WHEN Topanga Realtors Gary and Karen Dannenbaum have big news, they typically share it with each other first. Except for the time Gary made an offer on a client's behalf for $2.5 million, and only hours later, wife Karen heard about it through the grapevine.
"That really annoyed me," she says. "The listing agent had told another agent, who congratulates me. So the word is going around that they have a full-price offer. All someone has to do is offer $5,000 more and they might get it."
Karen was irritated and a little surprised. Although sellers and their agents have never been legally obligated to keep the terms of offers to themselves, those involved in the business routinely assume they will. But in a hot real estate market -- for reasons that include hopes of sparking a bidding war or simple pride shared with neighbors over how much their home has appreciated -- sellers and some agents have been known to blab.
Now, however, the National Assn. of Realtors has revisited an idea it kicked around two years ago -- and this time made an addition to its code of ethics. Effective Jan. 1 of this year, buyers' agents in all member states, including California, are required to inform clients that their offers might not be kept confidential. Although many home buyers may not realize it, the terms of the offers they make may be revealed to other clients in a practice that the real estate industry commonly refers to as "shopping offers."
And although many Realtors purport to find the practice distasteful or even unethical, others point out that negotiation styles and markets differ.
Coldwell Banker agent Paul Ferra, who lists homes in Topanga, Malibu and the Hollywood Hills, says he has some minor problems with the practice. "But in business there are a lot of things that aren't ethical. It's legitimate if it gets my seller more money. I do whatever I can to arrange an agreement between buyer and seller."
In other words, shopping offers is part of marketing -- the name of the game in selling a property. "It's all marketing," adds June Barlow, vice president and general counsel of the California Assn. of Realtors, part of the national association. "It depends on the market, how desirable the property is, the number of buyers -- all of that plays into it. It's an art, not a science."
Moreover, it seems that the ever-fluid art of real estate negotiation has already spurred some agents to perfect their skills in an emerging subgenre: the confidentiality agreement.
