I got a good weird call today from an agent who showed one of my listings. It was a good call, because her buyers love the place and said they want to write an offer. It was a weird call because when I told her we had an offer in counter, she paused.
"How much?" she asked.
"What??????"
"You have to tell me how much the other offer is. It's in The Code. Standard of Practice 1-15."
"Um, and which code might that be? Send me the cite and I'll read it, but I don't think we're supposed to divulge the price and terms of an offer that is in counter."
Turns out, she took a course yesterday. The attorney who conducted it called me a few minutes later and said that, yes, I had to tell her the terms of the other offer that came in. And once again, I asked for a specific cite and suggested he send me a link.
Now NAR has a Standard of Practice 1-15. It reads:
REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09))
I'm not a lawyer, and this lawyer who gave the class was on the other end of my IPhone. I'm parsing the sentence, and I can't find anything that says I gotta blab about the details of the other offer, only that one exists, that neither I nor one of my office co-workers wrote it. But he's a lawyer. I'm not.
So I called my favorite lawyer/Realtor® - Northern Virginia's own Brian Block. He said something very wise. Do what your clients tell you to do.
My clients then, at my request, sent me instructions that said in totally unambiguous language that I was not to disclose the price or terms of any offer that had been submitted on their property.
I asked the attorney who is training the next generation of young northern Virginia agents to please email me the specifics to back up his interpretation of Code, and he might be right. It also occurred to me that it could be a Virginia Association of Realtors section, or maybe something promulgated by the Commonwealth of Virginia, and that it might trump the NAR code.
But I can't imagine a scenario where it would be in my client's interest to disclose the terms and conditions of an offer, either one in counter or one that's been accepted but not settled.
I'll let you know how it turns out.
Strange. An agent hit me with this same thing a few months back. I don't know what they are teaching but I disagree. Telling the amount of the offer is like asking for bids and if the seller told us to do that, what should we do. I think it would be unethical to the agent who had brought in the first offer if we told how much hers was and asked for higher bids.
Patricia, that IS weird! You are poised and experienced and smart to phone Brian B. What we have been taught here is that we can't ever share that info, unless the Seller has given specific permission---and I don't know why they would, especially in this scenario. Good stand, and I'll be watching the updates.
Patricia,
That would be interesting to watch. I feel that there is a tremendous benefit for the seller to instruct the agent to disclose, as if their goal is to sell for the highest amount possible, opening the amount of the other offer can achieve just that, and can help fetch a higher price.
But that's me
Patricia, the quote clearly states "with the sellers approval." I'm not an attorney but that sounds like "only if the seller gives his approval."
Ah...let us know what happens with that one! I definitely have not heard of that one... I really doubt that it is in the best interests of the seller...and isn't it by 'law' we follow what our clients want. ....or is that lawyer saying that the seller is forced to divulge confidential info?
Patricia. Good for you calling Brian. Seems to me, and I can't wait to see what comes out of it, that if you gave the offered amount you would have a "mad dog" of a buyers agent and a buyer after you. Which may bring it's own set of troubles. Please let us know.
Pat, Sounds odd and certainly not my understanding of the COE. I know you won't be bullied into disclosing something that isn't in your clients best interest, even if the bullying comes from a lawyer. Last time I looked, lawyers had erasers on their pencils too. Rich
Barbara, I like Brian's advice. And even if your clients say you should tell all, it would so piss off the other agents with offers - something that is not the best strategy.
Mara, I was taught the same thing. The attorney who called me said you have to disclose unless the client says you can't.
Jon, I think this might be a good strategy on a fast market. But even then, I think that people are going to come in with their best shot if they don't know what the other offers look like. I remember the good old bidding war days when each offer had an escalator clause attached. It was not unusual to have several low offers, then one just off the charts. They wouldn't have gone that high if they'd known the other prices.
Robin, it talks about disclosing the existance of another offer and disclosing whether someone from my firm (or I) wrote it. That particular language in 1-15 does not govern disclosure of the price or terms. And I think Brian is right, the seller must set the ground rules, although our sellers tend to do what their agent suggests in this area.
Sally, I asked him that, and he had to think about it for a minute. He said if either buyer or seller incuded a confidentiality clause, the information needn't be disclosed. To cover everyone, I got one fast from my seller.
Ron, I agree that the other buyer and her agent would, at a minimum, put gum in my hair.
Rich, that's a really cute expression!
The main thing, as it was already said above, is with the sellers approval. The Texas listing agreement has verbiage in there already that the seller is giving the listing broker/agent to disclose if another offer is on the property, and that we can give the details, but I don't really let my sellers give the actual permission for detail disclosure... Then, if you tell one agent that there is already an offer in counter, you have to go back to the first agent and let them know that someone has inquired about offers and for them to resubmit their best and final offer if the other offer actually gets in your hands. All parties should be on the same playing field.
