Sounds as though she was saving the property for the original buyers. They could be friends.

There are lots of dirty tricks going on like that in the RE world. I, personally know of situations like that. The sellers would get a lower offer from the first buyers, and the agent would lie to the second ones that it was higher and that sellers are not accepting any more offers. This usually happens when the agent knows the buyers, or knows she will get future commissions from them. It's sort of like greasing the palm ;)

Unfortunately, not much can be done,other than a quick phone call to her board. I would do it now.

Of course, I'd be mean and find out from the town records as to who owns the house and would call the owners myself...in addition to reporting her to the board.

Next time, get a "buyer's agent" to present the offer (one that just presents the offer) and you are under no obligation to pay directly to put in a signed offer. And I would absolutely report this as a violation.

It never hurts to get as many offers as possible:
1. You create a bidding war, which is better for the seller, who can get them more money. That is the agent's duty, isn't it? You never know, the second buyer may give the seller better terms, or the seller may think that they are a better fit for their house.
2. What seller in their right mind would say no more offers? And if they did, you as the realtor should advise them to think twice, especially with today's shaky deals.
3. You never know whether any buyer can get financing, so you shouldn't say no to any buyer. You should keep them around as close as you can until the house closes, because you never know.
4. What about the inspection? What if the first buyer walks?

I think I smell a big fat rat!
Oh, and I'm a realtor, but an honest one. I refuse to be part of the pack...
I still say call the owners. Tell them that you may want to be a back up offer, but without that twit of a realtor. Cut her out of the commission. Let her try to go after them. They can have her license.

Use an attorney for the paperwork if it should look like it may become a deal.

Sorry, ya'll, I hate bloodsuckers, and connivers.
I wish I could operate under a different title than the blemished "agent" or "realtor".

Pardon me, I skipped the REO part.
Which part of the Seller did not return the signed contract did you not understand?
Sounds to me that offers still should have been able to be submitted.

Gotta have all your facts before you tell someone to go and report someone.

Obviously that's not the only part you missed.

"That is the agent's duty, isn't it?"

The agents duty is to follow the sellers legal and ethical instructions. You are obviously new in the RE biz.

The agent knew virtually nothing about the place and kept saying she would have to ask the owner and get back with us. She asked who our buyer's agent was. We said we were using a real estate attorney. Then she tried to get us to sign something saying that she would be providing us with a buyer's agent anyway, even though we told her we didn't need (or want) one. She had her husband along for security and he was a sourpuss as well. When we first came into the house and said hello, he turned his back to us and pretended he didn't hear.

The house was nice but the agent was so horrible to deal with that we decided to send a letter to the owner and make an offer to him directly. He accepted our offer but the deal fell through.

We watched the house sit for 6 months. It finally sold but through a different realty co. It went for less than what we had offered to pay him the second time.

I guess the owner finally woke up and realized with an agent like this, he was better off keeping the house, getting someone else or going FSBO!

If your getting to much disrespect from an agent, I don't see anything wrong with going over their head and contacting the owner. I'm sure most owners would love to hear feedback about their hired representatives.

That's what I would do, contact the seller and make him/her aware of it.
However, in our listing agreement it also places certain obligations on the seller:
"7. SELLER’S OBLIGATIONS TO BROKER.
a. Negotiations and Communication.
Seller agrees to conduct all negotiations for the Sale of the Property only through Broker, and to refer to Broker all communications received in any form from real estate brokers, prospective buyers, tenants or any other source
during the Listing Period of this contract."

BUT I do expect my realtor to at least tell me - "hey someone without a realtor just said they want to submit an offer"
That said......
This was a REO and it seems like they would more likely want to at least hear about all offers since they are a more disinterested party trying, I'm assuming to not lose as much on a house....but again - when its short notice its harder to get anyones attention without a a solid credit pre-approval which is harder to "prove" unless you have someone "official" representing you to the other realtor. Even a bank might not want to squirrel a solid deal for a potential deal.

If it went down as the OP said I don't think that's right

I agree.
Having to deal with financial institutions as a buyer, is probably one of the most difficult ways to purchase a property today.
Many agents don't have the experience in dealing in short sales or foreclosures. Many Banks lack the systems in place (although they are getting better at it) to streamline the sales/review and decision making process.
Agents are placing themselves in vulnerable positions by not advising their clients correctly, because they don't know what they are doing.
To make this process as painless as possible for buyers and sellers, hire a very experienced agent, who is well versed in short sales and foreclosures, be patient and hope for the best.

Unlike in NY city (and maybe the whole state) lawyers are NOT necessarily involved in writing RE purchase contracts.

In many places they are draw up by the purchaser and their agent using standard forms (some from local RE boards, others are state supplied).

I have avoided purchasing in places that use lawyers to negotiate from the start (and so does my wife who is an attorney).

It is not worth the hassle and the games that occur.

What kind of games?

Contract 'negotiations' often drag on, with the hours racking up the whole time.

No contract actually exists during these 'negotiations' so either party can simply walk away.

Couple it with an inspection clause and it can take a protracted time to actually get anything done.

Many buyers seem to think the inspection results are a 'to do' list for the seller.
They want a 'brand new' house created out of one that could be 30, 40, or 50 years (or more) old.

