The buyer has NO RIGHTS in a transaction until the seller grants them. In other words, the seller has 100% of the rights in the transaction from the start. The seller has ABSOLUTE control over the disposition of the property, so the seller does have the legal right to establish parameters of the sale IN ALL REGARDS. The only exception to that are anti-discrimination statutes.
At what point do sellers cede some legal rights to their property ownership? When they sign a contract, the sellers grant specific rights to another party. The first contract is the listing contract. That contract, however, does not actually grant rights to potential buyers. It grants specific rights to the real estate agency and/or the cooperative/s in which that company participates (MLS is an example of that). A bidder STILL does not have RIGHTS, via that listing agreement. The seller can set parameters for the sale and can refuse ANY contract for ANY reason, other than discriminatory practices as defined by federal law.
In a traditional sale, for instance, a seller can legally refuse to sell to specific persons, for any reason (ANY REASON), other than those federal, and sometimes state, laws. Many banks, for example, give owner occupants preferential treatment in the purchase of a foreclosure. That is legal. It is also legal for them to define what they mean by "owner occupant."
All sellers have the right to exclusions in their listing agreements and throughout the listing period. Don't want to sell to the neighbor who has been a pain in the behind for years? You don't have to, but you should write an exclusion in the listing contract. Without an exclusion, a seller could end up owing a commission to the agent who writes a good-faith offer for that neighbor.
For owners of a property to assert their property rights concerning the disposition of that property absolutely does not constitute "dubious trade practices," as one reader of my blog charged (Lying Could Be a $10,000 Mistake). It's contract law, pure and simple.
The owner of a property owns that property 100% until they sign a contract. Basic stuff.
Another reader of my blog charged that a seller who calls for a Highest and Best round is "morally low" and guilty of "extortion." Cash is King--Or is It? Making a Highest and Best bid that wins. It is not morally wrong for owners of a property to conduct the sale of that property in whatever way they want. It is their right as property owners. The owner of a property owns it 100% and can dispose of it however s/he wants. That includes the right to call for the Highest and Best offer from all bidders. Buyers who realize they are in competition for a property often welcome the chance to review and even to revise their offer. Far from being immoral, they view it as fair. The buyer who gets the property s/he wants is not a loser in this scenario. All buyer offers are, from the start, blind; because any given property can sell above or far below list price.
Now I know that I will get kick-back from buyers' agents (I'm one myself on some transactions), and I certainly understand that. I just want to add some focus to the debate. The seller owns the property. The buyer can play or not play, but the seller owns the property--plain and simple. It's good to remember that. Of course, an intransigent seller may end up remaining the owner of the property!
The following are common beliefs held by buyers (and even some agents) that are FALSE ASSUMPTIONS, not backed up by contract law:
- The seller has to respond to offers in the sequence in which they were received
- The seller has to respond to all offers
- The seller can only work one offer
- The seller has to take the highest offer
- The seller has to counter
- The seller has to, at least, reject an offer
- The buyer has a right to a fair negotiation
- The seller has to give a reason for choosing one offer over another
- The seller has to choose one of the offers after calling for Highest and Best
Before you start accusing me of being unfair, remember we are talking about legality here, not what is commonly accepted as being "fair" or collegial.
Disclaimer: I am NOT a lawyer.