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October 8, 2018

Understanding Real Estate Basics: Presentation of Offers

The Presentation of Offers and the Acceptance of Offers are two separate phases of the offer process. Yet so many professionals confuse and commingle the rules when it comes to these very separate and distinctly different aspects.

Sometimes Listing Agents Say Things Like

"I am not presenting your offer until we put it on a particular form that we use or recognize." 

"You have to take a certain clause or condition out before I will present it." 

"I want you to attach a pre-approval letter before I present this." 

"I am holding all offers until Tuesday so that everyone has a chance to submit." 

And sometimes listing agents will express some other desire or ‘office policy’ of the listing agents choice or business practice.  Can they do this?

Understanding the Law

Everything starts with your state license law.  In your state license law, it will state the timing and rules associated with the presentation of offers.  If the license law doesn’t:

Restrict or limit the presentation of offers by stating that only offers with preapproval letters attached will be presented.
 
  • Stipulate that only those above a certain price will be presented.
 
  • State that only written offers will be presented.
 
  • Require only offers on a particular form will be presented.

Then all offers, including verbal offers, must be presented.  Office policy cannot restrict what the law does not.  

Some state license laws will restrict the presentation to only written offers (not most states by the way) which then means a verbal offer could be presented but is not required to be presented.  Please realize that this has nothing to do with the statute of frauds which applies to the enforceability of an offer - we are just addressing the presentation at this point.  

The other issue that must be researched in your state license law is, "Can a seller provide written instructions that add conditions to the presentation of offers." In some states, the answer is yes if the license law conditions the presentation of offers.  

For example, the seller only wants to see offers above a certain number, presented on a full moon and only wants to see offers on pink paper. If you are in a state where the seller can provide additional written instructions, then this is possible.  It may not be practical or even prudent but possible.  

Office policy can’t dictate all of this nonsense but a seller can.  The biggest challenge for listing agents is that they need to have a real conversation with their clients about what the ramifications of some of their choices might actually be before making a decision and getting those instructions in writing since some sellers make horrible decisions and then try to blame it on the agent.  

Regarding Timing

Your state license law may outline a timeline for presentation.  Usually, it is, “As soon as practical/forthwith/without delay/etc."  That means you have to follow that directive no matter what the seller says. If, However, the state license law allows the seller to choose a time and provides that request in writing, then it could be “next Tuesday”.  If the license law does not state a timing requirement and there is no seller conditions permitted in the license law, then there is no seller or company over-ride of the license law.

Also, the Code of Ethics (COE) standard of practice 1-6 states that, “Realtors shall submit offers and counter-offers objectively and as quickly as possible.  COE standard of practice 1-7 goes on to say that, “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.” 

All of this applies to the presentation of more than one offer.  It is, "As they arrive."  The seller doesn’t have to act on anything, but we don’t arbitrarily decide to hold everything in a pile for our convenience waiting for offers to materialize before letting the seller know that they have offers for consideration.  

With all of this said, the seller can choose to ask for anything and everything prior to countering an offer or accepting an offer.  No seller has to sell, even if the offer is full price, no contingencies and cash.  The price doesn’t have to be the highest, nor does the offer have to be the best.  The rules for the acceptance of offers are completely different since the acceptance phase is at the prerogative of the seller.  

There are a lot of other issues that surround this topic like disclosure of multiple offers, shopping offers, etc. but that will be addressed in future articles.

For more professional and career enhancing development opportunities, consider taking  The SRS: Seller Representative Specialist, ABR: Accredited Buyer Representative and RENE-Real Estate Negotiation Expert which are the trifecta of courses that all agents should take.  It is so much easier to co-broke out there when folks understand today’s skills and issues.

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