I have been following the real estate market in three places, New York (of course), East Coast of Florida and Costa Rica. I also informally try and keep an eye on what's happening throughout the US as well to have some sort of handle on the macro picture. But let's stick to NYC for the moment; things have moved from stable to a low rolling boil. So what's boiling? Any well-priced apartment in a prime segment of Manhattan is trading. For instance, 54 East 11th Street just went into contract fairly quickly (near ask), a nice, if not quirky space that needed a complete renovation.
Another unit we were involved with bidding on was at 5 East 22nd Street, yet another we lost (and we bid just a stone's throw away from the asking). We THOUGHT we had a deal, then my 6th sense kicked in as excuse after excuse came our way regarding getting the terms sheet to our attorney. When I pressed the listing broker a bit she fessed up: they had been negotiating with an all-cash buyer and it looked liked the seller was leaning that way, even though our bid was higher. I was not a happy camper. My client really wanted this place and I don't like to get played. Fact is, if we were told what was going on in a straight fashion, I would have advised my client to bid the ask, as I had told her that was where I thought the unit would trade. I can't say for sure if she would have, but I am pretty certain she would have went there. However, because of the way the negotiation was handled, I never would have suggested it and I know she felt the exact same way. Now I don't know if it was the seller or the broker who engineered their strategy, but in the end the seller may have sold herself short by not negotiating in good faith. We accepted it and moved on.
This is not the first time this has happened to me and I am sure it won't be the last. But this is (unfortunately) how deals transpire in NYC. There is NO deal until the fat lady sings, which means both parties have to put their John Hancock on the contract. In most cases, especially in this market, sellers will stay the course with a buyer once the ball starts rolling, meaning a contract has been sent out along with supporting documents to the buyer's attorney. I think in general this is the best way to proceed: any offers that come in after an offer is accepted, or (better yet) a contract has been sent out, should be honored. There is nothing wrong with having a back up offer (or two) if the present deal falls through. I have seen, more times than not, deals fall through when a seller decides to bump an accepted offer and proceed with a higher offer that came in after the fact. One reason this can happen is the second buyer is acting from a more emotional place after drawing a line in the sand with an offer and then not getting the deal. Or, sometimes by the time they decide to make their offer, the seller has already accepted someone else's offer. Type A Manhattanites don't like to lose (but they don't like to overpay either) after bidding with their ego and not their brain.
So, when you represent a buyer in NYC and have an offer accepted, everyone tends to get a little jumpy because if you are not attached in an emotional way to the home you are buying, you should not be buying it. Jumpy? Yes, because the seller's broker will continue showing the home until there is a fully executed contract. As a buyer broker I don't like it anymore than you do. However, if I was selling your home, I would be doing the same thing and like most brokers, I would advise you to stay the course with the accepted offer, especially if we were close to getting home. Now, of course, if a new offer comes in that is substantially higher we have to talk and then things can get a bit ugly (especially for buyer Numero Uno)!