By Michele McCaskill, VP of Risk Management
I am often contacted by agents who question whether or not their offers were ever presented to the seller by the listing broker. In addition, questions regarding how to handle multiple offers abound.
A quick look at the Realtor® Code of Ethics (Code) and real estate license law can answer any question you may have about what to do and how to do it.
Article 1 of the Code requires Realtors® to protect and promote the interests of their client and to treat all parties honestly.
The bottom line, for those that do not want to read any further (although I hope you will), is that ALL offers are to be presented to the seller, immediately.
Standard of Practice 1-6 states that “Realtors® shall submit offers and counter-offers objectively and as quickly as possible” [emphasis added].
Standard of Practice 1-7 reads, “When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease” [emphasis added].
Likewise, license law requires real estate licensees to deliver, within a reasonable time, a completed copy of any purchase agreement or offer to buy and sell real estate to both the buyer and the seller (NCGS §93A-6(13)). Failure to do so could result in disciplinary action by the North Carolina Real Estate Commission (“NCREC”).
The NCREC has provided that a listing broker has no authority to reject an offer on behalf of their principal even if the offer is unfavorable. Instead, ALL offers must be presented to the principal. The broker may at that time highlight for their principal the disadvantages of any submitted offer.
But what do I do if I get more than one offer on a property at about the same time?
Many of you have undoubtedly found yourself in a multiple offer situation. Navigating through this phenomenon can be a daunting task. When you do receive multiple offers at about the same time, the NCREC provides that all of the offers should be presented to the principal at the same time; regardless of which offer is the highest, which company submitted the offer or which offer was received first.
The law of agency requires a listing agent to communicate all offers to their principal as soon as possible and to disclose any additional information that might affect the principal’s decision to accept the offer. A broker should never withhold or delay the delivery of offers or information from their principal.
NCREC Rule 21 NCAC 58A .0106 requires all brokers to “ . . . deliver a copy of any written agency agreement, contract, offer, lease, rental agreement, option, or other related transaction document to their client within five days of the document’s execution.” Verbal communication of an offer by a buyer’s broker to the listing broker does not relieve the buyer’s broker from their duty to deliver the offer to the listing broker.
In addition, according to the NCREC, listing brokers must promptly inform the principal of any possible offers that may be forthcoming. This means that an offer verbally communicated to you as the listing broker should be communicated to your principal as soon as possible.
One final note when dealing with multiple offers, as many of you are in this market, is to remember that you are not permitted to disclose the terms of the offers to competing buyers without the express authority of the offering party. In addition, the listing broker, only with the seller’s express permission, may outline any terms the seller may favorably consider as long as the information is provided to all competing buyers.