Why Exclusive Buyer Agent vs Dual Agent?

  • January 02 2013 - Dallas
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Answers (174)


Clarifying:  Someone said  "In the more southern/middle part of NJ, I am told title companies usually handle the closings - I believe the title company's attorneys oversee the att. review."

It is interesting that within the state practices differ so much.  I work in both North Jersey  and South (as well as PA).  I've never worked in a transaction in North Jersey (actually North of Mercer County) that didn't have an attorney on both sided.  South of Mercer county only about 1/4 of transactions (in my experience) have an attorney on either side.  In North Jersey another contract difference is there is no "Time is of the Essence" provision.  In South Jersey there almost always is.

If a buyer wanted to avoid having the attorney review provision they could do it by having an attorney prepare the contract as that requirement only applies to contracts prepared by real estate licensees.  

The attorney review period doesn't just apply to the initial contract either - it also applies to any amendments a licensee would prepare to change the contract.  It is not uncommon to have an attorney prepare amendments specifically to avoid attorney review.  

In South Jersey one great way to have a messed up transaction is for the buyer to use a North Jersey attorney that is completely unfamiliar with common practices in South Jersey.  

Last, when I have a transaction without an attorney in South Jersey, I order the title and survey.  The title company conducts the closing and there are no attorneys around - even at the title company.  No one 'oversees' attorney review.  If buyer or seller want to change the contract in attorney review - they have to hire an attorney.





  • January 26 2013
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Duh...... to me Rushel!
I took your comment literally!

Humor is sometimes lost when typed on a forum.......clearly yours went right over my head!

I don't blame you for not coming to NJ - I love your left coast, too!!

  • January 24 2013
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Profile picture for Rushel Reed
Debbie,
I won't be coming to New Jersey; too many people.  I love my left coast!
  • January 24 2013
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Pasa: 

First of all, you are right about the party definition.  I am willing to admit I made a mistake and meant to say agent and not party.  So we will just start by saying that the negotiation takes place between the two agents.  
This will be my last post on this thread now because there is no winning with you.  You post to win an argument on a blog not to really make sense.  I already said I would never negotiate anything that a client doesn't approve.  I take their best interests and what they tell me and I present it to the other agent in a way that my training and experience has shown to get results.  I don't negotiate terms that I want and my client doesn't approve of and I never said I did...and frankly don't know why you keep bringing it up.  One of our main duties that we owe to our clients in Wisconsin is negotiation.  It is the top of the list with giving real estate advice.  We negotiate the terms the clients want with the other agent and then the agent talks to the their client.  Then that agent comes back to me and so on until an agreement is met.  

There is a difference between me saying we want this, this, this, this and this or we walk and saying if you can take care of these couple things, they buyers will take care of this.  There is a give and take...a compromise to satisfy both parties.  It isn't always winning and losing money.  If a house is on the market for one day and has 4 offers on it, than the negotiations are typically meaningless.  You give them what they want and the seller is in charge to pick the best offer.  If one offer is $200,000 and 20% down, I'm not going to be able to sell my clients offer for $175,000 and 3.5% down.  If you call that "losing" than I guess that's your right.  When the house has sat for longer or there are bigger issues with the house, than there is more room for negotiation.  What I have learned from experience has helped clients save money in more ways than telling them to get an inspection.  I help them by running comps, knowing the area, helping them with a purchase price, getting the other client to fix things ect.... Each deal is different.  I know for 100% that my experience with the Real Estate process saves my clients, time, headaches and money.  That makes it worth it for me.  
  • January 24 2013
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"It's interesting that the process in NJ is so convoluted".......well, not convoluted to us! haha
It's really a matter of all the personalities merging - like a well oiled machine - it can be seamless....................or not.

Debbie, do you also use a neutral party...............nope, there are already enough people involved in the deal!!  :)
 I suppose you could say the title company is neutral but they really only handle their paperwork, with no other input.

Good luck with your NJ exam - where will you be hanging your license?

Thank you so much for your kind words!
  • January 24 2013
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Profile picture for Rushel Reed
It's interesting that the process in NJ is so convoluted. That three days could really wreak havoc on a transaction if all parties are not on the same page.  Debbie, do you also use a neutral party?

We send our completed contracts to a title and escrow company.  The seller has the right to choose which company is used.  However, the title and escrow officers are, by law, neutral.  They are extremely helpful when problems arise, because they cannot interpret the contract with bias.

