Legal Hotline: How Should I Field Multiple Offers?
It’s rewarding to see pre-listing work pay off when a seller receives multiple offers – but now what? There are many options with just a few rules to keep in mind. Here’s one that’s true across the board: Be honest.
ORLANDO, Fla. – It can be incredibly rewarding to see pre-listing work pay off when a seller receives multiple offers. When this happens, a seller and listing Realtor should talk about which approach the seller wants to take with these prospective buyers. A seller’s goal is usually to secure the highest price without alienating valid buyers along the way, although some sellers may have additional goals, like getting to closing quickly. Here are a few rules Realtors should keep in mind when talking with a seller about fielding multiple offers.
One thing Realtors must never do is act dishonestly. Section 475.25(1)(b), Florida Statutes provides a long list of words to describe deceit, such as fraud, misrepresentation, concealment, false promises, and more. Article 1 of the Realtor Code of Ethics also requires honesty. Although Article 1 obligates Realtors to protect and promote the interests of their clients, they must treat all parties honestly while protecting and promoting the client’s interest. Therefore, while it’s OK to negotiate aggressively in trying to secure the best price, it’s not acceptable to do so using dishonest or deceptive means. For example, it’s not acceptable to pretend there are more interested buyers competing for a contract than actually exist.
This issue is much more limited in scope than many members believe, so let’s take a closer look at confidentiality.
If a company represents a seller as a single agent, then the listing agent will owe the seller a duty of confidentiality. The Realtor should always be careful what information they share with others and, if unsure about whether they can mention specific details, should seek a seller’s permission.
If, however, the company represents the seller as a transaction broker, the Realtor only owes a duty of limited confidentiality that would prevent the Realtor from disclosing “that a seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, of the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or of any other information requested by a party to remain confidential.” This transaction broker relationship leaves quite a bit of room to negotiate as the seller and listing Realtor deem appropriate under the circumstances.
As for the terms contained in any given offer, there is no default obligation of confidentiality. So, unless a buyer has included a specific confidentiality agreement with the offer, the seller is typically allowed to share the details of that offer with whomever the seller chooses.
The Residential Contract for Sale and Purchase prepared by the Florida Realtors and Florida Bar (FR/BAR) provides room for buyers to give sellers a deadline in case the sellers want to accept that offer. After the deadline, if a seller hasn’t signed and returned the offer, the original offer will be withdrawn. Please note that if the seller submits a counteroffer to a buyer, each counteroffer will have its own two-day window for acceptance before it will be withdrawn. Also note that the seller and buyer are still welcome to go under contract on the terms the buyer originally submitted, although the buyer and seller will need to overcome the withdrawal issue, typically by having the buyer indicate acceptance in writing (signature or initial) despite the earlier withdrawal.
Standard of Practice 1-7
Code of Ethics Standard of Practice 1-7 provides “Upon the request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller, or a written notification that the seller has waived the obligation to have the offer presented.” Please note that this does not obligate the seller to provide any documentation; the only burden is to respond in writing.
This is where most of our conversations fall when people call about a multiple-offer situation. Is the listing Realtor obligated to respond to an inquiry about the seller’s response to the offer? No, but it is a courtesy I hope most of our members extend to one another, even if the response is a brief one. After all, the NAR Pathways to Professionalism (not a rule – just aspirational encouragement) requests that Realtors “Respond to other agents’ calls, faxes and e-mails promptly and courteously.”
What if a seller asks multiple buyers to submit the highest and best offer by a deadline but then changes her mind after seeing the offers received? Assuming this is a bona fide change of heart, and that there was no dishonest dealing by a licensee (see honesty above), there’s typically not much a buyer can do.
Joel Maxson is Associate General Counsel for Florida Realtors
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