Ways to improve professionalism

What was Bob Thinking… 

Disclosure of Existence of Offers to Prospective Purchasers

Senario: Seller Sally listed her home for sale with Realtor® Bob. The property was priced reasonably and Realtor® Bob was confident it would sell quickly. The listing agreement included the seller’s authorization for publication in the MLS and authority to disclose the existence of offers to prospective purchasers.  Within days, Realtor® Bob had shown the property to several prospective purchasers and one of them, Buyer Zachary, wrote a purchase offer at close to the asking price.

Realtor® Bob called Seller Sally to make an appointment to present the offer. After hanging up with Seller Sally, Realtor® Bob received another call, this time from Realtor® Alan. Realtor® Alan explained that he represented a buyer who was interested in making an offer on Seller Sally’s property. Realtor® Alan explained that while his buyer-client was quite interested in the property, price was also a concern. He asked Realtor® Bob if there were other offers on the property, indicating that his buyer-client would likely make a higher offer if there were competing offers on the table. Realtor® Bob responded telling Realtor® Alan, “That’s confidential information. Please tell your client to make his best offer.”

Taken aback by Realtor® Bob’s comments, Realtor® Alan shared them with his buyer-client, who chose not to make an offer and instead pursued other properties.

Buyer Zachary’s offer was accepted by Seller Sally later that evening and, sometime later, the transaction closed.

Several months later... Seller Sally and Realtor® Alan met at a social event. Realtor® Alan related his conversation with Realtor® Bob. Seller Sally asked Realtor® Alan if he thought that Realtor® Alan’s buyer-client would have made an offer on Seller Sally’s home absent Realtor® Bob’s refusal to disclose whether there were other offers pending. Realtor® Alan responded that it was impossible to tell for certain, but his buyer-client had certainly not been favorably impressed by Realtor® Bob’s response to a seemingly routine question.

Seller Sally subsequently filed an ethics complaint against Realtor® Bob alleging violation of Article 1 as interpreted by Standard of Practice 1-15. She noted that she had clearly authorized Realtor® Bob to disclose to buyers and cooperating brokers the existence of pending offers and that Realtor® Bob’s arbitrary refusal to share information he was authorized to share could have been the reason, or part of the reason, why Realtor® Alan’s client had chosen not to make an offer on Seller Sally’s home.

Realtor® Bob defended his actions indicating that while he agreed that he had an obligation to promote Seller Sally’s interests, his obligation to Realtor® Alan and to Realtor® Alan’s buyer-client was simply to be honest. He had not, in any fashion, misrepresented the availability of Seller Sally’s property. Rather, he had simply told Realtor® Alan to encourage his client to make her best offer. “I’m not required to turn every sale into an auction, am I?” he asked rhetorically. “I feel that I treated all parties honestly and fairly,” he concluded.

The Hearing Panel did not agree with Realtor® Bob’s reasoning, indicating that he had violated Article 1 as interpreted by Standard of Practice 1-15. They noted that Standard of Practice 1-15 requires Realtors®, if they have the seller’s approval, to divulge the existence of offers to purchase on listed property in response to inquiries from either potential buyers or from cooperating brokers. Realtor® Bob had not met that obligation and, consequently, the Hearing Panel concluded that Realtor® Bob had violated Article 1. (NAR Case Study 1-28 Adopted November, 2002)