AGENTS: Whether you are representing the Buyer or the Seller, it is important to engage in best practices
Best Practices: Offers – What Agents Need to Know
November 26, 2018 -- An offer is one of the core components of any real estate transaction. Despite how commonplace it is, and that Members should be familiar with the process, it's still essential that Members engage in best practices during the offer process.
Whether you are representing the Buyer or the Seller in a real estate transaction, it is critical to engage in best practices throughout the offer process to:
- Protect your Brokerage by ensuring good recordkeeping;
- Serve your clients' best interests;
- Handle the process fairly and with openness where required; and
- Protect sensitive information.
Read on to learn more about some every day offer situations and how to handle them according to Best Practices, including handling pre-emptive offers, disclosing multiple offers, and recordkeeping of offers for Listing Brokerages.
HANDLING PRE-EMPTIVE OFFERS
Did you know that in a situation where a Seller has indicated their preference to receive all Offers on a given listing presentation date, pre-emptive Offers can still be put forward by the Co-operating Salesperson, the Listing Salesperson is obliged to convey this information to the Seller, and the Seller has the right to consider this Offer?
What Do I Do in This Situation?
If you are representing the Buyer, you would prepare an Offer with an irrevocable date before the indicated Offer presentation date and inform the Listing Salesperson.
If you are representing the Seller and you receive an Offer before the date of the Listing presentation, you are obligated to convey the Offer to the Seller, but you should also remind the Seller of their initial direction to hold an Offer presentation on a given date.
If the Seller opts to change the presentation date, you must get this directly from the Seller in writing.
From there, it is your responsibility as a Listing Salesperson to:
- amend the MLS® Listing to reflect the new date;
- inform each Salesperson who has registered an offer of the new date and time;
- inform each Salesperson who has shown the property of the new date and time; and
- inform each Salesperson who has confirmed an appointment to show the property of the new date and time.
Tip: When you are signing a Listing Agreement with a Seller and they indicate their preference for a Listing presentation, you can educate them on pre-emptive offers and their right to review them.
If you're representing a client who is involved in a multiple offer situation, you must remember whom you represent and to act with fairness, openness, and transparency for the benefit of all.
What to Do as a Listing Salesperson Who Has Received Multiple Offers
It is your obligation to disclose only the number of offers in writing to all those Salespersons who have registered an Offer on the listing on behalf of their buyers. (Section 26 of the Code of Ethics). Neither privacy legislation nor the Code of Ethics permit or require any other disclosure.
If, after notifying all Salespeople with registered offers, the situation changes (e.g., another offer is registered, one Salesperson withdraws their participation, etc.), it is your obligation as the Listing Salesperson to again disclose in writing the number of offers registered to the remaining Salespersons that have an offer registered.
What to Do if One of the Multiple Offers on Your Listing is From Another One of Your Clients
In this case, you would need to advise the two other Salespeople that there are multiple offers on the listing and that one of the offers is your own (e.g., you are acting for a potential Buyer in addition to the Seller).
OFFERS RECEIVED BY LISTING BROKERAGES
Did you know that a Brokerage acting on behalf of a Seller must retain copies of all written Offers it receives, as well as copies of all other documents related to these Offers for a given period of time?
Successful Agreements of Purchase and Sale must be retained in their entirety for six years, and unsuccessful Agreements of Purchase and Sale or Form 801 (or equivalent) must be retained in their entirety for one year.
This is according to Section 35.1 of REBBA 2002 and only applies to properties listed for Sale.