After listing a property for sale, you receive an offer from a prospective buyer. Then, before you’re able to present the offer to your seller-client, a second and third offer arrive with all of the buyers and their agents impatiently waiting for answers.
While handling multiple offers requires more diplomacy than handling a single offer, from a business standpoint there is really little room for complaint here. You have an attractive listing, which has a good chance of selling quickly, and your marketing efforts are paying off, which should please the seller.
However, there is plenty of room for problems if you don’t handle the intense demand for your listing with diligence and fairness to all – your seller-client and the prospective purchasers.
Here are some guidelines to hang on your wall and refer to when multiple offers come your way:
– Effective July 1, a new Commission rule prohibits shopping offers unless permitted by the offering party, typically, the buyer. All buyers must be treated fairly, honestly and equally. Disclosing terms of an offer to other buyers gives those receiving the information an unfair advantage over the buyer whose competing offer is disclosed. Thus, it is not in the interest of most buyers to allow disclosure of their offers.
– Abiding by those three words will serve you well and help keep you in compliance with Real Estate Commission rules. You must present each offer immediately or as soon as you are able. Every offer must be presented to the seller within five days of execution. Presenting an offer means delivering the offer or transmitting a copy of it to the seller. Simply speaking with the seller by telephone about an offer is not sufficient to satisfy the delivery requirement in the Commission’s rules.
– There is no contract until all parties agree to its written terms, sign their names to express that agreement and communicate acceptance to the offering party. Until then, you have nothing more than a stack of offers – not a stack of contracts – any one of which could appeal to your seller-client. Do not advise a buyer or buyer agent that the seller has accepted the buyer’s offer until the seller has signed the offer. A seller who orally expresses a willingness to accept an offer has not yet accepted the offer and has no legal obligation to do so. Thus, no contract has been formed. Do not change the MLS status of a property to “under contract” until a contract has been formed as this would be a misrepresentation of a material fact and a disservice to your seller-client.
– Some clients are more knowledgeable about real estate matters than others. Make the appropriate assessment with your client of all offers, explaining, if need be, the differences in the various terms and conditions, how they would affect the sale of the property and the steps necessary to form a contract.
– Inform all buyers or buyer agents that you have received multiple offers. If your seller client does not find any offer acceptable, communicate equally with all prospective purchasers either through their agents or directly depending upon your relationship. Advise all who have made an offer that they may submit their best offer, if they choose to do so, or stand by their original offer. With the seller’s permission, you may outline any terms the seller would consider.
– The timing of receipt by you of an Offer to Purchase is not a consideration in assigning any priority to one offer over another. Until an offer is accepted by your seller-client, all offers must be treated equally and presented. When one is accepted, your client may be willing to negotiate another as a “backup”. Of course, this would require agreement by the second buyer and would require special language indicating that the backup contract has no legal standing unless and until the primary contract is terminated, such as the language contained in the NC REALTORS®’ Backup Contract Addendum.
To fully enjoy the time when multiple offers stream in for one of your listings, heed the advice above and take the time to manage the selling process fairly and efficiently for all concerned.
This article came from the May 2008-Vol39-1 edition of the bulletin.