Debbi, I'm getting close to being able to pass my NJ real estate exam!  And if you are as patient and thorough with your customers as you are on this forum, you are an asset to any client!
  • January 24 2013
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Rushel, my pleasure..........and...Mack - thank you  

this is fascinating stuff, isn't it?  :)

Our process  is interesting in some respects, and can also be challenging once the attorneys enter the picture.

Remember, up till then it was just the seller and  his respective agent, the buyer and their agent......and together we all managed to strike  a deal - an agreerment was reached on price, closing, time frames for the mortgage commitment and inspections, inclusions and exclusions,etc.
A detailed contract was pretty much in place.
Now the attorneys enter , and, depending on their personalities and abilities, the process can either  move along smoothly....or not.

There are  number of local, extremely responsive and capable attorneys I respect and know well ...... so I  really breathe a sigh of relief when  one of them will be part of the deal.
Even better is when both attorneys are equally adept.
However....
When I ask the buyer or seller if they already have a RE attorney (if not, I can provide a list and let them make their own selection)..... if the response is, "Oh yes, we will be using "Uncle Fred" as our attorney - he's not going to charge us".
 I take a deep breath and ask if Uncle Fred is, by any chance, a RE attorney, and if he has done any closings, at all,  in the past 25 years?
 If not, I know it may be a bumpy ride to the closing table.

Or, the response can be : "Oh, yes, I have an attorney -  I know Mr. HeadOfTheFirm, Esq....(the partner in a law firm with 150 attorneys)..... I play golf with him, so he will handle my sale".

Well...what I know that they don't know is - he will probably never even look at the contract - one of the young associates, Mr. IWannaBePartner, Esq.,  (or maybe even  the paralegal,who usually is the most efficient one to work with), will take over........and often they can nitpick everything just in case the "boss" does happen to glance at what is going on. They want to make sure they crossed every "t" and dotted every "i" - three times!

Once, the att,. review was taking so long, that I finally called the associate and said: "Look, we're not selling the Empire State Building here - just a house! Please get this  resolved asap so we can move along with the inspections"!

Anyway, it can be an interesting mixture of people....with varying  personalities, abilities and egos, along  with  emotions thrown in due to the stress of buying or selling a home that the buyers and sellers are experiencing.

But, fortunately, we usually do wind up at a closing table.....eventually!

  • January 24 2013
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That, my friends, is education!
  • January 23 2013
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Profile picture for Rushel Reed
Thanks Debbie,
It really is quite different from state to state!  It sounds as though the attorney review process provides essentially what the title and escrow service does.
Thanks again.
  • January 23 2013
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Hi Rushel

There is no law that requires a buyer or seller to hire an attorney in the state..

However, we have  a legal statement, called Opinion 26, that strongly  recommends the parties obtain legal advice, but it is not mandated.
As agents, we must have the buyer and seller sign off on that statement - the page is incorporated into our contracts. It states that as agents, we cannot give legal advice - hence, it is recommended that attorneys be used.
I have never had a transaction, or known of one, in over 27 years that didn't include an attorney on each side.

The buyer and the seller EACH hire their own attorney, and each of them pay individually.
I do not like to quote someone else's fee, but overall, attorneys for the seller charge less than a buyer's attorney.
Buyer's attorney orders the title work, cuts all checks for closing, prepares the HUD, (closings usually take place at the buyer's attorney's office.).
The attorneys may or may not get involved in negotiating the home inspection issues - it depends on the attorney and their style of doing business.
In my area (and this really can vary in the state), seller's attorney may get in the range of $800 - $1250 to handle a typical closing......buyer's attorney perhaps $1000 - $1500.

The fees cover the attorney review process and everything in between that and the closing.
I won't bore you with the details, but there are sme standard letters sent by RE attorneys, and the process can move wuickly. Some are more hands on with their clients - some not so much. Some welcome agent's involvement  - some not so much!

In the more southern/middle part of NJ, I am told title companies usually handle the closings - I believe the title company's attorneys oversee the att. review.

I can only speak for my area - northern NJ .

Hope this answers your questions!
  • January 23 2013
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Profile picture for Rushel Reed
Debbie, can you tell me who typically pays for the attorney review (in NJ)?  And how much does this cost?  And is there a law requiring the attorney review?

In Oregon, there is no such law, and neither buyers nor seller often retain an attorney.  It is very rare.  While real estate brokers are forbidden from practicing law, there is much explanation of the contracts, and many suggestions to a client that if they don't understand the contract fully, they should hire an attorney.  The vast majority of questions can be answered in the office or over the phone, with the remainder being answered by the title and escrow company (with a bit of legwork). 

