Dirty Little Secrets of Contract Confidentiality

By Monika McGillicuddy

Do you think that the purchase agreement /offer to purchase that you just wrote on your buyers behalf for their dream home is being kept confidential…   

If you answer Yes…think again because in New Hampshire it MIGHT not be.

REALTORS® have an obligation Ethically to disclose to their  buyer clients the fact that their offer may not be kept confidential and yes I am talking about the terms…i.e. offering price and or conditions…financing, deposit ,closing date all of which  MAY be released by the seller to competing buyers in hopes of getting a better /higher offer.

This is sometimes called “shopping offers” and is being done fairly routinely but secretively in New Hampshire and other states.  No one will talk about it because they feel uncomfortable about it…

I wrote about Article 1 SOP 1-13 in detail a while back in my blog  but the summary of the Code of Ethics involving this reads as follows….

 Standard of Practice 1-13

When entering into buyer/tenant agreements, Realtors^® must advise potential clients of:

5) the possibility that sellers or sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties.

I am curious as to how you all are handling this required disclosure if your state does not a have a law or regulation regarding contract confidentiality?  

Is it a routine procedure in your state/area to disclose the terms?  If so do the buyers you work with know this?

Does a prior (before purchase offer is released) confidentiality agreement work for you?

Every time I try to use one I get laughed at by the other REALTORS®…I mean who in their right mind would have their seller sign this type of stipulation.

Is this a problem in your area?  Many REALTORS® I’ve spoken with tell me they just ignore the whole thing because everyone knows that listing agents have an unfair advantage in a co-brokerage situation anyway.  

I think it’s interesting that our code of ethics removed the word fair a few years back and replaced it with the word honesty…

Your thoughts…