That attorney teaching the class sounds like an idiot...
Patricia you might want to check out this PA summary of 2009 NAR changes.
It states that with seller's approval, you can disclose existence of offers. You did tell her a counter exisited. There's no mention of disclosing the amount or any other details of those offers, other than the source, which now must be specifically asked for and only if offer disclosure is approved by the seller.
Pat - You are doing things the way i've been taught and you've been doing a lot longer than many of us here. I will tell you that recently I had another agent tell me what the other offer was and where my clients needed to be in an effort to assist me. I knew he was all wrong in doing so, but on the recieveing end of this information I couldn't complain one bit.
WHAT WHAT WHAT? That is crazy. The only thing that they added was that we have to disclose IF ASKED whether or not we wrote the offer we have IF we have one. I can't believe they tried to pull the fast one on you. GOOD FOR YOU FOR DOING WHAT YOUR CLIENTS SAID!!!
Patricia - Good for you for doing the right thing! Please keep us posted... :)
I've heard it before... with the sellers consent you can disclose... but if they say no, then that's all she wrote. I don't believe forcing the divulging of information was ever the intent of 1-15.
Donna, our agreement allows sellers to authorize disclosure of another offer in the boiler-plate language. And I guess a seller could say "Tell All". But mine didn't.
Roberta, I read it the same way you do.
Carol, when I'm the buyer broker, that information is just golden!
Michael, I think it was an agent who just got out of a continuing ed class taught by a lawyer who didn't get it - unless - and this is totally possible, there was a Virginia statute that overrides our Code. In that case, the lawyer totally gets it.
Debi, I'll do an update tomorrow.
Hi Pat... This is one of the most interesting posts. It's got it all... intrigue, legal and code of ethics interpretations... it's the Slumdog Millionaire of "You Make the Call" posts! I can't wait to read your update tomorrow!
Pat, to clarify, Virginia Association of Realtors members adhere solely to NAR's code of ethics -- VAR has no separate code. You're right, there may be a regulation specific to this matter that would trump NAR's code, but that's very unlikely. We have lawyers and government relations pros on staff that do a lot of research and negotiate with regulators and legislators to ensure that you're never caught in a catch-22 like that.
A quick call by your firm's broker to VAR's legal hotline should clear up this situation in a matter of minutes. (804) 264-5033 is our number and the hotline opens at 9 a.m.
Patricia, our listing contract in Anne Arundel County has a box for seller's to check indicating whether or not the agent has permission to disclose IF there's another offer. I guess no one ever thought to address the issue of what's in that offer because that would seem to violate the seller's confidentiality, as required by our agency disclosure.
I wonder where the attorney teaching this course got his law degree. Maybe it's from an online course originating out of Nigeria. The language looks pretty clear to me. Sometimes when I write a pre-approval letter for a contract offer I get a call from the listing agent asking what is the maximum the borrower will qualify for. My answer is that is confidential financial information and I will not release it without permission from the borrower.
Steve, I'm waiting to hear from the lawyer who started all of this! He promised to email me the link that would make it all obvious.
Ben, thank you. I have to get my broker to add me to as an alternate to the Hotline access list.
Margaret, I agree, and it seems awfully obvious, but I'm just reading the thing like it was a book!
and Alan, I'll ask him when I speak to him later today.
Really impressed by your taking of the extra step. There are many people that just try to bully thier way toward their goal. I ma delighted that you didn't let happen
Operative words, "With the Sellers' approval' and i can guarantee you, I'll never advise any of my Sellers to approve.
The Code of Ethics seems clear enough on this, that what you are allowed to disclose, with your client's permission, is quite limited.
So my question is: even if your clients told you to disclose the amount of the offer and counter offer, because they felt it might encourage a bidding war (yes there are bidding wars in some locations on well priced homes in good condition), would you be allowed to do so? I believe the answer to that is NO. I believe that's what we call "shopping around" and it is not allowed even if your clients want you to.
Tom Lynch, where are you when we need you???
A couple of months ago, I went to the Ethics class (again) and was flabbergasted to hear the same information. In Mass we have a listing agreement form, that give the seller an option if they want to keep it confidential, if they give your permission to divulge the fact of an offer or divulge all details of the offer. We sat in that training room with a lot of very experienced agents that were very surprised as well.
As mentioned before, it depends if the seller gives you permission! I had in one case that disclosing the information (to BOTH parties), got my seller a much higher selling price than the original offer.
The Code of Ethics and what we think is ethical -> obviously 2 different things!
Good luck figuring this one out, I am still on the fence!
No way! Yes - Brian gave excellent advise on that. But why would you EVER disclose, or be required to disclose, the price and terms of the other offer? That clearly is NOT in the sellers best interest!
