You Must Be Able to Prove You Presented Every Offer

Article 1 of NAR's Code of Ethics is the single most often cited article in ethics complaints filed with your local REALTOR association. Article 1 clearly describes the REALTOR'S® obligation to protect and promote the interests of their client, as well as the obligation to treat all parties honestly. 

The Code goes further and states that offers and counter-offers must be presented objectively and as quickly as possible, and that the listing REALTOR® must continue to present offers and counter-offers until closing unless the seller has waived this obligation in writing.

Also important to remember is, particularly with our current central Ohio market, that in response to inquiries from buyers or cooperating brokers, the REALTOR®, with the sellers’ approval must disclose the existence of other offers on the property; and where that disclosure is authorized, REALTORS® shall also disclose, if asked, whether other offers were obtained by the listing licensee, by another licensee in the listing firm, or by a cooperating broker.

NAR's official case interpretations illustrate how the Code of Ethics is applied in real life situations, and Interpretation 1-13 specifically addresses the presentation of offers.

Case #1-13: Obligation to Present Subsequent Offers After an Offer to Purchase Has Been Accepted by the Seller

REALTOR® A had a 90-day exclusive listing on Seller X’s property. Seller X instructed REALTOR® A to list the property at $150,000 based upon the sales price of a neighbor’s house, which had sold a month earlier.  REALTOR® A aggressively marketed the property, filing the listing with the Board’s MLS, running a series of advertisements in the local newspaper, holding several “Open Houses,” and distributing flyers on the property at local supermarkets. REALTOR® A, whose listing contract was nearing expiration, held another “Open House” on the property, which resulted in an offer to purchase from Buyer Y at $15,000 less than the listed price. REALTOR® A, convinced that this was the best offer Seller X was likely to obtain, persuaded Seller X to accept the offer. Seller X expressed dissatisfaction with REALTOR® A’s failure to obtain a full price offer, but signed the purchase agreement nonetheless.

The next day, REALTOR® B, a cooperating broker, delivered to REALTOR® A a full price offer on Seller X’s property from Buyer Z. Buyer Z had attended an earlier “Open House” and was very enthusiastic about the home’s location, stating that it would be perfect for his mother.  REALTOR® A advised REALTOR® B and Buyer Z that an offer had already been accepted by Seller X and that he, REALTOR® A, would not present Buyer Z’s offer. REALTOR® B and Buyer Z then promptly filed a complaint with the Board charging REALTOR® A with a violation of Article 1, as interpreted by Standard of Practice 1-7. At the hearing, REALTOR® A stated that he felt he was under no obligation to present Buyer Z’s offer, since the listing agreement did not specifically provide that subsequent offers would be presented to the seller. Further, REALTOR® A felt that such a practice could only lead to controversy between buyers and sellers, as well as result in breached contracts.

“Why get everyone in an uproar,” said REALTOR® A, “by presenting offers after one has been accepted? And what would I do if Seller X wanted to back out of the first purchase contract and accept Buyer Z’s offer?”

The Ethics Hearing Panel found REALTOR® A to be in violation of Article 1. In their “Findings of Fact and Conclusions,” the Hearing Panel cited REALTOR® A’s lack of understanding of the requirements of Article 1, as interpreted by Standard of Practice 1-7. The panel noted that state law did not prohibit the presentation of offers after an offer had been accepted by the seller; that the fact that the listing contract was silent on whether subsequent offers would be presented did not relieve REALTOR® A from the obligation to present such offers; that as the agent of the seller, REALTOR® A must always act in the seller’s best interest and advise the seller of all offers submitted; and that, should the seller wish to consider accepting a subsequent offer, REALTOR® A must advise the seller to seek the advice of legal counsel.

Proving an Offer was Presented  

Real estate licensees have guidance in Ohio license law, and our Ohio Association of Realtors legal resources provide handy Q&A on the licensee's obligations.  

Q: As the listing agent, what are my obligations when I receive the Agency Disclosure Statement from a cooperating agent with an offer?

A: You must present the Agency Disclosure Statement, signed by the buyer, to the seller before you present the offer to purchase. To document that you did this, have the seller sign and date the statement.

Q: What do I do if the seller or buyer refuses to sign the Agency Disclosure Statement?

A: In this situation you are required to note on the bottom of the statement the following: 
1) the parties to whom the statement was presented; 
2) the date and time the form was presented;
3) the fact that they declined to sign it; and 
4) the reason they refused to sign it if you know. You must also communicate what has occurred to either your principal broker or another management- level licensee in the brokerage that supervises you.

Best practices, Ohio law and the National Association of Realtors Code of Ethics all provide that every offer be presented.  And you MUST be able to prove you did, should a complaint be filed with either the Ohio Division of Real Estate or your local REALTOR® association.