Have you ever been guilty of a lapse in customer service? Or a breach in ethics? Poor customer relations isn't illegal, but the cost can still be high.

Consider the case of one New York couple who insist they lost the chance to buy their dream home when a previous offer was accepted two days before their engineer's inspection. They say the agent never told them theirs was the back-up offer. The agent says she did inform them the day they first saw the house. The question is who's telling the truth? And how could this customer relations disaster have been prevented?

After reading both sides, whom do you believe? Please e-mail the editor with your comments.

Special note: For those unfamiliar with New York real estate transactions, contracts are drawn by an attorney, not the agent, and the engineer's inspection takes place after the offer to purchase is made in writing but before the contract of sale is drawn. An offer to purchase is not binding until both the buyer and the seller sign.

The Buyer's story

"On June 28, 1998 my wife and I visited an open house in New York, run by an agent and her partner. Later that day my wife contacted the partner to place a bid. After negotiations, a purchase price of $192,000 was agreed upon. At this time my wife asked the partner if we were the first accepted offer and she replied, "Yes She also informed us that we would need half of our 20% down payment at contract."

"The following day my wife contacted the listing agent to set up a time to go out to sign the binder, show the house to our parents and leave a deposit. We wanted to do this before the long fourth of July weekend so she asked if we could go Thursday July 3rd . The agent informed us that this was no good for the home owner. At this time my wife asked if this would be a problem since we would not sign the binder for over a week later and the agent said no. At this point we were under the impression that there was no rush and the house was ours."

"On July 7th we met the partner at the house and proceeded with one last walk through with our family. After this we signed the binder and asked the agent how much we should leave as the deposit. She stated, "We don't need a check right now." At this time my wife, our family and myself felt that all that was left to do was bring in a engineer and go to contract. The following day my wife contacted the listing agent with the times that were good for our engineer. It took her a day and half to get back to us and inform us that the days that our engineer wanted to come were no good for the home owner. At this time my wife asked the agent what days were good for the home owner and she informed us that Friday July 17th was the only acceptable day. At this point we had the engineer switch plans to fit us in for the inspection. On July 10th, I liquidated securities since I needed half of my down payment at contract and I thought we would be going to contract on the 17th or the 20th the latest. This was done because it would take at least a week for the money to be available for withdrawal. The listing agent even contacted my wife prior to the 15th to confirm our appointment. On July 15th at approximately 7:00 PM, the listing agent informed us that a contract was signed by another party for the above mentioned house. When my wife questioned how this could happen, the agent told her that her partner should have told us that the house was being sold to the first person who could go to contract. When we informed her that we were never told she stated, "I assumed Cathy informed you that the house would go to the first party to go to contract."

"As you can imagine, we were totally devastated since we were never informed of another offer and earlier we were told that we were the first offer accepted. The following day I contacted the manager of the listing agent's office who spoke to both the listing agent and her partner, and they both told him that they had informed us of everything that was happening."

"I explained to him that I would have never sold my securities if I didn't feel that the house was ours. He then told me that the house was under attorney review prior to our offer and that a few points needed to be cleared up before the contract was to be signed. This news even shocked me more since it proved the point that we were nothing more than a backup in the event that the initial contract fell through. We were being used as a back-up and neither agent had the common decency to inform us of such."

The Agent's story

"These people have selected memory loss. When the house first went on the market, we held an open house and found a prospective buyer who had an engineer look at the house. There was a problem with the way the contracts were written, so the home seller's attorney said the buyer was taking too long to work things out and instructed me to hold another open house. He directed the homeowner not to sign any offers, but he added whoever goes to contract first is going to get the house."

"The couple came to the second open house, but they didn't write an offer then. They did later that day. They were told both at the open house and when they made their offer that there was an offer already on the house. They were also told that whoever went to contract first would get the house, and their offer was never signed by the homeowner."

"The homeowner liked the terms and price, and we were coming up on the 4th of July weekend and the buyers said they were going away. She came without her husband and brought her relatives to look at the house, but they had still not arranged an engineer to come look at the house. That brings us to the 7th. She called me the day after and asked when she could get an engineer, and said the Friday after the seventh. I wasn't following through with that buyer beyond what the attorney was telling me to do. The first buyer wound up signing the contract and sending them back with a check. Attorney called me and told me to call them and tell them that there was a contract and a check. They were notified more than 24 hours before the engineers came. "

"They took their time about the engineer. The attorney gave me my instructions and I have to follow that."

The Buyer's Rebuttal

"We signed a binder agreement on July 7, 1998. When we had trouble setting up a time for the engineer we became very suspicious. We even contacted our lawyer to ask his opinion and he said we should given them the benefit of the doubt on this issue but if another issue arises something may be wrong. Since we finally arranged for a date for our engineer we felt we were being silly. I sold my securities because the partnering agent said we were the first accepted offer and that we had signed the binder and had the engineer scheduled for Friday the 17th. My wife also spent time measuring rooms and discussing pre schools for our son with the owner. Both our family's even looked at the house. At no time did either agent tell us we were not the only offer accepted."

"Does this sound like the actions of people who were the second offer? Since nobody said anything during these visits and discussions we felt everything was still a go. I called the manager and all he could do was say he was sorry but he still felt that the agents were honest with us. But we still don't have a house."

The Agent's Rebuttal

"I would have worked with them on finding them another house if they had asked me. But when they called my manager and he became involved, we never had that conversation. I never had the chance to ask them that. When we talked about the house at hand, we just talked about that, not the possibility of other houses."

The Agency manager: "The price was the same, everything was the same so there was nothing to be gained by having one buyer over the other go to contract. My question is, what made the buyer liquidate his securities with so many uncertainties ahead of him? The inspection could have revealed anything, and there was no contract. The home wasn't his yet."

The buyer has written the Attorney General and has asked that the agency and the agents be reviewed for fraudulent practices. The outcome is yet to be determined. At the very least, a preventable misunderstanding occurred. At worst, a deception took place. Who is telling the truth? How would you have handled the situation instead? E-mail your responses to editor@agentnews.com.

Published: July 30, 1998

Use of this article without permission is a violation of federal copyright laws.