Hi Patricia, I certainly haven't heard this around Ann Arbor. Keep us apprised of the unfolding drama. Thanks!
You handled it well. Good luck in the transaction.
I certainly think you are on the right track -- I agree with Brian -- follow your client's instructions and get those instructions in writing so you have a "paper trail". I think the code is clear and IMHO, your interpretation was correct.
Well, the answer is simple enough. A lawyer does not interpret the code of ethics, the hearing panel of the Grievance Committee does. He has no business telling a class of students what the code says.
And by the way, the Standards of Practice are just that, standards, they are not the rule, just an interpretation of something that could come up under, in this case, Article 1. If someone was to file an ethical complaint, they can only site a violation of Article 1, not a violation of a Standard.
An interesting post with a lot of discussion. Your sellers will tell you what they want. Unless it is a hot running market, I'm sure once a seller gets a good contract they are ready to roll on towards closing. This is another one of those tricks of the trade issue for newer agents to learn. The seller gives you permission to release the information.
"I had to tell her the terms of the other offer that came in..."
That sound incredibly weird to me. Good luck on this one Patricia. :)
It does seem to always come back to -- don't make the decisions for the seller-- provide the information as guidance, and do what they ask, as we do represent them, as long as it is not unethical illegal or immoral.
And they have the right to choose to disclose or not disclose information about other offers. I believe there are times when it can be in their best interest. For example. I had a short sale offer that the bank was quiblly over. Another offer was coming in and the other agent called me. With the sellers permission, I told them, what the amount of the previously tendered offer was AND what I thought they would need to offer in order to get the 3rd party acceptance. In this case, telling them both pieces brought in an offer that the bank moved on immediately and it became a done deal. Listed to Close was 90 some days on a short sale. I could see that thing hung a bunch of different ways from Sunday with many months rolling on. But in this case, I had a hunch (a combination of linear factual information AND intuition, which we all have) that this was what it would take to bring this to a close. A close which was without question in my seller's best interest AS well as the bank's! In fact, everybody won, even though, for the bank and the seller were taking the much better of several evils.
I love real estate!
The real estate gal from Washington!
Karen Stanley
Hi Patricia-- Many of the older (more experienced) agents in my area believed that they could NEVER disclose information about an offer--even after going through a class on the COE. But, indeed, if the Seller instructs us to disclose details of an existing offer, we can and must. Of course, we must advise the Seller as to the possible consequences, so that they can make an educated decision and direct us as to their wishes. The language stating "where disclosure is authorized" is very clear, and it is a shame that the attorney teaching the specifics of the COE was not clear about the subject matter.
I envy you your market-- with competing offers today!
Melinda Dutton RE/MAX Home and Land http://melindadutton.com
The key wording would be "with the sellers permission" - very clear wording. Good luck in this situation.
I guess I dont understand why a seller would not WANT to disclose the amount of an existing offer. If you go to an auction, you know exactly what the highest bid is which often times drives the sales price up even more. I learned that from Ebay...many things sell for way over what they should sell for, even when they're used.
But I also understand it's very important to stand behind your client's wishes as long as they are ethical. I'll be watching to see the true "ethics" behind disclosing the offer amount.
Interesting. I was always told that this part of the code refers to where the offer came from not what the terms were. I suppose that if we disclosed that the offer came through the listing agent or another agent in the listing agent's company (an agent of the same Broker) there might be a chance that the net to seller could be different depending on the commission arrangement negotiated by the seller and listing agent. The MLS (MRIS, in our case) had a field to disclose "variable commission" to alert cooperating agents that a net to seller may be affected.
My clients always instruct me never to disclose terms. What they heck good is that?
I guess this is a good problem to have. Multiple offers! Is the market coming back?
Great job. So many agents assume the attorney is always right. You handled this perfectly and I look forward to your next post.
I am impressed with that some are taking the side of having to disclose. I believe, as you and so many others, that the disclosure is not required but obviously there is room for disagreement even in the Code. Keep up the good fight.
Patricia,
You are the real thing...an agent who truly protects the interests of their Seller. When I list a property and establish that relationship, I take it seriously and do not/would not give out ANY information without permission from the Seller - especially about other pending offers.
The other point is this: I find that instructors say many things in order to both inform and entertain their captive audiences. The more controversial their information, the more their name is brought up, the more people will hear of them and sign up for their courses.
I recently sat through a course during which the instructor told the group that a good Buyer's representative would insist that the Seller move out of the house BEFORE closing so the Buyer could be assured of taking delivery of the house in good condition. Personally, I think that is NUTS! And, it is bad advice. It is not normal and customary to expect a Seller to vacate a property when he hasn't received a dime for it. It isn't even good common sense.
