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Legally speaking: Is notification required when multiple offers are received?

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work “within the law,” we’ve launched a new “Legally Speaking” feature exclusively on the OAR Daily Buzz that spotlights some of the timely questions that are being asked by REALTORS. This one involves situations where multiple offers are received on a listing…

Q: If I receive multiple offers on my listing, am I required to notify all of the agents/buyers that they are in a multiple offer situation?

A: Even though there is nothing in the license law that requires such disclosure, many agents believe doing so is a good idea for two reasons. First, they believe this is fair to all of the parties involved. Secondly, they believe that making all parties aware of this situation is in the seller’s best interests because it could cause the buyers to increase their offers.

While both of these may be true, disclosing that there are multiple offers could result in one or more of the buyers withdrawing their offer because they don’t want to be in a “bidding war.” If this occurs, it is certainly not in the seller’s best interests. More importantly, the fact that the seller has received other offers could be considered confidential information. For these reasons the fact that there are multiple offers should not be disclosed without explaining to the seller the benefits and risks of such disclosure and obtaining the seller’s informed consent.

Standard of Practice 1-15 of NAR’s Code of Ethics likewise provides that the existence of other offers can only be disclosed if the listing agent has the seller’s consent to do so. However S.O.P. 1-15 goes a little further. It provides that if the seller authorizes the listing agent to disclose that there are multiple offers, that the listing agent must also disclose whether the other offers were written by the listing agent, another agent in the same brokerage or a cooperating agent — but this is only required if the listing agent is asked who wrote the other offers.

More information on handling offers and multiple offers can be found in the legal section of ohiorealtors.org

Tags: legal