'Attorney review' is common in some places, often 'within n days after signing.'

Why someone would sign a contract before having their attorney review it?
If they want it checked run it by the attorney before submitting it to the seller.

In the vast majority of places contracts are tendered, and if accepted they are binding on both parties.

Inspection clauses should be used for their intended purpose - finding major defects that are not readily apparent to the inexperienced.

Over the years I have had requests for new HVAC systems since it is "old."

The house was built in 1935.
The system was last upgraded 10 years ago.
It is correctly sized, works, but is not the 'latest and greatest.'

I had a seller walk when I refused to re plumb the whole house to eliminate the galvanized steel supply and smaller DWV lines.

Houses built in 1950 often used galvanized lines.
They functioned well and were not appreciably blocked in 1984 (I routinely replace them if they are badly blocked).
Will they last another 30 years?
Probably not.
The house is priced accordingly though.

The first time I made an offer on a home, many years ago, I got a LOT of serious attitude from the realtor when I insisted that my attorney look at the contract before it was submitted. He tried to pressure me into submitting an offer with two business days for attorney review. I refused. He was dangerously close to nasty. (I told him to lose the attitude or lose the offer)

Contracts are usually contingent on atty review. Depending on the market conditions, you could lose the house by not signing until after the atty reviewed.

That depends on your location.

RE contracts in Virginia are rarely contingent on an attorney review.
Some states require the contingency, while in others the attorneys negotiate the contract.

This may be true, but has little to do with the comment that was left in this post. The poster already said the agent tried to get him to do a two day atty review.

I don't claim to be an expert in every state, however, I've never heard of a state where attorneys negotiate the contract for sale of real estate.

Funny, that is exactly how my Aunt purchased her house on Long Island.

Brickeye:
Funny, that is exactly how my Aunt purchased her house on Long Island.

Brickeye why is that funny? I'm sure there are circumstances where it could happen, ie; a FSBO, but it certainly isnt NYS Law that atty's negotiate sales contracts for real estate in NY. I've been a broker in NY for almost 20 years, not once has an atty negotiated my deal.

Been there, done that and learned the hard way.

I also agree with points 2 and 3 in notto's post:

2. What seller in their right mind would say no more offers? And if they did, you as the realtor should advise them to think twice, especially with today's shaky deals.

3. You never know whether any buyer can get financing, so you shouldn't say no to any buyer. You should keep them around as close as you can until the house closes, because you never know.

In this market, who in their right mind would turn down the opp for a 2nd offer at the last minute to help drive up the price or at least have a backup? I think the LA should have at least suggested a backup offer in case the first one fell through.

Linda - what are you seasoned realtors seeing that those of us who think something is not right aren't? I'm genuinely curious, b/c as described, it just doesn't sound right. If I was a seller (I know this one is REO), I would be furious and report the realtor to the board if this happened to me.

We make recommendations to sellers all the time, however, we have to follow the sellers legal (and sometimes not so legal) instructions.

Sparkels Im only seeing that some of the facts are missing here. From being in the business, it sounds to me like they had a very strong offer on the property. (CASH or, a strong pre approval, good money down, strong credit scores, no contingencies) and had no reason to listen to any other offers, especially from a buyer who looked at the property a month ago (wasnt motivated enough to make an offer then). A red flag to me is that this buyer wasnt in contact with the listing agent for a whole month. Is this not a strong buyer that the LA didnt bother keeping in touch with him/her? When a bank has a strong offer on the table, they arent necessarily interested in getting the "highest" price, just the strongest buyer. They obviously felt that had that. Alot of people think the agent is doing something crooked or underhanded when things dont work out in their favor. I think most of the agents here are seeing that things are just not adding up. Parts of the story are missing. Agents have NO REASON at all not to submit offers, especially in this case where it would have been a double for the agent. My guess is they had a very motivated cash buyer in hand and had no reason to listen to any other offers.

We, as agents, are under obligation at all to follow the sellers illegal instructions. Quite the opposite, actually.

Do you mean "under NO obligation at all"?

If a seller asks you to NOT change the status in the MLS from "A" active, into "UC" under contract, although it is in the MLS rules and causes a $100 fine, given the owner would pay the fine, would you follow the owners instructions?
You might not, but I would, if it's in the owners best interest.

My attorney said under these circumstances it's ok. Fiduciary obligations are not always clearly defined in black or white.
I listen to my attorney.

My long term reputation is way more important than going against my ethical values as an agent, and getting to be known as a shady agent by other agents.

So you must also think it is OK to lie to other agents and buyers about there being multiple offers on a property when there are none. It is unethical, but not illegal. I would not do it.

Our responsibility IAW the COE:
"Duties to Clients and Customers

Article 1
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client.

Standard of Practice 1-15
REALTORS®, in response to inquiries from buyers or cooperating brokers shall, WITH THE SELLERS' APPROVAL, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended" 1/09))

Your post made it seem as tho you were talking about state laws, not MLS rules. There is quite a difference. Agents ARE NOT obligated to break the law for any clients. IT could mean the loss of their license. Lets stop the nonsense. You're dancing all over the place with this.

Fiduciary obligations to our clients are the law, as spelled out in the COE.
To know the fine line of carrying out ones obligations to a client and breaking the law, is what attorneys are for and I rather follow their advice.