Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate. This week, we talked with Kate Sax, the director of professional and ethical practices for the Mainstreet Organization of Realtors, on how agents can deal with multiple-offer situations in an ethical manner.
Multiple offers have increasingly become a part of everyday business for many Chicago-area REALTORS®, driven by factors such as low inventory and growing demand. Even though they’ve become relatively commonplace, however, multiple-offer situations can still be vexing because no two are quite the same.
The Mainstreet Organization of Realtors’ Department of Professional and Ethical Practices regularly fields questions from members about professional ethics as they relate to multiple offers. While there is no “one-size-fits-all” approach when it comes to navigating a complex transaction, there are some fundamental principles from the Realtors Code of Ethics that apply.
Here are the top seven guidelines to keep in mind the next time you and your client find yourselves in a multiple-offer situation:
7. You are not required to disclose multiple offers to potential buyers. Your seller can choose to simply accept the best offer, invite all parties to submit their “highest and best,” or counter one offer while putting the others aside or rejecting them. There is no need to give buyers a chance to counter-offer if you and your sellers agree it’s not in their best interest.
6. It is ethical to “shop” offers. Though it can be a risky strategy, because you could potentially alienate a buyer who has already submitted an offer on your client’s property, it is ethical for sellers and their listing broker to share a buyer’s offer and terms with other parties. Buyers’ brokers should make sure their clients are aware that their offers may not be treated as confidential.
5. It is your responsibility to determine if the listing broker is a dual agent. As the buyer’s representative, it is up to you to ask if the listing broker is a dual agent and – if so – what the difference is between their offer and your client’s. When disclosure of multiple offers is authorized by the seller, brokers are required to divulge that information, but only if asked.
4. Submit offers and counter-offers objectively and as quickly as possible. Much of the frustration in multiple-offer situations stems from brokers feeling like they’ve been left in the dark about the status of their clients’ offers or counter-offers. As long as it’s in your client’s interest, you should always do your best to be responsive and keep an open line of communication with cooperating brokers.
3. Communicate with your clients ahead of time that a multiple-offer situation is a possibility. Let them know what to expect, explain the pluses and minuses of each approach, and discuss your potential strategy, should a multiple-offer situation arise.
2. Accept or reject offers and counter-offers in writing, if possible. It’s always in everyone’s best interest to have your client put in writing that they have reviewed an offer and accepted or rejected it. That documentation can then be returned to the other party as a formality, with the date and your client’s signature or initials. A written rejection can help further allay any concerns about impropriety.
1. Finally, remember that all decisions about how offers will be presented, negotiated and accepted are made by the client, not the broker. Remind your clients that, while they will have the benefit of your counsel, the decision is ultimately their’s to make.
For more information on ethics and professionalism related to multiple offers, you can review the Multiple Offers Code of Ethics and Arbitration Manual.
Kate Sax serves as Director of Professional and Ethical Practices for the Mainstreet Organization of Realtors. Earlier this year, she oversaw the launch of MORe’s new Conflict Resolution program, which provides education and resources to help members and consumers work through issues that may arise during real estate transactions. The program includes a confidential Professionalism Hotline at 855-737-6990 that homeowners and members can call to connect directly with members of MORe’s Resolution Response Team.