Question: 1who are the stakeholders affected by the potential sale of...
1.Who are the stakeholders affected by the potential sale of the house?
2.What potential conflicts of interest do you see in this situation?
3.What is the relationship between the “as is” and the “option” clauses in the contract, and what is the resulting effect?
4.Was there anything illegal about the buyers making multiple offers? Was it unethical?
5.Do you think Jason’s attempts to renegotiate the offer after the home inspection are ethical?
6.Based on the Code of Ethics and Standards of Practice of the National Association of Realtors, what do you think Michael should have done? What should Jason have done?
7.Were there any other unethical issues disclosed in the case…maybe involving confidentiality?
Real estate agent, Michael McNally, reviewed the listing information for his latest property for sale, making sure everything was correct before tomorrow’s open house. After several years of slower sales in his east Texas county, the real estate market was getting hot again, although not as intense as in the north Dallas area nearby. Sales of single family houses had risen 10 to 15% from the recession in 2007-2010. Average prices were increasing slightly this year. In fact, the pent-up demand was threatening to overwhelm the current available housing inventory. Some recent properties in the area had received multiple offers the first day on the market, often above asking price.
This house was a 2200 square foot 3 bedroom/2 bath traditional style house in a desirable neighborhood. Very few homes had come on the market in this neighborhood, so there would be a lot of interest tomorrow. The owner, Mrs. Serena Daily, was a family friend and fellow church choir member, who was moving to an independent living community in Dallas to be near her children. Michael wanted to get Mrs. Daily the best possible price for her house so that the move wouldn’t be a struggle for her. Mrs. Daily was a widow, and although she had kept the house in good condition for over 40 years, there were a few problems that she didn’t feel up to correcting. The roof was replaced in 2014, and the house recently passed a termite inspection. However, there were foundation problems, not uncommon in this part of Texas, but visible in the cracks around windows and doors in the family room. Mrs. Daily wanted to sell the house “as is” and carefully noted flaws on the disclosure form.
In determining the recommended asking price, Michael carefully balanced comparisons of similar property against possible costs of fixing the foundation and walls, replacing stained carpet and carpentry on the exterior. The house had been decluttered and professionally cleaned. Mrs. Daily’s grandsons removed most of the pictures and repainted the whole house in a neutral color. The house would show well, and Michael expected a lot of traffic at the open house. Even with the disclosed problems, Michael was sure the house would be a good value priced at $179,500. This was slightly below comparable properties in the neighborhood, which were selling at around $90 a square foot. A quick sale would enable Mrs. Daily to move before the summer was over.