Navigating Multiple Offers, Part 1
(Jeff Sorg, OnlineEd) – Multiple offers on one listing are not uncommon, especially in a competitive marketplace. While multiple offers are usually a positive situation for most sellers, they do present some legal and ethical challenges for real estate brokers.
When faced with multiple offers, the real estate brokers involved must be sensitive to the needs and direction of their client, whether the buyer or seller, as well as to their fiduciary duty to provide fair and honest dealings to all parties. For the listing broker, this means that to create a fiction (to lie) or implication that multiple offers exist, when no such offers do exist, is a violation of professional ethics and the law.
A listing broker cannot disclosure any offer without the seller’s express consent. Likewise, terms of offers, including price or hinting if the price is above, at or below listed price also needs client approval. And, the listing broker should not present offers in a manner designed to show favoritism to a particular offer, buyer or cooperating buyer broker.
- REALTOR® Code of Ethics, Standard of Practice 1-5: REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property.
- REALTOR® Code of Ethics, Standard of Practice 1-6: REALTORS® shall submit offers and counter-offers objectively and as quickly as possible.
While there is no standard for presenting multiple offers, the listing broker should make sure to present every offer to their seller for consideration, unless the seller issues written instructions to the contrary. The broker is not to discourage or reject offers for the seller just because a better offer already exists.
A listing broker should not present offers with favoritism or in any way designed to manipulate the seller into accepting one offer over another. The best practice is to present all offers before engaging in discussions with the seller about which offer is best.
REALTOR® Code of Ethics, Standard of Practice 1-7: When acting as listing brokers, REALTORS® shall continue to submit to the seller all offers and counter-offers until closing unless the seller has waived this obligation in writing.
Listing brokers are to help get their client get the highest price and most favorable terms for the property while the buyer broker is to help get the property at the lowest possible price and terms favorable to the buyer. Regardless of these competing dynamics, the real estate broker cannot make disclosures and representations that end up not being true. The broker must act honestly and fairly toward all parties and must put their client’s interest above everyone else’s.
These are some different ways for a seller and their broker to deal with multiple offers:
- Inform all buyer brokers that other offers do exist and ask them to ask their clients to deliver their “highest and best” offers.
- Inform all buyer brokers that there are multiple offers, all of which will get presented on a date and time specified.
- Counter-offer one offer while making the other offers wait for the outcome.
- Counter-offer one offer and reject all other offers.Accept the best offer and reject all other offers.
While each of these options has pitfalls that may result in buyers pursuing other properties, the listing broker should discuss each option with their seller. Remember; it is not up to the listing broker to decide how multiple offers will be presented – it’s up to the seller. The listing broker can only offer advice and cannot make the final decision.
Click below to keep reading…
Page 1 | Page 2
Interested in more FREE coaching tips? Sign up here!
OnlineEd is a provider of pre-licensing, post-licensing, and continuing education for real estate licensees. For more information about OnlineEd, please visit www.OnlineEd.com.