Does the real estate brokerage retain an attorney?  Are they neutral, or does either the buyer or seller get to choose?  Lots of questions, but in my little burg of Bandon, Oregon, we are starting to see even more (we already had quite a lot) out-of-state buyers.

Thanks in advance!
R
  • January 23 2013
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Maybe you could do that Karl, , but we (as in, the agents in my part of NJ) can't and don't. It's just not customary here.

And it has nothing to do with being"young", as there are lots of young agents in my company - it's company policy.

The $1000 is sent via courier to our accounting department and placed in our trust account....just part of our "business as usual" procedure.

I suppose overseeing wire transfers is easy in a small company, but with  hundreds, if not thousands, of transactions occuring on a daily or weekly basis, it would be challenging for corporate to follow and track each transfer, and  report back to each agent and manager confirming receipt of each transfer.
  • January 23 2013
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Then it need to be put in a trust log and all that fun stuff.  I am of the young generation, moving everything closer and closer to paperless.

You could do the $1000 as a wire transfer.
  • January 23 2013
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Interesting, isn't it, to learn how business is conducted in other states?

Thats part of the draw for me on these kinds of sites.

In regard to the $1,000 check - it's all we get for the first several weeks, as usually the balance of a 10%( of the purchase price) deposit is due 10-14 days after the attorney review is concluded.
Most time frames begin after the review (mortgage commitment, inspections, etc.), so that date becomes significant, as does getting OUT of attorney review.

And Karl,  yes, a buyer could go back (even if told all offers were final -  highest and best) and increase his offer during the review....it might create a bidding war, but you just have to let things play out (some agents try to choreograph it, but you really can't - you just inform them what is legal and allowed).... whether the seller will entertain or consider new offers at that time, is up to the seller.



  • January 23 2013
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I agree Michael.  I don't do checks though, every offer I present I submit it with an agreed upon amount being wired to escrow with in 3 business days. 

Debbie, thank you for helping me understand how that works.  I don't like that as you could lose a house in those three days.  At the same time, if you lost a bid to another, it would give you time to go back with a higher offer, and it could start a bidding war.
  • January 23 2013
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,,,anyone who came to me with less than a check and  signed contract in hand would not be seen as representing a serious buyer.

Anytime I have verbally 'floated' an offer to a listing agent regarding a clients interest or an approximate dollar offer, the agent comes back with "write me an offer and they buyer will consider". Without something in writing you're just blowing smoke and wasting time.
  • January 22 2013
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Profile picture for blue screen exile
"...wonder if those buyers are forewarned and prepared, for that possibility?" -

Of course not... flippers aren't interested in why their offers might be rejected, they are only interested in getting the absolute lowest price possible on something they can put back on the market in a few months to turn as much profit as possible.

Which is why Paul goes out of his way to explain to his "clients" how they can hide the termite infestation and damage that is evident.
  • January 22 2013
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In case anyone wants clarity on how offers are usually presented in the good ole state of NJ (why would you?) well  - here we go (the rest of you can take a nap).
There will be an open book quiz at the end!!

Ok - first of all, most of us start with signed contracts (most are  put out by the NJ Assoc. of Realtors - some contracts are created by the larger companies - like mine - but all pretty much say the same thing)
 which spell out all the details. ...if there is an accepted offer,  and all parties have signed off on it -  we go "under attorney review".
The contract  becomes binding after the attorney review period ends (3 business days, but can be extended by the attorneys).
Once the attorney review is concluded, the property is deemed "under contract" and marked as such on the MLS.
Homes may still be shown during the review, and buyers can still look at houses.

During the review, while the attorneys make whatever changes they care to, EITHER party can cancel the deal without any reason.
So, if a higher offer comes in, the seller can kill the first deal and then sign the new one.
it works both ways, though.
If the buyers, for example,  see a new listing they like better, they, too, can cancel the deal.

My offers include the signed contract (signed by the buyer) along with a check for $1,000 (could be higher depending on the price of the house) which is seen as an initial good faith deposit - fully refundable if the sale is cancelled during the review.
.
The negotiations are usually verbal once the intial offer is presented, and can move along quickly.
In the old days, we used to present offers in person...that's when, imo, real negotiating took place - want to see you youngins sit in front of a seller and their agent,  and make the case for your buyer's offer without having them throw you out!!!
.....but I digress ............ today the offer is usually emailed to the listing agent, and then shared with the sellers.

Once there is a meeting of the minds - any changes to the original contract are made, and the buyers initial them....the contract is then given to the sellers for their signatures.
The very next business day, the contracts are given to the attorneys and the review begins...the clock starts ticking on that 3 days.
We use attorneys in the northern part of the state........southern NJ, seems to use the Title companies to handle their closings.

