, as you can imagine, you would need some evidence of fraud before proceeding, both to convince an attorney to take your case and to avoid spending much money on a wild goose chase. Good luck.