On the other hand, he said a good Seller's agent would make certain the Sellers did not move out of the house before closing...thereby setting up a huge debate in the local market about who is the better agent....the agent for the Seller who advises them not to move until the property is closed or the agent for the buyer who advises the Buyer not to enter into the contract if the Seller won't move? What a mess!
But, the instructor is coming back in a few weeks and his class is full.
Oh well..............You know what they say, "Those who can, sell. Those who can't sell, teach." ( No offense to the hundreds of wonderful instructors out there who do a creditable job. It's just that the ones like the attorney Patricia is dealing with give you all a bad name.
There are plenty of terrible agents giving the rest of us wonderful ones a bad name, too. Happens in every profession except maybe the legal field.....:)
That's nuts. From the beginning, I always treat me clients how I would want to be treated. Would I want my agent telling someone else about my offer. No.
I think every situation is different depending on who you represent. It is up to your client.
I've been in some mustiple offer situations and here's what happened. I was representing the Buyer. The Listing Agent informed all Buyers it was a multiple offer situation and gave each Buyer a deadline to make "Highest and Best" Offer. I thought it was totally ethical and fair.
Patricia, !!
You made lots of great points here. Many that I needed more clarification on...thanks for your .2!
In California, the purchase agreement has a paragraph in BOLD stating that the offer is NOT confidential. Even so, it is my understanding that the seller must give their permission to disclose. I'd guess that most sellers do not tell their agent to disclose price and terms of existing offers. When representing a buyer, I always ASk and am surprised by the number of listing agents that actually tell me! Somehow I doubt the obtained permission to do so.
"...with the sellers’ approval..."
That verbiage stands out to me.
On the flip side, does the buyer agent have to disclose the existence of other offers, and their respective price and terms, made by the buyer on other properties? I suspect the answer is no, as that would not be in their interests.
Pat, Great blog entry as usual. I just had a CE class today and definitely raised my eyebrows over one or two statements made by the instructor in passing that seemed to not jive with what we've been taught and practice, so its definitely a good lesson not to take things at face value, but to follow up on your own to make certain you're adhering to the law and code of ethics.
Many have commented that divulging the terms of an existing offer to a potential buyer is counter to the Sellers' best interest. I whole-heartedly agree. But, in addition, it also puts the Realtor in the position of not treating all parties with fairness and honesty (another ethics requirement). Why? Because now the potential buyer who has yet to submit an offer has vital information that will guide their offer that the initial offering buyer did not have. Is that treating the first offering buyer fairly? Is there any way you can level the playing field for the original offering buyer? From that original buyer's perspective, probably not.
Do you sometimes feel as if you are constantly being tested by other agents and their brokers. I have also interpreted that sentence just as you have. I can disclose that their is an offer but not the details of that offer. Now I'm going to follow up and get confirmation from my clients that those are their instructions.
I wonder if the attorney giving the advice would share his strategy with opposing counsel in a law suit. Probably not. This sparked a lot of discussion, thanks.
That's the most ridiculous thing I've ever heard of!!! You HAVE to tell them what the other offer is?? I don't think so!!!
Dan
Amazing...
Key words: "with the sellers' approval." Absent that, you simply can't disclose!
So what happened? Did that lawyer ever get back to you? I have been taught and I have interpreted the code as you have - - existence ok to divulge; terms not ok to divulge. Also, it wouldn't seem that the seller's approval would be enough -- wouldn't you also have to get approval to divulge terms from the buyer who made the offer? It's their terms you are divulging.
This is interesting. I always do what my clients wants...usually divulge the existence of other offers, but it has never occurred to me that we would divulge the terms. Although someone made a good point--wouldn't divulging the terms possibly bring the best results for your client? This is a Pandora's Box since I also believe in maintaining good relations with local agents (who would be very unhappy to have their offer terms shared with the competition). I will be following this one, too!
Huh? It is the way it reads. You have a contract with the Seller. It's amazing what people can read into a simple clean statement "with the Seller's approval" Some attorneys just have too much time on their hands
This has gotten a lot of discussion. I think REALTORS do really know what they are doing. Following the wishes of the client certainly takes precedence over what we want to do. With the seller's permission you can disclose anything that is confidential. And if I have that permission, I make sure I have it in writing. But usually I advise my seller to let me disclose only the existance of an offer, meaning a real offer in hand, and not all the rest of the terms. I want the buyers to give their best shot based on their qualifications and not fabricate their price that would cause a fall thru later.
The second point I want to make is the confidentiality statement that someone mentioned. Remember, that if you ask for the terms in your offer to remain confidential between those parties and you write that in your offer, that's all it is, is a request, because the offer has not been agreed to by the seller. SO if you think you want the offer to be condidential, then you need to get a confidentiality agreement signed first, before you submit your real offer.
Let us know if the attorney ever sends you anything.