How to stay in compliance with the Code of Ethics and be your client’s best resource.
As we are now in the midst of the busy spring and summer buying season, we are fielding calls from members with questions about dealing with multiple offer situations. We’ve put together a few pointers for REALTORS® on both the buying and selling ends about how to handle a multiple offer situation while keeping both the REALTOR® Code of Ethics and your clients in mind.
As the listing broker in a multiple offer situation, what can I disclose, and what can’t I disclose?
Your ability to disclose depends on what your client has given you permission to disclose.
Q: Must I disclose to the other brokers that we are in a multiple offer situation?
A: This depends on whether your seller has given approval to disclose this information.
In the REALTOR® Code of Ethics, Article 1, you will find information relating to multiple offers. Article 1, Standard of Practice 1-15, states that “REALTORS®, in response to inquiries from buyers or cooperating brokers, shall, with the seller’s approval, disclose the existence of offers on the property.”
If you have permission from the seller to disclose that you are in a multiple offer situation, you then have to tell other cooperating brokers this information.
Q: What if my clients do not want this information disclosed?
A: At the end of the day, although you are working in the best interests of your client, you cannot lie to another broker.
While it is not explicitly written out, Article 1 says that REALTORS® are required to “protect and promote the interests of their client.” Additionally, Article 1 also states that REALTORS® have an “obligation to treat all parties honestly.”
So, if your seller does not want this information disclosed, you must instead tell the other brokers that your client has asked you not to disclose this information.
How should I approach multiple offer situations?
Your approach to and obligations in working with multiple offers depends on who you are working with — the seller or the buyer.
WORKING WITH SELLERS
Sellers have several ways to deal with multiple offers.
- They can accept the “best” offer.
- They can inform all potential purchasers that other offers are “on the table” and to come back with their highest and best.
- They can accept one offer and reject the others.
- They can “counter” one offer and reject the others.
Please note: The listing broker has an obligation to present all offers promptly and in the order they were submitted. While the listing broker can offer suggestions and advice, decisions about how offers will be presented – and dealt with – are made by the seller –
not by the listing broker.
WORKING WITH BUYERS
There are advantages and disadvantages to the various negotiating strategies you can employ in multiple offer negotiations.
- A low initial offer may result in buying the property your clients desire for less than the listed price – or it may result in another buyer’s higher offer being accepted.
- A full price offer may result in paying more than the seller might have required.
- In some cases, there can be several full price offers competing for the seller’s attention and acceptance.
Keep in mind: purchase offers generally aren’t confidential.
- Sellers may make other buyers aware that your offer is in hand
- Sellers may even disclose details about your offer to another buyer in hopes of convincing that buyer to make a “better” offer.
- In some cases, sellers will instruct their listing broker to disclose an offer to other buyers on their behalf.
For questions on multiple offers or any other Professional Standards topic, please contact our Professional Standards team at professionalstandards@chicagorealtor.com.