That's an overview of  how it works here.
zzzzzzz

Now - I have had contracts accepted right from the initial offer, and the sellers sign right away. Even with negotiating, this can all proceed quckly and we can reach an agreement and sign off on the same day the offer was first presented.
This is the reason I have  asked Paul, several times,  how he presents his offers - with no clear response, because, if he did it in the customary manner, his buyers could y wind up with 2 signed deals at the same time..
That would not be good.

On the flip side, and probably more important to his scenario........as a listing  agent - anyone who came to me with less than a check and  signed contract in hand would not be seen as representing a serious buyer.
Red flags would go up...questions asked.

This could ultimately  impact (negatively) the seller's perception of the buyer's offer, and it could stall any negotiations.......wonder if those buyers are forewarned and prepared, for that possibility?
  • January 22 2013
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Profile picture for blue screen exile
"REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices." -

It is not enforceable, not enforced, and agents don't want to get involved to enforce it, so it is meaningless, just like most of the "talking points" that come from NAR.

Besides, the Realtors® on websites like this seem to do just fine at putting their own foot in their mouth without any help from others.

Pointing out what an agent wrote is neither "false" nor "misleading" nor "reckless".

Besides, even when a complaint does go to the local board, the agent just claims ignorance, as documented in NAR's comments about their code of ethics.
  • January 22 2013
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This is actually in the Realtor® COE: "REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices."
The General Public, of course, has no such restriction. 
  • January 22 2013
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"Is there a way for a REA to distinguish themselves within the profession without denigrating other's business models, ethics, or expertise?"

There are many ways an agent can do this...most require some work though. For example, an agent may seek out additional qualifications/education. They can become highly specialized in a certain neighborhood or type or property, or type of move - like relocation. Promoting these skills isn't saying someone else is worse. It's saying "I prefer to offer these 'a, b, c' services to clients in 'x' niche", or "I value you as a client, so I have increased my ability to help you in [insert skill set]." It could be anything from learning about construction to studying economic theories that apply to housing prices to becoming certified as an appraiser, etc., etc.

It's a marketing and professional strategy choice. Like politics, some people prefer to say "pick me because I believe/offer this", instead of saying "pick me because the other option is worse on x, y, and z."
  • January 22 2013
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I can't say I've learned anything positive about EBA's from this discussion thread.  Ironically the EBA's themselves seem to have left the worst impression.  Followed closely by agents that want to represent "buyers" agency as more than it really can be under MLS rules and current customs.

At least you made blog fodder for some.  Probably not a positive there either.
  • January 22 2013
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Profile picture for blub blub blub
Come on everyone...didn't you know that's the way they do things in New Jersey. Everyone else has been doing it all wrong.

You don't put an offer in writing on just one property at a time...you throw out multiple verbal offers and hope one sticks. That way you don't have to go back and cancel any offers that may have been accepted along with your other offers.

That's working in the buyers best interest.  That's working as an advocate for the buyer.  That's saving the buyer money and stress.



  • January 22 2013
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- Which segment of consumer's do you think really respond to pure chest-thumping?

The segment that is like themselves, no doubt.

- Is there a way for a REA to distinguish themselves within the profession without denigrating other's business models, ethics, or expertise?

There are just some people that like that sort of thing, SoCal!

- And if they go INTO CONTRACT as you your self wrote, how is the offer NOT on a contract?  How can it be both?

I think we're going to find out more about the "attorney review" period and how it affects buyers and sellers.

  • January 22 2013
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Profile picture for blue screen exile
"how is the offer NOT on a contract?  How can it be both?" -

It is very simple, he wrote in the offer.... "this offer is not binding"... meaning there never was an "offer" in the first place, it was only "fishing".

Which is why the only clients that he could possibly have are "house flippers", since the only parties willing to entertain such meaningless low-ball "statements of possible interest" are extremely desperate.

And since he has never mentioned anything he does to help match a client's needs and desires to housing stock that may be available, it appears that he only got his broker's license in order to lower his own transition costs for the house flips he used to do, prior to losing his shirt on a bad foundation he didn't look at ahead of time, and prior to the housing bubble correction that caught him off guard on numerous highly leveraged "investments".

Even if someone signed the "letter of interest" that he sends stating "all terms accepted as is, except "not binding""; and with the "not" crossed out and initialed... it still would not be a binding contract as the letter of intent stated the buyer had "no intent" of any kind.

There was another thread on Zillow on the "letter of intent" concept about 2 years ago, that went over the exact same issues.
  • January 22 2013
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The more I read this thread, the more I am absolutely blown away.

