Question about realtor ethics and/or tactics

[comrade]

Here's the situation:

So my parents have been looking around the west side for a place to buy, when they come across a nice place in Springbank Hill. Apparently this house has been on the market for a month or so (beginning of May I think) and has already had it's list price cut three times (the last of which was 16 grand). Based on what my parents have been seeing, it's current list price is quite reasonable.

My parents put an offer (conditioned on inspection) on the house. Their thoughts are that it looks like the seller is motivated and wants the place gone quickly. Anyway, they put in an offer and within an hour the offer is outright rejected. My understanding is that if there were other offers they would have gotten a chance to put in one more blind offer.

My question is what happened? Why would a house with a rapidly falling list price not even bother to counter my parents offer? I'm sure their offer was close to the list price, they wanted the house and they're not adept at bargaining.

My dad, being a rather cynical fellow, thinks that the realtor is screwing the owner. His reasoning is that since the owner is looking to sell fast (conjecture, I know) the realtor is sandbagging the owner, getting the price down to a place where the realtor can buy it and then flip it for a nice profit at some point.

A couple of caveats here: First is that I don't have any first hand knowledge, only what my parents say. Second is that I do realize that my Dad's idea could be completely false and is based primarily on intuition of what the seller's position is, but since I don't know much about realty I wondering what other scenarios could it be?

Finally, if my dad's hunch is actually correct, I have a couple questions:
1) The realtors actions are clearly unethical, but are they illegal? Could you sue if you found that your realtor was doing something like this?
2) How do you protect yourself from realtors taking advantage of you? Once your realtor is fielding all the calls regarding offers, how can you ensure that the realtor can't pull something on you?
3) Rookie question, I'm sure, but are offers (and other things like counters etc.) documented in any way? I always assumed it was just a telephone conversation.

[albertGQ]

I think your dad is out to lunch

[Rathji]

I think a realtor would have to be brain damaged to attempt such a stunt.

I am guessing the likely answer is that the seller has a floor that the price needs to be at for them to sell, and the offer was below that level.

[dubc80]

How much did they offer in relation to the list price?

Did they Kijiji-style low ball them?

[Ace]

it's weird to not at least counter...i'd counter every single offer, even if just to restate the listing price. Why would you just shut somebody down?

[Locke]

I think a realtor would have to be brain damaged to attempt such a stunt.

I am guessing the likely answer is that the seller has a floor that the price needs to be at for them to sell, and the offer was below that level.

Then wouldnt you think they would counter with that?

[red sky]

Peoples' perception of a low ball offer differs. It sounds like you don't know what the offer was so perhaps it was indeed a "low ball offer".

[troutman]

Article 3:

http://www.crea.ca/sites/default/files/files/REALTOR%20Code.pdf

[1stLand]

Always the Realtor's Fault!

In all seriousness, I think perhaps it was too far off list price perhaps?

[albertGQ]

Maybe it was a joke low ball offer that seller didn't think buyer was serious so didn't want to waste his time.

[comrade]

Asking price was 559,000.
Offer was 538,000.

House was originally listed at 609,000 a month earlier and there had been three cuts to the asking price in that time.

Is this a lowball offer?

[1stLand]

If you parents want the house so much, why don't they re-submit an offer at their 'best price'?

[red sky]

Looks like it is pending anyways,

http://www.joshhamilton.ca/mls-C3569250-26_SPRING_VW_SW_Calgary_Alberta.html

[ken0042]

Asking price was 559,000.
Offer was 538,000.

House was originally listed at 609,000 a month earlier and there had been three cuts to the asking price in that time.

Is this a lowball offer?

Yes. They lowered their price by $50K. You said the latest drop was $16K, so that means the other two drops were also in that range. So not like they dropped it $2K or something. Now your dad comes in another $22K below that.

I would think a more likely scenario is the seller dropped the price in hopes of having a multiple offer situation. Then getting the buyers in strengthen their bids and sell for higher than the "new" asking price. What your parents did was come in well below what the new price was. That wasn't even in the ballpark of what the seller wanted, so they flat out refused.

I'm not sure, but can realtors pull up what previous bids were on a place? I'm just thinking if the seller countered with $570K and your parents flat out refused, would it show as a house with an asking price of $559K and a rejected bid of $570K?

It could also be a tactic to make your parents come back with a stronger offer. They also could have believed another stronger offer was forthcoming, and didn't want to have a pending offer possibly screw up that offer. Or maybe $538K didn't cover what they owed.

So many possibilities.

[troutman]

Springbank Hill - is this a mountain view property?

[Travis Munroe]

I have done a deal or 2 with the list agent - Donna Gaylord and can assure you she is in no need to try the stunt you had a hunch of.
The offer was not unreasonable to the point of not wanting a counter however I see why they didnt.
The dropped the price 50k in under a month. The final price drop happened on the third and come the 5th is was C/S. They obviously had a ton of buyers through expressing interest and there was no chance they wanted to waste time playing ball when they knew something higher would come in.
A flat out rejection simply means its too low to negotiate. If your folks wanted the house a new offer should have been written and sent in. Im not sure why their realtor would just give up on the case. Do you mind PMing me who it is? (I wont contact them, just curious)
Its back to showing "active" on the market so again their realtor should be inquiring.......

[Travis Munroe]

Speaking of other realtors "tactics"

I wrote a offer for a client on Wednesday early afternoon for a property... 97% of list price.
The sellers agent complains about some things on the offer which are standard and I have been doing since I got into this industry. My suspicion is that he is a new agent and sounds like he is past retirement. Long story short, I ask for him to reply to my email confirming the offer has been received. Hours go bye with no response and I am forced to call him. He says he just got in front of his email machine and has it. More hours pass and I get no counter. I call him first thing the next morning and he says the power of attorney rejected the offer so they have to inquire through the actual owner who is in Germany. Its been about 48 hours and the guy says he has not contacted the actual owner. I was joking around with another realtor friend on questions sellers need to ask their realtor. #1 - Do you use a email machine or do you get emails to your phone, computer, tablet, etc.
/End rant

[onetwo_threefour]

I wonder if there isn't something that might show up on an inspection on the OP house that the seller is worried about. All those price drops and the fact that the house went c/s but is now back active could suggest that there is an issues with the house. Maybe they're seeing some moisture in the basement after all the rain?