Oct. 8, 2005 - Case #1-12: Presentation of Subsequent Offers

Case #1-12: Presentation of Subsequent Offers After an Offer to Purchase Had Been Accepted by the Seller (Adopted November, 1987 as Case #7-16. Transferred to Article 1 November, 1994.)

REALTORŪ A, the listing broker, presented an offer to purchase to his client, Seller X, which was $20,000 less than the propertys listed price. The property had been on the market for several months and had not generated much interest. In his presentation, REALTORŪ A told Seller X that, in his opinion, the offer was a good one and Seller X should consider accepting it. With interest rates on their way up again, said REALTORŪ A, properties are just not moving the way they did six months ago. Seller X decided to accept the offer and the transaction closed. Several months after the sale, Seller X filed a complaint against REALTORŪ A alleging a violation of Article 1, as interpreted by Standard of Practice 1-7. It had come to Seller Xs attention that a second offer had been made on the property after Seller X had accepted the first offer but prior to closing. This second offer, alleged Seller X, had not been submitted to him by REALTORŪ A and was for $2,500 more than the first offer. Seller Xs complaint stated that by not presenting the second offer to him, REALTORŪ A had not acted in his (the sellers) best interest, as required by Article 1.

At the hearing, REALTORŪ A produced a copy of the listing contract, which contained a provision reading: Seller agrees that Brokers responsibility to present offers to purchase to Seller for his consideration terminates with Sellers acceptance of an offer. REALTORŪ A told the Hearing Panel that he had explained this provision to Seller X at the listing presentation and that Seller X had agreed to it, as indicated by Seller Xs signature on the listing contract.

Seller X admitted that he had understood and agreed to the provision at the time he listed the property, but he felt that REALTORŪ A should have advised him of the second, higher offer nonetheless.

The Hearing Panel found REALTORŪ A not in violation of Article 1. In their decision, the panel noted that REALTORŪ A had explained the contract provision relieving him of the obligation to submit subsequent offers to Seller X; that Seller X had agreed to the provision and had signed the listing contract; and that, while it was unfortunate that Seller X had received less than full price for the property, REALTORŪ A had fulfilled his obligations under the listing contract once the first offer to purchase had been accepted by Seller X.