I really am at a loss of words right now.

QUOTE - "Mack,  I hear you but it is not uncommon for a seller in NJ to go into contract - get a higher offer and in the 3 day attorney review period - cancel the first accepted offer -- that is a contract they are 'breaking' .. when the offer itself is NOT on a contract the seller may not like it but there is no legal issue involved."

Does this really happen?  And if so that is messed up.  What constitutes a contract, I am pretty sure that if we both sign off on a napkin that counts as a contract.  The paper doesn't need to say CONTRACT across the top.  And if they go INTO CONTRACT as you your self wrote, how is the offer NOT on a contract?  How can it be both?
  • January 22 2013
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Profile picture for blub blub blub
Don't care how someone chooses to handle their business.  If it's working for you great. Just don't come here and spout your way is the only or best way and then deny it when called on the carpet about it.

It's really about choices and one should offer what services they provide or express their techniques, strategies etc. without making it seem that their way is the only way.  It's misinformation.

There's a thread going right now where several agents have stated that a seller must pay a certain commission rate blah, blah, blah.  That is simply not true.

Offer the alternative to the traditional method and leave it at that.
  • January 22 2013
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Profile picture for SoCal Engr

A quick sidebar...

As a consumer, I find this all somewhat amusing. Is there a way for a REA to distinguish themselves within the profession without denigrating other's business models, ethics, or expertise?

"Use a REA to sell your house, we get you a better sales price."
"Use a REA to buy your house, we get you a better sales price."
"Don't trust a REA who rebates commissions, you get what you pay for."
"Don't trust your business to a part-time REA."

What's wrong with "I can make the transactions go smoother, and will represent your interests and provide advice"? I have opined before that one of the reasons there is less a-la-carte offerings of RE services is that REAs, as a gross generality, do not understand the true value of their individual services.

For the most part (because there are no absolutes?), informed consumers already have an idea of what services you can provide, and which of those they find the most beneficial. I cannot speak from experience in the RE industry, but my personal experience is that people who understand what I do are easier to deal with. Their expectations are realistic, and they understand it's not "magic".

Unfortunately, there is also a signifcant consumer segment that will never take the initiative to learn anything on their own. It's much easier to let others do the thinking, and then blame them for any bad decisions. My experience with these types of people effectively lead me to deal with them as little as possible.

Which segment of consumer's do you think really respond to pure chest-thumping?

And now, back to the food fight...

  • January 22 2013
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So, Pasadenan, you do not have 5 NAR clock hours. OK.

Paul, it would seem that your statement differs from the way I read http://www.njmls.com/consumer-information-statement. I would also like to know why a buyer's agent cannot "guarantee that they will be able to use whatever skill they have for the benefit of the buyer."

BTW: Pasadenan may be a hater, but surely is a tenacious one.
  • January 22 2013
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Profile picture for blub blub blub
Blub:  Where did you get this:  "You are trying to sell that the services of an Exclusive Buyers Agent are better, more ethical and not as deceptive as an REA that handles both buyers and sellers or does Dual Agency, and that your services are in the best interest of the buyer, less stressful, can get a better deal and provides more options."   I never made a blanket claim about the services an Exclusive Buyer Agent provides except to say that only an EBA can guarantee that they will be able to use whatever skill they have for the benefit of the buyer.

Um from you!!


ONLY an exclusive buyer agent can guarantee that they will be able to maintain the role of an advocate for the buyer from start to finish.


What there is NOT room for is the deception that has been going on for years by a few in the 'traditional model' that has had  the effect of limiting the growth of EBA companies

Adhering to the Exclusive Buyer Agent business model DOES ensure that whatever skill the agent has will be used to benefit the buyer.  The distinction is that other agents don't know that, when they first meet with the consumer and ultimately may also be working for the seller -- or for no one at all -as in the case of a state in which dual agency is illegal.
 
But in those areas that HAVE exclusive buyer agents and for buyers that want to ensure that they ARE represented taking HUDs advice to consider an EBA may save them a lot of headaches - and money.

 
Agents that advertise themselves as buyer agents but are not EBAs lead consumers to believe they will be able to provide buyer agent services when, in fact, they may not be able to provide the service. Such advertising is deceptive.

The main distinguishing trait of an EBA is that when they advertise their services as a buyer agent  responding consumers can be sure that they will receive  that service.

They may be mislead that is true.  So what.  Though in most cases I let the sellers of one or both know that there are competing sellers.  It gets my buyer a better price AND makes it less stressful for them since they have more than one option.


  • January 22 2013
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