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November 14, 2018

Ethics and Offers

There is one issue that surfaces every time I teach classes about any of the following: ethics, offers and negotiation. 

Was it Presented?

That issue is the uncertainty that the listing broker either presented the offer at all or if it was presented, was it presented objectively?  Another issue is whether or not the offer was ‘shopped’, which is a topic for another day, because that is lengthy as well. 

Let’s talk about was the offer presented at all, and was it presented objectively? The REALTOR® Code of Ethics, in Standard of Practice 1-6 is succinct: “REALTORS® shall present offers quickly and as objectively as possible.”  One of the things I point out when teaching this is that what does not appear in this SOP is as important as what is in it. What does not appear? Things like: ‘written,’ ‘on my favorite form,’ ‘with an earnest money deposit.’

To me, the Code is clear: I owe my client, the seller, any and all information I have about a buyer who wants to buy their property. If presenting a verbal offer, we discuss the statute of frauds in our state, and we advise our clients that anything verbal is unenforceable.  

Also, if we get an offer that might be in a written form which is unacceptable, because it is incomplete, or contains clauses our client will not accept, we do not advise our client to accept that written offer ‘as is.’  And of course, we all know that ‘good and valuable consideration’ includes a signature, but we also know as listing brokers we advise our clients to set a reasonable amount of earnest money to be put down before taking the property off the market. 

Note that I’m repeatedly saying advise.  That’s our role as agents, to give our clients information and advice. Our role is not to make decisions for our clients.

Agent Knows Best?

One of the most popular excuses given by agents who don’t present offers is, “I know my clients would not take that offer.” Again, it is not an agent’s job to decide, but to present, offer advice, and allow the seller to direct them.  Many offers are simply the beginning of a negotiation. 

To that end, NAR has a new policy which they rolled out at the NAR Annual Meetings in Boston, MA in November of 2018.  Here’s what it is all about, “NAR approved a requested change to Right of Cooperating Broker in Presentation of Offers (Policy Statement 7.73) which will now read as follows:  The highlighted area is the addition to this policy. 

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.  

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. 

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.”

What does this mean? It means you might expect a cooperating broker to ask for a written affirmation that the offer has been presented.  Many states, including mine, already have a standard form “Seller’s Reply to Offers.” 

This form, in my state of Pennsylvania, is succinct and essentially is the seller affirming that they have seen the offer and they aren’t taking it. Note that the policy from NAR says the broker can provide the affirmation, which means that the listing broker could put in writing, “Yes, I presented this offer.” To me, it is much better to have a document I can give you that my seller has signed, so that you and your buyer know that offer was presented and considered. 

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Ethics and Offers

November 14, 2018

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